Goodbye to the Apparatus

Deterministic frames are the bane of much of social science. Marshall Sahlins has done a worthy and readable job of lampooning and trying to understand the lure of such social science. I do want to try to make time for Sahlins and Hart because they manage to formulate what I call durable and even truthful thoughts on the social. In short, they preserve the classical, basic tensions. I need those tensions to be able to think and breathe.

Exaggerated “plaints without tears” by such figures as Foucault and Agamben, to name two of the more clever writers, have been terrorizing students since the 90′s in many a would be social science. I just read Agamben’s Apparatus recently and I was struck by the determinism that he assumes without scrutiny.

“Monolithic determinism” is the phrase that one critic used to describe Foucault’s metaphysics of power in the early 90′s, so the pushback against the middle Foucault of Discipline and Punish is already very old hat. So, exactly what is Agamben up to in 2005 when writing Apparatus?

I’m not sure. In some sense, he is a kind of literary critic, a philologist, and an elucidator of some very interesting twists and turns in a very complicated story or history. However, to my cursory reading, he mystifies and assumes a kind of “monolithic determinism” at work in social relations that should give any thinking reader pause.

He collapses the tension between the individual and society down to a narrative in which society is a monolith that is as he says “imposed on the individual.” When he, for example, discusses Hegel’s notion of “positivity,” Agamben seems to come unequivocally down on the side of imposition and what he calls, after Foucault, “subjectification.” By the word, subjectification, he presumes to describe how subjects are “created” by society.

He does not seem to maintain a sufficient tension between the imposition of power and control by institutions and the assent to and investment in the “reigning symbols of authority” by individuals.

As he progresses in the essay he seems to reach to the level of a farce. Or am I missing the irony? At one moment, he points to the little telefonino (cell phone) as a sinister apparatus that divides ourselves from ourselves. He makes noises about the “apparatus”, about the social infrastructure that Keith Hart is talking about. The apparatus is supposedly what is dividing us from ourselves.

Agamben is a brilliant writer and a deft philologist, so terrorized readers are presumably kept in enough awe to not notice the mystifications. Does anyone wonder why Agamben hardly lets himself speak plainly?

Truth is, I’m terribly divided and I was so long before the telefonino and I must accommodate myself to a fact: I’m divided. I’m also enabled by society. Society is the first amputation and also what enables. There is the tension again. When Agamben preserves that tension, I can follow him. But I cannot follow him blindly.

I’ll leave off this short foray into Agamben with one very silly sentence of his. Perhaps he is, at one level, yet one more intellectual who is so far removed from daily life that he can see no life or agency in the common man? Agamben actually writes,

He who lets himself be captured by the “cellular telephone” apparatus whatever the intensity of the desire that has driven him-cannot acquire a new subjectivity, but only a number through which he can, eventually, be controlled.

Conversations with Peers: Birth in Dialogue

So much of my communication takes place in dialogue. I find it quite difficult to even think outside of dialogue. In fact, dialogue seems to me to be the very soul of thought.

Much of my professional life is spent in dialogue and collaboration with peers, and much of my intellectual life is as well. Dialogue and collaboration are the necessary conditions for me to both want to and to be able to communicate. I also want to find a way to share my thoughts with others outside of my peer groups. And here I am at something of a difficulty. I don’t expect that others will have the time, the inclination, or even the familiarity with the subjects or the language that I am concerned with. More difficulties arise from the fact that I value and use a certain amount of compression in my communications. Compressed statements are difficult and somewhat dangerous; they are also necessary. Compressed statements, the art of making them and the art of reading or listening to them, requires much of both reader and writer. Care. Respect. A concern for truth and life.

I am in dialogue with people whose persons and work I respect very much. One person in particular who I am in the midst of a conversation with. His name is Keith Hart and he is an economic anthropologist who is actively present on the interwebs.  I have been conversing with him on nettime. Keith, is doing some very important work, work that is producing some durable and extensible thought on political economy. I think it might be timely for me to post my latest response to one of his always interesting comments. In my response I select a very interesting and compressed sentence from Keith that I think is a very durable formulation that preserves the poles of a necessary tension in economics, in society. Both poles are necessary and there is a necessary tension between them; the tension, however, is very difficult to work with. There is a temptation, in confronting any “siege of contraries”, to collapse the poles, to choose one are another at the cost of diminishing the opposing pole. If you are impatient or you lack the time, you may profitably skip ahead to Keith’s sentence below. Keith’s sentence is durable precisely because it manages to compress a full enough accounting of necessary tension into one simple sentence that can be remembered, held in the hand, turned over in the mind.

Herewith, the meat of my response to Keith’s response :

I need durable, succinct, and extensible ways to think about the social. I need to preserve the tensions between the classical poles. I especially like the way that you have condensed Mauss below to one very rich paragraph.  And I love this sentence: “To be human we must be concerned with our individual self-preservation and we must learn to belong to each other in society.”  That seems to me durable, succinct, and rich. To belong to each other in society.

I also very much like this: “There is no point therefore in socialists demonizing markets. We have to bring out the humanity in them that is obscured, marginalized and repressed by bourgeois institutions.”

I agree wholeheartedly with that statement. It is very difficult to get a clear view of just what the hell is going on. One way of starting to talk about it might be:

A very real social infrastructure is obscured by a dominant religion that sees entrepeneurialism and free enterprise in rent seeking and bureaucratic stagnation. Perhaps during the naive phase of capitalism, such secular prayer was merely sentimental and not so obviously hypocritical and false. Schumpy and others put a fork in naive capitalism in the early 20th. Without a respect for the history of markets, my previous statements would not make sense. On the one, official hand, we have an increasingly farcical secular prayer that celebrates a reality that is no longer there.

On another hand, we have resistance to the prevailing symbols of authority and to the dominant secular religion. The reality underneath and behind the secular religion is also obscured by analysis that takes the idealizations of the sales effort for the real thing or the thing itself. I’m thinking of David Harvey here as one of the best who still falls for the idealizations of secular prayer. However, due to the scarcity of my capacity, I do not at this moment have a specific example from his texts. One simple thought experiment would be to just call to mind where most critical commentary on markets gets the basis for its critique from: mostly from the business booster press or from the think tanks of the institutions of secular prayer.

Contempt for the study of the oligopoly as it really is, and laziness or blindness seems to mar so much commentary. We get the idealizations of the sales effort and we get denunciations of those idealizations as if they were true. But rarely do we get an honest or thorough look at what the hell is really going on. I’m no exception to that rule, given the scarcity of my time and my capacity both; I often rely on caricature and secular prayer as if it were truth. However, I am catching myself and calling myself to account as much as I can.

I find your work helpful and useful. A path to genuine understanding starts with respect, and for me the path involves quite a bit of struggle to find the time, the space, and the capacity to understand. I’m also grateful for these interchanges on this little forum that a couple of people named nettime a few years ago.

I’m not on facebook because I do not have the time and because I’m already overwhelmed as it is. I’d be sorely lacking in humility and in generosity of spirit if I imagined what that experience is like for any user. I navigate nettime for example in my own way; I must and do grant the respect to other people that they navigate the tensions of communication in their own rich ways. Schumpy comments somewhere in his overwhelming econ analysis on the need that thinkers have to reduce their interlocutors to caricature. I only ask, “How rich is the caricature, how much does it at least grant respect to the worthy aspects of an opposing view?”

I respect the machinery of secular prayer. I don’t have sufficient time to read all the propaganda and caricature. I’m rather looking for the durable and the truthful. I try to see across the impressive caesuras that might otherwise blind me. The frames are there: nettime, facebook, wild internet, twitter. But what of the durable (the aphorisms, the thought experiments, parables, essays, poesy) formulations that might allow access to truth? They are there as well, and they are so much more important and more enduring. A thing of beauty is a joy forever.

Hominem Quaero

Quaero Homines. A man in search of a man. A man in daylight holding up a lamp in parody, in pantomime. Diogenes of Sinope searched and did not find.  He wandered about in full daylight with his lamp; when asked what he was doing, he answered, “I am looking for a man”.  His not finding a man has often been seen as a critique of society.  Rousseau famously said that Diogenes could not find a man because man in his simple and natural state no longer existed in the already sophisticated Athens of his day.

We can read the effort to find a man, and the absence of a man found, as a critique of society. We could hold that such an absence is true: there are no adults, no men in the room. But what if the absence of a man is the result of where and how we are looking? If we were to search for a man in much of contemporary social science, we might find him not in the object of science but instead in the basis for science. A competent practitioner is always assumed in any science. But social science must grant competency or consciousness to the object of science if it is to find a man.

Thomas Nagel recently wrote a book review titled The Taste for Being Moral.  In the review he gently chides an evolutionary psychologist for not fully accounting for the conditions of his own science: “We cannot ignore innate human instincts and cultural conditioning, but anyone who wants to think seriously about morality must be prepared to evaluate such motives from an independent point of view that is achieved by transcending them.” An independent point of view is a necessary condition of the practice of science; it is to my mind a necessary condition of coherence and meaning as well. Nagel further holds that we must grant the status of an “independent view” to the object of our study as well. We must find a man.

Conscience, consciousness is the “independent point of view”: consciousness determines; conscience values. A man transcends the objects of his study in order to make determinations, in order to value. Value is determined by quality, by qualitative judgement, by an interpreter.  Many people say that consciousness is a hard problem for the human sciences. From the perspective of a practitioner or observer, it is the fundamental problem or the very basis from which all other problems or questions are to be contemplated.

It may be easier to just waive away the problem, and I can understand the temptation. It is much easier to treat human beings as caricatures, or as sets of modules, as robots, or as the products of forces. But to do so is to miss the very human being that one would study. And the scientist or the philosopher who treats human beings as robots fails to account for the conditions of their own judgement, of their own science

Social practice—what people do, how and why they act—is more sophisticated than our social and moral science. The practice of social scientists, how they go about deciding what to study, is often much more sophisticated than their published science is.  One will more readily and more easily find a man or woman in the social scientist than in the science. To further make my point, I will even say that quite a few researchers may deliberately make their science dumb and they may deliberately reinforce existing social prejudices as the easy path to get their work funded and their grants attained. It is up to the reader or the consumer, the interpreter, of the science to discount the science. Philosophers such as Nagel are gently discounting their peers in the social sciences. How severely we must discount them will depend on our own needs.

Crisis Interminable

I choose the word, crisis, advisedly, knowing that a crisis is usually thought of as acute and punctuated. In the usual sense, a crisis is an event and an event is discrete. But what of an extended crisis, one without enough acuteness to merit the more common uses of the word? What of crisis deferred or not allowed, and thereby attenuated?

Some observers of the financial crisis of 2008 see current events as part of an extended crisis that has been attenuated by policymakers. Much of policy response to financial crisis can be viewed and is viewed by many as not enough or never enough, especially as regards stimulus, both monetary and fiscal. But there is another broad side of policy response that involves not only stimulus but also direct support or stabilization of an ailing banking system through for example bailout, direct support, and the forestalling of the pricing in of loss (i.e. suspension of mark to market pricing ). The freezing of market pricing in a kind of “amber” is a good example of an attenuation of financial crisis through the forestalling of market pricing mechanisms.

Ashwin P. of Macroresilience.com has written extensively about stabilization versus resilience and of how in complex systems (i.e. global finance), stabilization can and does paradoxically lead to decreased resilience in a complex system. Ashwin mentions the example of how forest fire suppression has led to catastrophic fire danger and less fire resilient forests. Stabilization of a financial system by policymakers during the “great moderation” has paradoxically led to decreased resilience. Hyman Minsky is often credited with what is known as the financial instability hypothesis which states that conditions of stability lead to instability or as Ashwin writes, to lack of resilience. In other words, stabilizing and backstopping the financial system has led to conditions of instability that have come home to roost in the form of an extended or rolling crisis. Ashwin has done an excellent job of outlining the costs incurred in terms of endemic fragility and I recommend his blog for an exploration of that aspect of the problem of financial policy. In this post, I want to begin to ask about the costs of attenuation itself, about the costs incurred when a deemed to be too fragile system is not allowed to experience failure or loss.

Because the large bank holding companies and the systemic financial system was perceived as too fragile to allow for active pricing, mark to market accounting was, for example, suspended in 2009, and since that time many of the weaker large banks have been taking not writedowns but writeups on their portfolios and they have been reducing their loan loss provisions, all this with the implicit blessing of policymakers. This has forestalled punctuated crisis and attenuated the pricing in of deflation and decay in their mortgage portfolios, and it has also helped the banking system avoid facing a solvency crisis.

What are the costs of such policies? The system is perceived to be too fragile to handle writedowns and proper pricing of impaired and deflating assets, so assets are held at “model to maturity” prices. In the words of John Hussman quoted in the creditwritedowns.com article linked above, he says that “the U.S. financial sector [has become] essentially opacity masquerading as solvency”. Whatever the merits of favoring opacity, what are the costs of it?

I have a parallel in mind to this policy that is drawn from the work of psychoanalytic work of Wilfred Bion.

It used once to be said that a man had a nightmare because he had indigestion and that is why he woke up in a panic. My version is: The sleeping patient is panicked; because he cannot have a nightmare he cannot wake up or go to sleep; he has had mental indigestion ever since.

[1]

If I translate this analysis of an individual into a social and economic analysis, I might say that the inability of the “system” to allow for the nightmare of failure can promote an attenuation of crisis in which an economy neither experiences a punctuated or terminal crisis nor a subsequent recovery. We might then profitably speak of an economy that has a type of “mental indigestion”. If a large portion of an economy cannot price in or take a loss, then the effort to attenuate that experience of loss may forestall recovery as much as it forestalls catastrophe.

Bion replaces an old conception of the nightmare as a negative experience that is the accidental and transient effect of a physical cause with a notion of the nightmare as negative psychical experience that is both the product of and the opportunity to experience the negative or the difficult. In Bion’s view, an individual may be unable to “thoughtfully” process “food-for thought” or emotional experience and a nightmare is both an opportunity for and a limit of capacity for “learning from experience.” The inability to have a nightmare, to experience or work through the negative, is itself a condition of “mental indigestion.” Elsewhere, Bion describes such an individual as unable to contact “reality” and as “truth starved.”

I’ve focused in this post on the example of the US financial system and not that of the EZ because the US has more capacity to forestall and attenuate crisis and because the EZ may be forced into punctuated and more catastrophic crisis. My intent here is to begin to think through and to suggest what the costs to and the conditions are of a society and an economy that can somewhat effectively forestall and attenuate financial crisis. To suggest that it may be salutary for an individual or a society to actually have a nightmare and to “take the loss” or experience loss is not necessarily, I want to add, to sadistically suggest that people ought to suffer in unmitigated fashion.  A condition in which a person or a society cannot learn from experience, a condition in which an individual or an economy is “truth starved” and unable to contact “reality” is, I rejoin, a species of suffering. The experience of loss is a type of suffering that can be acknowledged and mitigated by care, but how does a society or an individual even begin to learn from let alone heal a type of sickness or suffering that cannot even be acknowledged?

The visible and evident costs to an economy or society that resorts, out of inability to mentally digest truth, to opacity and to the engineering of the signs and signals of premature stability or even recovery are perhaps only the tip of the iceberg of the full extent of the costs. Those evident costs would be: prolonged uncertainty due to lack of visibility into long term viability of firms; a pronounced “valuation” problem; volatility in actively priced markets; inability of markets to “clear”; etc. The deeper costs might be?

1.Wilfred R. Bion, Learning From Experience, p. 8. ↵

The Strain of Being Evil

On my wall hangs a Japanese carving

The mask of an evil demon, smeared with opulent gold

In sympathy I see –

Bulging veins on the forehead, expressing

the strain it is to be evil.

-Bertolt Brecht

Sympathy strains to find anything of character at all in the vilified Banksters, let alone evil. Pace the moral outrage, one strains to find some worthy scapegoat amongst the Dramatis Personae of the Great Financial Crisis. They are all pygmies. The robber barons of yore have shrunk in to little warts, wens, and gnomes. Where on their faces, where in their physiognomies are the equivalents of bulging veins, of spiritual and moral stress and strain?

Blankfein pantomimes the gestures of moral strain, but he gives evidence only to moral weakness and lack of character. He is a stand-in for a figure that in an earlier era might have been ruthless but has now become wholly routinized. Blankfein as the paradigmatic pygmy is evidence even of a kind of progress, of the moderation and the cultural inflation that attends a great growth in the money supply and the advancement of globalization and industrial consolidation. Else why could such a gnome as this mock the ages by standing in as a representative of the power of financial capital?

I’m not the first to point out how our era of diffuse fraud and diffuse cynicism is not an era of an overall decay in morality or even literacy but a decay in something else.  One might call it the Decay of Evil. Each crisis seems to be the occasion for further routinization, growth and consolidation of Too Big and Too Bland to Fail. The TBTF Banksters have positioned themselves as indispensable parts of the financial infrastructure. Whence comes the scandalous subsidy and backstop that is their haven during times of crisis.

Too much ruthlessness and an excess of risk taking without also serving as an indispensable part of “our” financial system and a firm runs the risk of not getting a backstop or a bailout when the tide turns.

In our own great crisis, the last of the raptors amongst the pygmies, Dick Fuld, a kind of shadow of the beasts of prey of times long past when Bankers took real risks with real money, went down. The scandal here was that the implicit backstop and saftey net for the Banker as too big to fail was pulled away at the last moment, and Fuld was actually, gasp, sacrified.

Fuld at least had something of the physiognomy of the raptor, of the beast of prey, a kind of last remnant of aggressive character. And his firm was aggressive in its pursuit of risk, balance sheet adventuring, and even dare I say it, innovative in its pursuit of profits at the heights of leverage and Ponzi finance.  In the new normal of even greater consolidation and the merging of commercial and investment banking, Fuld is a gorilla left behind on an evolutionary tree that ends only in the pygmy.

I don’t want to tax reader patience by delivering another routinized harangue on routinization and consolidation in the tails I win heads you lose, world of big banking with a sovereign safety net. Suffice to say that character itself has become superfluous.

Observers have had to become wicked to render the irony of an advance in industry and state that is marked by the rise of the pygmy leader, the sovereign as dolt, the CEO as figurehead that knows little, and has no real need of knowing. It is in this gimlet eyed tone that Hegel should be read when he says that “no reference to particularity of character” is necessary in the leader of an advanced state or in this case, large bank in an advanced money economy. Hegel continues:

In a completed organization we have to do with nothing butthe extreme of formal decision, and that for this office is needed only a man who says “Yes,” and so puts the dot upon the “i.” The pinnacle of state must be such that the private character of its occupant shall be of no significance. What beyond this final judgment belongs to the monarch devolves upon particularity, with which we have no concern. There may indeed arise circumstances, in which this particularity alone has prominence, but in that case the state is not yet fully, or else badly constructed. In a well-ordered monarchy only the objective side of law comes to hand, and to this the monarch subjoins merely the subjective “I will.”[1]

What is known in the literature as “moral hazard” creates an ecology that results in moral lassitude rather than evil. These our banksters are no robber barons, no blood suckers, but rather dot the i dolts, and at their best, their very best they are performers who pantomime what a leader should look like in order to dot the i or appear to. Think of Jamie Dimon here.

Evil in the good old sense of character or daimon is not to be found in the hothouse of our mature Big Banking industry, especially not an industry gone soft through safety net and subsidy. Even if I thought outrage and vilification were called for, I’d have a hell of a time finding a target for it amongst the pygmies. Perhaps that is why those prone to outrage seem so confused and why they seem to always miss their targets. Perhaps they are looking for evil in all the wrong places.

As the pygmies shrink more and more, the sheer scale of the numbers at play and the scale of the system itself grows more and more vast and sublime. The figures and the scale of enterprise are worthy of awe and terror or at least the respect that the Banksters have forfeited. A gap between the scale of industry and the bathetic figure of the Bankster appears, a gap in which the Bankster is smaller and more ridiculous at every turn.

The observer outside of the bloated and coddled Big Banks appears in the “high spirit of a kindness that looks like malice.”  A thinker or an innovator in this climate has a “right to a ‘bad character’ and a duty to suspicion.”[2].

Something of an aggressive character is necessary in any observer who would see behind the Kabuki theater, who would envision what an entrepreneur or innovator might do or think in this environment. And here intemperance or outrage are barriers to thought. Anyone who needs to shout or to write in all caps is not aggressive enough. In this environment the qualities that once made for a successful Banker, such as reason, are anathema to the official voices of the Big Banks. Reason, aggressive realism without indignance or outrage, is evil in this light.

 

 

1.GW Hegel, Philosophy of Right, p. 167. ↵

2. A shameless steal from Walter Kaufmann and that intrepid soul whose wickedness was a form of kindness. Jenseits von Gut und Bose, aph. 34. ↵

Zizek!: The Method and the Madness

Up Close and Impersonal: A Portrait of The Manic Intellectual at The End of Time:

Your correspondent, sent with a very modest stipend to report on the premiere of Zizek! the movie, encountered a flash mob at the same day first show ticket sale line, and did contemplate scalping a ticket or two, partly for the novelty of it and partly to defray the cost of getting some other members of the collective into the screening.

And quite the flash mob it was; the Roxie staff the day before did not even know who the hell that guy with the Z name was, and there was no advertising; the show sold out. You don’t really know who the hell Z is at the end of the movie either and that is I think something of the point. In fact, I would wager that one of the biggest sources of his appeal as a speaker as much as a writer is his very impersonality, his dis-concern with the trappings of what is supposed to pass for a thinker addressing a public.

It’s not the jokes or even the pop culture references, but what he does with them, how he uses them to try to understand or to short circuit his own and others understandings of the contemporary condition that marks him. His willingness to turn insights into one-liners and to see if they stick is a part of his method. At the talks I’ve attended in San Francisco, his engagement with and concern for the questions and not the personalities is telling of his interest in dialogue. Perhaps I’m partial to him through some familiarity, but I do find his efforts to articulate and test or prove thoughts with little fanfare and in bare form if need be to be exactly the kind of public thinking that I want to engage with. He is willing to think in public and say ridiculous things. But I don’t think he is just trying to be a buffoon. He makes terrible mistakes and he, for example, does not know enough about economics to not say ridiculous things at times, but he is always willing to engage others in dialogue.

As a passionately impersonal thinker, he is concerned more with common experience than pop culture per se. Although the pop culture references are what people most mention and remember about Ziz, his method is to use common experience to question.

Zizek! the movie is mostly just Z talking, about philosophy and about himself from the perspective of philosophy or of analysis or what have you. Why would a crowd of people pack uncomfortably into a theater to stare at a monstrous mug on the screen telling us that he is a monster?

He riffs on his ideas and remixes familiar, signature Ziz tropes, that gain a certain charm with repetition. He is a jolt of meth-spiked coffee in the tedium of the talking head genre. I was not bored; I laughed, I squirmed, I felt as if Zizek were jumping up and down on my chest in a cramped seat, boxed in. And I walked out of a couple of hours of rapid fire Zizek-chiasmus exhilarated.

Classical writers had a name for this, mania, and it is this in its classical sense more than a psychoanalytic sense, that sums up Slavoj Zizek. His is an erotics more than a polemic, and that is where an emphasis only on the pop culture references and the jokes would miss the heart of a genuine encounter with Zizek. Eros is passionate and impersonal, ruthless and earnest. The jokes would be so much less without that earnest searching.

The very disavowal of attention, of the conventional trappings of “thinker” can draw attention. Not unlike Foucault who attempted to disappear in his writings and all the more drew attention, Zizek pulls people in with his oddly, earnestly impersonal manner. It may be a clever move. But it also requires a willingness to prove and test ideas; to attempt to make them understandable to oneself and to others. It is disingenuous of Zizek to say that this aims are modest (as he did during the q&a); to attempt to read so many things and to attempt to make them understandable is not modest.

He fails. So, he repeats himself. He shows the failure. He stages the impossibility of thought. He stages the deadlock. The payback is modest; but, the attempt is ambitious. If there are short-circuits enough for you, the benefit is modest.

Zizek is honestly trying to say something. As even he says, utopia is what he is driven to. And driven he is. Beyond the tics, beyond the constant pulling on his nose, beyond the wild gesticulations, the ideas are of value, the ideas and the impersonal searching eros.

Update: His latest books (at the time) contained confrontations with cognitive science, with the philosophical and political problems confronting the pharmaceutical and genetic science industries and the political subject of the late “empire” of “affiliated nations.” End of time. End of history. But no end to slogans. Zizek is the fool who points at the moon here. Ignore the fool. Try to study the moon.

Bank Holding Companies

The major Bank Holding Companies (BHCs) were at the heart of the credit crisis of 2008, and they are involved in a long, drawn out workout process that will probably continue for a number of years. For some of these holding companies, a breakup is possible.

Watchers of the arc of the crisis are in some agreement that the eventual workout or even the taking of the real measure of the loss in wealth that is on the hook has not happened, even as the risk has shifted to the sovereign balance sheets through the lender of last resort function of policymakers.

The more speculative firms that failed during the crisis have either been merged with, bought or have had their portfolios cordoned off, both with and without policymaker backing.

Thus, parts of the “shadow banking system” that were attached to the speculative firms have been integrated into the large BHCs. The BHCs are now even larger and more “vertically integrated” or if you prefer the pejoritive, even more incoherent. These colossal BHCs are attempting to maintain cash flows and to generate revenues. A big part of recent revenue has been in the trading divisions of the BHCs; they are trading in public exchanges and markets and in OTC markets. Insiders have taken to joking that the new banking revenue policy is “borrow short” and “buy or trade anything” as large sources of revenue of late have been in trading and/or one time subsidy.

Forebearance and changes in accounting rules have given them time to trade, relever up, and raise some capital through the issuance of bonds and equities, as well as maintain revenue generating business, surely. But is the capital raised enough and are the revenues enough?

They have also led a rally in the equities markets on the recent boost of some one-time “trades”, accounting magic, and “unreliable” earnings. At the same time that they are in the slow, grinding process of working out failed and failing loans or decomposing distressed securites tied to loan portfolios, they are also putting significant value at risk in complex trades.