Losers Logic  

I'm trying to ignore the ever-increasing financial angst that is enveloping the blogosphere - mostly because I overdosed on this stuff years ago and eventually accepted it was going to happen one day and there was no point worrying about it - so now there isn't much more to say than other than "I told you so" (which doesn't add much to the conversation).

However, I quite liked some of the phrasing in this dispatch from Crikey's Guy Rundle, in which he notes the relatively low key media response to the Bear Stearns collapse (to be honest, there is no point inciting panic, so this is probably the best approach). He also notes that Jon "Bomb, Bomb Iran" McCain's strategy on Iraq is classic loser psychology at work - refusing to cut your losses.

While McCain and the remnant best and brightest advance strategic arguments for the war – the "defeat them over there" line, as if continued occupation was not sand around which the pearl of a renewed Al-Qaeda is forming – it is the sentimental "honour the dead with fresh dead" line that is most prevalent among the pro-war people you talk to in bars, in taxis, on the street.

Such an idea is more often than not entirely disconnected from any idea of who is being fought, or for what – the reconstruction of Iraq, the multiple decentred franchise/meme of Al-Qaeda, etc. The troops are simply fighting "over there" and we have to win the struggle to honour those who were there already – in other words, the complex, abstract process of war reduced to the atavistic morality and logic of a gang brawl.

There's no real point in reproducing these conversations because by and large there is no insight, or even phrasing in them, that does not closely follow the outlines supplied by Fox News or MSNBC in their endless berating shout-shows. Quite aside from the evil doctrine that the lives of more young men and women should be sacrificed only for the honour of those who have already died, the reasoning is simply an example of losers' logic.

Winners cut their losses, and let their profits run. They cut their losses even if they've failed to cut them earlier – in other words, they don't let the embarrassment or feelings of foolishness or reproach tempt them into hoping for a turnaround when a good result is no longer possible. They suck it up, and take the loss. Losers' logic by contrast is narcissistic – letting your losses run relies on a delusion of some sort of specialness which absolves you from the laws applying to everyone else.

In a media culture losers' logic attaches itself easily to the idea of American exceptionalism – all this "last best hope of man" bullsh-t, as if history stopped in 1776. To maintain it, history must be fictionalised. John McCain's ads have him ranting "we won't surrender they'll surrender. We're Americans and we never surrender!" This man is a VIETNAM WAR VETERAN. He was released from a POW camp only because the US had surrendered, and prisoners were allowed to return home. How does this line – akin to Sarkozy saying "Us? We never get invaded!" -- even work? Because losers' logic is dominating the debate.

So as with the war, goes the economy. The collapse of Bear Stearns – for that is what it is – has, in a flash, taken the economic crisis from the moral sphere into the operational. Before this, there were vague floating worries and general disquiet, quibbling about whether the country was in a recession or not, anecdotal reports of downturns in key harbingers of a future crash – moderate priced-restaurant takings for example – and the identification of the sub-prime mortgage crash as the result of unscrupulous lenders praying on the poor – and often functionally illiterate – lacking the means to understand what exactly they were getting into.

But when a slide is on, it's on, and the Bear Stearns crash is a reminder that the sub-prime crisis was not simply an anomaly in an otherwise healthy system – it was a deformation made necessary to keep the anaemic American financial system going a little longer, the equivalent of an adrenalin shot.

Colleagues above and below me will no doubt give a neoclassical account of the crisis which is pretty much like going to a second Chinese herbalist to work out what to do about all these weird herbs making you feel like crap. The very process of accounting for an economy inherent in the neoclassical vision is the problem – it masks all distinction between investment in plant v luxury production, between investment in concrete (not necessarily physical) investments and highly abstract phenomena (such as the ever more ethereal layers of derivatives, instruments, debt bundles) or public infrastructure versus the private property that feeds off the roads and bridges that currently go unbuilt.

The US economy is utterly deformed, and has been for decades. Indeed, in terms of "social plant" – infrastructure and education – it has been running down, relative to its own growth – since the New Deal and WW2 left it with the sole undamaged industrial and infrastructural system in the world. But here the cognitive dissonance thang hits once again.

When in February, Congress gave the economy the "sugar hit" of a cash rebate to spend on Chinese imports, your average punter recognised that this was not a good use of money, when highways were potholed, bridges were falling down and school roofs were caving in. Yet what could be articulated at the public level could not be said at the political level because it would immediately be labelled "socialism" – and the very people who think it's a good idea would turn against it once it acquired the label.

Of course the government now has no choice but to engage in socialism for the rich – a transfer of public funds to Bear Stearns to keep the private system ticking over a little loner, without of course any government equity in the brand (which would be socialism). Rewarding moral hazard and thus making the system shakier in the long run by letting every shonk know that the government can't afford to let you fail, but will let you keep whatever profits you make (and cut taxes on it) – so why not really let rip? And when you make your pile, transfer it to a stable currency like the euro, before the dollar falls against it further.

These very concepts are nowhere in the debate on any side. McCain – who, riding into the storm, has dropped in on Iraq to skulk in the Green Zone, or stroll a market with 200 bodyguards and four tanks, and hope nothing big happens – is talking about structural problems of post-industrial economies without really being able to spell out how bad it's gotten (because who made it so?).

Hillary has taken up John Edwards's populist rhetoric, talking about a whole range of schemes – foreclosure moratoriums, rate ceilings etc – which, whatever their economic justice, may actually make the big picture worse, and Obama is talking about hope and change. The media as a whole is talking mostly about Obama's problem with his firebreathing pastor, whose taped rhetoric has a lot of dislikeable playing-the-victim discourse mixed up in its rousing rhetoric, and his increasingly inept distancing from the latter, with the "I wasn't there when he said that stuff" line, a sort of "I didn't inhere" (theology gag). And this is against the wider backdrop of the Democrats looking incapable of running their own party in the basic primary process.

The Bear Stearns reports run in parallel to this, third or fourth in the news line-up – like it was a major story, happening to someone else.