21 February 2009: "Do u ever wish u could sleep 4ever?"

This post is about the Basel II accords. These, as Carles suggests, were just a dream all along, as much a flawed system for providing financial stability as the adherence to the gold standard was in the early 20th century.

so while I keep hearing things about the economie
being ‘in the shitter’ [metaphor]
I realize that we just have to pretend that ‘gold’ is valuable
but in all reality
that’s just corporate bullshit

The Basel II accords proved easy to circumvent by globalized corporate banks, using various tactics enabled by the tolerated existence of a shadow banking system -- we see now how well that "bullshit" worked out. "if u really think about it even more there’s no such thing as money," Carles explains epigrammatically, summing up decades of research on the money illusion.

The Basel II accords have been, as Carles points out, an abject failure, just as maintaining the gold standard ("pretending" the metal had transcendental value) was in the face of the astronomical legacy debts from World War I. The period called for a international regime of loose monetary policy to maintain worldwide economic stability. Instead, the mercantilist mind-set of Wilson and his like-minded cohort at Versailles led directly to the hyperinflation in Weimar Germany, which in turn presented a ripe opportunity for the Nazis to seize power.

If only we had listened to Keynes and had forgiven more of that war debt! Carles, ever mindful of the threat of fsacism ("if u really think about it
there’s no such thing as ‘normal’ [metaphor]"), seems also to be thinking of this unfortunate turn of events, and wishes to prevent it from happening again:

Not sure if I’ll ever pay back my student loans
Not sure if I’ll ever own a home
Not sure if I’ll ever make more than $33K/year
Not sure if I’ll ever find what I’m looking for

What he is looking for, of course, is an international regime of financial regulation that features something more than a toothless enforcement division. Then he won't have to wonder whether it makes sense to repay debts that may well have been forgiven under a more sensible emergency fiscal policy. He won't have to perform devilish calculations riven with unaccountable political risks when trying to work out his inflation expectations and prepare to smooth his income out over the life cycle with judicious debt incursions.

Such a regulator would be heaven-sent -- "Sometimes I wish I had a beautiful angel in my life to take care of me and tell me that every thing’s gonna be alright," Carles laments -- but sadly, that means it is most likely to remain a dream. Would that we could "////SLEEP /// 4 /// EVER."