03 November 2009

No one you see, is smarter than he

There is an interesting article in today's Guardian examining the intelligence of dolphins.

It starts by recounting the behaviour of a dolphin called Kelly at the Institute for Marine Mammal Studies in Mississippi, who in response to fishy rewards from trainers for giving them litter that ends up in her pool, has learned to hide pieces of paper at the bottom of the pool, in effect banking her favours to be redeemed at a later stage. What's more she has learned how to get a return on her investment:
"Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on. This behaviour is interesting because it shows that Kelly has a sense of the future and delays gratification. She has realised that a big piece of paper gets the same reward as a small piece and so delivers only small pieces to keep the extra food coming."
This immediately brought to mind the discovery of the Dead Sea Scrolls by Bedouin goat herds in 1946, who quickly discovered that they would make more money by ripping up intact scrolls and selling them as individual scraps of paper rather than by selling whole scrolls, as antiquities dealers foolishly paid by the item, not by the square meter. Biblical scholars kept coming back to buy more parchment scraps and the scrolls continued to be torn to shreds, and as a result are now scattered in public and private collections around the world and their subsequent translation and publication remains a source of ongoing controversy.

All this suggests that dolphins are at least as intelligent as Bedouin goat herds, and that their handlers are as trainable as Biblical Archaeologists.

In both cases the original intent of the purchasers was subverted by the sellers through the inevitable flaws of the capitalist system*. The handlers wanted a litter-free pool, but by monetizing the clean-up they in fact incentivized the production of litter by the dolphin herself. The biblical scholars wanted the scrolls, but instead their behaviour ended up destroying the very artifacts they coveted. The introduction of a monetary reward in both cases led almost immediately to the seller trying to game the system.

It was thus with a sense of crushing inevitability that I read this week of the Minister for Finance's decision to cede control of the banking and property fiasco to the private sector. After creating the state-run National Asset Management Agency to use €54 billion of public money to buy bad assets from the banks at above market rates, Brian Lenihan has now decided to create a Special Purpose Vehicle that will administer this public money and manage the toxic assets. 49% of the SPV will be owned by NAMA, and 51% by private investors. The private sector, and in all probability the same individuals who created the financial collapse, will now be handed complete control over the vehicle that will further reward their reckless behavior by cleaning up their mess at above market rates using money borrowed by the government that successive generations of tax-payers will be paying-off for many, many years.

Yesterday alone in the High Court 76 cases involving mortgage defaulters were heard, resulting in 18 repossessions. According to today's Examiner one person has been sent to jail for non-payment of debts every single day since the bank bailout began:
"The official Department of Justice figures show the problem of spiraling debt led to 306 cases of imprisonment last year and 186 cases up to June of this year – the latest date for which figures are available. This does not include the estimated 25,000 cases of homeowners in mortgage arrears."
While ordinary citizens continue to suffer Minister Lenihan further rewards the financial leaders that created this crisis and now is incentivizing their destructive behavior with public money.

Brian Lenihan has been well trained by the dolphins and goat herds of our banking classes, who continue to shred our economy into the tiniest of fragments knowing that each scrap they present will be amply rewarded.

It's not every day that I get to draw upon my experience as a Biblical Archaeologist to offer advice to a Minster of State, tune in tomorrow when I explain how stoning could be an effective deterrent against short-selling.

* hopefully you could tell where I was going with this from a mile away.

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