Economics - Capture of the Cretan Bull
Myth and Introduction
For his seventh task, Hercules was ordered by Eurystheus to sail to Crete in order to capture the Cretan Bull. This was a bull of mysterious origins. Some say it was the one saved from a sacrifice to Poseiden that had sired the Minotaur, and others say that it was the same bull sent by Zeus that had ferried the goddess Europa.
Whatever the origins it turned into a nasty beast that, when riled, would breathe out flames and lightning, and cause thunder to roll across the land, followed by fierce gully-washing rainstorms. For these reasons, King Minos of Crete was pleased when Hercules arrived to take on this labor. After a prolonged battle, with much thunder, lightning and rain, Hercules finally managed to throttle the bull around the neck and knock him out. The hero then trussed the bull up tight and packed it off to Eurystheus in a cage. At first Eurystheus thought he would sacrifice the bull to Hera, but Hera wanted nothing to do with anything that glorified Hercules. Consequently it was dragged to different places where it would wander around wreaking havoc and would have to be captured all over again. Finally in Marathon it was captured and sent back to Athens and presented as a sacrifice to Athena.
No one knew what to do with the Cretan bull, just as the money managers are befuddled over what to do in modern times with the bulls on Wall Street. In September 2008, one blogger’s headline offered an explanation: “The Merrill Lynch Bull Has Died and Gone to B of A Heaven.”
In the wake of the financial meltdown, the monumental sculpture of a bull in front of Merrill Lynch’s office building, which the company used to say symbolized “leadership, optimism, and determinism,” seemed to have a panicked look on its face. To add insult to injury, tourists were lining up at his rear end to have their pictures taken while they performed obscene acts with the bull’s bronze testes. At the same time the raised tail seemed poised as if the beast was going to unload another pile of Wall Street bullhockey on their heads.
Merrill Lynch, a company that once had client assets of $1.6 trillion, had failed. This was preceded and followed by the collapse, sell-off, bailout or takeover of some of the largest financial institutions in the world, including Lehman Brothers, Bear Stearns, IndyMac Bank, Wachovia, Washington Mutual, Freddie Mac, Fannie Mae, AIG, and Citigroup. Even the vaunted Bank of America, which had been forced to buy Merrill Lynch by the government, soon found itself in need of a bailout with its stock falling a nauseating 82.9% during the six-month period ending in February 2009.
The Dow Jones Industrial Average reached 6547.05 on March 9, 2009. It had not been this low since April 1997, as measured in points, but adjusted for inflation according to the standard Consumer Price Index it was actually back down to 1966 levels. Preceding the meltdown of the financial sector was the popping of the stock bubble, which caused $30 trillion in worldwide stockholder losses in 2008. The U.S. housing bubble was deflated by $8 trillion in the same year. To some it was not a surprise. Housing prices had been outpacing inflation since 1995, a phenomenon that had been stoked by sub-prime lending, and collateralized debt obligations (CDOs). While cleaning up after the crash, it was easy to see why it had happened. With 20/20 hindsight, most economists agreed that the financial meltdown de-leveraged inflated values and allowed political decisions that would provide much needed regulation to the financial markets.
While projecting what it will cost to spend our way out of an economic crisis the Congressional Budget Office has expressed alarm about the U.S. budget deficit, which could grow by almost $1 trillion per year between 2010 and 2019. The extra $9.3 trillion debt would exceed 5% of the gross domestic product, and this is widely regarded as unsustainable. The budget deficit for the year beginning October 1, 2008 was $1.8 trillion.
Once we get through the current recession the bigger question will be what do we keep the market from experiencing recurring cycles of boom and bust? Does the fire-breathing bull need to be penned in for the good of all? In the past, every time it was subdued it went back into hibernation, like a bear, and when it was released it turned back into a fire-breathing bull again. The problem is that it just keeps being captured and released time and time again without ever addressing the problem of what makes it so volatile. How do we increase transparency while also increasing comprehension of the vast amounts of data being created? This is a Herculean task that takes real subtlety to figure out. With the Eurymanthean Boar (drugs), the Hydra-headed overpopulation problem, the cleaning of the Augean Stables (environment) or other labors, there was always a clear directive and result. In some ways, the Cretan Bull is like the Nemean Lion (politics) that was always sneaking out the back.
In fact, politics and economics are closely related, because special interests and the forces within the military industrial complex will always attempt to manipulate the economy toward their perceived self-interest. For example, the Nobel Prize winning former chief economist of the World Bank, Joseph Stiglitz, has “conservatively” estimated $3 trillion in once and future costs for America’s portion of the Iraq war alone, not including Afghanistan. The Joint Economic Committee of Congress estimated what they consider a more realistic $3.5 trillion. Stiglitz’s estimates cost of the Iraq war for all countries at more than $6 trillion. That money, along with thousands of lives was, and will be lost, with scant benefit. According to Stiglitz, just $1 trillion of this lost money could have built 8 million housing units, provided healthcare for 530 million kids, or provided college scholarships for 43 million students. There are other wasteful strategies to examine and it will take a step-by-step approach in each category of public policy to bring sound economic policy and politics into alignment.
To read more about Economics click here to buy the books and help the author finance his Herculean efforts. The next labor is Energy - click here.