• Kenneth Asher

Toxic Logic

There’s a story in The Big Short, Michael Lewis’ chronicle of the recent U.S. housing bubble, about a guy named Michael Burry. Burry, the Christian Bale character, if you saw the film, managed Scion Capital -- a small hedge fund he started with some savings and a small inheritance. Burry was one of a handful of people who saw what was coming in the housing markets, and he positioned his fund accordingly. When the collapse came, Burrys’ investors realized more than $700 million in profits and Burry himself became wealthy beyond measure. It’s an amazing story, but the dynamic that captivates me most is between Burry and his investors prior to his predictions coming true.

For two long years, in exchange for the Credit Default Swaps he had purchased, Burry paid huge monthly fees to several investment banks. These Swaps were insurance policies that would pay out if (and only if) mortgage holders defaulted on their loans. Burry understood that the implosion would come in 2007, because that’s when interest rates on many of those mortgages would reset, higher. But no one else understood that, including Burrys’ investors.

In 2005 and 2006, Michael Burry was under siege from irate investors who didn’t or couldn’t comprehend what their fund manager was doing with their money. Burry held firm. The risk, he understood, was not that the defaults wouldn’t happen -- he had made sure to cherry-pick the most god-awful loans to bet against – but rather that the rest of the banking world would wake up to the logic of his strategy. Burry was operating in the plain light of day. The information he used to stake out his position was free and available for all the world to see. But for two years, with every monthly fee, he enriched the investment banks at the expense of his investors. For two years, you could say, he was dead wrong.

Until he wasn’t.


The problem with time is that it unfolds in only one direction. There is no way to sneak a peek at the future, but imagine if we could. We may be astonished at what we’d see, but we would certainly delight in the validation of some present day views. We would know, with absolute certainty, who was right and who was wrong. We would be able to separate the sagacious from the rest, and we would return to the present with a newfound respect for certain opinions. We wouldn’t even think about them as opinions – they’d be truths. Ideas that today seem backward or irrelevant would transform instantaneously. They would become dead right.

But because we can’t time-travel, we’re all just making guesses, whether well-informed or not. And that means the sagacious are nearly impossible to make out in the crowd. They look like Michael Burry did in 2005 and 2006 – not like the genius but like the fool.

The thing is though, Michael Burry didn’t turn out to be correct because of guesswork. If we had been paying close attention in 2005 and 2006 to what HE was paying close attention to, we might have been able to see what he saw. And “saw” is the right word there. As I’ve written many times, the ability to see, even in our minds eye, is the very basis of sagacity. Michael Burry saw something that everyone else missed. Why? Because he actually read the grueling subprime-mortgage-bond prospectuses that were written by lawyers to obscure the very things they were supposed to illuminate. The housing mortgage industry was a behemoth, and colossally crooked – and its enormous scale unquestionably helped to conceal its rot. Not through some mystical superpower or data-devouring algorithm,but by painstaking observation, attention, self-reliance and hard work, Michael Burry saw through the fix.


In 1985, Guardian Press of West Edmesten, NY published a small, saddle-stitched booklet by Wendell Berry called Property, Patriotism and National Defense. Finding myself between Berry books and thrilled to discover this typewritten relic hidden between the paperbacks at my local bookstore, I snagged it for $15 and downed the 15 pages at once. I’ve since read it a couple more times, thinking about what has and hasn’t changed in the past 33 years, and how primed I am to plunge into Wendell’s polemics in what is sure to be an unruly year ahead.

The thrust of the piece is Wendell’s dissent against America’s national defense strategy, which, at the height of the cold war, was based on the mutually-assured-destruction logic of a nuclear arms race with Russia. Everything about America’s national defense strategy in that era is objectionable to Wendell Berry. His reasons are as logical as they are intuitive. Why would we select a defense strategy that would be fatal to ourselves? Why would we lay down our lives – all of our lives – for some high and noble purpose, when we refuse to make smaller sacrifices, like say, higher taxes, or the acceptance of lower profits. Perhaps we would be willing to sacrifice some profits for the military-industrialists who have everything to gain and nothing to lose from their war footing. Ah no. And, he asks, is the country even defensible? Nearly all Americans are landless and uprooted, dependent on foreign goods and materials, and reliant on a food supply that itself relies on a tiny few producers utterly yoked to cheap credit and exhaustive chemical inputs. In the end, Berry wonders, would an American people even fight to defend places that they don’t love, for a capitalistic system that has taken so much from them?

Ultimately, in a nuclear war, it wouldn’t matter – which is exactly his point. There is a logic that extends from an anti-local, environment-killing, nihilistic set of domestic policies, to a nuclear defense strategy. We’re deceiving ourselves when we make it okay to kill off some things – agricultural pests, rivers and streams, small rural places, indigenous peoples – while believing that our country wouldn’t tolerate the elimination of enemies abroad, their children, the ozone layer, our entire biosphere. Technology, Berry writes, “past a certain power and scale” dictate its terms to us. Toxins are the same. They follow their own logic, ruthlessly, indiscriminately. Human discrimination, in fact, is their first casualty.

Nuclear war terrifies me. We’ve had these weapons my entire lifetime, and they’ve not been used once, which gives a false sense of security I think. The US and Russia have far fewer warheads than they once did, thanks to a slew of disarmament treaties, but thanks more to the technological advances that make the remaining missiles extremely precise. The risk of nuclear war is higher than ever, according to Joseph Cirincionne who runs a foundation to prevent the use and spread of nuclear weapons called the Ploughshares Fund. Not only is a new nuclear arms race underway (all nuclear countries are seeking to expand their arsenals), but the United States withdrew from the recently negotiated Iran Nuclear Deal, which was supposed to curtail the nuclear program of one of the most dangerous governments on the planet. Worrying as that is, “rogue” nations like Iran and North Korea no longer pose the greatest risk to our safety. According to Cirincionne, the country that we need to be deathly afraid about is our own. The U.S. president, says Cirincionne,

…is the greatest nuclear risk in the world, more than any person, any group, or any nation. The policies he is pursuing are making most of our nuclear risks worse, and he is tearing down the global institutions that have reduced and restrained nuclear risks over the last few decades.

At the close of his essay, Wendell reframes the religious command to love one another as a practical necessity and the only possible defense against all-annihilating weapons. “Our choice is not to win or lose, but to love our enemies or die.” This reduction most be the most elemental, and it reminds me of the post from exactly two years ago called Clarity, Not Victory. Winning and losing, victory and defeat, “America First,” us and them – these are all the same formulations of a singular construct, and that is the divided mind that sees itself as separate and therefore always at risk. A good question to ask would be how this mind might be avoided in the first place? What values and policies might engender a kind of thinking that would have us not want to beat our enemies, but to love them? It may well start at home, literally. It may be that a place of one’s own, in participation with a membership of friends, relations and neighbors, are the prerequisites for nuclear disarmament. It may be that the many forces that conspire against localism, from unfair corporate competition to industrial agriculture to exorbitant land prices, are the regimes that need changing first and foremost. Resistance to aggression begins at home – begins in the home in fact – begins with the notion that you have a home to defend. Homeland security is nothing but a metaphor unless a people are housed, in places where they consider themselves home.


We return to that uncomfortable spot, as usual, with the impression that Wendell Berry is arguing for a Jeffersonian America which didn’t exist during Jefferson’s lifetime and couldn’t be farther from the American experience of the early 21st century. But with a nod to Michael Burry, I think Wendell Berry may be persistently wrong -- for now.

Take this one little essay, from 33 years ago. The mustiness of Property, Patriotism and National Defense is owed to its cold war pretext and a few references to urban decay, which reached something of a nadir in the mid-1980s. But read in the context of our present situation, the bases of his argument remain relevant -- even more so now than then. For example consider Berry’s very first point about the effect that a preposterous nuclear defense policy has on its citizens:

To ask intelligent citizens to believe an argument that in its essentials is not arguable, and to approve results (that) are not imaginably good, and in the strict sense are not imaginable at all, is to drive wedges of disbelief and dislike between those citizens and their government. And so the effect of such a form of defense is ruinous, whether or not it is ever used.

It matters today, and has mattered these past three decades, that disbelief and dislike has separated intelligent citizens from their government. The cynicism that now pervades the country is both appropriate and tragic, and it infects people on all sides of the political spectrum. It arises from a sense that the government is not what it ought to be – that it has lost a basic decency, prostituted itself to moneyed interests, and abdicated the higher purposes that constituted its founding. Presciently, Berry analogizes nuclear weaponry to the fatuousness of political quarrels that have metastasized all through our body politic. They are both, he says, too general, too extreme, sanctioned by a public passion not validated by personal experience, prejudicial and all-condemning without sufficient cause.

And what are we to make of our “nuclear preparedness? Is an unprincipled government one worth dying for? Wendell doubted it then, and it must be less true 33 years on:

Our alleged willingness to die for high principles is all whitewash. What we are prepared to die for, if anything, is resignation to the sham piety and greed of those in power.

Forget for a moment the life and death stakes of a nuclear incident. What about our preparation to fight for our government? Not necessarily in defense of a foreign threat; how about fighting for the government that belongs to us, for the government we want and deserve? Sham piety and greed are as evident as ever. Are we up for a fight, or are we resigned? The next year or two will be revealing – not only about our current government, but about ourselves.

Another of Berrys' targets in this essay is debt, inflation and usury (i.e. the taking advantage of borrowers, typically through high interest rates) – that is, the money economy. Interest rates in the early 80s were astronomically high, as was inflation. Back then, the effects were to put the cost of everything out of reach for regular people. Small businesses suffered, weakening local communities. Young people had no chance of success in that environment. High interest rates sucked investment capital away from personal and business loans that were risky relative to federally guaranteed bank notes and savings accounts.

The federal government’s role in the money economy – the excessive printing of money (inflation), the excessive borrowing from future generations (debt), the enslavement of borrowers back then (usury), and the enslavement of the government to the “money interest,” was then, and still is, a root cause of American misery. Millions of Americans have been displaced and tens of millions of acres have been destroyed in the name of GDP growth. That GDP grows at the expense of small, local economies is, by now, a well understood fact. Less well understood is why so many intelligent citizens would, unlike Wendell Berry, resign themselves to such a lamentable situation. Like the nuclear defense strategy, Berry argues, the money economy destroys the very thing it is supposed to protect.

The reason the essay concerns itself with the predictable Berryist themes of good land use and care, and settled communities with high degrees of independence, is because of Mr. Berry’s claim that such communities are, in point of fact, our true national defense. In thriving local communities, Berry sees national defense already happening, as built-in, because of the good works and care that are exhibited in those communities for the people, businesses and natural features that constitute those communities. And history suggests to him that such a grassroots defense would be naturally extendable to a sovereign military defense, should one ever be necessary. Any student of American history knows that

…our own revolution was won, in spite of the gravest military disadvantages, by a farmer-soldiery, direct share-holders in their country, who were therefore, as Jefferson wrote, “wedded to its liberty and interests, by the most lasting bonds."

More poignant, I think, is Berry’s observation that while some people blithely submit to the ludicrousness of the government’s defense or economic policies, other people carry on a daily and weekly defense of the country “without asking for or needing government sanction,” to defend their home places, whether by participating in a watershed council, or by reducing their waste stream, or by looking after their friends' children.


What I’ve wanted to do in this post is argue that ideas we think of as “quaint,” might just be untimely, and that there may be a positive correlation between the size of a problem and the extent of our blindness. The problems of property, patriotism and national defense are still problems for Americans who want to feel good about all three. Property is exorbitantly less affordable than it was 33 years ago, and, based on topsoil loss and deforestation and scores of other measures, far less well taken care of. The concept of patriotism is ripping the country apart instead of uniting it, which is oxymoronic. The national defense isn’t even a topic of discussion any more, despite our having entered the single most dangerous phase of the nuclear age.

Berry wrote this piece in 1985 to register his dissent. Like Michael Burry, he arrived at his position through a long study of his subject – his country. Also like Burry, he finds himself swimming against a strong tide – the 1980s ushered in a neoliberal and global world order that, over the past three decades, has exacerbated every one of Berry’s concerns. But unlike Burry, there won’t ever be a cashing in for Wendell Berry. When he’s proven right, if he ever is, his reward won’t come in the form of an enormous windfall. It will probably come as a horrible shock and a radical unmaking of this country, followed by, one hopes, a new and quiet rippling of American men and women slowly finding their way home.

#MichaelBurry #ScionCapital #JosephCirincionne #PloughsharesFund