Airs - Ian Lance Taylor

The U.S. government is trying to free up credit, by reducing interest rates and other steps. This is probably good for the economy. It also has the effect of reducing the risks faced by banks which made some very bad investment decisions in purchasing unsecured debt. This is a moral hazard: when things go well, the banks keep the money; when things go badly, the government cushions the blow. The effect is to encourage risky behaviour by banks.

We can avoid a lot of this moral hazard by realizing that banks are run by individual people. We can bail out the bank and punish the people, thus getting the best of both worlds and not encouraging future risky behaviour. Certainly it’s true that some bank CEOs have lost their jobs recently, but they walked away with millions of dollars, which is hardly punishment. I don’t think any of them committed a prison offense, but I certainly think some stiff fines coupled with losing their job would be appropriate–whatever it takes so that they are not rich.

Unfortunately this will never happen because the people who make the regulations are also individual people, and they are friends of the people who run the banks.

I recently read the trilogy of books by Sergei Lukyanenko: Night Watch, Day Watch, Twilight Watch. I’m surprised they aren’t better known–my local science fiction bookstore doesn’t carry them at all. On the surface they seem rather derivative: they involve a struggle between the forces of light (the Night Watch) and the force of darkness (the Day Watch), and include vampires, werewolves, and magicians. In execution, though, they are quite interesting.

Lukyanenko shows the light and dark forces as parallel, but unlike most such efforts he does it 1) convincingly given the background; 2) in a way which makes the forces of light seem like the good guys while also showing why the forces of darkness oppose them. The books primarily trace byzantine plot maneuvers run by the head magicians which the ordinary characters do not fully understand.

Also the books are originally in Russian and set in Moscow, giving them a different perspective than most books I read. The translation is not very idiomatic English–it’s hard to tell how much of that is the original Russian and how much is the translator. There are a few side comments on the Americans which are interesting.

I understand that there is a movie of Night Watch which was very popular in Russia, but I haven’t seen it. Anyhow, I think these books are definitely a cut above the standard fantasy fare.