The Italian playwright, author of the brilliant satirical play “Accidental Death of an Anarchist”, won the Nobel Prize for Literature in 1997. According the Academy, Fo “emulates the jesters of the Middle Ages in scourging authority and upholding the dignity of the downtrodden”. Fo noted that a medieval Italian edict against “jesters who defame and insult” allowed any and all citizens to insult, beat and even kill them without any risk of being brought to trial or being condemned.

In his acceptance speech, Fo noted his debt to the rich oral tradition of old storytellers, the glassblowers of his village. One particular story that stuck in his mind was that of the rock of Calde:

“Many years ago, way up on the crest of that steep cliff that rises from the lake, there was a town called Calde. As it happened, this town was sitting on a loose splinter of rock that slowly, day by day, was sliding down towards the precipice. It was a splendid little town, with a campanile, a fortified tower at the very peak and a cluster of houses, one after the other. It’s a town that once was and now is gone. It disappeared in the fifteenth century.

‘Hey’, shouted the peasants and fishermen down in the valley below. ‘You’re sliding, you’ll fall down from there’.

But the cliff dwellers wouldn’t listen to them, they even laughed and made fun of them: ‘You think you’re pretty smart, trying to scare us into running away from our houses and our land so you can grab them instead. But we’re not that stupid.’

So they continued to prune their vines, sow their fields, marry and make love. They went to mass. They felt the rock slide under their houses but they didn’t think much about it. ‘Just the rock settling. Quite normal’, they said, reassuring each other.

The great splinter of rock was about to sink into the lake. ‘Watch out, you’ve got water up to your ankles’, shouted the people along the shore. ‘Nonsense, that’s just drainage water from the fountains, it’s just a bit humid’, said the people of the town, and so, slowly but surely, the whole town was swallowed by the lake.

Gurgle… gurgle… splash… they sink… houses, men, women, two horses, three donkeys… heehaw… gurgle. Undaunted, the priest continues to receive the confession of a nun: ‘Te absolve… animus… santi…gurgle… Aame… guuurgle…’ The tower disappeared, the campanile sank with bells and all: Dong... ding... dop… plock…

Even today, if you look down into the water from that outcrop that still juts out from the lake, and if in that same moment a thunderstorm breaks out, and if the lightning illuminates the bottom of the lake, you can still see – incredible as it may seem! – the submerged town, with its streets still intact and even the inhabitants themselves, walking around and glibly repeating to themselves: ‘Nothing has happened.’ The fish swim back and forth before their eyes, even into their ears. But they just brush them off: ‘Nothing to worry about. It’s just some kind of fish that’s learned to swim in the air.’

‘Atchoo!’ ‘God bless you!’ “Thank you… it’s a bit humid today… more than yesterday… but everything’s fine.’ They’ve reached rock bottom, but as far as they are concerned, nothing has happened at all.”

The joy of old folk tales is that they can be used, interpreted and understood in so many ways. So while this old Italian tale still has much to teach us, it is likely that different people will draw from it different meanings.

Even so, it is hard not to see the analogy today with the world of international finance, the city with its campanile (tower) of the stock market, its church of the cluster of multilateral institutions and investor forums, its priests in the IMF and in Finance Ministries, and the international media that refuses to see that there is more going on than a little humidity.

The sense of denial is all the more extraordinary because it is necessarily interrupted every now and then by spasms when one more large bank is about to fail, one more country is on the verge of debt default, one more stock market collapses. The instinct of policy makers is still simply to tinker around with the system, and sometimes even to make things worse by demanding continued or further deregulation in the face of crisis.

The same story is being repeated in country after country. Banks and large companies that are beneficiaries of large bailouts funded by tax payers’ money have continued to demand freedom from significant public oversight, and remarkably, so far they seem to have got it. Humongous sums are handed over to banks so that they can extend credit, and the banks simply sit on the money and refuse to provide loans to those who really need it. Large companies, which have already made hay during the previous boom and over-extended themselves in completely irresponsible ways, demand government subsidies to continue doing the same thing, threatening that otherwise they will sack their workers. They get the subsidies and then sack workers anyway, because the conditions turn out to be worse than expected – a “little more humid“ than they had anticipated. Investment funds that have wreaked havoc through speculative flows based on the plethora of new “financial instruments” that were allowed by deregulation seek to find new such innovations to tempt small retail investors, pretending that these are safer and more designed to suit that now risk-averse savers.

Meanwhile, no one really dares to look at the structure and organisation of the financial system, its inability to meet the basic requirement of financial intermediation. Those who shout from below about how the whole thing is sinking (or has already sunk) are dismissed as doomsayers who “talk down the market”, and all the signs of collapse – the fish coming into our ears – are nothing more than a few untoward signs that should not contradict the notion of the fundamental viability of the system.

So here we are in the town of Calde, perhaps already under water, certainly on the way to the bottom. Will it take an equivalent streak of lightning to make us really see it?

February 3, 2009.