A Natural Curiosity

The Trillion Dollar Meltdown by Charles R. Morris

2008-11-17T20:53:01-05:00

The Trillion Dollar Meltdown has been making the rounds at the mutual fund company where I work. It’s not surprising — this is a timely, hard-hitting, and opinionated look at the global financial crisis we find ourselves in. If you want a deeper understanding of what’s going on, but without reading a massive tome, this is the book for you. That doesn’t mean it makes easy reading, though. Morris has followed Einstein’s advice by making his explanation as simple as possible — but not simpler. He is evenhanded but not wishy-washy. The Republican cult of deregulation comes in for severe criticism, but so does what he sees as the failure of liberal Keynesianism that preceded it. Morris shows in painful detail how much havoc the exotic derivatives created in recent years have caused, but he also believes that some of these were useful and ingenious inventions. Contrary to those who maintain that the “free market” will magically correct all excesses, Morris thinks that each financial innovation will almost inevitably be pushed to its limit until it crashes. Only then will we know its limitations, and how to regulate it. But in a globalized, computerized world, dangerous financial innovations can spread faster and wider than ever before. Dodgy credit becomes marbled through our institutions like fat in a steak, to use his colorful analogy. Colorful analogies are, in fact, one of Morris’s strengths. Here’s another: According to the Financial Times, in October 2007 several big banks were negotiating discounted lending terms to vulture funds, firms that specialize in distressed debt, on the condition that they use the money to buy the banks’ deal-related leveraged loans. This is a snake fighting starvation by eating its tail. The credit crisis isn’t just about bad mortgages, this books makes plain. It’s not about any single type of asset, and that is what makes it harder to cope with than the bubbles of the past. Overpriced assets are like poison mushrooms. You eat them, you get sick, you learn to avoid them. A credit bubble is different. Credit is the air that financial markets breathe, and when the air is poisoned, there’s no place to hide. Like Paul Krugman and other critics, Morris names former Fed chairman Alan Greenspan as one of the key culprits. It’s ironic that Greenspan is so well known for his warning of “irrational exuberance,” because Morris cites many examples to show that Greenspan was better at inflating bubbles than letting the air out of them. I was pleased to see that Morris singles out an example that struck me at the time. “I’m sure Mr. Greenspan is a very smart guy,” I remember thinking then, “but this makes no sense to me.” In 2004, when families had a historic chance to lock in long-term fixed-rate mortgages at only 5.5 percent, Greenspan said they were losing “tens of thousands of dollars” by not grabbing one-year ARMs, then at teaser rates of only 3.25 percent. In any scrapbook of bad advice from economic gurus, that should be near the top of the list.

Keith Olbermann in 60 seconds

2008-11-14T19:40:00-05:00

Whether you agree with his politics or not, the blistering “special comments” that Keith Olbermann delivers on his Countdown show have rare entertainment value. The folks at 23/6 have boiled them down into 60 seconds.

Not the New York Times

2008-11-13T22:24:01-05:00

On my walk to work yesterday I picked up one of the free copies of the New York Times that were being handed out by clean-cut young men around the city. It didn’t take long to realize that this wasn’t the real thing — too thin and too slippery — but it obviously took considerable effort, creativity, and expense. I hear that over a million copies were handed out. Happily it’s available online as well. The faux Times was the creation of the Yes Men, along the lines of John Lennon’s billboard “War Is Over (If You Want It). You help create the world you want by imagining it’s already here.

Happy birthday, Keith!

2008-11-12T16:07:00-05:00

Greetings from Brooklyn to Boulder! Jenn and I hope you have a great birthday and many happy returns!

Payback by Margaret Atwood

2008-11-12T14:53:00-05:00

Some writers lose their sense of humor with age. V.S. Naipaul, for instance, seems to have lost his after publishing A House for Mr. Biswas in 1961. Other writers, on the other hand, find their sense of humor. Margaret Atwood’s gray, earnest early novels Surfacing and Life Before Man put me off her work for some time. But The Handmaid’s Tale had flashes of wit, and some dark satire for those who know Cambridge, Massachusetts. And Oryx and Crake is hilarious in a postapocalyptic kind of way. Payback is a highly original work of nonfiction, a look at the many aspects and mechanisms of debt. The breezy style cannot disguise the rigorous thinking in this book, and some of the darker corners Atwood explores would be hard to face without her light touch. The chapter “Debt as Plot” looks at how money and debt drive the action of novels like Vanity Fair and The Mill on the Floss. When I was young and simple, I thought the nineteenth-century novel was driven by love; but now, in my more complicated riper years, I see that it’s also driven by money, which indeed holds a more central place in it than love does, no matter how much the virtues of love may be waved idealistically aloft. Heathcliff of Wuthering Heights loves Cathy passionately and hates his rival, Linton, but the weapon with which he is able to act out his love and his hate is money, and the screw he twists is debt: he becomes the owner of the estate called Wuthering Heights by putting its owner in debt to him. And so it goes, through novel after novel. The best nineteenth-century revenge is not seeing your enemy’s red blood all over the floor but seeing the red ink all over his balance sheet.

Gertrude and Claudius by John Updike

2008-11-07T21:38:00-05:00

Even John Updike’s jeux d’esprit give you more to think about most authors’ earnest tomes. Gertrude and Claudius, published in 2000, is a prequel to Shakespeare’s play in which we learn more about queen Gertrude’s affair with her husband’s brother Claudius, and how it led to murder. Updike draws on some of the early Hamlet legends for his version, and even the names of some of the characters — following these legends — change from one section of the novel to the next. Updike has thought about the dynamics of adultery more than most, and his speculations about the roots of Hamlet are plausible. Gertrude, married very young to an overbearing clod of a king, is drawn to the exotic tales and dashing manner of the king’s brother Claudius, who has been spending his time in Italy and other parts of the Mediterranean. The attraction deepens and becomes mutual, and Gertrude enlists the king’s counselor Polonius to lend her his country home for meetings with Claudius. The adulterous couple enjoy their affair, but when the king begins to suspect, they realize (along with Polonius) that their lives are hanging by a thread. And so comes Polonius to pour a vial of “leperous distilment” into the king’s ear, curdling his blood and covering his body with a “vile and loathsome crust.” Well, Gertrude and Claudius shouldn’t have had an affair, God knows, and they certainly shouldn’t have killed the king. But was it really necessary that they should die too, along with Polonius, and Rosencrantz and Guildenstern, and Laertes, and Ophelia? The killing of Hamlet’s father was arguably a matter of self-defense. The same could not be said of Hamlet’s revenge, especially when he stabs Polonius through the arras before determining who he is. In his Afterword, Updike quotes the view of the critic G. Wilson Knight, which he himself seems to agree with. Putting aside the murder being covered up, Claudius seems a capable king, Gertrude a noble queen, Ophelia a treasure of sweetness, Polonius a tedious but not evil counsellor, Laertes a generic young man. Hamlet pulls them all into death.

Cruising with Patrick O’Brian

2008-11-06T16:38:00-05:00

Unhappily it is no longer possible to take an ocean cruise with Patrick O’Brian himself. But Annemarie Victory did just that, and now offers the next best thing through her specialty tour company. Here’s how she introduces it: When Patrick O’Brian agreed to sail with me on the SEA CLOUD in April 1999, it resulted in perhaps the most fascinating and memorable of my over 40 charters of this glorious ship. Urbane, charming, witty and surprisingly gregarious, Patrick quickly fell into the wonderful shipboard life aboard SEA CLOUD. Indeed, as he disembarked after the cruise (which was almost the same as the one described in this brochure), he told me that he definitely wanted to sail with us again, and would really look forward to it. This possible reunion ended, of course, with his unexpected and tragic death just a few months later. It is rather charming that Ms. Victory could see the death of an 85-year-old man as “unexpected and tragic.” The cruise aboard the Sea Cloud runs from April 23 to May 2, beginning in Barcelona, stopping at Minorca (where Captain Aubrey rescued Dr. Maturin from torture at the hands of the French), then proceeding to Port Vendres, Bandol, Aix-en-Provence, St. Tropez, and St. Florent on Corsica. There are lectures by Count Nikolai Tolstoy and Brian Lavery, the authors of books on O’Brian, and an optional extension to Nice. Prices start at $6,600: too rich for my blood, but not out of the question for a true fan.

Obama and “postracial” America

2008-11-05T18:48:00-05:00

Support for Obama has been so strong in New York City that both campaigns hardly bothered to run commercials here, and not many residents bothered to wear pins or put out yard signs. But when the election was called for Obama at around eleven last night, my neighbors in Fort Greene spilled out into the streets, hooting and yelling and grinning at strangers. White and black folks milled around, blocking traffic, and crammed into cafes and bars to hear Obama’s acceptance speech. It was a thrilling night. An Obama presidency will be good in a variety of ways, starting with (to look at my own priorities) the war, the environment, human rights, and the economy. But does it mean that this is now a “postracial” society, as some of the pundits have been saying? Have we solved our racial problems overnight by putting a black man in the White House? Not so fast. When Jenn and I had our bookstore cafe in Fort Greene, there were recurring debates (not only among black customers) about the racial state of America. Some claimed racism was a thing of the past. Others said America was still racist to the core, as bad as it had ever been. The truth, I think, is closer to what’s summed up in the title of the book Long Way to Go. The country has come a long way, but it’s still got a long way to go. That said, Obama’s election was a watershed moment in race relations. You could see it on Jesse Jackson’s face last night. It wasn’t just that he was weeping: it was that he looked totally stunned, as if his brain couldn’t process what his eyes were seeing. A milestone had been reached, and it had been done with methods very different from those that Jackson had used as an activist and a presidential candidate. Those methods were needed: entrenched political power does not yield without a confrontation. But to take things to the next level required a different approach. Obama’s strategy, which seems to grow naturally out of his own personality, was to appeal to the better angels of our nature. He knew that as individuals and as a country we have not lived up to our ideals, but he trusted that many of us would like to. Obama’s early victory in the Iowa primary was a sign that something unusual was going on. A very white state had voted for a black man, and not because they had been made to feel they were racists if they didn’t. They did it because Obama seemed to offer acceptance and a better way, rather than rubbing their faces in the sins of the past (and the not so past). African American parents, some of the pundits are saying, can now tell the truth when they tell their children, “You too can grow up to be president.” But if they are wise, they won’t hide the fact that it will be tougher than it would be for a white person with similar qualifications — just as it is for people of color in every aspect of life. It doesn’t help you to succeed in business when the “self-made” millionaire tells you you can be like him if you pull yourself up by your bootstraps. And it doesn’t help you to overcome the racial barriers in American society to be told that this is a postracial America, that those barriers are all in your mind, and that if Barack Obama can do it you can too. Having Obama in the White House will help create opportunities and heal racial wounds, but putting him there is the beginning, not the end.

A visit to Dia:Beacon

2008-11-04T16:23:01-05:00

On October 25 I paid my first visit to the Dia:Beacon art museum, prompted by an article called “Art and Calm Just Up the Hudson.” I’d heard about the museum but never took the trouble to go there. (The trip takes about 80 minutes on the Hudson line of Metro North. For about $27 you can get a ticket that covers the round trip plus museum admission.) Leaving the train in Beacon, I felt as if I was a long way from the city. Canada geese stalked along the riverside, and the steady rain brought out the smells of grass and herbs. Lichen only grows where the air is very clean, and here you can see it on rocks and fence rails. It’s a short walk to the brick building that once housed a Nabisco factory and is now the home of Dia:Beacon. You don’t realize how enormous the building is until you get inside. The sheer scale of it makes an impression, and the museum is able to accommodate sculptures and installations that would be close to impossible in the city. Dia:Beacon’s attitude to visitors is an odd combination of overprotectiveness and laissez-faire. Backpacks must be checked, cameras and even pens are not allowed in the galleries, and numerous signs warn you not to touch the artwork. Yet guards are scarce, there are no electric eyes and alarms, and protective plexiglass is almost nonexistent, except to keep visitors from falling into the enormous geometric pits that artist Michael Heizer has built into the ground floor. (This picture gives little sense of gloomy and impressive these are.) There are many children with their parents, and some of the sculpture almost begs to be touched. The biggest works of art were the ones that most impressed me, although you do get a strong sense of something — maybe futility — from walking down a gallery as long as a football field that is filled with nothing but square white paintings. On the top floor is a titanic malevolent bronze spider by Louise Bourgeois that recalled the malevolent Shelob in The Lord of the Rings. There is also Michael Heizer’s “Negative Megalith No. 5,” a huge upended boulder that is neatly fitted into a white wall. Walk up close and you get the pleasingly scary sensation that it might topple over and crush you. It was a treat to walk inside each of the rings of steel that Richard Serra calls “Torqued Ellipses.” One of them is a ring within a ring, so that you make your way carefully between two curling, sloping, rust-streaked walls. The sensation was strangely familiar, and I realized that it reminded me of how it felt in 1990 to walk between the two high sloping stone walls that surround the main enclosure at the ruins of Great Zimbabwe.

Thus each wind is self-registering

2008-11-03T15:42:00-05:00

One hundred forty-seven years ago today, Henry David Thoreau posted the final entry in his journal, completing the major work of his lifetime. After going out to count the rings of tree stumps during a rainstorm, he had contracted bronchitis, and his health gradually declined until his death on May 6, 1862. His last words were “moose” and “Indian.” Though he is not remembered as one of those great writers who died unusually young, he was only 44. It gives me a melancholy feeling to read this entry again, though its exact observation and its message that nature is an open book make it thoroughly characteristic. Better to look back on what he wrote three years and two days before, when he compared the turn of the seasons to one of the enormous panoramic scrolls that were popular in his day, where a viewer could sit and watch the length of the Mississippi or the Nile pass by on painted canvas. I seemed to recognize the November evening as a familiar thing come round again, and yet I could hardly tell whether I had ever known it or only divined it. The November twilights just begun! It appeared like part of a panorama at which I sat spectator, a part with which I was perfectly familiar just coming into view, and I foresaw how it would look and roll along, and prepared to be pleased. Just such a piece of art merely, though infinitely sweet and grand, did it appear to me, and just as little were any active duties required of me.