10 worst predictions for 2008

Foreign Policy presents the 10 best intuitive (?) predictions made by pundits in the course of the past year. My personal favourite:

“Peter writes: ‘Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?’ No! No! No! Bear Stearns is fine! Do not take your money out. … Bear Stearns is not in trouble. I mean, if anything they’re more likely to be taken over. Don’t move your money from Bear! That’s just being silly! Don’t be silly!” —Jim Cramer, responding to a viewer’s e-mail on CNBC’s Mad Money, March 11, 2008

An economic sonderweg for the 21st century?

As Gordon Brown and Nicolas Sarkozy go on a spending (not to mention PR) spree to avert recession and organize Forums to convince the world of their sound judgment; as the economies of the EU periphery start looking towards the IMF and Brussels for help; as certain politicians in my native Greece and elsewhere, have started realizing that the Euro is no panacea for creditworthiness and have started muttering pleas for Eurobonds; Germany is having a relatively quiet and drama-free Christmas. Last time the Germans were so obviously the gatekeepers of prudence, in the early 1990's, the rest managed to lure them into the EMU through endorsing unification and accepting a Central Bank in tho mold of the Bundesbank. Now what chips do they have on the table? I have a feeling the Germans will remain unfazed:

A former economic adviser to the commission, Belgian economics professor Andre Sapir, says: "The message that Germany has to pay more because it has room for manoeuvre is not a very credible message".

But, I say, that is the way the EU has been run for the last 50 years. "Yes, but I don't think that is the way Europe is going to work for the next 50 years. It's true that Germany was the paymaster because of the past, the war, and the view that what is good for Europe would be good for Germany. I don't think that Germany should be made to pay forever for its sins. They were great, there's no doubt about that, I lost all four of my grandparents to the Germans, but Germany doesn't need to pay forever. Europe cannot be Europe if Germany is put in one corner and has to pay forever for the sins of the past."

"We have to fight the will to ignorance"

This Christmas I will be reading the amazing history of postwar Europe by Tony Judt. I have read only the first 100 pages so far, but the book is fascinating in its clarity and breathtaking scope. Besides being a meticulous historian Judt seems to be a great thinker as well, which in my mind was confirmed by a public lecture I found on his NYU website on the role of modern intellectuals. At the end of two months in which this blog was rocked by both the triumph (Obama) and the defeat (Greek riots) of informed, intellectually sound discourse, I found his views particularly welcome. The video is on the right-hand column.

Merry Christmas from the PoliSci Department

Inspiring postcard from Josep Colomer's website:

-384 -322 Aristotle
1469-1527 Niccolò Machiavelli
1588-1679 Thomas Hobbes
1632-1704 John Locke
1689-1755 Montesquieu
1711-1776 David Hume
1712-1778 Jean-Jacques Rousseau
1723-1790 Adam Smith
1724-1804 Immanuel Kant
1748-1832 Jeremy Bentham
1751-1836 James Madison
1805-1859 Alexis de Tocqueville
1806-1873 John S. Mill
1818-1883 Karl Marx
1864-1920 Max Weber
1883-1950 Joseph A. Schumpeter
1903-1957 John von Neumann
1915- Robert A. Dahl
1915- Paul Samuelson
1917- Maurice Duverger
1919- James M. Buchanan
1920-1993 William H. Riker
1921-1979 Stein Rokkan
1922- Gordon Tullock
1922-2006 Martin S. Lipset
1924- Giovanni Sartori
1926- Juan J. Linz
1930- Gary S. Becker
1930- Anthony Downs
1932-1998 Mancur Olson
1933- Amartya Sen
1933- Rein Taagepera
1936- Arend Lijphart

It is different from 2000

Today's NYT article states what was pretty obvious, that the problem of the economy this time is not overproduction (as was the case in the early phase of capitalism) or a productivity bubble (as in 2000), but a tightening of finance. Companies do not want to lay off productive workers but to stash cash for later times. There is a sense that this crisis is not going to last much longer. Of course, this is far from certain:

A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor.

A day at the museum - II

Next in line is a 1970 Braun transistor radio. Braun was at the forefront of the German modern industrial design with its minimalist and functional style. The reason why it caught my attention at the museum is that we had one of these pieces at my old house in Thessaloniki. My mother would often cook and listen to the damn thing. When my mother cooks there is always a TV or a radio on, except for when we have guests. Invariably, then, all the conversations around lunch time have to be conducted in a louder than usual voice which of course is very convenient for her because she is a high-school teacher and used to speaking loud. Anyways, I think we might have dumped the transistor somewhere when we moved to a new house, or perhaps it's at my grandmother's place.


As the two arch-rivals plunged into the Berlin and Cuban missile crises, they abandoned the amiability of the early Khrushchev years. Art and design became fascinated with nuclear catastrophe, spies and high-tech military gadgets. Kubrick's black comedy Dr. Strangelove captured the absurdity of the era and the production designer of the movie, Kenneth Adam designed the War Room as a concrete bomb shelter featuring a circular table where diplomacy is played like poker.

It was around that time that the space race captured the imagination of artists, architects and designers. This is - I think - by far the best room in the exhibition perhaps because it demonstrates how much of modern design smacks of the utopian (or dystopian) vision of those years. Below, a house entrance (from Alison and Smithson's House of the Future) and a chair (by Eero Aarnio) inspired by life on a spaceship.




The images of satellites and the possibility of space colonies in remote hostile planets launched the building of strange structures on earth. Some of them like the Jested Tower in Czechoslovakia were built on very unwelcoming terrain. Others, like the BT Tower were raised in the middle of London. Typical of the period, the BT Tower was actually a state secret and did not appear on offical maps until the mid-1990s, when its existence was confirmed by a government MP.





Icould not imagine how the space craze could be translated into everyday clothing, until I saw the Pierre Cardin "Cosmos" design. If you have found yourselves in posh circles of downtown London or university campuses recently, you cannot but agree that the English still love this stuff.

And then, of course, the late sixties came in all their glory and there was talk of revolution and a new society, freed from Communist or Capitalist hierarchies and fueled by new forms of social protest. In a sense, modernity itself, the object of the race (and the exhibition) until then, was disputed. My take on the period is that a lot of the protesting students were spoilt bourgeois brats, as demonstrated so vividly in this clip from Godard's La Chinoise:




One of the posters I couldn't find online to post it was the in-your-face rejection of liberal democracy by the protesting youth (it read "to vote is to die a little"). It was designed by the Atelier Populaire in May 1968. I have replaced it with another famous poster of similar tone from Atelier Populaire. Below and on the right, a part of one of my favorite exhibits, Boris Mikhailov's "Red Series" of photography, which depicted the meaninglessness of the Soviet symbols in all their kitsch glory.


Below, Mikhail Kalatozov's "Soy Cuba" conveys, through the camera-work, the energy that shook the movement of the period. It contrasts the decadence of pre-revolutionary Cuba and the moral fervor of the upcoming revolution:


Last, but not least, the unofficial logo of the exhibition, the stuff of best-selling t-shirts and, perhaps, a comment on who won the Cold War:

A day at the museum - I

A few days ago I went to the Victoria and Albert Museum in London to see a really interesting temporary exhibition on Cold War Design. The website can be found here. It was an entertaining evening, full of insights into, to use a Marxist term, the aesthetic superstructure of the titanic clash between the USA and the USSR. On the downside, the exhibition lost some steam after the space age room and, more generally, portrayed the Soviet experiment with modern design as a priori doomed. In any case, for those in England, a visit is highly recommended, and if not for the exhibition itself, certainly for the excellent gift shop (I found miniature Trabants which made me happy). Here are my favorite posters, buildings, objects and videos in chronological order as they were roughly presented in the V&A.





In these first two posters, designed made after the end of the War, the clash of the two visions of modernity (promised by both superpowers) is evident. Skyskrapers, roads and bridges signify progress in the West, a progress promised by the advent of the Red Army in Prague and celebrated by the neo-avant-garde poster on the right. Click to enlarge, please.


This looks positively awful for a Berlin memorial (something like a cell phone tower with a couple of charred figures underneath). It was supposed to celebrate the human spirit of East Berliners not crushed by the Soviet machine - it would be called The Memorial to the Unknown Political Prisoner. Two things about this monstrosity made it appealing to me: it was supposed to be the Western counterpoint to the Soviet memorial and built on a hill opposite to it, which made the hill as important as the memorial. The second interesting thing is that the project fell through because the West Berliners either realized that minimalist abstractions are no match to Soviet heroic realism or simply found the whole thing extremely ugly.


The tower on the right is the eighth of the Sister towers that Stalin decided to build around the city of Moscow. Bottom-up Gothic structures, hierarchy, concrete Soviet modernity and an Orwellian bleakness define the buildings. The period they were built is marked by zero tolerance on the part of the regime for symbolic avant-garde or other "formalist" influences. Seven of the eight Sisters were actually built and have defined, ever since, the Moscow skyline, but this one never materialized.


Above, a magnificent piece of design produced for the literate masses, the Lexikon-80 Olivetti typewriter; manufactured objects like the Olivetti and the Vespa showed that Western industrial objects could be practical and charming at the same time. The early 50's were still not a time for too much design-related added value, but a few decades later the insights from the designers Italian Reconstruction would prove very useful to IBM.


I spent about a quarter of an hour inside the museum watching and rewatching the dreaming sequence of the adaptation of Shastakovich's musical parody Cheryomushki (Cherry Tree) - it starts at 2:45 on the embedded video. The musical was acted out in 1959, in a strange period for the Soviet Union; Khrushchev promised standards of living on a par with the West, but the Soviet system couldn't help frustrating its citizens with its inefficiency. Masha and Sasha, the newlyweds of the video, express their dim hopes of getting a fully-furnished apartment while dancing classical ballet underneath a block of flats of the Khrushcev era. The whole thing is hilarious and rather crude, but the music is really beautiful. The two superpowers were now competing not over housing, food and health care, but over appliances, kitchens and dancing spaces.


Lastly, on the right is the visual response of a human rights group from France to the peace-loving, anti-imperialist pretensions of the USSR. Of course, the dove had been originally adopted as a symbol of peace by Pablo Picasso, a famous Communist of the era.

What I will ask Santa Claus to bring to my country

It is hard to come to terms with a single act of violence; it is even harder to fathom a complete breakdown of order in a supposedly modern European country. When this happens to be your native country and the streets in flames are those that you have been strolling up and down on Saturday evenings ever since you were a kid, understanding becomes painfully impossible. In the last four days Greece has become hostage to extremist elements found in the police and among its students and it has gained notoriety all over the world for being, essentially, a messed up country that is rioting without a sense of direction. I am so bitter and sad about what has happened I can't even start.

But enough with rambling and groaning - it is the very attitude which gains momentum in the Greek media and shifts everyone's attention towards conspiratorial finger-pointing (the reaction of isolated, uneducated, frustrated individuals that most Greeks are definitely NOT). Here are some lessons that I think are worth pointing at:

1) The Greek police should be revamped immediately. The killing of the 15-year-old is not the first incident of a policeman demonstrating that he is more of a thug than a keeper of law and order. Examples of "accidental killings" and "provoked beatings" abound in the records of the police forces. Recruitment and training should be totally restructured and the heads of the police should be ceremonially decapitated. The possibility of getting rid of guns altogether should be seriously considered (they have been doing it in the UK for more than a century).

2) The extremists wearing hoods who burn down Greek cities should be tracked down and captured immediately. Greek democracy should not tolerate anyone who hides their faces when protesting publicly. The investigations should be carried out by an independent prosecutor and, if that is impossible, by an inter-party parliamentary committee. I cannot believe that some of these "known unknowns" as we call them in Greece have ties to the political establishment, but if they do, all politicians involved should be stripped of their asylum and thrown into prison. The fact that nobody has been caught in 30 years is a veritable theater of the absurd. In a truly Greek way, the silent majority is expecting a catharsis.

3) The university asylum should be abolished immediately. It has drifted very very far from its original meaning (it was very much a byproduct of the dictatorship) and it has become a cancerous tumor for the campuses and the society as a whole. Freedom of intellectual expression should and can be maintained through other means.

4) The government should resign within the next few days and call general elections. I am serious. With almost no exceptions they are incompetent and unable to manage any kind of crisis; the longer they cling to power the more demoralized the political class becomes.

And a longer-term goal:

Institutions in Greece have as of late become the laughing stock of average Greeks. Only the military retains some credibility, especially after the latest church scandals. Universities, the media, politicians and the public sector (both employees and services) have experienced a long and painful moral decline. The latest economic crisis has exacerbated collective cynicism. Now an accompanying social crisis proves that young people like me are so cynical that they will just destroy everything in their wake. It 's about time we started fixing our institutions one by one to get rid of uneducated fools and damning practices that deiegitimize any attempt at a collective endeavor. If we don't start soon, more people will get exasperated, lose their sense of direction and will seek to grab the attention (of their friends? their parents? the cameras?) through public-ized destruction.

Of course, the process of reform requires competent politicians and public servants, whom I am not sure the country has. What it does have is strong families and responsible parents - no wonder why the sturdy old-school minister of Public Works (Souflias) essentially asked for their help to control the wild masses. Pretty pathetic for a supposedly modernised country.

This post is deliberately argumentative, too general, perhaps too sweeping and out of sync with the rest of the blog. Yet, I had to get these things out of my body.

PS. There is a smartass BBC correspondent who says that all this is some kind of rite of passage for the Greek youth. This is the sort of logic that compels hotheaded misfits into burning down the properties of others. Well done, Mr. Brabant, for perpetuating this rubbish.

Greece in flames

Translating from vlemma:


Athens, Dec 7 2008.


Alexandros, 15 years old, died from the wounds inflicted by a policeman on Saturday night.

A 15-year-old kid dead. My eyes well up with tears as I look at his beardless face on TV, inside a cafe on Tositsa st, amidst teargas, fire trucks and clashes with the police.

After the kid, a second victim, the city.

I don't know why I well up; from the teargas or out of desparation. I don't have a solution, or an answer. I only feel pain, confusion, anger, confusion.

Athens is Sarajevo. It's Baghdad. But it can't be. We are eating our own flesh.

I don't know any more why I well up.

A glimpse of the third industrial revolution

As Ford announced today the launch of a plan for a "green" vehicle, Jeremy Rifkin thinks that we are experiencing the beginning of what will be the third industrial revolution.:

To make this transition happen, we need to understand that transport revolutions are always embedded in larger infrastructure revolutions. The coal-powered steam engine revolution required vast changes in infrastructure, including a shift in transport from waterways to railways and the ceding of public land for the development of new towns and cities along critical rail links and junctions. Similarly, the introduction of the petrol-powered internal combustion engine required the building of national road systems, the laying down of oil pipelines and the construction of new suburban commercial and residential corridors along the interstate highways.

The shift from the internal combustion engine to electric and hydrogen fuel-cell plug-in vehicles requires a comparable new commitment to a third industrial revolution infrastructure. To begin with, national power grids and transmission lines will need to be transformed from centralised control to distributed, digitalised management. Already, Daimler has partnered RWE, the German utility, and Toyota has partnered EDF, the French utility, to install recharging points along highways, in car parks and garages and in commercial and residential areas.

Of course, technological change in and of itself cannot produce an industrial revolution without a subsequent shake-up of supply and distribution channels, as well as economies of scale more generally. Rifkin apparently thinks that we are heading towards that kind of large-scale restructuring. How? Well, revolutions starts at home, apparently:

To accommodate plug-in vehicles, utility companies are beginning to transform the power grid, using the same technologies that created the internet. The so-called smart grids or intergrids will revolutionise the way electricity is produced and delivered. Millions of homes, offices and factories will be converted or built to serve as “positive power plants” that can capture local renewable energy – solar, wind, geothermal, biomass, hydro and ocean waves – to create electricity to power the buildings, while sharing the surplus power with others across smart intergrids, just as we now produce our own information and share it with each other across the internet.

The third industrial revolution brings with it a new era of “distributed capitalism” in which businesses and homeowners become participants in the energy market. In the process, we will create millions of green jobs, start a new technology revolution and dramatically increase productivity, as well as mitigate climate change.

Back to the roots

From the Economist, an indication that the large exodus of migrants from "core" countries has already started:

Latinos are among the hardest hit by the economic downturn in America. The unemployment rate among all Hispanics rose to 8.8% in October, according to government figures, well above the national unemployment rate of 6.5%. It is expected to be worse still for Hispanic immigrants, whose unemployment rate already stood at 7.5% in the first quarter of this year; though their numbers are declining fast. The Mexican government said last week that the number of its citizens who left to live abroad this year was down more than 40% compared with 2006, and America’s Border Patrol says it caught 18% fewer people in the fiscal year that ended in September than in the one before.

A similar phenomenon is happening in Europe where a lot of Eastern Europeans have, for example, started moving out of places like England and Spain. If history has any lessons to offer, these people will go back to their countries and stir up politics there.

Pointless squabble of the week

A few days ago Jeremy Clarkson of the Top Gear fame called Greece "a toilet". Which is not very far from the truth, with regards to the urine/alcohol/puke-studded resorts in Rhodes the lads and the lasses from Manchester leave behind at the end of the summer. Needless to say, the Greek blogosphere was promptly flooded with denunciations of "that fucking twat" (my translation).

And so it was that Greece was added to the never-ending list of countries Jeremy has offended. What can one say? The man is a legend. Apparently, there is some history behind this:

David Cameron's ideas

A review of two books on Cameron and his program uncovers some of his principles. Cameron is basically a Burkean and Oakeshottean conservative, radically mistrustful of big government plans to engineer society, a crusader against the corrupt political classes and enamored with the power of small community to generate social welfare:

According to the Cameron analysis, New Labour offers change from the centre, the Conservative party change from below. Belief in Burke's "little platoons"—bodies like the women's institute, independent universities, a decentralised NHS, self-governing schools, the voluntary sector—underlies everything that Cameron says. This vision is intellectually coherent, and far more rooted in Tory thinking than critics inside the Conservative party have ever acknowledged. Cameron's political beliefs, applied in 21st-century Britain, would subvert the way we are governed.

Aside from the obvious objection raised in the article, that is whether Cameron the PM would willingly relinquish the power Westminster has amassed over the last years, there is always the issue of timing:

- Can this ideology survive a time of crisis, when BIG governments emerge as the only guarantors of good market functioning?
- With the decline of the City of London, Britain might be heading for another restructuring of its economy. Can the "little platoons" produce the economic edge that will get the British economy out of depression?
- Less government means less redistribution of wealth. With the middle classes in the US and England grumbling about the widening gap between them and the upper 2-3%, is it possible to revert to a more "hands-off" approach to tax and spend?

Time will show.

The meaning of Mumbai

In a gem of an article at the Atlantic by Bob Kaplan:

...the immediate result of the Mumbai terror attacks will be a further hardening of inter-communal relations within India. The latest attacks will also increase the likelihood that in national elections slated for early 2009, the result will be a BJP-led government, as Hindus, who comprise the overwhelming majority of Indian voters, take on another layer of insecurity.

Internationally, this event will further aggravate Indian-Pakistani relations, making it harder for the incoming Obama Administration to effect a rapprochement between the two countries, necessary for progress in Afghanistan, where the two subcontinental states are engaged in a proxy struggle that goes on behind the immediate conflict between the United States and al-Qaeda.

But the real story is India itself, whose undeniable rise as a major world power is being threatened by these civilizational tensions

.

Believe it or not, I have a personal story to share about the bombings. A very good friend of mine and roommate in college recently married an Indian woman and moved to Mumbai. Two days ago I was on the phone with him, catching up after almost two months. We had already talked for almost an hour about life in India and Mumbai's city centre, when the connection was cut off abruptly. I tried to call a couple of more times, but to no avail - a lady in distinctly Indian accent would inform me connection was not possible- so I hang up thinking the battery of his phone must have died. It was only three hours later that I realized Mumbai was hit and that the network got completely clogged the first few minutes after the attack. There was no way they could have been hurt - he was talking to me from home and safely. Still the immediacy of the whole thing disturbed me thoroughly.

I eventually reached him the following afternoon. He sounded concerned, but in his usual jest he played down the danger. He did mention, however, that a few hours before the attacks he was having dinner with his wife in a restaurant next to the cinema that was eventually targeted by the gunners. After dinner, he had suggested that they watch the new Bond film, but she was too tired and wanted to go home. And so they did. Now, you tell me if life isn't funny sometimes.

War between private and public sectors

One of the many collateral damages inflicted by the depression is, I believe, the revival of the 80's war between public and private sector employees in European countries. Not that the conflict was not always latent, but it's time it came to the fore again. David Cameron, the Tory leader, has already started gathering the troops for a potential retrenchment of the public pensions system in Britain:

“We have got to end the apartheid in pensions,” he said, where growing numbers in the private sector rely on, usually much less generous, defined contribution pensions but public employees still enjoy final salary schemes largely paid for by the taxpayer.

Private and public sectors, at least in my mind, often represent two different drives of society, one that is mercurian and risk-loving and the other that is conservative and risk-averse. Because the former is substantially more dynamic, it is also more volatile and initiates political turbulence.

And this is what is going to happen now: for many years policy analysts have stressed the importance of reforming an unsustainable public pensions system, but it will take the disenchantment of the private sector to finally put conventional wisdom into practice. This is, of course, quite ironic, because the public sector has absolutely nothing to do with the current economic crisis - in fact the collectivization of risk in a public pensions scheme has seen its appeal increase recently. Not to mention that tying pensions to the stock market has proven to be an incredibly stupid idea. Yet the public sector might stand to lose a lot from the thrift epidemic among employees in the private sectors of the economy.

Waltz with Bashir

Two days ago I watched one of the most touching and thought-provoking political movies I have seen recently and, no, it was not the much awaited Baader-Meinhoff complex (that was very chaotic and very substandard, unfortunately). In the Persepolis tradition, Waltz with Bashir treats the problems of the Middle East through the medium of animated documentary, because the madness of it all is not easily captured by realistic movie-making. The film does not aspire to be anything more than the personal struggle of a former Israeli soldier to come to grips with the 1982 Sabra and Shatila massacre which he had witnessed in person. In 90 minutes the soldier-turned-filmmaker progresses from complete obliviousness to cathartic self awareness by interviewing former cosoldiers about their shared experiences in Lebanon.

It is a very personal movie and will prove difficult to swallow for those looking for a clearcut political statement. Yet it is astonishingly beautiful (watch the video above and you will understand) and it captures how hopeless people are when confronted with the reality of modern war. The motives of these soldiers (a recent break-up, masculinity problems, an obsession with slick martial arts) look so absurd that they are funny, but they are, after all, the only narratives that matter to young men who are asked to become cogs in a military machine. The contrast between reality and personal illusion makes the film good, but it is the decision to reflect this through the animation medium itself that makes it really great. At the end of the day, talking things through and hindsight self-reflection are singled out by the filmmaker as potent healing tools. Politicians could use some of his advice, I guess.

lending after a bailout

After the massive bailout of Citigroup on Sunday, I was left wondering why the banking sector has so far not bounced back and started lending again with all this taxpayer money at its feet. Robert Peston (who, by the way, has become a journalistic superstar in the UK since the Northern Rock bailout) drops a hint:

Against that backdrop, the question is whether it is remotely sensible to put a deadline - implicitly or explicitly - on the repayment of all that taxpayer funding for banks.
But if we don't demand our money back, we'd be formalising that there's been a semi-permanent nationalisation of the entire banking system.
And that would massively encroach on the ability of our banks to operate as independent commercial entities.
There would be massive political pressure on them to become quasi-social utilities, providing loans at the behest of ministers and officials rather than on the basis of commercial criteria.
So here's what may turn out to be the choice: less lending for years or public ownership of the banks for the foreseeable future. It's not an easy choice, is it?

Read the whole entry; it is a true tour de force. Or a good sample of, as Alastair Campbell once put it, "the Peston School of smartarse journalism". Peston can afford to be a smartarse these days.

Geithner, Summers and co.

The NYT editorial today, one day after the introduction of Obama's economic advisers poses the right questions:

As treasury secretary in 2000, Mr. Summers championed the law that deregulated derivatives, the financial instruments — a k a toxic assets — that have spread the financial losses from reckless lending around the globe. He refused to heed the critics who warned of dangers to come... Mr. Summers now will advise a president who has promised to impose rational and essential regulations on chaotic financial markets. What has he learned?

At the New York Fed, Mr. Geithner has been one of the ringmasters of this year’s serial bailouts. His involvement includes the as-yet-unexplained flip-flop in September when a read-my-lips, no-new-bailouts policy allowed Lehman Brothers to go under — only to be followed less than two days later by the even costlier bailout of the American International Group and last weekend by the bailout of Citigroup.

So far, Obama's appointments have been rather moderate and pragmatic. Something is sorely lacking though, and that's creativity for the array of new policies necessary to turn the economy and America's image in the world around. This is the reason why I am not a big fan of the Clinton appointment as Secretary of State. Another reason for opposing her is that, if her campaign serves as an indicator, she will not be a good manager of the diplomatic corps. I do not, however, think that she will be undermining Obama's leadership. She knows very well that the Democrats will be Obamaland for the next 8 years and she might as well partake of the Obama brand.

PS. Apologies for the 6-day silence, GREs and PhD apps took their toll.

Passive Aggressive Notes

This blog is hilarious.

Big pharma jittery

Obama will try to sever ties to big lobbyists and reduce drug prices, or so he says. The Economist (as is so often the case) acts as the Cassandra:

FOR many years America has been the heart and soul of the pharmaceuticals business. The adoption of price controls and government-run health systems in Europe, where the industry began, led many drugs firms to pitch their tents in the land of the free market. Keen to encourage innovation and suspicious of big government (until recently, anyway), America has allowed drugs companies to price their wares more or less as they please. As a result, over half of the leading firms’ profits come from America alone.

So it might seem odd to suggest that the industry’s future now lies in the developing world... If growth is the carrot luring the drugs giants into emerging markets, the stick is the change in regulatory outlook in America from friendly to possibly frosty. The industry is concerned that Barack Obama, once in office, might allow cheap drugs to be imported from Canada or force Medicare, the government health-care system for the old and disabled, to negotiate big discounts with drugs firms. Peter Lawyer of Boston Consulting Group estimates that the latter reform alone could reduce the industry’s American revenues by 3-10%.

Last, but not least, the word is out that Obama is "gonna take 'em guns from us" and gun sales in the South are going through the roof.

Hic Rhodus, hic kitsch!

Collossus of Rhodes is to be rebuilt, courtesy of a German architect. It will be interesting to see how he will fit his vision into the tranquil medieval port of the Greek island.

Which gives me the opportunity to post a painting from one of my favourite artists, Goya's Colossus.

The Republican wasteland

Canvassed by Frank Rich of the NYT:

At the risk of being so reviled, let me point out that in the marathon of Palin interviews last week, the single most revealing exchange had nothing to do with her wardrobe or the “jerks” (as she called them) around McCain. It came instead when Wolf Blitzer of CNN asked for some substance by inviting her to suggest “one or two ideas” that Republicans might have to offer. “Well, a lot of Republican governors have really good ideas for our nation,” she responded, without specifying anything except that “it’s all about free enterprise and respecting equality.” Well, yes, but surely there’s some actual new initiative worth mentioning, Blitzer followed up. “Gah!” replied the G.O.P.’s future. “Nothing specific right now!”

China in the doldrums

I found this Newsweek murder story truly fascinating.

Back in August, Tang's ordinariness was cause for relief: authorities quickly figured out that he wasn't a terrorist, and the Games went on. But the truth is perhaps more disturbing. The troubles that destroyed Tang—the loss of his job, the collapse of his marriage, heartbreak over his wastrel only child—are all too common across China. The country is the world's most stressful: three decades of reforms have shredded China's safety net and transformed society beyond recognition. That's why, as Chinese leaders prepare to mark the 30th anniversary of Deng Xiaoping's capitalist reforms next month, they're also frantically pumping more than half a trillion dollars into their economy in hopes of staving off a downturn.

The fall of the Wall

Michael Lewis writes for Portfolio:

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

When I was an undergraduate at Harvard I was always puzzled by (and, I must confess, jealous of) the prospect of some classmates making 150 grand straight out of college. What I am experiencing now is, well, not exactly schadenfreude, but definitely relief that there is a speck of commonsensical fairness in this world, after all.

Hat Tip: Dish

Something good will come out of this crisis...

... for my native country:

Greece could save in excess of 1 billion euros by reducing its defense spending next year, according to cuts announced by Prime Minister Costas Karamanlis in Parliament yesterday, as it was confirmed that the eurozone had slipped into recession.

Speaking after the news that the economic crisis has officially taken grip of Greece as well as the other eurozone members, Karamanlis said that he would cut the defense budget for 2009 by 15 percent in a bid to save money.

The big question is: WHY NOW? WHY SO LATE? Somehow, Turkey is no longer such a big security threat, after all. My personal long-standing position is that the military takes up too many resources of my country (financial, human, moral) and should be seriously curtailed.

Cool commercial of the week

Bretton Woods II?

No way. Obama decided to stand on the sidelines, Bush is clearly not willing (or mentally fit) to craft a coherent plan, the developing countries seem to think this is an opportunity to slash a larger share of the pie and the Europeans were not very specific in their delineation of a regulatory "college". This was a bit disappointing, I have to say. Expect large losses in the stock market tomorrow. A good analysis of what happened and the coming attractions from Business Week here. The full text of the common statement of the G-20 here. There was actually one interesting idea: the insertion of the principle of anti-cyclicality into the banking sector. Andrew walker of the BBC expounds:

And here is one to set the pulse racing: "mitigating against pro-cyclicality in regulatory policy". That might actually turn out to be quite important.

The idea is to have banking regulation that does not exacerbate the cycle of boom and bust - indeed the aim is to moderate it.
'Dynamic provisioning'

Spain's system has attracted a lot of interest.

In effect, it requires banks to build up a financial cushion in the good years which can help them absorb losses in the bad times when increasing numbers of borrowers fail to repay.

The basic principle is not exactly financial rocket science, although the name it has - dynamic provisioning - makes sound as though it is.

The war of the sexes

The World Economic Forum has released the 2008 Gender Gap Index which combines economic, educational, political and health indices. The UK is in pretty good shape (21st globally), but still needs to do a lot on equal pay (81st). Greece is abysmally low and it is the political index that is so very disappointing (93rd out of 130). Actually, the United Arab Emirates score higher than Greece on this one! If anyone is quick to use the familiar "South European exceptionalism" excuses, just have a look at Spain (ranking higher than Britain on the table).

My post-election blues

Rebecca, that was very kind of you:)

Class-based affirmative action is the answer

From the Atlantic:

On the other hand, as the first black president, Obama is uniquely positioned to help persuade civil rights leaders that it is time to resurrect King’s idea of affirmative action as a set of programs for low income Americans of all races. He could point to King’s political insight that only a class-based emphasis would forge a potent black- and working-class-white coalition for real social change. And in phasing out race-based preferences, Obama could simultaneously put real money into the enforcement of important anti-discrimination laws to protect against bias in education, housing, and employment, a part of the colorblind agenda that no president has fully funded.

Hints of a new approach towards Russia?

Headlines from today's news:
1. Obama throws US missile shield into doubt.
2. EU resumes Russia talks isolating Lithuania.

and my favorite one for the day, from the IHT:
3. Reckless Georgia.

It is way too early to tell, but it's getting very interesting.

That racist vote

NYT reporting from the South is rather chilling.

One white woman said she feared that blacks would now become more “aggressive,” while another volunteered that she was bothered by the idea of a black man “over me” in the White House.
Mr. McCain won 76 percent of the county’s vote, about five percentage points more than Mr. Bush did, because “a lot more people came out, hoping to keep Obama out,” Joey Franks, a construction worker, said in the parking lot of the Shop and Save.
Mr. Franks, who voted for Mr. McCain, said he believed that “over 50 percent voted against Obama for racial reasons,” adding that in his own case race mattered “a little bit. That’s in my mind.”

Soros on financial market fundamentalism

Credit—whether extended to consumers or speculators or banks—has been growing at a much faster rate than the GDP ever since the end of World War II. But the rate of growth accelerated and took on the characteristics of a bubble when it was reinforced by a misconception that became dominant in 1980 when Ronald Reagan became president and Margaret Thatcher was prime minister in the United Kingdom.

The misconception is derived from the prevailing theory of financial markets, which, as mentioned earlier, holds that financial markets tend toward equilibrium and that deviations are random and can be attributed to external causes. This theory has been used to justify the belief that the pursuit of self-interest should be given free rein and markets should be deregulated. I call that belief market fundamentalism and claim that it employs false logic. Just because regulations and all other forms of governmental interventions have proven to be faulty, it does not follow that markets are perfect.

The whole article covers briefly his theory of reflexivity in the financial markets and can be found here.

Why do Scandinavians have to top this list too??

I really hoped Greece would have nailed this one, but it's the Danes again, alas.

Squaring the Guantanamo circle

One of Obama's first priorities will be to shut down the detention centers at Guantanamo. What he will do with all those prisoners is a legal riddle:

"There would be concern about establishing a completely new system," said Rep. Adam Schiff, D-Calif., a member of the House Judiciary Committee and former federal prosecutor who is aware of the discussions in the Obama camp. "And in the sense that establishing a regimen of detention that includes American citizens and foreign nationals that takes place on U.S. soil and departs from the criminal justice system — trying to establish that would be very difficult."

In my mind there is no way a liberal empire can survive for too long, without sacrificing either its liberal or its imperial credentials.

Al Gore's action plan for the new economy

The high priest of environmental reform explains his plan for transforming the energy industry in the US. A more holistic approach to the problem is provided by two Stanford economists. I must admit I do not know much about the state of this debate and remain skeptical to both sides. However, I cannot but feel that there is a tradeoff between economic growth and changing our whole energy infrastructure to go environment-friendly. To me there are two conflicting imperatives at work: a moral and an economic one. I totally respect both, but in times of economic crisis and when millions of people rise above poverty in the developing world the latter (at least temporarily) is of higher importance.

However, it is true that if we manage to wed Keynesianism (all those grids and factories that Mr. Gore talks about) to environmentalism that would be a miracle of human ingenuity. But will it work? Please leave comments and send links to seminal books/articles on this.

Update: The Economist runs a tirade against Obama's Green New Deal. Skip the article and go to the comments section where an actual discussion takes place. Once more, the readers are much wiser than the editors.

The ins, the outs and the what-have-yous of the campaign

Newsweek runs an exhaustive 7-chapter (!) special on the campaigns. I just finished chapter 2 and it reads like a novel.

Why did Obama win? (some numbers)

66% of voters between 18-29 voted for the Democrat
96% of blacks (!) voted for Obama
67% of Latinos voted for Obama (up by around 10%). An explanation for this can be found here.
52% of people earning more than 200,000 dollars who opted for Obama (these are the people who will carry the burden of Obama's tax increases)
58% of people holding a postgraduate degree voted for Obama
52% of Independents voted chose the Democrat
26% of voters were contacted by the Obama campaign
84% of Clinton Democrats finally went for Obama
17% of Bush 2004 voters went for Obama, 9% of Kerry voters went for McCain
51% of Americans think that government should be doing more (76% of them voted for Obama)
57% believe that Obama is in touch with people like them (the same number for McCain was 39%)

Some more here.

Why did McCain lose?

A collection of analysts ruminate. Your pick:

The political environment could not have been worse: an unpopular incumbent; an unpopular, costly war; and an economic calamity.

The irony is that McCain spent the past four years morphing from what the voters wanted into a diluted Republican. And he also seemed disadvantaged by a disorganized campaign.

When America has felt lost and uncertain about its prospects, as it does today, it has often searched for transformational leaders to steer it into the future -- FDR, JFK, Ronald Reagan. Was it within McCain's power to be that man? No. His campaign created a great narrative, a great story, but it was only about John McCain. He did not create a narrative, as Obama did, about where he would lead us and about where we, as Americans, were going. That, perhaps, was his failing. The bigger question is: Who built the Republican Party that doomed him?

McCain's biggest mistake was not going with his instincts and picking Joe Lieberman as his running mate. This would have allowed McCain to run a campaign based on bipartisanship and results-oriented policies -- what was best for the American people -- and not one geared toward the GOP's right wing.

Saying that "government is the problem" was okay for Reagan's inaugural, but it was politically untenable in today's economy. Exit polls Tuesday showed that, by an eight-percentage-point margin, voters said that government should be doing more rather than less -- an 11-point swing from four years ago.

Had McCain voted against the bailout of Wall Street firms and backed the Republican alternative, there is no question in my mind that he would have won. After calling attention to his "suspension" of his campaign, McCain compliantly and supinely embraced the Bush bailout backed by the Democrats. America was waiting for him to speak out against excessive government spending and against bailing out Wall Street firms for their greed.

Ain't no stoppin' us now

Dizzee Rascal for Prime Minister

Haha, Jeremy Paxman is such a cocky bastard.

Reality check

Obama's team are already trying to lower the expectations created by Tuesday's landslide.

With the Democrats falling short of a filibuster-proof 60-seat majority in the Senate on Tuesday, his agenda will probably require some modicum of horse trading for Republican support. Further complicating the picture, Mr. Obama’s winning coalition includes new voters who will be watching him closely but may not have patience for the deliberative give and take that accomplishment in Washington often demands.

I often tell non-American friends that one point not very well understood about American politics is how weak the Presidency actually is compared to many European governments with large parliamentary majorities. This is a point related to the system of checks and balances at the heart of American politics. The task is made even more complicated by Bush's 8-year legacy on public debt and international law. I hope the effect of the lame duck transitional period will be minimal.

KNOW HOPE

I have been following this campaign for nearly a year now (and quite intensely in the past 2 months) and today I am feeling quite hung over physically, emotionally and intellectually. The all-nighter and the alcohol galore by way of celebrations did not help. I have been trying to find something worth posting for some time now, but somehow nothing captures the moment quite accurately. It is as if opinion pieces, quirky videos, interesting exit polls and vivid photographs were worthless compared to the simple fact that yesterday the American community as a whole overwhelmingly voted for decency, intelligence, tolerance and HOPE.

I am not American by birth. I lived, studied, worked and travelled there for four years and I have quite strong feelings of affection for the country, its ideals and the fundamental decency of its people. Yet I also feel quite European in the sense that I have developed a certain amount of cynicism towards "the American Dream" and its overstretch as the backbone of American life. I could never reconcile these conflicting attitudes, or at least not any more than one can reconcile one's idealism with the complexity of real life.

Last night, however, as the exit polls and vote tallies were coming in, I felt that my personal ambivalence about America evaporated as the reality of a man who personifies the American Dream started sinking in. In his own words: If there is anyone out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer.

While America's economy is losing its global edge, America's politics are leading the way redefining campaigning, rhetoric and message. In the years to come I look forward to seeing whether bad economics will trump good politics or vice versa. Last night and today, however, I am celebrating America's comeback as the great nation.

America votes

Come on America, you can do it.

My humble prediction:

Obama: 338 - McCain: 200 (I am inclined to add Missouri to Obama's electors, but I have decided to be a little cautious just because some friends are calling me partisan- imagine THAT)

Who is against the Euro now?

The Eurozone might expand soon as national governments come to see the perils of playing a little too much with the currency speculators. Denmark and Hungary are obvious candidates. I would add the UK to the list.

Fact check on the August war

The BBC, battered these days by English newspapers over a rather stupid radio scandal, reminds us why it is still the envy of many a public broadcasting agency.

Last poll-check

Is Obama "too European"?

Matthew Price strikes a half-note about Obama and some American voters:

It boiled down to a sense that he was just a little bit too different. He seemed to have a different outlook, something they weren't quite sure about. Something unfamiliar... For many the fact that Barack Obama is different is intoxicating. For many others it is something that leaves them unsettled... This is about the people who simply feel his policies, and his approach would not be good for this nation. This is why John McCain's focus on "Barack the Redistributor" has hit a chord with many segments of the population here.

One can understand the worries of these people. Obama may look and sound like a Martian to many older or less educated voters. But are these voters the "real America"? Is Obama really the Un-American candidate?

What I see in America is the epitome of modernity in all its aspects - the good (liberty, equality, rational pursuit of happiness) and the bad (corporatism, social dislocation, intense consumerism). Voting for Bush, however, looked like a reversal of this creed - people voted for him because he was folksy, religious and unencumbered by the complexities of modern times - he also descended from a very wealthy family, an aristocrat palling with the average Joe if you wish. In the last eight years Americans recoiled from modernity into a pristine past of us-vs.-them, cowboy-like straight talk. They voted for Bush because they thought they could have a beer with him in his ranch in Texas. Well, I think we know what the results of this retreat were.

Obama, instead, is the American candidate par excellence, because he is self-made, technology-savvy, intensely hardworking, practical and young. Due to these qualities he represents the return of the States to the values of dynamic modernity at the core of the American Dream, at least the way I understand it. But he goes beyond that. He is also intellectually sophisticated, receptive of other people's different opinions and moral codes and he is post-racial. These are qualities necessary to redefine the American Dream domestically because the States need to move beyond the divisive culture wars and the anti-intellectualism of the last decades. These qualities can also redefine the American position abroad because the US can no longer have a claim to unrivalled greatness.

Why you should go vote (?!)

This is tres cool and tres Starbucks. It is also a good example of preaching to the converted - I am referring to those latte-sipping liberals who are usually more educated, more politically savvy and more likely to vote anyways.

On second thought I have decided I really dislike this commercial: it implies that a profit-driven corporation becomes the standard bearer for a "healthy" community. Who cares what Starbucks thinks about voting? Why have we (progressive urbanites) allowed it to create so much cultural and political capital at the expense of non-market forces? Thank God this election is about real issues, competence and grassroots campaigning, rather than fake feel-good messages.

Update: The black guy wins the race

Unbelievable finish! Hopefully the other race will not be determined on the last lap.

The revenge of the SS (Social Sciences)

The Guardian runs an interesting interview with Gillian Tett, an anthropologist working for the Financial Times who had taken notice of the stench coming out of the City:

Firstly, you're trained to look at how societies or cultures operate holistically, so you look at how all the bits move together. And most people in the City don't do that. They are so specialised, so busy, that they just look at their own little silos. And one of the reasons we got into the mess we are in is because they were all so busy looking at their own little bit that they totally failed to understand how it interacted with the rest of society.

A truly great man passed away

RIP Studs Terkel.

One time, ... I was doing 'Studs Place,' my early TV show, and I'm supposed to be quitting cigars and I'm yearning for a smoke and I quote from the 'Odyssey.' I say, I am Ulysses passing the Isle of Circe. Meaning I got these temptations. Truck drivers called in and said they liked the classical reference.

The Economist endorses Obama

Here we are then, the acerbic and consistently right-of-centre "newspaper" endorses a man with a a consistently left-of-center voting record in the Senate.

The only counter-argument to their own endorsement they offer and one worth considering is the following:

Our main doubts about Mr Obama have to do with the damage a muddle-headed Democratic Congress might try to do to the economy. Despite the protectionist rhetoric that still sometimes seeps into his speeches, Mr Obama would not sponsor a China-bashing bill. But what happens if one appears out of Congress? Worryingly, he has a poor record of defying his party’s baronies, especially the unions. His advisers insist that Mr Obama is too clever to usher in a new age of over-regulation, that he will stop such nonsense getting out of Congress, that he is a political chameleon who would move to the centre in Washington. But the risk remains that on economic matters the centre that Mr Obama moves to would be that of his party, not that of the country as a whole.

However, it seems to me that trade and protectionism are not the biggest issues of the day. Financial re-regulation, balancing the budget after a fiscal stimulus and giving China a say in IMF and other international institutions will be much more prominent issues. As for trade, Obama has been rather clear lately that he wants to create new, competitive jobs for the middle class rather than protect old, inefficient ones.

For anyone looking for a clear analysis of Obama's economic policies here is a good one from the NYT.

“Grant me chastity and continence, but not yet.”

Paul Krugman, the Nobel laureate, concludes that a fiscal stimulus is necessary now that consumers are super-conservative and the Fed cannot do much to help.

That means building American roads, bridges, dams a new energy industry and many more things that will make the great capitalist nation much more, well, socialist?

We found someone who will miss George W.

He is, of course, a cartoonist.

Disenfranchised by illiteracy

This article is deeply moving. In case someone had not grasped the historical significance for all the underprivileged anywhere of electing a black man as President of the United States.

Is this a battle for the 10%?

Michael Tomasky thinks so:

Republicans and conservatives must be asking themselves - we're throwing everything against the wall, all the old tried and true stuff that has worked many times before, and yet this time, it isn't sticking. We're calling him a socialist and soft on America's enemies, we're hitting the taxes thing as hard as ever, we're dropping subtle but not too obvious racial hints in certain parts of the country. None of it is really taking. Why?

Of course the economy is the main answer. But I think there's a lot more to it than that. Those attacks have often worked in the past because they persuaded swing voters. In other words, when thinking about questions like this, you always have to divide the country into threes, because there are three main and easily distinguishable groups of voters. Loyal Republicans, who are around 45%. Loyal Democrats, also around 45%. And the 10% in the middle who go either way.

I have to disagree on this one. In this election we might witness a broad coalition in the making. The reason is this:


Update: Harold Myerson of the Washington Post makes the same argument today.

I-Boooks

Google and the publishing industry have finally reached an agreement over Google Books. My first reaction is that this is great, revolutionary, will change the way people read forever etc. However, I do wonder how Google will determine the prices for each book they scan and if this will make financial sense for authors. A reader of the Information Weekly voices his concerns:

In the end, the Author's Guild capitulated. The result sets up a meager $35m dollar fund for compensating authors victim of continuing Google copyright infringement practices. And now copyright violations are winked at, putting the onus officially on the Authors/Publishers to have their works removed from Google Books.

This is not how copyright protection is supposed to work, and it's not how legislation is supposed to work. I don't like big business forcing change down people's throats by blatantly breaking laws, forcing a judicial ruling, instead of legislation by congress. If Google wanted to do this project, the proper way is to ask congress to legislate modification to the copyright laws. Then the congress could properly weigh the merits and legislate for the benefit of all parties.

Instead Google forces the judicial hand and we get legal precedent, and essentially copyright legislation, from the negotiated settlement between a David and Goliath.
So now Google gets a pass on systematic widespread illegal copyright infringement because the Author's Guild were forced to capitulate? It's still illegal!!! Why is the US Attorneys Office sitting on their hands? Private parties cannot be allowed to negotiate between themselves how they will obey law. Google should be roundly punished, Google Books should be suspended, and the matter should be turned over to congress to decide if and what modification to copyright law is needed.

What if Will Jones oversleeps?

Why should conservatives vote for Obama?

The Dish, as is often the case, offers the most compelling answer. E-mail the list to conservative friends accordingly!

An unlikely scenario

Why McCain will win the election.

What happened to Iceland?

BBC News runs a short but comprehensive analysis of why a small and wealthy country like Iceland has gone bankrupt. The argument about overexposure to foreign borrowers and speculators is familiar; what strikes me in this analysis is the realization that it is the big fish (call me big countries) which will survive the crisis and the small fish that will go bust:

In a crisis, such as the one we are experiencing now, the strength of a bank's balance sheet is of little consequence.
What matters is the explicit or implicit guarantee provided by the state to the banks to back up their assets and provide liquidity.
Therefore, the size of the state relative to the size of the banks becomes the crucial factor.

In case you didn't get it, the photo shows an agitated Icelandic volcano;) I confess I know nothing about the country to post a more appropriate photo-cum-metaphor.