conjuring grace: field notes from the 21st century

Bhutan Stories

2008-11-11T09:04:00.006Z

THE REINCARNATION OF THE IRON BRIDGE BUILDER

Kinga and I went to a nunnery. "Holly, this is the nunnery. It's a place with a lot of nuns." At first I was really annoyed with his style of information-presentation ("This is where the male and female rivers meet. It's very inauspicious when two rivers meet." "Why is it inauspicious, Kinga?" "Well, it has to do with the meeting of the rivers.") But it became charming, after awhile. In this nunnery, the great shrine was to the Iron Bridge Builder. When Kinga was ten years old he went to this nunnery and met the reincarnation of the Iron Bridge Builder, Thangtong Gyalpo. Four nuns grabbed him and took him to the man for the blessing. The man looked terrifying, with long hair and nails several inches long. He scratched the young Kinga on the head, and Kinga still gets the creeps when going to that nunnery.

*

LAMA KARMA

I was sitting in the sunny square beneath the clock tower in Thimphu, reading the Bhutan Times, when a monk approached; a short man in crimson robes. He had long hair, because he had spent four years in a cave (actually the norm is 3 years, 3 months, 3 days; all the monks who do this do not cut their hair). His name was Lama Karma (Karma being a common name here)-- we had tea and oily cabbage & carrot pakoras; talked about the world. He lives between Nepal and Bhutan, is trying to get a Spanish visa. Discoradical transglobal. We walk up a mountain, see Thimphu fading in the afternoon sun. "Do you want a special friend in Bhutan?" Everyone everywhere is such an operator, even the holy men in the most protected countries of the world.

I asked the lama about the doma, the betel nut, that stains the streets a burnished red. "Well, this is because people used to eat people." The gods gave us betel nut instead, to satisfy this craving. The nut is the flesh, the lime is the blood, or something like this. Betel: It's Better Than Cannibalism.

*

THE HOT STONE BATH

So I was at this farmhouse, fast asleep in the afternoon sun after two days in a row of 3am flights, and a boy wakes me up. He wants me to go have a hot stone bath. I can't make sense of this so I get up, blinking. We climb down a ladder to the muddy yard, and enter a shack (below), which has three wooden bathtubs. The mother puts hot stones, volcanic rock warmed over a fire, into the water. I lie there for awhile, listening to the cows, and then climb out. It was a good bath, but perplexing.

Then the teenage boy explains that twenty tourists are coming for a bath at 6 o'clock, the traditional Bhutanese Hot Stone Bath. I cannot picture twenty German or American tourists taking baths in this small building; cannot picture their perplexed expressions, but it is not my business.

The next morning the family-- grandmother, mother, daughter, son-- are sitting on the smooth, worn wooden floor, drinking hot milk (hot from the cow) and eating home-grown fried rice for breakfast. We are watching the coronation of the king. He has just received the crown. Everyone talks excitedly in Dzongkha and laughs. "We are laughing at the crown," someone explains. The crown is shaped like a raven and is very sacred. "It's very heavy. So the King has already taken it off." The crown weighs 7 kg. It is a lovely family moment.

"What about the tourists?" I can't help but ask before I leave. "Did they like the bath?"
"No, Holly, they didn't like it," the son says, seriously. "It was too compact."
Some experiences just don't translate to mass tourism.

*

LUCK

The betel-nut-stained astrologer at a temple affirms that I have had an unlucky year. To counteract this, he sells us a string of prayer flags. We hoist them on the hill with the antenna with the tangle of other prayer flags.

*

I went to another temple, where two footprints were worn into the wood. They were from a man who had done a million prostrations, his faith carving the smooth wood.

*

BAR-HOPPING IN THIMPHU

First we hit the Hub Bar, a basement-space with ambience... no smoke, because Bhutan is the first country to ban smoking & the sale of tobacco altogether. They burn incense instead, for the ambience. We sit at the bar drinking Hit beer. Someone orders me peanuts, which turn out to be peanuts soaked in spicy oil with raw onions and peppers. The television breaks from the BBS broadcast of the coronation celebrations for a long anti-drug program: "The story of a youth's journey towards doom." The Bhutanese teenagers on their way towards doom step out of a car, hip-hop thumping in the background. I look around the bar; it's the kind of semi-artsy place I could feel at home in; a lot of people in the Bhutanese film industry apparently come here. On one wall is a classical Buddhist dragon-monster surrounded by skulls; it looks like a heavy-metal fusion, but it is actually a traditional painting. The monster is next to a picture of Bob Marley. There is also a faded plastic Christmas tree, planted in a rusting can that once contained Paneer Cubes. An illuminated picture of the King in his traditional yellow robe sits over the bar. He is young and good-looking, King Wangchuck, he could have been a film or music star, if he wasn't His Majesty, I think to myself.

The Boomerang Bar, my favorite locale: it's a place where people crowd around, generally buying nothing, and watch people dance. You can sing, too, but most choose to dance: two, three, or four up on the small stage in front, which is really just a slightly-elevated platform with some carpets. The girls wear the traditional kira and dance to this music in Dzongha, but with a modern beat... the songs are very sweetly sentimental, love songs, except for the one "Coca-Le-Co", about a rooster. The groups of dancers practice their dances at home, and all do the moves in synch; it's amazing how they remember them all. The bar owner convinces me to do a Nepalese dance with her, even though I protest that I don't know the moves. A young actor named Tashi charms me with his longish wild hair. Random young Bhutanese come over to congratulate my dancing: "I thought you were Nepalese!" It was lucky for me that the Nepalese style turns out to be very close to how I naturally dance: who knew?

Next: a kareoke bar, which features some videos shot right here in the Tiger Pub. We drink Tiger Beer from Singapore. The crowd is more upscale, somehow, older, less bohemian. There are plenty of cheesy Bollywood videos to sing to, as well as sentimental American tunes with mystifying graphics that don't connect up: a man in an American gas station and a classic car paired with "Have You Ever Seen the Rain"; Phil Collins and "Another Day in Paradise." "Bhutan is a paradise!" a semi-drunk Bhutanese man in a denim shirt affirms to me. Yes.

Some other joints: crowded, smoky, girls come up and dance close to me, this is normal here. "Remember me?" a girl with a tight white shirt appears, wiggling in my face: I don't remember her from anywhere. It's also normal to dance in a small group; nobody dances alone. At "Club Ace", the most renowned disco in all of Bhutan, Bollywood hits are mixed with British techno. A young man apologizes to me that the discos here are not as "developed" as in my country. I tell him, over there, people are too concerned with looking cool so they don't have any fun-- it is more fun to be in a Bhutanese disco. Although, this one isn't to my liking at all: the girls wear pointy shoes, a drunken-conniving look in their eyes, they are the first women I have seen in Bhutan like this. For the most part, the women in the country seem wan, yet hearty, honest: not dolled-up as in other parts of Asia. Not so much lipstick & heels, here: but I wonder if the dolled-up look will catch on, or if Bhutanese women will be able to reject it for something simpler & more comfortable, more practical for navigating the unsmooth streets and fields...

*

THE ROAD OUT OF TOWN

mountain kingdom

2008-11-06T14:19:00.002Z

Singapore

2008-11-06T14:18:00.001Z

I spent a week in Singapore awhile back, a week that dissolved like grains of sugar in weak tea // here are a few fragments from this city, which I consider to be the true twenty-first century city.

Once a rule sighted a strange beast that he assumed to be a lion, and hence Singapore got its name: the Lion City. A city named for a mistake; a city that was always a site of transglobal commerce (or so the travel computer on the Airbus 380 from Narita tells me).

There is an island here that used to be called something like the Island of Death from Behind -- it was a prison island-- but in the 1960s they had a contest to rename it; now it's called Sentosa, meaning Tranquility. You take a monorail there, to the simulacrum, and are greeted by exuberant calypso-esque music; the manicured gardens scream with cicadas, and off the white beach of sand bought from Indonesia, tankers fill the straits-- An oil refinery looms in the distance-- It's my twenty-first century nightmare-- But at least they tried to make a playground for the people-- Some utopian impulse at work there, though terribly misguided--

On my last night in the city, my friend treats me to a ride on the Singapore Flyer, the world's largest ferris wheel (until Beijing opens one in a few months)... It takes 35 minutes to make the rotation. It is raining.

You have little context for this photo (besides what I wrote above), yet you can vaguely tell it is of something Important & glorious, no?
In a 4am taxi to Changi, I stare at the television inside the seat in front of me, watch repeats of a commercial for Global Handwashing Day. There are sort-of-headlines, wannabe headlines, information-fragments that stream past on the top of the screen. IN KAZAKHSTAN, THEY EAT, DRINK, AND RIDE HORSES. Or, AIRCRAFT MAINTENANCE IS AN INDUSTRY WITH $1 BILLION GROWTH POTENTIAL. signal/noise floating past in the sultry night, blurred skyscrapers blinking past in the unstarred night, you can vaguely tell something important and glorious is unfolding in this city, in this century, but you can't make sense of it; the whole thing crawling past contextless, speaking indirectly to a silent viewer--

second impressions, Bali

2008-11-06T14:17:00.001Z

One day there was a cremation; the streets clogged with celebrants. I watched them building this tower all week in the main intersection, to race down the street with, shouts and clanging-- Death as celebratory occasion.

There is always some suggestion behind each wall, each glance, each gate.

There is a temple here with a holy spring. The water bubbling up-- blue, sparkling gray sand, within the ancient rock pool-- maybe have been the most sublime thing I've ever seen; no exaggeration. It looked like life itself; it was life itself, revealing itself so simply--

You bathe there, clothed in sarongs, everyone together in another pool, with several spouts gushing water from the stone walls. The spouts are laden with offering baskets, fragipani & incense & crackers piled high; you step into a cool pool of petals, holy debris floating on the surface, orange koi swimming below-- and you wait in line to wash from each spout, going down the line and dunking your head in the waters, becoming purified. Old women, young men with tattoos, babies carried by their father, shivering people unaccustomed to cold, becoming pure together--

Already I miss waking to the sounds of cocks crowing, of people sweeping the ground with branches lashed together.

Impressions, Bali

2008-10-31T05:40:00.002Z

"America is a very big island." I couldn't agree more. The man was chatting with me about Obama. He hopes Obama will win, because then his friends in the U.S. can help him out again (so they told him); it's been two months since they sent him any money.... Stopped by an art gallery by the side of this track through the rice field to have a thick Balinese coffee, with grounds & palm syrup. There was a stooped old man with a toothy smile, mouth red from betel nut, I liked him so I stopped, and of course the guy with the motorbike sat down to talk about Obama and his personal hardships. I didn't even want to be on that side of the river in the first place; it was a long story involving water buffalo, a family compound I didn't want to walk back through, a bamboo bridge, etc. It's impossible to be alone here, especially when so many people have their petrol tanks on empty; you take the shape of a full petrol tank; so many shapes one can take--

Fragments::: Exercises in making sense--

One man is working away at the edges of the field with a hoe, collecting eels. He keeps them in a blue plastic bag. They are good fried, apparently.

Cooking lessons--

"What you call this?"
"Butterfly."
"And this one?"
"Dragonfly."
"That one is good to eat."
"How you eat it?"
"Fried. With coconut."

We walk one morning in the rice field & I say, I will be sick if I don't take water. My friend commissions an old farmer with a sickle to climb up a tree and hack down a young coconut for me; through the gash, the water is sweet. Later there is a downpour; he chops off a banana leaf for an umbrella. Abundance.

Poverty: a boy of about nine strokes my arm, "Money, darling, money." They learn to pick up foreign women quite young. I have one twenty-one-year old texting me messages of love every night: he dreams of me, he feels sick, he can't sleep. There is one corner, by the football field, which is particularly bad, but to avoid the corner is so out of my way in this town that I usually just bear it. The kid in the orange-and-green jacket with the Eurotrash hipster haircut is twenty-six, I know, he offered one time to show me his ID; last week he was sitting on the step talking with a woman who had stringy gray-streaked hair. He winked at me as he went past. I guess he was feeling like it would be a lucky night. Another friend assures me that he's not a "cowboy", as they call him, though he does have twenty-five year old friends who meet ladies of sixty-five... It's a bit more nuanced than prostitution, though, because the foreign women that come here are not plainly looking for sex: they also want to be loved, romanced a bit, to feel special. At any rate, though, it's a bit strange to walk the streets with these boys basically offering themselves up for sale to you. Perhaps this is how it must feel to be a man, approached by beautiful women who are just looking at you as a walking dollar sign, knowing that you are not really valued as a person... market rules all.

There are many flags and signs for the election next year: yellow and red, a bull with black horns, the politicians looking angelic, portrayed with light, a holy air. "If you vote for that one," a friend points out, "you get 50,000 rupiah." Five bucks. Not bad, in a place where a hotel room-cleaning boy makes 350,000 a month-- about a dollar a day for eight hours at work.

Sitting in a cafe with a delicious blueberry lassi... Listening to a Bali-travel relationship play out at the next table. Foreign man, perhaps Japanese, unattractive, gold watch. Balinese woman, pink toenails. The man/woman script is made even more cliche by the simple English, for of course neither of them are speaking in their native tongue. If I leave you If you leave me Let's talk about this. Laid out point-by-point. They have known each other two or three days. "I don't marry you because you are good-looking and sexy. Just one of many reasons." You could infer the whole conversation just based on tones and inflections; you wouldn't have to make out the words to make them up. "How old do you think you like to have baby? At what age?" She is ready now. These matters are so uncosmic, stripped of any glow, mystique, glamour. But perhaps life is simple like that, here; not so many grand expectations out of Life, not the pressure to Make a Life... He tries to convince her that home is wherever you go. That you can make a home anywhere and you just follow the opportunity. "Maybe I make some business in Sumatra, a contract over there, we move over there. Maybe Surabaya." I doubt he realises that these islands are different, or that home means family to these people. The transglobal ideology is proving a tough sell. She hasn't taken off her purse throughout the whole coffee; black strap shiny across pink shoulder--

"Up through the turn of the twentieth century, more than half the European men in the Indies lived in domestic arrangements with native women."

*

But I am not doing justice to the beauty, the richness of life here. Hardly anyone asks for money outright; the smiles are genuine. A gracious and gentle spirit-- the religion is strong. Always people making offerings, rice and flowers in little baskets... unlike in so many places, colonization did not break the religion here. People believe in karma, they believe in doing good. I've never seen anything violent or mean, here; the first place in the world I've been which was like this... I mean, I guess Japan is gracious and gentle too. But not on this level.

"People are perceived as poor if they eat millets (grown by women) rather than commercially produced and distributed processed foods sold by global agri-business. They are seen as poor if they live in self-built housing made from natural material like bamboo and mud rather than in cement houses. They are seen as poor if they wear handmade garments of natural fibres rather than synthetics. Subsistence, as culturally perceived poverty, does not necessarily imply a low physical quality of life. On the contrary, millets are nutritionally superior to processed foods, houses built with local materials are far superior, being better adapted to the lcoal climate and ecology, natural fibres are preferable to man-made fibres in most cases, and certainly more affordable. This cultural perception of prudent subsistence living as poverty has provided the legitimisation for the development process as a poverty removal project." -- Vandana Shiva, Staying Alive

When are we going to talk about creating abundance? "Rather than eradicating poverty, I mean-- such a better way to frame the problem. "Eradicating poverty" as a millenium development goal just continues the aid-relief cycle, by the way that it's framed...

but, back to Bali:

Bali is not poor; it is one of the healthiest and safest places I've experienced. Rich in life, spirit. Hopefully, it can continue to be so; its status as a cultural tourist destination may give it some protection from "development." Hotels and villas may continue to encroach on the rice fields, but the place is too strong to be "developed" in other ways... I think this development thing is an old story, a tired story, a very twentieth-century story, by now. What comes next?

I know what comes next, but not how to get there. What comes next is recognizing that traditional people had a lot of really smart ways of doing things... agriculture, building, etc... and learning from them, combining their methods with the best of our technologies to create decent lives. It's really simple, and yet, I can't figure out how to do it, how my life can help to do it. Whatever train we're on seems so fixed on its tracks, but this must be an illusion. Whatever train it is, though, it's global-- But there are still people watching it from the fields, farming their rice-- It affects them because it churns through their fields-- But it runs out of power-- Maybe the passengers can hop down, leave it to rust, before it crashes--

Japanese Tones

2008-10-20T15:40:00.005+01:00

One:

a high, manic vibration
the sonorous totality that emerges from the Pachinko parlor,
or the cuteness. The graphic design: smiling fishes, cartoonification. The exclamation points! The schoolgirls posing with peace-signs for photographs. OK!

The school bunny...

The cute train. OK!

Two. But there is also a sleeker side; quieter in a swooshy modern way. Displayed in the bullet trains, of course; the plastic-and-metal kind of order...

Three. The hushed, reverberating tone; quieter in a deep way. The lowest tone of Japan, underlying it all, I like to imagine... before the more recent tones added to the mix...

altogether, a sonorous place; not quite harmonic enough to be called a symphony, but fascinating in its notes--

Hakodate Again

2008-10-06T13:00:00.004+01:00

I am thinking of how you counted each time I said your name aloud.

I order noodle soup in a restaurant. The cook brings me two acorns and sets them on the table. I do not know why.

Where are we going?

Sleeping on tatami mats. Waking up with the gong at dawn.
The monk makes an English translation for me of the morning ceremony.
Apparently there is a god sleeping in the graveyard. When he wakes up, when the Buddha comes, the pure will go to the Pure Land. Something like this; some esoteric sect.

This afternoon etched in my mind. The yellow orchid unfurling at an empty table.

I dreamed the colours of the light, the rainbow.

Why don't we take hold of what is important? Because we are afraid.

Driven Towards the Future, on Two Wheels

2008-08-06T20:50:00.004+01:00

Recently, Toronto police busted an alleged bike thief - the notorious Igor Kenk. Reports of new warehouses and discoveries kept coming in, and the recovered bikes began to number in the thousands.

Q: Why did Igor Kenk keep 2,800 bikes?
A: Because he knew the post-oil apocalypse was coming.

Read more . . .

Good news!

2008-08-01T21:03:00.003+01:00

The Guardian reports that the Aral Sea restoration plan is working.

"One of the 20th century's great ecological disasters has been partly reversed, according to a report that claims the waters are rising once more in part of the Aral sea.

...

Now, the salty drying waters which had dwindled and contained only a single species of fish, host 15 different species of fish and more birds, reptiles and plants, says a report by the Kazakhstan government.

Fishing has also been rejuvenated, and a second phase of the scheme is underway to restore pasture and improve grazing.

"The return of the north Aral sea shows that man-made disasters can be at least partly reversed, and that food production depends on the sound management of scarce water resources and the environment," said the World Bank president, Robert B Zoellick, in a statement released through the government."

from jajouka, with love

2008-07-10T20:10:00.003+01:00

a man from an ancient musical tradition spoke to me from his village of Jajouka, Morocco-- regarding the power of the music, its history, and its future.

see...

an interview with Bachir Attar, Master Musician of Jajouka

Toronto

2008-07-04T16:14:00.003+01:00

Global finance, a coda: Continuing to explore why we view economics as both boring and terrifying.

2008-06-23T14:10:00.005+01:00

So, we were discussing why economics is viewed as boring, when it's really pretty fascinating stuff -- and we were thinking about how to put the life back in it, how to re-imagine this discipline which has gone stale.

Re-imagining the entire discipline of economics may fall on the shoulders of the media. Alas, there are institutions that have a stake in presenting economic information in a certain way. An ignorant populace is an easily manipulated populace.

I am not claiming a conspiratorial "they" that consciously controls these media images, but the fact remains that the way the subject now is presented (boring, in the realm of "professionals") is very useful to the people presenting it-- the corporate media, etc. Economics news coverage is pretty interesting in that it's alternately presented as some incomprehensible mess of numbers, or it's presented in a way to incite fear: two very different reactions to the economic news. Either it makes your eyes glaze over, or it terrifies you. Isn't it possible to learn about what's going on economically in a way that's measured, yet engaging? Apparently, not when the people hired to inform you have an interest in you being bored or terrified about the economy.

Let's look at the Money section of USA Today.
We've got "'Shocking' slump: Industry pros see Detroit steering into a skid." We've got "Stocks extend losses in bruising volatile week as Dow drops 4.2%". And we've got "German man torches his car to protest high gas prices." Bruising? Metaphorical car crashes? Torching? It's looking violent, and scary. They take the humanity out of economics, conceptually, and insert it back in how they choose: in the language of pain & injury. I mean, really read into this stuff sometime.

But the blame for our bored/fearful state doesn't rest just on the media; we have our own psychic filters when it comes to economics. I mean, we have a way of thinking that kind of glazes over it and tunes it out. If you don't get what I mean (I've phrased it a bit imprecisely), go and observe the reactions of people when economics gets brought up in conversation. If people do get excited about it, they don't usually relate it to their own lives, or look at it as concerning moral issues. This is partially because our ways of thinking have habituated us to a certain kind of economic environment where we take certain things as given.

John Maynard Keynes: "The power to become habituated to his surroundings is a marked chracteristic of mankind. Very few of us realize with conviction that the intensely unusual, unstable, complicated, unreliable, temporary nature of the economic organization by which Western Europe has lived for the last half-century. We assume some of the most peculiar and temporary of our late advantages as natural or permanent and to be depending on, and we buy or plan accordingly."

He wrote that in 1919, by the way: uncanny, no?
However, I think this is changing: that economics (and oil) are starting to come to the attention to the middle class, and thus the media. Increasingly, we will see economic matters viewed as public issues (more so than before) now that they are starting to affect people in a measurable way. But how will we see them? I think it will be through the lens of fear, again. It gets scary when the middle-class becomes poor... (to the middle-class anyway, most of the world just deals with it) because they thought they were invincible, a few decades ago. Like the tone of this CNN piece on an older woman who lost her condo and now has to live in her SUV. "'She added, "The way the economy is going, it's just amazing the people that are becoming homeless. It's hit the middle class."" As if the middle-class was some sacred, untouchable thing-- There are psychic markers with gas prices, too-- Then reality shifts, and a new norm is adapted to. It is interesting to watch how reality shifts, because this is where possibility comes in. (This is the psychic premise of economic "shock therapy", but I've always argued that reality shifts can be used to positive ends, if we were as smart as the financiers to take advantage of them).

How did we get so accustomed to a certain way of viewing economics and the world? Charles Derber in Corporation Nation attributes it to what he calls the corporate mystique; "the main recipe for how to think, and live in a corprate world ... an ideology, which for decades has effectively disguised the rising power of corporations in our lives." Pointing out that "the personal identity of today's worker, consumer, and citizen is becoming a corporate construction," he asks where we get our dreams and opinions... in great part, they are subtly given to us by corporations. They have a huge part in manufacturing our very identities. This works at a very subtle level, even for those of us who think we are aware of it.

"It is impossible to underestimate the extent to which one's own moral integrity and sense of self-respect stem for how one is situated in that world, and the extent to which most of us are involved as both agents and targets of corporate power."

So, in great part, we are the ones manufacturing our own limitations. Furthermore, as Derber points out, we see corporations as the source of our creature comforts, so we often view them in a positive light... as benefactors.

We are psychically tied up and invested in this corporate economic system, even when it is working to destroy us, and the planet. (I know that last sentence sounded melodramatic, but I mean it quite matter-of-factly.)

Who makes the information you get on the financial system? All the headlines are manufactured by corporate media conglomerates. This is a huge issue, because so much of what goes on in economics is about mood and confidence. If they manufacture a certain mood, things either glide on when they logically shouldn't, or things fall precipitously. Who controls the mood controls reality: few other fields actually work this way, but economics seems to. Right now the mood is anxious: Derber calls the middle-class "the anxious class."

But consumer confidence fell more than expected in June, hitting another 28-year low as surging prices and mounting job losses contributed to a bleak outlook, according to a survey Friday.

"Moreover, gas prices have risen to an all-time peak, food prices posted the largest increases in decades, home prices have fallen faster than any time since the Great Depression, and there has been widespread distress associated with foreclosures," the report added.

Distress. Falling confidence. Bleak outlook. Mood. The phrases above are from a USA Today article on the economic stimulus checks, but I could manufacture an article just as easily off the top of my head & convince people it was true. All you have to do is use words like "worried", "turbulent", etc. a bunch of times. At this point I sound like I'm just bitching, but really: there are implications to constantly being exposed to fear-formula news.

How will this anxiety be eased?

There's a very powerful psychological mechanism at work to simply trust in the corporate world, in the world of global finance, that everything will be sorted out.

But why trust them? It doesn't even seem like these guys are very smart. If you look at what they are doing, it is not very smart. In fact, it is like children. In deregulating the futures system in the way that they have, and running up the national debt like teenagers with credit cards, and failing to invest in alternatives to oil, both our politicians and economic experts have displayed an extreme lack of discipline and maturity.

Childhood is when you think about the short-term; you have your mother to step in and regulate your candy consumption because she knows in the long term it will be bad for you. Maturity is when you are able to plan for the long-term, and disciplined enough to follow your plans. As a society, we are quite immature, and we will be forced to grow up fast. It's looking like a painful adolescence.

The Final, Short List.

What does one do, in 2008, when faced with global economic difficulty ahead?

the most important thing -- is to truly assess your needs -- find worth, value, in meaning in things that are free -- break the mental shackles.

We control our moods; we don't have to accept the mood given to us by the media.

I think the individual psychic work to be done is just as challenging as the practical work. It will help immensely to have other people around you who are thinking as you do: only through group shifts in thinking can we really re-imagine economics on a scale large enough to do something about it.

smart things to work toward, practically:

-- figure out a way to make your voice heard on financial policy
-- get out of debt
-- put yourself in a situation where you don't rely on auto transport
-- put yourself in a situation where you can produce your own energy needs and grow a portion of your own food
-- become part of a community that shares expensive items, like cars or lawnmowers or kitchen appliances or whatever

Maybe it is a good idea to move towards this now, or at least continue to educate yourself on what's really going economically, so you can face these weird news reports without the fear they're intended to produce: information is, to some degree, confidence.

Granted, most of the ideas above are just common-sense provisions for damage control once the whole economic system is already really screwed up. As far as being able to influence the policy decisions to keep things from being totally screwed up... I honestly don't know the best way to do this. I've been basically arguing this whole time for greater citizen involvement, but I suspect it won't come quickly or easily, given that the people profiting from the status quo don't want citizen involvement. Persistence and ingenuity, I guess: if you have any ideas on this problem, comment.

Adventures in Global Finance [Part V]

2008-06-22T14:16:00.003+01:00

What the Future Holds

the future a cradle, holding / the future soil, holding . . . life? / the future a used mine, holding nothing? / the future a hand, holding . . .

...actually, everything written in the posts prior to this was just a prelude to the really interesting questions ahead.

But first, an important note: none of this is trying to be prophetic. I'm someone who looks at the evidence I can find-- from the best sources available-- and extrapolates conclusions from it. I encourage you not to believe anything I say, but to do your own research & extrapolate your own conclusions, so you can make the best decisions for your life-- decisions which take into realistic consideration the future facing you, your family, your country, your planet. My main argument to this whole piece, if there is one, is that we should think about and understand global finance. We should make educated financial decisions on a personal level, and elect people who actually have economic intelligence and solutions.

I think there has been a semi-deliberate attempt to obscure understanding of our financial system.

It's surprising that we consider ourselves educated people, yet we don't understand the basic workings of finance. We can have advanced degrees and explain deconstruction, and do fancy stuff with computer programming, yet most of us don't know that the financial system was deregulated, and couldn't give the definition of a futures contract. But which of these things affects our ability to buy food?

Why do we view a system that's so vital to our very lives as something peripheral and boring; why do we pay it little attention? This is, at first glance, very strange.

Part of this economic ignorance can be attributed to how we think about economics: we think of it as existing within the realm of experts who somehow know what they're doing.

I would like to re-imagine how we think of economics. These "experts" we let handle the whole thing are not experts, but experimenters, who are playing a vast game with our entire society (often much to their own benefit). And there are moral consequences to that. When people in Haiti are scouring garbage dumps for food, that's a moral issue.

There's an example in The Shock Doctrine that I think back to, when Margaret Thatcher goes to Thailand and comments on the sad, immoral situation of child prostitution... yet it was economic shock therapy contrived by economic policies, where the Thai baht fell and the IMF intervened, that resulted in the child prostitution. It didn't exist on that scale before.

We need to see economic decisions in context, linked with morality. And, as many have called for, a different way of measuring economic figures which takes into account environmental and social costs [see the Genuine Progress Indicator, etc.]

So, that's a brief look at how we think about global finance: boring, mathematical, disconnected to us, with little awareness of the moral implications of policies. But the question remains: why do we think about it this way?

To a great extent, why we pay so little mind to finance has to do with the way the information is presented to us. The public school experience does little to get us excited about economics, and the current media presentation of it is terrible in many regards. What's your reaction, when you think about the business section of the newspaper? What's your reaction when the business news comes on the TV? Think about it; now think about why you have that reaction.

Economics takes place in a whole other discourse community that not everyone is allowed to access. The language used is specialised, and most people aren't initiated to what the words even mean. And the imagery is equally exclusive: look at any business media, and you'll see a lot of men in suits. If you're not a man in a suit, you learn that this is the province of men in suits. Furthermore, it happens in the "business" section. I'm looking at the cover article in the business section of the Globe and Mail, which is on "The Cost of the Next Barrel." But the subject matter covers an issue that affects everyone in innumerable ways-- it's not just about "business".

We have this image of economics and finance being boring -- but really, what is boring about this stuff? Figuring out how we are going to move and eat this century is fascinating. Figuring out how people around the world can live in a healthy, sane way is the most interesting challenge our species has faced. These things are basically about economics: its finance that determines so much of the changes in our societies, in our environments, etc. And yet we've left these fascinating challenges up to a few not-that-smart guys, because they sold us the image of it being boring.

Finance is boring because it has had the life drained out of it. As living beings, we are much more attracted to things that have life and color and energy than we are to things that have the life sucked out of them.

Of course, it was draining the life out of economics that enabled the system to be the way it is. Reducing matters to numbers, instead of human issues. We don't say, people in country X are suffering and they slave away in factories to produce our cheap goods. We say, the average annual income in country X is $1261. If you go to these guys and put it to them like -- your social security policies are ensuring that your children will have worked their whole lives and not see a dime of the money, and you are spending the credit of your children -- even if they're evil schmucks, they won't say -- Oh, that's okay. But we don't put it in those terms, even though those terms are true. We put it in numbers and specialized language that the average person doesn't understand. In this way, finance is separated from life. What we need to do is put the life back in it; reconnect it to the whole. Economics should not be some distant branch of knowledge: economics comes from eco, as does ecology, from home. It is truly at the heart of things.

[To be continued...]

Adventures in Global Finance [Part IV]

2008-06-14T14:57:00.006+01:00

Coming towards Conclusions

Basically, my only real aim with all this financial writing is to point out that...

-- the economy is not a scientific, rational, proven thing run by experts who know what they are doing... but a wild, human experiment
-- the ways global finance operates now are quite different from even a decade ago, and nobody knows what effect the changes will have: this is all new
-- there is a great amount of public ignorance or misunderstanding, which (whether intentionally encouraged or not) works to the advantage of the people manipulating/profiting off the system-- and to your disadvantage.

There are four obvious factors that will make times ahead tougher, economically, than what the last two generations have known. In this piece, we'll look at each in turn, and then in in a final part (I know I said there would be 4, but I lied) we'll wrap things up with a picture of the future... and how to make it rosier despite some challenges.

The Four Horsemen of Economic Gloom

-- Bad financial policies
-- Debt
-- Shifting demographics
-- Oil

the horseman on a stupid horse: Financial mismanagement

Even if these policies weren't enough to force us into a crisis, they will certainly make it harder to deal with the other factors in the crisis: the shifting demographics, for example, could have been forseen and planned for with smart financial policies.

We've already began to look into bad financial policy (that's so vague-- "irresponsible policy", maybe?) in the last post, where we examined the role of speculation in the food crisis.

Let's briefly attempt to understand another example-- the subprime loan lending mess. (If you already grasp what happened and are sick of hearing about it, please skip ahead, but if you're wondering what that was all about, here's another chance for a readable explanation.)

Basically, lenders got borrowers to take out mortgages without taking into consideration whether or not they could pay it back -- sometimes hoping, in fact, they wouldn't pay it back, but that they would have to refinance into mortgages that would generate even more money for the lenders. These customers were called "subprime" because they were in more difficult financial situations, but at this time, lenders loved them because they could charge them more than "prime" customers.

Credit comes from the latin creder -- "to trust, believe". (Like "creer" in Spanish; like "credible.") Credibility costs-- the price of credit (the interest rate) -- is based on alender's belief in the borrower's willingness or ability to repay the debt.

(It is worth noting that 61 percent of subprime loan customers could have qualified for less expensive conventional loans -- they just didn't know it, which is another reason we need better education & understanding of finance.) (See this Washington Post article, which I will paraphrase below.)

How did this irresponsible practice how did this turn into a major upset in the global economy?

It was caught up in another irresponsible practice: that of selling these shaky subprime mortgages to other transglobal investors. From the Post article:

Mortgage finance giants Fannie Mae and Freddie Mac -- companies chartered by Congress to finance home lending -- bought home loans from banks, then bundled hundreds of them together to secure a bond, called a mortgage-backed security. Wall Street investment bankers bought the securities, which then traded freely in the bond market. For a fee, Fannie and Freddie guaranteed the mortgages behind every security against default, so they required lenders to assess each borrower's ability to repay a loan -- a prudent practice known as underwriting.

Fannie and Freddie's underwriting rules are the gold standard by which lenders evaluate the creditworthiness of "prime" borrowers, people whose strong credit histories make them a low risk and therefore eligible for the lowest borrowing charges.

Fannie and Freddie competed fiercely with each other to create these bonds at the best price, paying less and less for the loans they bought from banks. Securitization became so efficient that it shaved profits in the prime market paper-thin. In response, by 2000, a market had sprouted to lend to "subprime," or higher-risk, borrowers, who could be charged more for loans.

...

The private-label, subprime bond market grew from $18 billion in 1995 to nearly $500 billion in 2005. Wall Street sold subprime everywhere: to public and private pension funds, foreign governments and financial conglomerates, even fishing villages in the Arctic Circle.

(How did this happen? Well, it wasn't just commodity trading that was recently deregulated--
in 1999, the Clinton administration repealed the depression-era Glass-Steagall Act. The act had made sure that banks wouldn't use the money of depositors for investments other than loans, but after the repealing of the act, banks could form superconglomerates and diversify into other investments (see this PBS article about how the act was dismantled, with Citicorp playing a lead role in this.)

What happened, of course, is that the housing boom (which had in many ways driven this whole thing) slowed. Home appreciation and refinances of mortgages slowed, and eventually people who took out these loans couldn't pay them back, and the investment funds and banks who had bought their risk lost lots of money.

And what happens when a bank loses a phenomenal amount of money?

This topic is an article in itself, so let's be brief: British bank Northern Rock lost big on the crisis, and got nationalized by the British government. Swiss bank UBS saw its shares drop by half. In the case of New York investment bank Bear Stearns, it got bailed out for 30 billion dollars in a transfer to J.P Morgan Chase, arranged by the federal government. It wasn't that Bear Stearns was a super-important bank, but its collapse would have had reverberations throughout the infrastructure... however, we can't count on the Fed to step in and save all the banks. Let's talk about the Fed for awhile...

the horseman on a lame horse: Debt

Let's examine for a moment how the federal government handles its money.
Or, your money, our money -- we should seriously start thinking of this as our money, and take an interest in what's done with it.

You probably know that the government is in debt.
Do you know how much debt?

About $9.4 trillion dollars.

Aside from being a really big number, this signifies two notable things:

-- We have to pay interest on this debt. Yes, people have been investing in America because they get interest payments on the Treasury bonds they're buying. This year, the interest we owe comes to an estimated $459 billion, $244 billion of that which has to be paid out this year. (For comparison, we spent $583 billion on defense, $68 billion on education, $23 billion on energy, $52 billion on housing and urban development, $7 billion to the Environmental Protection Agency. So just the interest on this debt was far more than education, energy, housing, and the environment combined.) Plus, when the economy slips, we still have to pay our interest... so all the other stuff is what gets cut.

-- If confidence in America's economy falls (it is right now), investors might stop wanting to hold our debt and our dollars. (So much seems to depend on mood... & our brand name isn't the hottest this year.)

Who are these investors, and what happens if they don't think it's a good idea to finance our debt anymore?

About half of the debt is owned by our own government, bought with money that's supposed to be used for Social Security (which is a situation too weird for my limited powers of explanation; apparently there is $2.2 trillion dollars in a Social Security Trust Fund, but debate exists over whether or not this money is fact or fiction).

However, lots of people besides our own government own our debt-- foreign governments, foreign corporations, foreign individuals; also U.S. citizens who have bought treasury bonds, etc. (See the Treasury Statistics).

(MSN, not my favorite media outlet, but... has a very readable article on this topic. Also see the Debt Clock. Also, there's a funny (fake? real? legit government or pseudogovernment) government FAQ about the debt that tells you where you can send a "gift" to reduce the public debt [shady, no?])

How do we deal with this debt? Well, we could print more money.
Here I'm going be dubious and quote wikipedia's entry on the U.S. public debt, because it's quite well-done:

United States Dollars are essentially a commodity on the world market and the value of the dollar at any given time is subject to the law of supply and demand. In recent years, the debt has soared and inflation has stayed relatively low in part because China has been willing to accumulate reserves denominated in U.S. Dollars. Currently, China holds over $1 trillion in dollar denominated assets (of which $330 billion are U.S. Treasury notes). In comparison, $1.4 trillion represents M1 or the "tight money supply" of U.S. Dollars which suggests that the value of the U.S. Dollar could change dramatically should China ever choose to divest itself of a large portion of those reserves.

So, if investors did decide to stop financing our debt, all of a sudden the dollar could drop. (They probably won't do this, because they have a lot to lose when the dollar drops, too).

But what happens when the value of the dollar drops? It results in more than you having to cancel your European vacation, because your dollars don't mean anything over there... Though people who have lived their whole lives in this country have no experience of rapid currency devaluation, one can look at the experience of Russians or Argentinians to see what it's like when your money sharply declines in value. Not only can you not buy much at the store, but all the savings you've worked your life to earn are suddenly worthless.

As we read above, dollars are a commodity which is driven by the rules of supply-and-demand. We just briefly considered what a demand-dropoff would do to our economic situation. Who controls the money supply? That would be the Fed, or the Federal Reserve System, which you've probably heard a lot about. It was created in 1913 and serves as our central bank, tasked with monitoring the money supply and maintaining financial stability.

The Fed has this monolithic building at 33 Liberty Street, NY.
Apparently, 26m beneath it there is a vault
that bears the largest gold repository in the world,
with 500 metric tons of gold bullion.
It rests on the bedrock of Manhattan Island
(as the Fed says, "one of the few foundations considered
adequate enough to support the weight of the vault, its door,
and the gold inside." -- "To protect their feet from dropped bars, the stackers
wear strong, yet lightweight, magnesium shoe covers.")

On the building you can also read a nice story
about the farm of Mr. Jan Jansen Damen that used to be there.

There are basically two ways the Fed influences the economy: by manipulating the federal interest rate, and by printing money.

Through these actions, it influences the rate of inflation-- it has a legal mandate, by the way, to maintain stable prices. Not an easy job!

Congressman Ron Paul discusses what's going on with the dollar:

This decline in the value of the dollar is simple to explain. The dollar loses value as the direct result of the Federal Reserve and U.S. Treasury increasing the money supply. Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic-- which means the value of every existing dollar goes down...when the Fed sets interest rates artificially low, the cost of borrowing becomes cheap.

Individuals incur greater amounts of debt, while businesses overextend themselves and grow without real gains in productivity. The bubble bursts quickly once the credit dries up and the bills cannot be paid...the Fed steadily increased the monetary supply throughout the 1990s by printing money. Recent Fed numbers show double-digit annual increases in the M2 money supply. These new dollars may make Americans feel richer, but the net result of monetary inflation has to be the devaluation of savings and purchasing power.

But there's also other things influencing inflation and the worth of the dollar right now besides the actions of the Fed, such as supply/demand issues over oil, which we'll discuss later...

the horseman on an aging horse: Demographics

How much is the debt, really?
I just told you it was $9.4 trillion dollars.
But, in another way of thinking, it is actually $55 trillion. [See this article]

... the true national debt figure: $55,146,513,890,000.00.

This calculation of the national debt includes all the "off balance sheet" liabilities of the government, such as its promises to pay benefits to Social Security and Medicare recipients far into the future, as well as military and civilian government workers' pensions.

In other words, the true liability of the United States of America is not only the Treasury bills, notes and bonds we sell to finance our annual deficit and past deficits. To get to the true liability, you must include all the promises we've made to make payments in the future.

What happens when those payments come due? The demographic situation is the only economic factor that no-one really disagrees that we're facing: we know that the baby boomers will get older. When they do, we will have way more people retiring and needing health care-- making demands on the system-- that we will have people working and contributing to the system. This is a huge issue, and to give it a cursory treatment doesn't do it justice, but because I'm getting mired in this whole essay, I'm going to keep moving on.

horseman on a black steed: Oil

We're all pretty clear on the relationship between the cost of a barrel of oil and the cost of filling up a gas tank.
But besides driving... in what ways can oil really effect the entire economy?

-- The "green revolution" which enabled modern mass agriculture was born on oil: not just the huge agricultural machinery, but the fertilizers & chemicals used to produce the increase in crop yields, depend on oil. Higher oil prices = higher food prices.

-- Not just fertilizers, but all kinds of chemical products are made from petroleum derivatives: medicines, plastics, tires, and more. Higher oil prices = higher prices for plastic chairs, carpets, paint, etc.

-- Most of our goods -- not just food -- are moved around by ships and trucks and planes that run on oil. Higher oil prices = higher prices for everything that gets moved around.

-- A lot of our electric power comes from oil. Higher oil prices = more expensive to heat your home in the winter.

So far, merchants have been eating the cost of these increased expenses, but eventually they will have to pass them on to consumers. [Look to this NY Times article for more.] But basically, we will no longer have access to the cheap goods we are accustomed to.

For the small percentage of Westerners that currently are in the grips of a throwaway society, this will have good elements. We will owner fewer goods, of higher quality, and value them more: nothing wrong with that. Life could be enhanced. But for most of the world's population, the shock of dramatically higher prices for food, transportation, electricity, and goods will be impossible to absorb. Already, there are riots in many less-developed countries, and they could get much worse once countries like China, Egypt, and southeast Asian nations can no longer afford to subsidize gasoline costs. This situation will only grow more grave as the supply of oil declines (I'm not going to get into peak oil too much since I already wrote about it in 2005: suffice it to say that the situation's only become more evident). Can we transfer our infrastructure to something non-oil-dependent before oil gets scarce enough to be completely unaffordable? These are the great questions in life...

If you're concerned that all this is the wacky hallucinations of some girl on the Internet (I wonder from time to time myself), I would refer you to the updated UN report, "World Economic Situation and Prospects 2008". You can download the whole pdf, and it is quite readable for a governmental report. Here are the first two paragraphs:

In the wake of numerous challenges, the world economy is teetering on the brink of a severe global economic downturn. The deepening credit crisis in major developed market economies, triggered by the continuing housing slump, the declining value of the United States dollar vis-à-vis other major currencies, persisting global imbalances, and soaring oil and non-oil commodity prices all pose considerable risks to economic growth in both developed and developing economies. Additionally, the unfolding food crisis, which is not only a grave humanitarian issue, but also a serious threat to social and political stability in some developing economies, endangers the achievement of the millennium development goals (MDGs) by reversing some of the progress towards those goals made so far.

As with climate change, the poor & relatively "unseen" will get screwed the worst. While any of the things I've mentioned in these pieces could trigger a global economic crisis -- a stock market crash, a burst of the derivatives bubble, a loss of confidence & unwillingness to finance the American debt, etc. -- it is the oil-dependence situation that will be the hardest to recover from. I think we could mitigate the other things, even the demographic situation, with smart financial policy and open discussion... but to get our society off oil will require intense effort in all sectors.

At talks in Jeddah yesterday, Gordon Brown called the oil crisis "the biggest crisis facing the world" [The Guardian].

Coming next... looking at the future.

Adventures in Global Finance [Part III]

2008-06-05T15:09:00.006+01:00

From Derivatives to Rice Riots

To understand why the price of rice can double virtually overnight, we need to understand what kind of weird financial mechanisms have sprouted up in the past couple of decades.

The world is full of many complex, new "financial instruments."

(Could one say that as a musical instrument is used to play music, a financial instrument is used to finance something? It may or may not be analogous -- I can tell you simply that a financial instrument is "any funding medium".)

There are two main categories of financial instruments:
-- cash (like in loans, deposits, stocks) and
-- derivatives (which derive value from some other financial instrument or variable).

What's the biggest market in the world?

It's not the bond market (selling of debt/credit) -- that's worth about $45 trillion.
It's not the stock market -- that's worth about $51 trillion.
And it's not actual goods & services -- the world gross domestic product is about $50 trillion.

The biggest market in the world is in derivatives: at least $681 trillion & growing.

Derivatives are financial instruments or contracts with values that are linked to, or derived from, the performance of underlying financial instruments, interest rates, currency exchange rates, or indexes. In a simplified sense, a derivative links its holder to the risks and rewards of owning an underlying financial instrument without actually owning the financial instrument. -- FDIC web site

The main types of derivatives are futures and options. These are contracts to buy a certain good on a certain date for a certain price -- or for the option to buy that good on a certain date for a certain price.

from Wikipedia: A futures contract gives the holder the obligation to buy or sell, which differs from an options contract, which gives the holder the right, but not the obligation. In other words, the owner of an options contract may exercise the contract, but both parties of a "futures contract" must fulfill the contract on the settlement date.

Futures and options are commonly traded on commodities like wheat, oil, metals, pork, orange juice, etc. This kind of trading began in the US during the 19th century to help out wheat farmers -- it helped them ensure that they would get a certain price even if things went unexpectedly with the harvest. But futures trading on non-commodity things, like the interest rate, didn't begin until the 1970s; the rapid growth derivatives trading is even more recent.

Where are derivatives traded? On futures exchanges like the Chicago Mercantile Exchange, and also the NYMEX -- the New York Mercantile Exchange -- where every minute 1200 contracts are bought and sold.

The NYMEX went public in 2006 -- before then, it cost $6 million for a membership to trade there. It's electronic now, but also open outcry; traders have a special sign language they use to trade with. The human hand still has a part in all this.

But it's not just commodities that are traded-- derivatives have grown far beyond that. Futures & options can be traded on interest rates, stock market indexes, foreign currencies, etc. For example, people even trade in weather derivatives (an instrument pioneered by Enron); you can make money by betting on the temperature of a certain number of days. There's a $60 billion a year market in weather derivatives; one can imagine the unpredictability of global warming will increase this gambling market. It seems that many things that have an element of unpredictability or risk can be traded upon-- for these derivatives are basically a trade in risk.

Options, for example, come in flavors of "vanilla options" (the standard kind) and "exotic options", like rainbow options. You can, for example, put an option on an option. I am adding this extraneous information because I find it gruesomely amusing, at the risk of losing my readers, I am sure. But the points I want to make are:

-- Most of the financial activity going on in the world is in this kind of betting; nothing of value is created with these derivatives. For every $1 floating around the productive wold economy of real goods and services, there is an estimated $20 to $50 circulating in the world of pure finance, producing or creating nothing (Charles Derber, qtng. David Korten, Corporate Nation).

-- This is a new situation: it is only in the last decade that futures trading was deregulated, and that vital commodities really became speculative investments.

OK: believe it or not, that was just the beginning: the background necessary for this story.

Some questions to delve into:

What are the implications of these "exotic global speculative instruments" on our financial system?

As Charles Derber explains in his book Corporate Nation, we have moved into a state of 'finance capitalism', which is "dominated by financial rather than nonfinanical corporations and reifies the pursuit of money gains over the making of useful products ... Capital becomes a paper commodity increasingly unrelated to production, and the profitability of stock markets and finanical corporations becomes increasingly disconnected from the real economy." Still, the eventual implications of this are yet unknown -- experts are unsure of how it will play out, since it is after all an uncontrolled, improvisational experiment. So let's move to another question...

How will financial speculators somewhere affect our ability to eat?

This second question is more answerable. Let's look at the role of derivatives trading in the current food price crisis. For this, I'll refer you to an excellent Globe & Mail article published on 31 May, "The Byzantine World of Food Pricing" (cover page, business section), which I'll summarize and quote from below:

In the past few decades, pension funds became a common way for people to save for retirement. They produce a massive influx of cash into stuff like commodities-- you can invest in a fund that either tracks the commodity index as a whole, or funds that buy a specific "basket" of commodities. People like you & me wouldn't normally want to buy oil or orange juice in these quantities, but under this system, it seems like a good way to diversify your portfolio-- especially if the stock market is uncertain.

But it was only in very recent years that the amount of fund money in commodity indexes shot up-- from 13 billion in 2003 to 260 billion in 2008.

Why? Because until recently, there were restrictions on how commodity trading was regulated.

(For a miniature review...)

In a forward contract, the buyer and seller agree to the price of a commodity and a fixed date for delivery. A farmer enters into a forward contract with a food company by promising to deliver a certain amount of grain on a certain date at a certain price. ... A futures contract is the same basic agreement, but it trades on exchange, and the buyer rarely -- if ever -- takes delivery of the commodities. Instead, futures contracts are used mainly by farmers for hedging and by investors for speculating. These contracts have historically been regulated.

However . . .

Beginning with the energy market, regulators made a series of far-reaching decisions that gradually loosened oversight of complex commodity derivatives and created loopholes for large speculators, allowing them to trade virtually unlimited amounts of corn, wheat, and other food futures. Only now, nearly two decades later, are the full consequences of those decisions being felt.

Basically, there was a legal case in 1990 that decided that some kinds of futures contracts should be classified as "forward contracts" and thus be outside of regulation by the Commodity Futures Trading Commission. (Wendy Gramm, wife of Republican senator Phil Gramm, was the chairmon of the CFTC and made this policy). Rewriting the rules on how these contracts were policed gave birth to a "new frontier of commodity trading, enabling financial speculators to buy and sell complex derivatives away from the prying eyes of regulators and exchanges."

So, first financial speculators -- and then investment banks, armed with your retirement money -- swooped into the province of farmers. As Manitoba farmer Ian Wishart said: "The commodity market was designed to provide a forward pricing tool to protect ourselves ... not to provide an opportunity for someone else to make profits."

In 1991, after the rules were altered, a bank requested exemption from speculative trading limits (because it was using a middleman to get around the rules). It was granted, which allowed all kinds of funds to enter commodities trading. Later, in 2000, more exemptions from the commodity trading limits were introduced (including one for the electronic trading of energy contracts, "the Enron loophole.")

Why might it be a bad idea (not for you per se, but for the world) for you to have some of your retirement savings in a commodity fund?

Many in the food industry compalined that these index funds don't behave like traditional speculators in commodity markets. Unlike hedge funds, which actively buy and sell contracts, and make bets on price increases and decreases, index funds are passive investors. They take positions in various commodities and hang on for extended periods, betting that prices will continue to go up. Critics claim that this has resulted in a kind of hoarding, and that the market no longer reacts the way it should to supply and demand factors.

Are there benefits to speculation in the commodity markets? Many say yes: speculators increase liquidity in the market, and as trader Mack Frankfurter explains, "the function of speculators is required to facilitate the hedging utility and price discovery mechanisms" [citation]. However, many of those who support speculation believe that it should be regulated.

Will a revamping of the derivatives-trading system solve the food crisis?

It may help, though rising oil costs have played a part in rising food prices. (But not that big a part-- yet). So have rising population levels, ethanol, increased wealth in China & India, etc-- still, none of those factors explain how the price of wheat doubles in a year. Recently, we have seen riots over food prices in scores of countries, and rationing in Russia and Pakistan. Reconsidering how commodity speculation is handled could make the markets more stable. There is still enough food to go around-- the problem is that many poor people can't afford it.

What can you and I do?

For one, cut back on meat (animals consume grain people could eat), and eat locally.

Many people are coming to a common answer: grow your own food. Backyard gardens will probably come back into fashion, and supply a greater part of our food source again.

And, we should probably not invest in commodities, and take political action to get these derivatives regulated again. It's a humanitarian issue.

I'll close with an excerpt from a blog entry in the RGE Finance and Markets Monitor:

Two or three generations ago, most of us would have been directly involved in food production as a hedge against food insecurity. My parents’ generation kept a garden in the back yard, putting to me to work each summer to raise corn, tomatoes, cucumbers and other fresh foods for the table, sending me to pick berries and fruits in season from our own and the neighbours’ bushes and trees. My grandparents’ generation kept chickens as well as a garden behind their house in the middle of a large industrial city. The garden and chickens helped my mother survive the Great Depression at a time when my father suffered stunted growth from rickets. My great-grandparents’ generation were almost entirely farmers working the land.

Today global agriculture is dominated by eight multi-national corporations. The policies promoted by successive governments and international institutions including the IMF, World Bank and WTO have aimed at undermining local production, distributed commercial networks, and diverse local markets in favour of mass production, streamlined supply chains and concentrated global market pricing.

As with other areas of our lives, the policies of “free market fundamentalism”, as George Soros styles it, have not diminished risks but increased them. My children are hostages to food insecurity, as are yours and billions of others. A disruption in global food supplies or surge in prices that puts food staples beyond the reach of many low income or middle-class families cannot be offset from the back garden. The exposure of food to pricing in markets open to manipulation and excess speculation puts the lives of millions at risk.

*

In the final episode in this series, we'll look at derivatives trading in the housing market, as well as inflation, and put all of this information together into best guesses on what we can expect in the future of global finance (and, therefore, our economic lives).

*

footnote: If you're not convinced that some gardening is for you, check out this great piece in The Guardian, "Don't Give Up". It has to do with gardening and climate change... which reminds me that I haven't even gone into oil derivatives trading and energy prices. There are only so many hours in a day. Let it be known that the commodity market in oil suffers from similar problems as with food commodities-- though with oil, there is definitely a supply-and-demand issue at work.

Adventures in Global Finance [Part II]

2008-06-04T14:33:00.004+01:00

The Stock Market

Of Trees and Origins

New York has long been a home of speculation & intense trading.
In 1791 and 1792, there was so much speculation that the state cracked down & banned auctions of securities [citation]. To deal with this, twenty-four traders met one day in May, beneath a tree where they regularly met. (A buttonwood, or sycamore, tree). They signed an agreement to form a private club, where they could trade stocks with each other, with a set rate of commission. (The "Buttonwood Agreeement.")

After that, they didn't hang out under the tree, but met regularly at the Tontine coffee house to gossip and trade stocks. In 1817, this exclusive club became the New York Stock Exchange & Board, and rented a room to do business in. Over the years it grew, but maintained exclusivity: and until 2005, only those with one of the 1,366 seats could trade directly on it (the price for a seat peaked at $4 million). In 2005, the NYSE became a for-profit, publicly traded company, which sells 1-year licenses to people who wish to trade on it. Now the largest stock exchange in the world (in dollar volume -- the Tokyo exchange is larger by other measurements) it meets in this well-guarded building at 11 Wall Street.

It is interesting to note that the stock exchange began as an illicit attempt to avoid a law, by taking business into the private room... also that it has such a simple, narrative beginning. The sycamore tree, the coffeehouse, the twenty-four guys: it all began so simply, convivially, so classically & charmingly human.

Stock Crashes: What caused the stock market crash of 1929?

Surprisingly, there is really no consensus on this. (What does it signify that 70-80 years later, we have no explanation for what happened? Have we made a real effort to understand it, or are the causes still obscure because the practices involved are still at work today?)

Basically, the famous stock market crash preceding/causing the Great Depression had either one cause or many; either domestic or foreign causes; it may have been an inevitable result of business practices, or it may have been caused by governmental actions -- your interpretation of the origins of this crash will be determined by your economic philosophy.

Here are some of the oft-cited causes:

-- a decline in consumer spending/investment
-- the size of the money supply (too small, according to some experts)
-- the amount of personal debt citizens carried (they had just began to use payment-in-installment credit schemes, then)
-- corporate mergers / consolidation of wealth into the hands of a few
-- the fact that the economy was too dependent on just a few industries (autos, for example)
-- a wide gap between rich & poor; the polarization of incomes
-- deregulation actions
-- stock speculation

There was a speculative boom in stocks, which led to the market being overvalued; people were living with the anticipation of future riches rather than in economic reality.

Because of the practice of "buying on margin", people only needed 10% of a stock's price as a down-payment to buy stock: they would borrow the rest from their broker. In Sept. 1929, for example, there was 8.5 billion in outstanding broker loans.

Once people realised this was a bad idea, there was a lot of panic selling... and then, the famous stock market "crash" (which actually was a rolling slide that stretched for several weeks, in the autumn of 1929).

the ticker tape from the NYSE which tracked the crash of 1929,
on display at Wall Street's Museum of Finance

The crash followed a period of genuine optimism, fueled by the industrial boom during this time. The industrial boom gave people the idea that they were in a glorious era of something-for-nothing, and this confidence fueled all kind of schemes, like a real-estate bubble in Florida.

Could the stock market crash again, like in 1929?

To begin somewhat tangentially, we should consider the role of mood in the stock market. The 1929 crash was as much a crash of confidence as it was of stocks. Why do you think "consumer confidence" is constantly "measured" by economists? Because the mood is important, somehow. Whether there is an all-out panic or a mild sell-off depends on mood.

"Irrational Exuberance" was a phrase coined by Greenspan, to describe the mood of the markets (back in 1996)-- the phrase seems to echo the mood of the Roaring Twenties.

So, will the irrational exuberance of the 1990s result in a crash? Consider this paragraph from a dated (2002) but interesting article by economist Ellen Frank:

In 1999 alone, the market value of U.S. equities swelled by an astounding $4 trillion. During that same year, U.S. output, on which stocks represent a claim, rose by a mere $500 billion. What would have happened if stockholders in 1999 had all tried to sell their stock and convert their $4 trillion into actual goods and services? The answer is that most would have failed. In a scramble to turn $4 trillion of paper gains into $500 billion worth of real goods and services, the paper wealth was bound to dissolve, because it never existed, save as a kind of mass delusion.

I suggest that a stock market crash happens when reality crashes delusion. But as long as confidence is high, the delusion can be sustained.

Can't it be good to get rid of your delusions?

As Andrew Mellon told President Herbert Hoover, regarding the crash & Depression: "...it will purge the rottenness out of the system. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."

Cold, no? The truth lies in the part about "values being adjusted"; this could be quite positive.

It's worth nothing that a stock crash today would be quite different than in 1929, because today, most middle-class people own some stock (only a small percentage of the population did in 1929). Your retirement money, or your parents' retirement money, likely involves a 401(k) or a mutual fund plan, etc. If the market crashes, and the baby boomers lose their retirement savings overnight, it will not be a good situation. (I know how weak that sentence reads, but I'm pressing on...)

I think that we will have a crash of confidence again, in the next decade -- for many reasons, some of which I will go into later (the two main reasons being energy & demographics). But basically, there is a gulf between image and reality that needs to be corrected; a gap that will correct itself eventually. A stock market crash, or at least a downturn, will likely be part of this.

The foundation of the whole system, whose shape I am beginning to discern, lies with responsibility -- the cracks in the foundation lie with irresponsibility. People in the 1920s who bought stocks on margin were acting irresponsibly, as are people who run up credit card debt today, as are the recent mortgage lenders who urged poor people into unreasonable sub-prime loans, as are the banks which bought these loans, as is a national government who runs up its debt into the trillions: all of it childish & irresponsible.

But why should you care if some people act irresponsibly? ... because we will all fall together.

In the next part of this series, we'll look deeper at speculation -- if you've ever wanted to know about futures, options (vanilla and exotic) -- or if you just wonder why it costs so much to buy a bag of flour this year -- well, we will try to understand it together. Stay tuned!

me posing with legendary financier J.P. Morgan
In 1907 there was a financial panic
in which stocks fell 50% (due to speculation, that evil spectre)
J.P. Morgan stepped in and saved the economy,
bailing out the market with a team of bankers he organised.
Who can play J.P. Morgan today?

Adventures in Global Finance [Part I]

2008-05-24T14:46:00.005+01:00

Understanding Global Finance:
An Introduction.

"You, in your personal lives ... will need to make decisions. These decisions will be affected by the price of commodities, every day of your lives. And all of that happens right here." -- Chairman of the New York Mercantile Exchange

Most people -- until about last week, myself included -- are not very interested in reading about global finance. I know about two people who even understand it. However, what happens in the markets affects all of our lives... and will probably do so even more in the future.

Therefore, it's worth educating ourselves on it. But where to begin?

I began at the nearest node of it, for strangely enough, something as nebulous as global finance does have certain centers, certain geographic locales where it takes place. Yes, this week I paid a visit to Wall Street, where I learned many strange and interesting things. In this four-part series, which attempts to explain some basic history of global finance, I will share with you what I learned from Wall Street.

Please keep in mind that I am thoroughly underqualified to write about this topic, so please help out by posting comments to correct any errors-- and don't believe anything written here unless it corresponds to your own research & conclusions.

That disclaimer given: Let's go downtown & attempt to understand what's going on inside these implacable monolithic buildings . . .

COUNTERING COMMON ASSUMPTIONS.

-- We tend to think that the financial system is kind of a fixed thing that has certain rules that it has always operated with.

-- We think that it is a technological, rational system, taken care of by economists who know a lot more math than we do.

At least, this is what I thought, until I began looking at what actually goes on. I knew that markets could behave erratically, but I considered finance something that is generally looked-after by experts who have been doing this for a really long time.

However, my impression now is of a vast improvisation, a grand experiment that you and me and everyone on the planet is a part of. But this is no science experiment -- there is no experimental design no control, no stated hypothesis or goal. Rather, it is an uncontrolled venture into the unknown, with all our futures at stake.

Dramatic? Maybe, but let's look at some key points.

Most of the financial instruments that are now in use are very new.

Trading in derivatives was up to 681 trillion USD at the end of Dec. 2007 [citation].
(I will explain more about derivatives in the third part of this series -- for now, understand that "a derivative product is a contract, the value of which depends on the price of some underlying asset. You can buy and sell all the risk of an asset without trading the asset itself."-- The Globalization of Finance: A Citizen's Guide, Kavalijit Singh)

So we have this huge amount of trading going on in things that don't actually exist.
What's being traded is contracts to buy things; what's being traded is risk.

To put that 681 trillion in perspective:

U.S. annual gross domestic product is about $15 trillion
U.S. money supply is also about $15 trillion
Current proposed U.S. federal budget is $3 trillion

The GDP for the whole world is just 50 trillion.

So, the value of derivative trading is now 13 times the value of the world's actual production. And this has happened only in the last few years.

(See this article on MarketWatch for more information; citations.)

In the 1980s, most of the "private capital flows" took the form of investors lending to foreign governments, through banks. Now, we have private capital going to the private sector through these financial insturemnts (paraphrased from Citizen's Guide). Stock-index futures began to be traded in 1982; interest-rate futures in 1988; but this trading only exploded in the 2000's.

Also, institutional investors (like investment banks, mutual funds, hedge funds, pension funds) only really emerged in the late 1980s and early 1990s. Instead of investing money themselves, people have these institutions invest their money for them. These institutions now control about 50% of U.S. stocks.

There is thus a fundamental change in financial structure: savings are being shifted away from regulated and insured
banking institutions to entities that are sometimes not insured, and that operate in different regulatory regimes and
have different investment objectives. This rising institutionalisation of savings has a profound impact on the structure
and functioning of the world's capital markets.
-- Hans Blommestein, "The Rise of the Institutional Investor", OECD journal

I'm not really qualified to comment on the consequences of these two developments -- derivatives trading and the increase in institutional investors -- my point is simply that these are radically new developments.

What I'm trying to explain is: we don't have a tried-and-tested financial system that manages things; we have a very new, very untested system-- and nobody really knows what the consequences will be.

It is not a game whose rules are fixed:
it is a game where they make the rules up as they go along.

As for the second assumption -- we think that it is a technological, rational system, taken care of by economists who know a lot more math than we do -- I would paint a picture of a system run on emotion, hype, and primitive human impulses as much as mathematics and rationality. The financial system seems shockingly human.

This claim is hard to substantiate, given that not too many people really understand the hows & whys of the markets-- so I offer not evidence, but impressions.

a stock trader, on video at the New York Stock Exchange:

"there's a lot of gut decisions that we make down here ... decisions not only technical or fundamental....

"at the end of the day people want to trade here
they feel comfortable
It's New York
It's the New York Stock Exchange"

The Myth & Mystique. Not just of the places, but of the legendary players. J.P. Morgan. George Soros. Jeffrey Sachs. Alan Greenspan.

"Remember that the stock market is manic depressive" -- Warren Buffet

"The market's judgment is often colored by irrational swings instead of realisitc , measured thought." -- display, Museum of Finance, 48 Wall Street

The look in the eye of the bull as it is beaten by the bear, in the famous sculpture that stood in the NYSE. The primal struggle. Somewhere, this primal struggle, this battle, lies in the human heart of the market.

"it's very primitive
you scream and yell to make yourself heard
It's all about eye contact" -- oil trader on the NYMEX

Global finance from one angle: computer transactions darting across the borderless globe.
Global finance from another angle: Men in a room, a room in New York, a room in physical geographic space, sweating and yelling, high on adrenaline, primitive biochemicals coursing through their blood.

Both these impressions are true, I think.

Egypt's Facebook Rebellion

2008-05-22T14:58:00.004+01:00

[Continuing to think about the role of technology in political activism...]

The Washington Post ran this article about the "Facebook Activist" in Cairo.

Ahmed Maher was a 27-year-old activist who created a Facebook site which got 74,000 registrants in the past 2 months.

Even some of Egypt's older, more disillusioned proponents of democracy had let themselves hope that a social networking Web site created by American college students could become an electronic rallying point for protest against President Hosni Mubarak's 27-year rule.

But the experience of the Facebook activists showed the limits of technology as a means of organizing dissent against a repressive government. Maher would end up among what rights groups said were 500 Egyptians arrested during two months of political activism in Egypt -- and find himself stripped and beaten in a Cairo police station, he said.

The group had run a successful protest in April against rising food prices, and they were planning for another strike on May 4, which would mark Mubarak's birthday.

But the protest was a failure: the government had taken actions to calm the people beforehand, and few people turned up for a general strike.

Poor people, even more than the middle class, knew what the strike was about, Hibba Imam, 22, said in the decayed and crowded quarter of Imbaba. "The connected people, they don't feel the suffering. They don't see the bread lines," she said, adding that she had stayed indoors until Sunday afternoon. Imam had heard of Facebook, she said. Many others in the neighborhood said they never had.

...

Afterwards, Maher was arrested and beaten for hours by police demanding more information about the Facebook groups.

I would recommend to read the Post article, because it's very well-written. It provokes a lot of questions: How much of online activism is just talk that won't translate into action? What role does technology have in creating real-world change? Is a technology-based revolution going to be working with the right people? What does it take to get people to actually protest; what kinds of injustices must we face before we are ready to shatter the known reality?

The general strikes in France, '68, were successful (in getting people to strike, I mean) because the affluent students managed to bridge that gap to the workers.... I have the same feeling when I read this article as I do when I think about '68. It is a feeling of sadness, the sadness that comes when these realities collide -- the young hope for change colliding with the gravity of the boot & the gun. Something about the sound a revolutionary dream makes when it bursts. You have to listen closely to hear it, but it does make a sound ...

Portugal

2008-05-22T00:44:00.004+01:00

What country has the newest, smoothest roads and the cleanest, most futuristic subway in Europe?

I think it is PORTUGAL.

Portugal is blue, green, and white. You might think of falling-apart whitewashed houses and fishermen and endless crashing waves; you might think of the colonial empire that didn't make out so well as its neighbors, the economic bastard child; but this is only a part of Portugal. And a passing part...

Portugal today is gorgeous tiny tiles and palm trees, but also renewable energy plants and gleaming toll roads; it is up-and-coming, Portugal.

A wikipedia cut-and-paste:

In 2006 the world's largest solar power plant began operating in the nation's sunny south while the world's first commercial wave power farm opened in October 2006 in the Norte region. As of 2006, 55% of electricity production was from coal and fuel power plants. The other 40% was produced by hydroelectrics and 5% by wind energy. The government is channeling $38,000,000,000 into developing renewable energy sources over the next five years.

Portugal wants renewable energy sources like solar, wind and wave power to account for nearly half of the electricity consumed in the country by 2010. "This new goal will place Portugal in the frontline of renewable energy and make it, along with Austria and Sweden, one of the three nations that most invest in this sector", Prime Minister José Sócrates said.

I felt like I learned something about Portugal
from this mosaic on a seemingly-abandoned building
though I could not tell you what, exactly--
it just seemed to contain some essential Portugese truth.

How do you sell an electric tram?

2008-05-16T18:43:00.003+01:00

Here is a little story about the ways in which we conceive of the future.

It involves an anecdote about this town I'm spending this month in, but the story actually has to do with all of us... scroll to the bottom to find out why.

Recently, a plan by General Growth officials was released that involves building a road bridge across a beautiful lake in downtown Columbia, Maryland.

[See this article in the Columbia Flier for details].

In an early design of downtown Columbia, there was a street linking Town Center to the east Columbia neighborhood of Oakland Mills by way of a bridge across Lake Kittamaqundi.

Columbia's original developer never built the connection, but now, 40 years later, the town's current developer hopes to make the bridge a reality.

The proposed bridge is one aspect of a traffic plan intended to complement developer General Growth Properties Inc.'s larger 30-year master plan to redevelop downtown Columbia by adding 5,500 residences, 4.79 million square feet of office space, 1.05 million square feet of retail and a 550-room hotel.

***

So, this bridge and road network is being planned to ease congestion in the downtown.

However, traffic studies have shown that building more roads doesn't actually decrease traffic -- it simply encourages people to drive more. See this
excerpt from the book Suburban Nation for an excellent explanation of why this is the case.

The brief letter I wrote to the Flier in response, "Look Forward to the Future", is below:

The solution to our future traffic woes is not to increase the amount of pavement, but to decrease the amount of cars.

Contrary to popular perception, traffic studies have shown that building new roads does not decrease traffic congestion. Rather, it encourages people to drive more-- this phenomenon is what people in the transportation industry call "induced traffic".

Why, in an era where burning gasoline is increasing expensive (and climate-changing), would we consider inducing more traffic? Looking "back to the future" is a grave mistake. We need to be thinking of long-term, progressive solutions for the future that we see now-- not the future that we saw forty years ago. Smart planners should be doing everything they can to make the urban landscape more walkable and mass-transit friendly. We should be developing the infrastructure for this now.

Consider trams. Seriously. Most small cities in Europe have tram systems: quiet, electric streetcars integrated into the traffic flow of existing streets. Modern trams don't necessarily require overhead lines. They are safe, comfortable, and elegant. And they're not just for Europe-- the city of Kenosha, Wisconsin (population 90,000), opened their tram line in 2000 for a cost of just 5 million.

Jim Rouse possessed great imagination when he envisioned this patchwork of farmland as a thriving city. Can we possess the same kind of risk-taking imagination, and envision a future Columbia which can be a model city again?

***

This letter is insufficient, though. What I wanted to say would be something like:

Baby-boomers and thirtysomethings, how are you going to explain this to your children and grandchildren?

They will be stuck in this place with a bunch of roads, but nobody can afford to fill their gas tanks. Their economy will already suck because of the debt you ran up, they will have paid twice as much taxes as you do now to support you in your old age, and their climate will be screwed. They will look across the ocean and think: how come the Europeans have trains and paths and trams and buses to get to where they have to go, but we don't? They will think: we are left with these huge spaced-out homes that are in the middle of nowhere, with miles of roads to travel to get to the store to to work... while people in Europe or in real cities can use the infrastructure provided to get around cheaply, quickly, and cleanly. They will probably live in a second-world country because they had all this car-dependent infrastructure that they couldn't afford to support any more.

Are you going to tell them-- well, we didn't know that automobiles polluted and that oil supplies were going to run low? They'll say: how could you not know, the evidence was right there. Are you going to tell them: we couldn't afford to build new infrastructure? They'll say: you were the richest country on the planet; that's like saying you can't afford to give your citizens health coverage like any other developed nation. Are you going to tell them: we just couldn't think of a better idea than to build more roads... back when we had the money and time and resources to build lasting, future-sighted infrastructure? That's what you'll have to tell them, unless you act now to build a world they can actually live in. But it doesn't look like you'll do that. You'll act out of some misguided idea about what the future will look like in 10 years, instead of thinking for the next 100 or 200, and continue wasting resources and time while spending credit that future generations could live on.

***

I mean, I'm really shocked by the planning that goes on in this country. I would even argue that people should start seeing planning as a moral issue. It's immoral to use precious resources to build infrastructure that future generations won't be able to use, when you could be actually making the world more liveable for them.

I would be really surprised if Columbia, Maryland decided to build a tram system. But here's the shocking thing [for those of you unfamiliar with the area]: this city, with a population of 100,000 and two major metropolises on either side, has no rail link with either Baltimore or Washington DC. The tens of thousands of people who work in either city have to drive, or they have to drive to a parking lot where they can catch a commuter bus: they have no other option. It's mindblowing that a major megalopolis does not have rail infrastructure.

Do you know why? I think it's out of fear. My understanding is that Columbia didn't want a rail link because it would make it too accessible. They want to maintain exclusivity and keep the urban riffraff out.

Thankfully, I don't actually live in this town: I couldn't deal with the mentalities of the people on a long-term basis. Unfortunately, I am not yet graceful enough to try and educate people who make decisions out of fear for their own property values. But if I did live in this town, I would be instituting a Tram Education program and printing out lots of pamphlets about mass transit. I would also be going to planning meetings and discussing it. Really I would be selling it: trams are sexy, they are sleek and elegant and comfortable, they are the future, so is rail; I would be passing out loads of pictures of sleek German trains.

But I would be discussing it on the friendly, positive level of the first letter... not in terms of the moral indictment of the second piece. It would be too much for people, and my message would be lost. Yet I do think we need to transition to thinking of these things as moral issues, for they are.

Of Weddings and Dictators

2008-05-13T13:27:00.002+01:00

As we know, disaster aid in Myanmar is slowly trickling in, though often-confounded by the oppressive regime's efforts to control it.

Listening to the CBC this morning, I came across something interesting: the daughter of the dictator, Than Shwe, was married in a lavish ceremony in late 2006 -- and videos from the wedding were posted on YouTube... enraging the people, who caught a rare look at how their dictator actually lives.

Technology to the people! Nobody would have been able to glimpse this side of his life, years ago...

It strikes me how many of the images are the same as in an American wedding -- the bride's nervous smile as the jewels are being put upon her... Trying to be delicate while cutting the towering cake.

And how different; all the troops present.

from the YouTube comments:

---

i fucking hate these fucking assholes there enjoying while my peope are dieng and suffering from hunger and millions of other issues........fuck do they not ssee that there country is a fourth world country not even a third world country anymore.

---

Watch closely and you may see the entrapped souls of starved children twinkle in those diamonds. You may see the blood of countless monks pour of the silky drapes, and the eyes of a thousand dead men stare wateringly from the white of her wedding dress. Watch and you may know that if there is a place of reckoning, then the fires will burn gingerly on the flesh of those who've fattened themselves on the suffering of others.

---

wow....is ur country that bad?sorry to interupt but i went clueless with what's happening in u guys' country...what that dictator did?erm does ur country practice diplomation?anybody wana tell something?i really wana know

---

Ew! They're going to sleep together? Dude...I think I just lost some of my youth

---

...why is everyone disgusted?

--
[response]

becoz the freaking bride looks like FIONA!!! oh wait..i'd say 'fiona' is more beautiful than her...so let's just say she looks like a fat bitch fulled with shit!!!!

--
[response]

Because that government has a strangle hold over the country. Lets just say it isn't a democracy.

Bolivia, Spain, and "Balkanization": imagining "countries" in the 21st century

2008-05-12T15:06:00.002+01:00

Do you know how many countries are in the world?
By many accounts, the number today is about 195.

How long have there been this many countries in the world?
Well, 100 years ago, we didn't have such staples as Finland, either Korea, Vietnam, Turkey, India, Morocco, etc.
50 years ago, we didn't have Jamaica, Kuwait, Singapore, and other household names.

Most of these thoughtforms we call countries evolved very recently, even though we somehow think of them as fairly solid institutions right now.

How many countries will the planet have in 20 or 50 or 100 years?
What is a country, anyway? (Is it the same thing as a nation or a state?) (What does it mean to have one?)
Is it even a good idea to have countries?

Let's leave the hard questions for a minute, and turn to the news of the moment.

*

Is Bolivia about to become "balkanized"? This week, Bolivia has come to a "state of crisis", as the department of Santa Cruz declared autonomy. The referendum on autonomy was declared illegal by the president, Evo Morales, and widespread protesting and riots have broken out, as the declaration of autonomy threatens to split the country.

Anxious eyes in Spain are watching the situation closely, much as they did when Kosovo went independent in February of this year. In Spain, anything that speaks of autonomy or independence provokes concerns that it will provide a precedent for the Spanish provinces that desire more autonomy.

From an article in Deutsche Welle, written prior to Kosova's independence:

If Kosovo declares independence from Serbia, it will set a powerful precedent for movements from Spain to Scotland, all wanting to rewrite the map of Europe and form their own independent states, according to experts. "There is a real risk that the quasi-dogma of the intangibility of borders which has existed since the end of the World War II will fall," French political scientist Jean-Yves Camus of the Paris-based IRIS institute told AFP. "This would benefit movements which seek to rewrite the map of Europe based on ethnic, linguistic or cultural criteria," added Camus, a specialist on separatist movements in Europe.

Why is it that the breakup of a country seems inherently scary somehow?

Do we have a basic, unquestioned bias that a large country is a good thing?

Why does every situation in which a region is seeking more autonomy from a federal government produce fears of "balkanization"?

I'll start by addressing the latter of these questions. One thing I would emphasize is that in reality, none of these situations -- in Spain, Bolivia, or Kosova -- bear much resemblance to each other at all. I don't find them comparable, and I'll explain why. While I'm certainly not a political expert, I have personally been to all these places, so what follows is my informal, travelers' understanding of the respective situations:

Kosova

In Kosova, we have a group of people who have been violently persecuted by the state they were claiming independence from, and quite recently. The ethnic Albanian Kosovars remember having to flee their homes from Serbian violence and hide in the mountains, for this happened less than a decade ago; these are fresh memories of oppression. Imagine being a young person growing up in Kosova, having your school closed to you because you are not Serbian, and then having your parents lose their jobs because they are not Serbian, and then having violence and warfare come to your neighborhood.

Imagine being a university student, and having most of the students expelled by being from a certain ethnic group ... then having a church from some other religion being erected in the university quad, right next to the library, smack in the open middle of your campus. This is what I saw at the University of Pristina: a church which never ended up being used, and stood empty with barbed wire around it, since the war began before the church was fully finished... in 2003 it stood trash-laden, surrounded by Roma camps; maybe it is put to use now, or transformed into somethng else.

Tolerance Campaign: UN-sponsored billboards picturing ethnic Albanians, Serbs, and Roma, with the caption - We are all Kosovars.

Spain

Spain, however, could demonstrate that the de-unification of a country does not have to end in the kind of warfare and violence experienced in the Bakans. There are several regions which flirt with the idea of autonomy, to differing degrees, including Catalonia, the Basque country, Navarre, and Galicia. While Franco was repressive towards the regional differences in Spain -- banning the Basque and Catalan languages up to 1975 -- these regions, aside from the occasional ETA attack, now get along quite civilly. You will see independence-related slogans on the streets, and protests and rallies, but for the most part, things are peaceful: Catalunya and the Basque country simply want to determine what to do with their own tax revenues and be able to speak their languages. They are not racist or hostile towards their neighbors; they get along as all nations in the European community do. These regions get along mostly-harmoniously with greater Spain, and enrich it.

Peaceful Basque independence rally and concert, in a village outside San Sebastian

And polls have shown that the majority of people in the Basque country don't even favor independence -- just one third are pro-independence, and only a small minority agree with ETA's terrorist tactics.

The central government has dealt with the regional challenges maturely, all in all: "Zapatero's Socialists ... believe increasing decentralization creates a modern, tolerant country where an understanding of each region's special characteristics helps keep separatism at bay."[citation]

Bolivia

So: why can't Bolivia have a model of government like Spain, where the regional departments have more control, asks Bolivia? Other countries have states or provinces, with their own regional police forces, for example...

If you're viewing Bolivia and Spain as equivalent, it is a reasonable question. But what's going on in Bolivia has to do with natural resource control and indigenous racism; it has to do with colonial conflicts that never quite got resolved. The department voting for autonomy, Santa Cruz, is whiter and richer than the rest of Bolivia. They want the ability to control the revenue from the natural gas under their land. The populist president, Evo Morales, and the Altiplano region of the country are indigenous, and want the gas to provide for all of Bolivia; they call the referendum illegal. From the Guardian:

"My family is voting for autonomy because the Indians want to dominate us," said Olga Tordolla, a woman in a largely indigenous quarter of Santa Cruz city known as Plan Tres Mil. "They are racist, they hate white people."

The federal government rejected the referendum as an "illegal survey" and an attempt by greedy, paler-skinned Bolivians to continue the social and economic exclusion of indigenous people which dates back to the Spanish conquest.

This conflict is about the exploitation of resources, in a more dramatic way than the conflicts in Spain or Kosova are. To have Santa Cruz secede is to open the natural gas to foreign exploitation, and Morales would like to keep the gas in the hands of Bolivians.

Llallagua, Bolivia -- Miners support president Evo Morales

Is there U.S. involvement in this situation? Roger Burbach in the blog Bolivia Rising argues that there is:

The illegal referendum held on Sunday to declare autonomy in Santa Cruz, Bolivia’s richest province, is backed by the Bush administration in an attempt to halt the leftward drift of South America. ... Evo Morales, the first indigenous president of the country, bluntly declares: “The imperialist project is to try to carve up Bolivia, and with that to carve up South America because it is the epicenter of great changes that are advancing on a world scale.”

The US ambassador, Philip Goldberg, who was appointed by the Bush administration in September 2006, has maneuvered behind the scenes to support the political forces opposed to Morales and his governing party, the Movement Towards Socialism (MAS). It is notable that Goldberg came to Bolivia from Pristina, Kosovo, where as the US Chief of Mission, he played a central role in orchestrating Kosovo’s independence from Serbia, which it had been a province of for centuries.

While I personally wouldn't put it past the U.S. to meddle this way-- they do have a long history of this around the world-- it is also suggested that this is "a homegrown issue." Jim Schultz, the director of the Democracy Center in Cochabamba (and a really kind, smart guy) recently was interviewed by Amy Goodman on the radio program Democracy Now. He explained that the current referendum is something that has been going on for a long time, and the significant point he made is that the oligarchs have managed to turn their wish for power into a regional issue that people on the streets support. Schutlz reported that both a taxi driver and a woman selling gum on the street in Santa Cruz declared that they don't want to be sending their money to the central government. While it used to be the indigenous people vs. the wealthy elite of Euro-descent, it is now the people vs. the people, and that is a difficult situation.

While I support the autonomy of Kosova and am ambivalent about the benefits of autonomy for the Spanish provinces, I wouldn't support autonomy for Santa Cruz (and the other gas-and-oil rich provinces that are also having referendums on autonomy) because it seems like yet another stratagem to screw the indigenous people out of resources and wealth that should be theirs to share in. It would destroy Morales's project to actually have a people make use of their resources. I was trying to cross Bolivia on May 1, 2006, when Morales nationalized the gas. Troops guarded gas stations on trucks; the mood was strange; but it was a remarkable symbolic gesture in saying the wealth from the land belonged in the hands of the people, and not multinational corporations. Movements towards decentralisation and autonomy should be used to give a people a homeland where they are safe from oppression and can practice their culture; these movements shouldn't be used to sell out a people.

These matters are complicated and controversial, but the basic point I was trying to make is that one disintegrating state does not equal another. It is difficult to imagine the Spanish coming into Catalonia and forcing the Catalunyans to flee to the mountains to avoid death, for example; Catalunya is no Kosova and Bolivia is no Spain. Each situation must be understood on its own terms; these situations don't provide precedents for one another in actuality.

SEPARATION ANXIETY

In the United States, the idea that borders are inviolable likely comes from the Civil War; its pain inscribed somewhere in our collective consciousness.

But Europe is already full of small states: so where does this fear of separation come from? Again, memories of war:

European stability since World War II has rested on the concept that borders are inviolable, even if they contain within them regions of other nationalities.

The break-up of Czechoslovakia was the result of mutual agreement, and that is precisely what the Europeans want. They do not want Kosovo to set a precedent for Belgian Walloons wanting out of Belgium. To a great extent the world wars of the 20th century were triggered by borders not matching nationalities. [citation]

But people can exist in small states peacefully without war: Europe generally proves this. To believe that decentralization results in war is to take a dim view of humanity.

Before I close this epic, I'd like to point out that the idea of nations is flawed. Countries are fictional entities. I do not think there is actually such a thing as the "United States", in reality.

And in too many cases, the arbitrary creation of these nations has caused much pain. Look at the current war in Sudan: caused in great part by how the Brits drew colonial borders.

Our bizarre sentimental attachment to countries might do more harm than it does good.
Often, the sentimental feelings we have about countries are simply tools that other interests use to manipulate us. Do you have a nation in your heart? Is it your country you love, or your culture? Your country is the force that takes a third of your hard-earned income and goes and bombs other countries with it. Your culture is the tapestry of traditions and values that makes your life meaningful. And regions of cultures can (and do) exist without nations.

A return to regionalism is exactly what the world needs. But how will we stop ourselves from being overrun by the Chinese, without our big federal army? the skeptic asks. Well, the EU is a decent example of a coalition of nations that works together to build a power bloque. I wish the United States functioned in the same way, as a coalition of nations rather than weakened states (I suspect it will in the future, but that's another post).

Perhaps this century can become truly cosmopolitan and global; where we will abandon these thoughtforms of countries, and honor the cultures we live in. Where we don't allow business interests to manipulate our feelings, or our hatred for others, into warfare on the basis of these "countries"; where we can live regionally, for the benefit of our bioregion, harmoniously with nearby regions.

What are your town's demons? Looking at the people next door

2008-05-08T19:49:00.004+01:00

Today, I've been trying to write something about separatist movements, but I keep coming back to the Fritzl case, and then the Ellis case, and then this torrent of wonderings about the people who compose our society; the people we think we know.

I don't know how much coverage the Fritzl case got in the U.S., but they manage to keep it in the Euro headlines every day, and out of some grotesque fascination, I keep following it.

In summary: Josef Fritzl, of the quiet little town of Amstetten, Austria, built an underground dungeon in his home. When his daughter Elisabeth was 18, he forced her down there, where she bore 7 of his children over the years. Some of them were kept down in the dungeon, one died and was incinerated by Fritzl, and others came to live upstairs after being adopted by Fritzl, who "found" them on his doorstep. ... One of the children from the dungeon -- Kerstin, 19 by this time -- was sick, and so Fritzl took her to the hospital, and that's how the 42-year-old Elisabeth came to be freed, too.

Fritzl says he is not a monster:

"When I went into the bunker, I brought flowers for my daughter, and books and toys for the children, and I watched adventure videos with them while Elisabeth was cooking our favourite dish," News magazine quoted him as saying.

"And then we all sat around the table and ate together."

It is the details of this case which are distressing; the details which paint a parody of normal life. From the Guardian:

On the grimy white bathroom tiles are a painted yellow snail with green shell, a purple octopus, a child's drawing of a flower and a fish, and stickers of stars and the sun - all of them things her 'cellar children' had never seen, except on the television, which was on all day.

...

He bought Elisabeth clothes. Sometimes she chose them out of a catalogue. On other occasions he would choose them himself. Friends he holidayed with in Thailand saw him picking out a glittering evening dress and lingerie at a market - clearly much too small for his rotund, ageing wife. When he realised that he had been spotted, he joked about 'having a bit on the side'. Not for one minute did they suspect it could be his daughter.

But it is clear that he wanted Elisabeth, whom he called his Liesl, to dress up and parade around for him in the squalid, miserable cell he forced her to call home. Then, after raping her, he would settle down at the table while she prepared a meal and they would discuss the children's upbringing.

It is these details which make the whole story so twisted; if the circumstances had been farther out-there, they would have belonged in some imaginary land. No, this was entirely planet earth in 2008: the cell with electronically locking doors that was allegedly equipped with poison gas; the mimicry of normal family life.

The people in the community of Amstetten are asking how they didn't notice this was going on for the past 24 years -- not to mention how a person with a rape conviction could legally adopt children, or how building plans for the elaborate dungeon could be approved.

The people of Austria as a nation are engaged in soul-searching, too. Natascha Kampusch made headlines when she was freed from a dungeon after eight years; she had been snatched on her way to school as a girl. From the BBC:

She also suggested Austria's history had played some part in the cases of abuse which had taken place there.

"I think this exists worldwide, but I think it's also a ramification of the Second World War and its connection to education and so on," she said.

"I think it can happen everywhere and it also exists everywhere, not just in Austria."

She went on to explain: "At the time of National Socialism the suppression of women was propagated. An authoritarian education was very important."

What in his environment, in or his society, turned this man sick? From the Belfast Telegraph:

"Josef grew up without a father. His mother raised him with her fists," Mrs R said. "She used to beat him black and blue almost every day. Something must have been broken in him because of that. He was unable to feel any kind of sympathy for other people. He humiliated my sister for most of her life."

Fritzl was born in 1935 and would have been four years old at the start of the Second World War. It was not clear whether he lost his father during the war, but, when the war ended, he would, as a nine-year-old, have experienced first hand the invasion of Austria by the Soviet Red Army in 1945. Reports in the Austrian media have claimed that as a child he "suffered badly" during this post-war occupation which was notorious for the high incidence of rape perpetrated by Russian soldiers on civilian German and Austrian women.

And there were Nazi death camps in Amstetten, "a short stroll" from Fritzl's home, as reported in The Sun.

Austrian academic and social commentator Martin Reiter, 45, says the Fritzl case highlights the “dark underbelly” of Austrian society.

Mr Reiter, who grew up 30 miles from Amstetten, said his countrymen became insular and adopted an “ask no questions” policy after the war. He added: “Austria needs to face up to her demons. When I lived near Amstetten you could sense the paranoia in the air. It was like living in a Hitchcock film.

"No one wanted to know what their neighbours had done in the past, no one wanted to talk about the dark history.”

Our criminals can tell us something about the ills of our societies; they are the agents of our society's ills.

So you don't live in a quiet town with former Nazi death camps. What are your town's demons?

A few days ago I flew into the town where I grew up. As I usually do, I flipped through the pages of the paper which lands on everyone's driveway for free each Thursday: the Columbia Flier. The first story I read was about one of my former classmates, who used to be in my "Gifted and Talented" classes throughout middle and high school: Ex-teacher gets 5 years for sex abuse of student.

Don't you occasionally wonder about those people that you used to do projects with in school when you were forced into "group work", the kids that your friends had crushes on, the names and faces of people who you never really cared about but saw every day, the names and faces that exist somewhere in deep memory? Well, it seems good old Joey Ellis went to college and became a social studies teacher and coach in the same county we went to school in. At the age of 25, he emailed nude photos to a 17-year-old student, sent her sexually explicit text messages, and on one occasion exposed himself to her during an after-school visit in the classroom. After a painful trial, he's got five years in jail -- the district attorney requested that he get nine.

Sick? I would not call this sick (especially when compared to the above case), but I would call it absolutely moronic. If we were talking about a seven-year-old, that would be sick. I don't think Ellis was sexually sick, but I think he was stuck in high school, in some adolescent mentality where a 25-year-old thinks it would be hot to score with a 17-year-old high-school senior. He probably had the fantasies that most men have-- that our culture kind of encourages-- and, with the lack of impulse control of an adolescent, was stupid enough to act on them. This was a lame suburban crime, a produce of the lame suburban society that Joey grew up in.

"The former student victim's statement .. described how the incident has left her unable to trust men and the effect it has had on her and her family, leading her parents to the brink of divorce ... 'I never though I'd be one of those girls with crazy psychological issues, but now I am,' the student said in her statement."

Well, it's a shame. And, controversially, I think it's a shame he'll have to spend five years in jail for it. I definitely believe the guy deserves some kind of repercussions that might make him less moronic, but is he going to be a better person after five years in the U.S. jail system? No, he'll likely be much more fucked up after that experience, and maybe even genuinely sick, maybe even a genuine menace to society. The crime is so born of suburban America and the reaction to it is so typically suburban-American; it all gives me a headache.

What would I suggest for Fritzl, for Ellis, for all of us? I don't suggest that we all go around wondering who the normal people next door are, afraid. If we want to live in healthy societies, we should be trying to learn from our criminals, instead of treating them as sick aberrations and objects of curiosity. They might have clues to what is wrong with us as a whole, and instead of sequestering them and "punishing" them, we should be trying to help them understand themselves and heal. Putting people in prison is not going to cure anything; it's treating the symptoms instead of the causes. Imprison only those who are truly a danger, but help them; in doing so, we all will be helped.

the Horror of Andorra

2008-05-04T21:02:00.004+01:00

Imagine if your entire country was one long traffic jam.

If that doesn't sound like fun, I don't recommend visiting Andorra.

I knew as soon as I entered this country that I wanted to leave ... but the queue of cars trying to escape back to Spain at the border was too long to bear, so I resigned myself to spending the night. I settled down to eat at a Tex-Mex restaurant where New Mexico plates decorated the walls, where disco versions of Manu Chao distracted me, where a plump lady with jingly jewelry brought me tacos that were stuffed with green beans and peas. (There is nothing like EuroMexican food to make you feel like something is missing in life.)

Claustrophobia was setting in...

Why, you may ask, might a charming principality like Andorra provoke such glumness?
I had always wanted to go to Andorra since I was a little girl learning my capital cities: the very name Andorra la Vella rang like a magical city of princesses and unicorns in my head...

The thing about this tiny country, nestled between France and Spain, is that it is an entire country squashed into what is basically a canyon (technically, there are 3 valleys, shaped like a Y). The valley is sometimes as wide as a kilometer, but sometimes only wide enough for a two-lane road between the rock walls.... hence, the incredible traffic.

Not only are there an abundance of cars, but there is an abundance of shops. It is said that Andorra is one big duty-free mall, and they have crammed commercial centers selling tax-free alcohol into the crevasses of the mountains. Andorra survives through this, and through banking: it is well-known as a tax haven.

Celebrating 50 years of the Private Bank of Andorra

But why on earth would its ~ 70,000 residents, living in this area the size of Queens, most of which is huge mountains, even need or want cars? I wondered. They should all just park their cars on the border and walk, or build a rail line, through the country. Perhaps I just caught the country on a bad day, but living in a traffic jam seems to put everyone here in a negative mood. For it could be quite a beautiful place, with the majestic mountains, if not for the cars...

I seriously wonder how long it will be before the automobile is generally recognized as humanity's worst mistake. I am thinking perhaps 20 years; what do you think?

Trains, Again: A Metronome in Prague

2008-05-04T20:17:00.004+01:00

Leaden outside; gold and warm in the train. This train would go all the way to Budapest Keleti-pu, but I am getting off at Praha Holesvice.

I was thinking about how national demons get vanquished -- if they ever do get vanquished, or if they simply die down to rise up again later at another opportune time.

Germany was heartening, is heartening to think of. They are one of the most liberal and progressive countries in the world, in the 21st century, despite the 20th century difficulties. In Dresden there is a bridge with a stone inscription that reads something like Freedom is the Freedom to Think Differently; a post-war reconstruction. Imagine how drastically a manner of thinking can change in a generation...

In Prague, my friend tells me, there used to be this statue of Stalin up on a hill. Then they blew up the statue of Stalin -- now a metronome stands in its place (pictured below). Time keeps on ticking; everything changes -- sometimes more than you will expect. The world is in need of a radical change in thinking, but history proves that it is possible.