Cuba Travel Diary - Preparations (1)

It seems that the train journey I had planned to take from Havana to Santa Clara is not to be. It was one of only two reasons I could muster for making the journey, the other being a visit to the mausoleum of el comandante, but it seems that El Che doesn't open for business on Mondays.

My itineraries are usually distinguished by their flexibility, but over in Cuba they like to see a firm committment to location for at least the first three days and so, after booking my flight and making reservations for the three evenings that I plan to spend in the capital, Monday it was really going to have to be unless I was prepared to sacrifice one of my stops en route to the east of the island.

Sadly the evening rattler to Santa Clara is said to be the only reliable train service these days in Cuba, a society which once proudly boasted the first railway system in all of Latin America. It will have to wait for another day, and I will have to depend on the buses of Viazul to get around.

If any of the train journeys I made between Reading and London Paddington last April were at all memorable, I'm sure I'd remember at least one of them. I do however recall having to traverse the Thames valley that way four times in forty-eight hours around the time of the Royal Wedding.

So this year's only unforgetable ride on the rails was the return leg from Machu Picchu (Aguas Calientes) to Ollantaytambo on IncaRail. On the way out I'd been packed in knee-to-knee with the French tourists, but on the return leg the only seat avaialble was in First Class, where I was to share a delightfully robed table with a well-to-do Peruvian mother and her somewhat high-maintenance, coppertopped ten-year-old. The meal was served in little ceramic pots: there was a tomato confit and quinoa salad, queso paria, a veggie lasagne, and sacred valley fruit infused with mint for dessert. The wine was local, a Tacama Gran Tinto from the oasis of Ica (south of Lima), and appeared first in a steaming mulled form — one might say the last hike of the day, and very welcome as the cold closes in at 3300m.

First Great Western commuter services aside, I can readily agree with Paul Theroux's notion that, alone of all forms of transportation, a train is just as much a place as a vehicle. Of course the most famous train in Santa Clara is indeed now a place (of pilgrimage), as it was famously derailed by el Che himself at the wheel of a bulldozer as it attempted to deliver government reinforcements to the critical final battle raging in that city. (Viz Stephen Soderbergh's Che Part 1)

Sleeping Beauty (2011)

If I hadn't sat through 2/3 of Aqui Me Quedo, I would have no hesitation in describing Sleeping Beauty as the worst movie I've seen so far this year. And relative to budget and intellectual aspirations it almost certainly is.

Before I really get stuck in however, let's just cast our minds back to the source material such as House of The Sleeping Beauties by Nobel Prize-winning author Yasunari Kawabata. From a nation that has staked a realistic claim to being the mecca of all things outrageously pervy, there's perhaps a surprisingly elegaic subtlety to his esoteric tale of lost potency. It has twice inspired Nobel Prize-winning author Gabriel García Márquez to explore similar scenarios, most notably in his last novel Memorias de Mis Putas Tristes, but also in the short story in which he locates himself next to a beautiful sleeping girl on a long haul flight. (The debt to Kawabata is directly acknowledged when Gabo remarks that House of Sleeping Beauties is his chosen reading material for the journey.)

Non-Nobel Prize winning author and first time film director Julia Leigh obviously thought it would be illuminating to view this conceit from the sleeper's perspective. Its origins are acknowledged obliquely via a load of bonsai trees in the background and other Japanese interior touches, yet it is movies like Kubrick's last masterpiece Eyes Wide Shut and the guilty pleasure that is Hostel, that more openly spring to mind as influences.

The result is some sort of boorish Australian pastiche of European art house cinema from the mid part of the last century. Leigh appears to have scripted her characters so that they act just short of what we would expect of human beings made of flesh and blood. All the excrutiating underlying emotional currents present in the novella have been purged, because for this director the concept and its ramifications are far more important than the individuals encapsulated by it. During the scene in which one of the old geezers delivers a po-faced monologue about a short story by Julio Cortázar before climbing into bed with 'Sara', the fourth wall broke down, and so did we, into fits of hysterics. Who needs soporific drugs when you have these guys around?

Now Eyes Wide Shut also divided critics, attracted accusation of art porn, and is not without its flaws (most notably Kidman and Cruise). But other than the changes in time and location, Kubrick was far more faithful to Schnitzler's vision than he was to say Stephen King's in The Shining. Might one suggest that this was because Kubrick knew himself to be a superior artist to King, but perhaps not to Schnitzler?

Anyway, my own view on this matter would be that whilst it is perfectly OK to add flesh-eating zombies to Jane Austen classics, it would not be a recommended career move for any budding female author to re-write the works of Hemingway as a critique of masculine power relations. In short, if there's any chance that an author might have been better than you are, resist the temptation to steal his or her basic idea and rejig it to suit your own concerns.

There's really nothing more unedifying to behold in art than mediocrity affecting a painstaking pose of profundity.

GRADE: C

2012, here we come.... (#28)

Let's pause to calibrate our sense of doom and gloom by checking out some of the latest thinking from the pessimist platoon's point man. It seems that Dr Death likes to invite people back to his pad for wine, canapés and talk of creeping cataclysm.

It's a funny old thing this 'slow motion train wreck'. It looks a bit more to me like a set of nested train wrecks all playing out at slightly different frame rates. Indeed, some of them are periodically on freeze frame, almost tempting one to imagine that they might stay that way for long enough for most of the passengers to exit unharmed, or somehow even snap into reverse.

Greek politics seem resistant to all efforts at containment. If the Greeks themselves should have been offered the chance to vote on their own rescue package, then there are surely quite a few non-Greeks who probably feel they should have had in on the Papandreou confidence vote. The Greek PM managed to survive that process, albeit with a large knife in the back courtesy of his Finance Minister, but his plan of forming a coalition government of 'national unity' looks unpromising this weekend, given the continuing absence of the main opposition party.

Yet perhaps the more intriguing train wreck right now is Italy. The Euro denominated BTP/bund spread separating Italy from Germany is at a record high. The Italian Central Bank claims that Italy is solvent so long as it doesn't have to pay more than 8%. We're at 6.6% and counting. Last week, at a joint press conference, when Merkozy was asked if Berlusconi had been able to reassure them, they looked at each other and burst out laughing.

Meanwhile, the Italian PM has been bragging that Italy turned down the option of a low interest loan from the IMF.

Perras (2011)

Given the way Perras had been shamelessly plugged across the more shameless comedy shows on Telehit, we had both been expecting this festival reject to be both amateurish and trashy, but it turned out to be a more substantial work than either of us had anticipated. (We might have guessed this had we then known that it began life as a work for the stage scripted by debut director Guillermo Ríos.)

Now, I've recently had cause to re-flag my insight that Mexico and Japan share an occasionally creepy pop cultural fixation with adolescent schoolgirls and the similarities and cross-currents are very much to the fore again here. It's frankly hard not to smirk at the underlying intentions of an film which wishes to document the over-sexualising of teenagers whilst seeking to titilate its audience with the very same phenomenon.

Yet in truth, these kind of fourteen-year-olds do exist in some quantity down here south of the border. Part of the power of this film to disturb was the frisson of recognition. Ríos has more on his mind than prematurely misplaced innocence however, as the core scenario sees the ten girls of his ensemble cast locked away in detention, uncertain of which of their number has done the unnamed terrible thing to cause this punishment. As the collective polemic ensues, Ríos flashes us back to prior events in school, and several of the girls recount a more personal story which touch on some of Mexico's more familiar endemic difficulties.

It's a scenario that is perhaps more theatrical than cinematic, though the best of these outgrowths is a delightful animation (another borrowed Asian technique) in which a grandmother is forced to share her home with the family of her hijo patán. Ríos also goes to town a bit with a car crash sequence. The trouble is that on many levels (character, narrative etc.) the whole rather inevitably ends up being less than the sum of its parts. And yet this very unevenness is one of the factors which contributes in the end to maintaining the disguise of the terrible event and the identity of its protagonist.

Over the years I've come to realise that one can almost immediately tell if a movie about Latin America's problems has been made by outsiders or insiders. Sin Nombre and Maria Full of Grace for example, could only have been made by non-indigenous eyes looking in. This kind of ennobled, bleeding heart take on the issues is rarely found in the region's native cinema. Perras is symptomatic of the irreverent local-eye approach we've seen over the years in movies like Matando Cabos, though it lacks the satirical bite of funny yet moving works such as La Nana, Y Tu Mamá Tambien and even El Infierno.

GRADE: B (+)

The 70 That Matter

Yes he's back: El Chapo is at No55 on Forbes magazine's list of The 70 That Matter.

As ever it's an idiosyncratic, Yankocentric chart. Guzmán Loera comes in seven places ahead of Japan's new PM Yoshihiko Noda. Indeed, Japan's leader is now deemed considerably less weighty in today's world than Brazil's.

Meanwhile, the ECB's 'Super Mario' Draghi matters (just) a bit more than Nicholas Sarkozy, while the UN Secretary General Ban Ki-Moon matters a lot less (at 38) than several US corportate CEOs, though, surprisingly enough, Carlos Slim ("& family") outrank Amazon's Jeff Bezos, who clearly lacks significant relatives. Berlusconi's in, Zapatero isn't. No room either for Papandreou, who matters quite a lot right now and may still do so tomorrow.

And what's with the President of the International Fencing Assocation Alisher Usmanov, at 70?

2012, here we come.... (#27)

Does anyone really think that Merkel and Sarko had no idea Papandreou would go rogue (i.e. to the people) after the Brussels get-together last week?

And why is it so surprising, that the nation which invented democracy should think it appropriate that some sort of popular consultation could take place before surrendering much of its sovereign control over its economic fate for the next several years.

Papadreou's gamble does now appear to have backfired, but one can understand the original motivation: transform a Hobson's choice cobbled together by foreign technocrats into something at least resembling a local political Catch-22.

For the Greeks, who might be forgiven for caring less about what now happens to the wider world economy, there's an extended period of economic pain ahead. In the short term at least, the pain would probably be greater if they were permitted the option of disorderly default and a return to the Drachma.

Papandreou may have hoped that his government could play upon popular terror of that greater pain, turning the plebiscite into something of a formality, and covering the collective backsides of Greece's political elite with a democratic mandate for the barber-shop approach to bond-holders.

Or, maybe he wanted to leave the door open for the full meltdown 'solution', which would at least leave the Greeks in charge of their own destiny once again — first in the queue as far as the euro exit sequence goes, and perhaps not that much worse off than everyone else once the impact of this decision has run its course.

2012, here we come.... (#26)

Most people are able to go about their lives without even the sketchiest understanding of quantum physics. To lack even an intuitive comprehension of classical Newtonian physics is a far more dangerous disposition however.

Until recently something very comparable applied to the world of economics. Most people could get on with their daily lives as producers and consumers of goods and services and not really have to give much thought to the weird underlying reality constructed out of semi-comprehensible securities, credit default swaps, CDOs, quantitative easing etc. etc.

Yet rather like a scientist who wakes up one morning with the premonition that the quantum world is the primary one and that everything else we perceive around us mere epiphenomena, I had a similar awakening myself with regards to the structure of 'late stage capitalism' around the middle of the last decade.

Surrounded by marketing people who thought of their own role in life as the most creative and fascinating part of the whole supply chain, I started to pity them for the bottom-feeders that they now appeared to me to be. For suddenly nothing was as it had always seemed: economics, politics and society in general was revealed as inexorably emerging from the hidden reality of high finance. And then in 2008 it stopped being quite so hidden.

There can hardly be a citizen in a major western democracy who is not now aware now how their world really works. Millions have been deprived of the illusion of usefulness (and not just PR and marketing people!). Can anyone deny that over the course of the last three years our leaders have made all other social and political goals subsidiary to that of maintaining the solvency of our banks? And however much we moan about this, if they hadn't, we'd have a lot more to moan about.

This is why the US markets responded so positively to news of the latest Eurozone fudge at the end of last week. This new plan is likely to accelerate the pending recession across the old world but, lets be clear, America doesn't care. These Frogs and Krouts are competitors after all. The current American administration cares about two things only. Postponing any day of reckoning beyond the 2012 Presidential election, and preventing a 'credit event' with global economic consequences. If the Europeans can find a way to sink themselves without affecting everyone else, so much the better...

2012, here we come.... (#25)

Remember how I told you how I was done with this little series of posts?

...I lied.

2012, here we come.... (#24)

Tom Meltzer explains the European bailout 'plan' with the help of his animated friends. Hilarious.

2012, here we come.... (#23)

Given that the can has now been kicked further down the road than I can be bothered to gaze, (right into the kind of distant mirage one habitually witnesses when traversing Florida's 'Aligator Alley'), I shall signal a break from this series of posts, by quoting the last sentence of Michael Lewis's Boomerang:

"As idiotic as optimism can sometimes seem, it has a weird habit of paying off."

420 days, 16 hours and 53 minutes to Bak'tun 13.

Bedevilled (2010)

Town mouse visits country mouse, whereby both discover just how deeply messed up they are, setting off a chain of events involving sado-masochistic cruelty that's pretty full-on even for a South Korean revenge flick.

The delightful bleakness of this film results from its insistence that while the provinces are full of violent, petty-mined retards, the metropolis breeds soulless egotistical misanthropes. As this is not an environment in which redemptive arcs can take place, there are only one or two brief glimmers of real kindness: in the person of a boatman and a bank employee, as well as the more problematic case of a puta, whose fate on the island was one many questions we were left with.

In western stories, even when good doesn't precisely triumph over evil, some sort of stasis triumphs over chaos, but in most Korean movies of this sort, normality rarely achieves ascendency at any stage in the narrative. Chaos reigns. Revenge is usually the only thread that runs through from beginning to end, and it habitually presents a disturbingly amoral spectacle. One is never quite certain where the chain of events is heading, plot and character become detached along the way, then recombine in new forms, and the endings, are typically announced (if indeed announced at all) with a zap of very black humour.

In this particular instance we were left with a sense that the overall experience had been thoroughly satisfying, even though the story had once again failed to resolve in any of the familiar ways.

"Put bean paste on it". I will remember that one!

GRADE: A-

2012, here we come.... (#23)

Knowing that the Germans wanted to treat the Greeks to a number one haircut and that the French preferred to see them sporting a fashion-friendly number three, I could have told you a week ago that they would settle on a number two.

As soon as this compromise had been announced, and the banks and other bond holders were facing up to a 50% 'voluntary'* decapitalisation of their Greek paper, Klaus Regling, boss of the European Finances Seriously Fucked fund (EFSF) was off to the airport in order to board a plane to Asia in the hope of spreading the contagion as fast and as far as possible. I hear that in Asia people wear surgical masks conscientiously in order to indicate to passers-by that they could be infectious. Somehow I doubt that Herr Regling was wearing one of these.

Back in the days before the Lehman Brothers collapse the very last people to buy subprime-backed bonds were nearly all Germans. Now the Germans themseles have to hope that there are fresh territories full of even more ingenuous financial patsies out there in Russia, China, Brazil etc.

However this ends up being funded, the impact on EU financial institutions and the flow of credit will be marked. The markets might have been relieved by the noises coming out of Brussels last night, but those pesky economists have been rather less impressed. Carl Weinberg of High Frequency Economics for example, predicts a double digit drop in Eurozone GDP across the funding period:

“Seen from the funding side, the euro package will divert €1,300bn worth of savings from private sector investment and spending. That must mean a reduction of Euroland’s €9400bn GDP by €1300bn, or 13.8 per cent over the period in which it is financed."

* Up in the land of licentious litigation there will be people taking legal counsel about their credit default swaps today.

2012, here we come.... (#22)

"I've said it before and I'll say it again, this is a marathon not a sprint." (Nicolas Sarkozy, last night)

Didn't Pheidippides keel over and die at the end? Beware of Greeks bearing metaphors.

2012, here we come.... (#21)

There's a new movie out in UK cinemas right now, Stephen Sodebergh's Contagion, the subject matter of which is a biological rather than a financial pandemic. I was however interested to hear the director's stated opinion that when the time comes, when thousands if not millions of lives are threatened by some nasty little microbe, we, humanity, will inevitably find a solution.

Broadly the same idea was worked into the teleplay for this week's The Walking Dead (again, not in fact a documentary about a sizeable portion of the world's developed economies) in which a character referred to the zombie apocalypse in rural Georgia as just another one of those blips in human progress which we seem to be able to muddle through.

And this set me thinking how we do seem to have this underlying apprehension that all major problems have some sort of solution...as long as we put our thinking caps on and kind of douse them in our collective output of opinion. Yet the euro crisis has all the makings of a properly intractable difficulty.

A last word on the sort of cultural change which might save the day; not, I'm afraid to say, a particularly optimistic word. In Boomerang, Lewis identifies the current euphemism used to describe the kind of miraculous transformation which would make Greek people more like German people: structural reform.

He goes on to point out sagely that this kind of personality about-face can rarely happen quickly enough to be relevant to what actually transpires. I would add that most forms of significant cultural change are organic, which means that individual-level mirror-gazing, combined with promises to be less selfish, myopic, reckless etc. are ultimately akin to attempts to reseed a rainforest by systematically planting individual trees.

2012, here we come.... (#20)

"If there were any justice in the world the Greek bankers would be in the street marching to protest the morals of the ordinary Greek citizen." (Michael Lewis)

I've read up enough on the Greeks recently to have to resist the urge to get on the next plane to Athens and start chucking those petrol bombs back at them. And I'm not especially well disposed either to those masked Italian protestors brandishing 'We are the 99%' banners.

Lewis's book amply demonstrates the human need to pin the blame. His visits to countries affected by the current crisis, which he likens to financial disaster tourism, also show us that — depending not just on our political biases, but also on our national cultural backgrounds — we tend to look in different directions for our scapegoats. Only the Irish seem to have been collectively flummoxed by the question of who is actually to blame. For everyone else it is really simple: investment bankers, dodgy politicians, the 1%...not me. (Been thinking of getting myself one of these t-shirts.)

In truth cheap money brought out the worst in everyone, and what we have witnessed is perhaps the greatest flowering of human folly in the modern era. And to my mind a good deal of the populist protest sentiment, whether Tea Partyist or OWS, is just another expression of this absurdity, though one can appreciate the levels of frustration that seem rise in parallel with our collective improvidence.

Technological change has surely played a major part in all this, because it is that much easier to be immoral (or at least recklessly irresponsible) when you are sitting behind a computer screen. But lets not blame our tools eh?

Greece has had what Lewis describes as a societal level moral collapse, and when that happens there really are no political solutions, only cultural ones. And these are of course incredibly hard to introduce as piecemeal policy measures.

Of course Greece is only an extreme case of what has happened on a far more international level. Guatemala may not have been exactly flooded with cheap credit over the past decade or so, but it's hard not to examine the state of its political and social affairs without considering the wider context of a global ethical malaise. It's enough to make one turn to religion. Well, not quite.

Anyway, I'm not really buying the argument of Marshall Auerback (The Myth of Greek Profligacy, Counterpunch) that all attempts to paint the Greeks as deadbeats are "nonsensical propaganda, designing to justify the continued collective execution being inflicted on Athens for the sins of its father and grandfathers. As if Greece is the only country ever to cook its books in the European Union!"

Of course European monetary union has always implied a degree of book-cooking. But just to gain entry to the single currency Greece had to commit grand fraud — pretending that their budget deficit was 3% when it was in fact 15% — a situation which was only fully revealed once the IMF had had a chance to de-manipulate all the numbers and uncover some of the expenses which had been simply shifted out of the accounts to prepare the way for euro membership.

As with much of the sub-prime lending that went on prior to 2008, it must have been obvious to quite a few people (who should now feel thoroughly ashamed of themselves) that Athens was utterly crooked and therefore a very bad bet.

And some of the usual suspects from across the pond quickly became involved to make things even worse: Goldman Sachs reportedly took $300m in fees for fixing up some suspect loans which helped the Greek government to disguise its real level of indebtedness. The Wall Street men also taught the Greeks how to securitise future income streams from things like the lottery and motorway tolls, so they could spend cash up front from revenues yet to be received. As individual blame connected with collective blame, local blame duly connected with global blame.

2012, here we come.... (#19)

At 12m, the population of Greece is roughly equivalent to that of Guatemala, though the Greek economy is around four times as large. This hasn't stopped the denizens of that Mediterranean land from running their taxation system along Third World lines.

While researching Boomerang in Athens, Michael Lewis had a coffee with a disgraced, formerly whistle-blowing tax inspector who made a point of pointing out how the waitress in the smart hotel cafe in which their interview was being conducted, had singularly failed to supply the author with a receipt.

Sales tax avoidance is of course rife here in Guatemala, though the standard method is a little less flagrant; one could even say a little more sophisticated. For many of the retailers in this town (big international operators like McDonalds included) provide customers with receipts which appear to have been printed using ink which fades to illegibility within a day or so of the purchase.

In Greece as in Guatemala, sales tax is only so important because only a minority are in a position where income tax is much of a bother to them. (Usually only salaried employees). Lewis explains how Greece has the largest number of 'self-employed' workers in the Eurozone, most of whom, including surgeons earning millions of euros have no problem reporting their annual income as €12,000 thereby entitling themselves to the 0% tax rate. In fact two thirds of Greek doctors pay no income tax at all, though presumably they have to expectorate the odd bribe or two.

There are laws against tax avoidance in Greece, but enforcing them would apparently mean imprisoning almost every single doctor in the country. And quite possibly each and every member of the 300-strong Greek parliament as well, because it has been revealed that not a single one of them is being taxed on the real value of their properties. And we Brits were indignant when our MPs started building duck ponds off the back of their Parliamentary expenses!

The similarities with Guatemala reemerge when Greece's system for taxation based on real estate values are considered, though the Greeks also lack a proper national land registry. Properties have a computer-generated 'objective' value and as prices have risen these have tended to stay static. The difference is usually paid in cash, with only the formula-driven value reported to the revenue collectors.

Here in Panorama, real estate values have increased quite dramatically over the past thirty years since our colonia was founded. Many of the original residents would have a real problem paying the annual impuesto de inmueble based on any kind of 'real' valuation, and so a variety of techniques exist for keeping the burden both manageable and, you might say, equitable.

Firstly, any legal documents relating to sales or transfers attempt to preserve the valuation dating back to the 80s. Lots with houses on them are often reported as baldíos for tax purposes. Inheritances can be handled as sales within the family whereby the children are sold plots (often by pre-deceased parents) at bargain prices, which are then solidified in the associated paperwork. And in general Guatemalan citizens like to hold their central and local governments to ransom by not offering up their accumulated tax debts until the last possible moment, in the hope of extracting some sort of special offer — such as pay up now and we'll offer you a moratorium on the mora (fine), you can pay by installments etc.

As a consequence of all this the Guatemalan government collects revenues equivalent to just 11% of GDP. Even the Greeks can manage three times that at 33%, but given the fact that their economy is four times as large, one has to assume they have more people in a position to contribute if the inclination somehow grabbed them.

Michael Lewis however concludes that the evasion of taxes is likely to remain endemic in Greece, in part because it's hard to enforce a prohibition against such a widespread abuse, and in part because any cases that do make it to court, take an average of fifteen years to prosecute. As the tax collector reported to him...

"The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It's a cavalier offence — like a gentleman not opening a door for a lady."

2012, here we come.... (#18)

In Greece the banks didn't sink the country. The country sank the banks — Michael Lewis, Boomerang.

Greece's bankers were amongst the most conservative in the Eurozone during the last decade. They somehow neglected to award themselves huge sums of money and stayed well away from the American subprime scene. (In fact the worst bet they made was on their own government.)

Instead you could say that the people earning whopping, unjustifiable bonuses over there can mostly be found working for the state: the average public sector worker in fact earns three times as much as the average private sector one, and has seen his or her pay double in real terms over the past 12 years — bribes not included, as Lewis helpfully points out.

The state-owned railway company has to offset a wage bill of €400m and other outgoings totalling €300m against its annual revenues of €100m. Meanwhile its average employee earns €65,000 a year and expects to retire at 55.

So it's not just the lenders who are going to need to take a 'haircut' if the Greek situation is to have any meaningful resolution. To those who say that austerity is the not the right approach the current global financial crisis, I would say that in the case of the Greeks, oh yes it is.

So, while one can begin to sympathise with the Germans when they peevishly suggest that Greece should sell a few of its islands to help meet its obligations, all this would really achieve is leave them with fewer assets and a reduced 'export' income from tourism next time the debt gets out of control, as it most surely will, unless significant adjustments are made to the corrupt and wasteful Greek state.

Anyway, Lewis's excellent new book serves as a reminder that it is too easy to blame the bankers for this whole mess we're in (even the ones who were fishermen just a few years previously). Cheap credit created temptations and exaggerated behavious across whole sectors of society.

He likens it to locking whole nations in a dark room with a pile of borrowed money. Each succumbed to a different temptation...

"What the Greeks wanted to do once the lights went out..was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it."

Clarification required?

Had to tap myself on the head a few times this week listening to the hacks from up in the imperio yanqui querying the manner of Moammar Gaddafi's death.

After all, he had only just narrowly avoided America's chosen method of liquidation for what their President has described as 'Arab leaders' (and anyone else who happens to be in the vicinity, and regardless of whether they carry a US passport.)...the unmanned drone attack.

Well, that and a French bomb, one or both of which may represent a fictitious attempt to share the praise/blame.

That some random Libyan should choose to put a bullet in the hated tyrant's head in the middle of a war zone after 42 years of misrule and eight months of civil strife, in which said dictator passed up on a number of clear opportunities to vacate, has somehow become the cause of a great deal of tut-tutting.

The inverse loyalty scheme

Over the course of the past few years we have been repeatedly netflixed by the lady who runs the shop right in front of our house.

Each time we show any kind of propensity to repeat purchase specific items over the medium term, she raises the price of said items*, presumably for us only — so more or less the opposite approach to the coupon schemes run by the big UK chains like TESCO.

And whenever this happens I stop buying the item in question forthwith, as if to demonstrate that the apparent convenience offered by her tienda (if I tripped up on the cobbles outside my front door I'd probably end up at her counter) will not so easily translate into economic captivity.

Now I'm not a total codo — I can spot a value-added shopping experience when I see it (Waitrose over Tesco say) — it's just that I am not really seeing it here. And unlike our old friend in Federal lock-up, I don't have an inherent problem with differential pricing schemes, even 'gringo' prices (though V has actually had the worst experience of hikes), it's just that I don't care to be gamed in this way, and would have thought that our response might have put a stop to it by now.

We're down to a few items where the opportunity for opportunistic margin grabbing are limited; eggs for example. I stopped buying milk there last week when she upped the price by another Q0.50, thereby handing the Bodegona a 20% price advantage.

When it comes to the afternoon bread session, I try to intercept the van before it reaches the shop. Firstly, this permits me to ensure that all the pirujos, bolas, champurradas etc. that we buy are fresh, because the tienda-owner likes to pad out one's purchase with a few odds and ends left over from the morning, or even the previous afternoon. That's if she is willing to sell you any bread at all unless you have made a prior arrangement to reserve Qx from each delivery.** The bread that has not been firmly set aside will be sitting there in its basket, but she will be extraordinarily reluctant to part with it, perhaps because she will need it to add a few squishily stale rayaditas to tomorrows orders.

*In the case of red wine, she stopped stocking my preferred brand of Chilean plonk and instead started offering another label which costs Q15 more.

** This sort of lock-in might work for the majority of our neighbours — who are nothing if not slaves to routine — but our dietary habits and timetables are generally more flexible, so I want to be able to impulse purchase my bakery products.

2012, here we come.... (#17)

And here's a chart from another continent that tells a scary story. Chinese GDP figures released this week might seem to suggest the possibility of a softer landing over there, but when you look at the way real GDP and nominal GDP have diverged since 2008, there are clear signs that things may actually be getting bubblier.

2012, here we come.... (#16)

Today the can-kickers took it to another level, kicking the can with the can in it further down the road, via a de facto delay to the EU summit and the decision everyone kind of hopes it will come up with.

Meanwhile, MoneyGame published what it describes as the 'new scariest chart in Europe' (above), with the following commentary:

Greece, in a way, seems like a lost cause. Everyone knows it will default in some way or another. But while Greece might theoretically be ring-fencable, nobody thinks Italy is...

2012, here we come.... (#15)

Gold traders are reportedly more bullish about their prospects next week than they have been for several months.

Maybe they have heard the latest audio message from Rapture prophet Harold Camping who remains set in the view that the end will come before we've even said hello to 2012. Having been largely wrong about May 21, Camping has turned his attention to October 21, next Friday, which he cautiously predicts will be "the final end of everything".

This time "the end is going to come very, very quietly," Camping affirms, without such telegenic collateral effects as earthquakes, volcanic eruptions and catastrophic tsunamis.

And fortunately, "There will be no pain suffered by anyone because of their rebellion against God," (even commodity speculators), because "he has no pleasure in the death of the wicked."

2012, here we come.... (#14)

The panic is starting to take hold...

Campero's image 'adjustment'

Severo is about right in this instance.

Having worked with companies like Shell that protect and venerate their brand/marque with a near religious devotion, this update from los Gutiérrez strikes me as reckless, whatever its relative merits aesthetically.

When you choose to revamp rather than refresh you are often showing premeditated disrespect for those customers who have, in some cases, a lifetime's worth of emotional investment in your brand.

It matters less for B2B firms, but leading consumer brands always try to make iterative changes where there is something in the design that signals backward compatibility. I'm not really seeing it here.

I note that their main corporate website has yet to make the leap, so either PC intends to roll out the new image regionally (something one of the world's leading brand owners like Shell is unlikely to contemplate), or they are being a bit chicken, and want to test the waters in Texas with a potentially more yufe-ful customer base before admitting to a brand desecration back home in the motherland.

2012, here we come.... (#13)

Fools' errands and fools' gold...is how leading American historian John W. Dower has characterised both post the 9-11 military-statebuilding adventures and the financial collapse of 2008.

These were parallel phenomena in his mind, because both were grounded in historical amnesia and an ideological commitment to the notion that we have somehow slipped the usual constraints, allowing free makets alone to take full control of both political and economic systems.

So perhaps it isn't so hard to see why some of our fellow Europeans have tended to regard the resulting mess as largely an 'anglo-saxon' problem. This allowed them to erect an imaginary Maginot line between themselves and the consequences of this anglophone shallow-mindedness, and now that it has been definitively breached, they are only just starting to realise how much trouble they are in.

When the crisis first broke regulators ordered European banks to increase their liquidity buffers and most of them did so by investing heavily in government bonds, seen then as comparatively risk-free as well as highly liquid. Meanwhile, believing that the problem lay elsewhere, the French and the Germans went about the recapitalisation of their banking system with a lot less enthusiasm than their US and UK counterparts.

Now almost half of the €6,500bn stock of eurozone sovereign debt is showing signs of heightened credit risk and this particular, highly interconnected part of the global financial infrastructure is surely carrying the greatest exposure.

As Jeremy Warner put it recently in the Telegraph:

BNP alone has a eurozone sovereign debt exposure of some €75bn, amounting to roughly 6% of total assets, including €14bn of Greek debt and €21bn of Italian government bonds. And that's just BNP. The other two major French banks, SocGen and Credit Agricole each have exposures of a similar order of magnitude. Collectively, French banks have €56bn of Greek sovereign bonds alone. They've so far only written down this Greek debt by around 20%, or in line with the restructuring agreed at the time of the last bailout.

2012, here we come.... (#12)

Jason O'Mahoney in Marketwatch yesterday:

"It’s kind of like being on a family safari: There’s a herd of elephants charging towards you, but your young kids just love the cute elephants and if you shoot them they’ll never forgive you. Yet if you don’t shoot them, there’s a very good chance the elephants will trample both you and your whole family. Welcome to the choices facing the leaders of the European Union."

Later in the article the author manoeuvres his elephantine prose into a new metaphor of impending yet (supposedly) avoidable calamity:

"There are some who argue that if Captain Smith had turned the Titanic into the iceberg and rammed it direct, the move would have damaged the ship but left it afloat while at the same time destroying his reputation. Today, Titanic would be a metaphor for a crazy captain who annoyed 2,223 passengers, instead of a maritime disaster. Europe’s leaders don’t need the benefit of historical hindsight. They can see the disaster coming and they know that the only way to save the ship is to go at it with overwhelming force, even if it destroys their political names in the process. The iceberg is looming out of the night. It’s time to decide."

Nada Haces Por Mí

Mexico is one of three nations which spring to mind sharing a pronounced pop-cultural obsession with efflorescent females.

Juan Carlos Lozano's video for his new solo rolo Nada Haces Por Mí, ever-present these days on Telehit, can be found closer to the tasteful French end of this slightly suspect scale than the pervy Japanese position at the other extremity. Lozano himself sits at the leading edge of Mexican ambient electro-pop/rock having headed up both Moenia and Morbo before setting off on his own with this catchy track.

2012, here we come.... (#11)

"Living through a collapse is a curious experience. Perhaps the most curious part is that nobody wants to admit it's a collapse. The results of half a century of debt-fuelled "growth" are becoming impossible to convincingly deny, but even as economies and certainties crumble, our appointed leaders bravely hold the line. No one wants to be the first to say the dam is cracked beyond repair."

That was the opening paragraph from Paul Kingsnorth's Guardian piece last week, in which he sought to draw our attention back to the work of Leopold Kohr, for whom bigness was never a good thing. Most political and economic systems (even Communism) work well on a small scale, he believed, but once they grow become increasingly problematic. Kingsnorth thinks he may have been on to something...

"The crisis currently playing out on the world stage is a crisis of growth. Not, as we are regularly told, a crisis caused by too little growth, but by too much of it. Banks grew so big that their collapse would have brought down the entire global economy. To prevent this, they were bailed out with huge tranches of public money, which in turn is precipitating social crises on the streets of western nations. The European Union has grown so big, and so unaccountable, that it threatens to collapse in on itself. Corporations have grown so big that they are overwhelming democracies and building a global plutocracy to serve their own interests. The human economy as a whole has grown so big that it has been able to change the atmospheric composition of the planet and precipitate a mass extinction event."

2012, here we come.... (#10)

Historically 90% of all American economic expansions have been of less than three years' duration. So perhaps one ought not to be so surprised that things appear to be about to go in the other, wrong direction. Yet I still cling to the view that, left to its own devices, the US economy has (or had) the ability to muddle through this situation.

The trouble is that would require a hypothetical situation in which everyone is constrained to act like jurors in an on-going trial, and thereby prevented from reading or viewing any commentary on its progress. For such is the condition of modern communications that all prophecies — even Mayan ones — tend to be self-fulfilling. (Mea culpa...)

The nature of short selling is that it helps to bring about the desired situation while creating a backlog of negative sentiment. Economic data published this week may not have been as scary as it might have been, but now the prevalent expectation has been recalibrated based on events in August. The hedge fungus and other speculators have been back on the case of the global banking system since the current crisis entered a new phase around the time the House Republicans revealed the true nature of their insanity. As John Lanchester puts it:

"The disturbing thing about the whole process wasn't so much that the Tea Partiers were irrational as that they were irrationalist; they were consciously pursuing a course of action which made no economic sense, as part of a world-view which is essentially theological."

Lanchester compares Rumsfeld's known and unknown unknowns with what investors might describe as risk and uncertainty. The former is the natural state of affairs, the environment in which they function, the latter is 'uncharted territory' and thus much harder to operate within, as well as being fairly terrifying.

As we commence viewing Act III of this particular Greek tragedy, all other stock market signals are being drowned out by emotive headlines. CNBC's Jeff Cox explains..

"In a normal market, the wide disparity between the Dow Jones Industrial Average and technicals would be screaming an ugly message, but these are not normal times. That's because the massive amount of headline risk—market moves driven by the constant churn of big news events—is at an apex"

So none of the usual risk signals really count right now and the Greek 'news event' is not a risk signal at all, for it has been cloaked in the unknown unknown of uncertainty (and the irrationality of that perverse doomsday faction within the GOP).

2012, here we come.... (#9)

While politicians from both sides of the pond have been attempting to reassure markets by reiterating their determination to kick the can ever further down the road, leading economists have, rather unhelpfully, already called the end game.

Nouriel Roubini, that fraternity's reassuringly nicknamed Dr Death, was first off the mark as usual.

"Greece is stuck in a vicious cycle of insolvency, low competitiveness and ever-deepening depression. Exacerbated by a draconian fiscal austerity, its public debt is heading towards 200 per cent of gross domestic product. To escape, Greece must now begin an orderly default, voluntarily exit the eurozone and return to the drachma."

Acknowledging that there are no real rules in place for how this might be achieved, and that both a good deal of international trauma and 'collateral damage' are inevitable, he too cites Argentina's pesification of its dollar debts and those dodgy folk on Iceland as examples of an effective emergency response.

Aside from an immediate restoration of competitiveness, Roubini mentions the more dubious secondary benefit of other Eurozone economies being able to see clearly just how screwed over the Greeks end up and thus having "a chance to decide for themselves whether they want to follow suit, or remain in the euro, with all the costs that come with that choice."

Others, while also favouring an orderly default, find the prospect of a Greek euro-exit too scary, while Citi's Willem Buiter believes it won't do any good anyway in terms of restoring competitiveness. In this he has been backed up by Ian Bremner, Visiting Fellow at LSE, who adds that

"The problem with this line of argument, however, is that Greece actually is less exposed to international trade than any other eurozone country. Only €16bn of its €230bn gross domestic product is export-based. True, the tourism industry does comprise a significant 15 per cent of GDP, but a devaluation would have limited upside against Greece’s less expensive Mediterranean competitors such as Turkey. Worse, Greece has a mountain of debt denominated in euros. A switch to a new drachma would not change this. In fact, the drachma’s devaluation would only make the debt that remains that much harder to pay off."

Furthermore..

"No legal framework exists for an exit from the euro. Greece would have to negotiate with its eurozone partners, and most likely with the 27-member European Union. It would be a prolonged and messy process, creating a political and economic drag for everyone involved."

As of yesterday it is advantage can kickers for the time being. Merkel has got through her local vote on the EFSF with her majority intact, but it won't be until the second half of next month that all the other members of the EU have caught up...around the same time that the Greek state starts to run out of money for pensions and salaries.

Anyway, the spectre of a catastrophic collapse before the next crucial German vote on EFSF2.5 in early 2012 does seems to be receding; the policy makers appear to be making the present state of traumatic uncertainty that much more durable with their not quite satisfactory fixes.

2012, here we come.... (#8)

"Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation. They need to regain control and they need to do so now."

So says George Soros in this morning's FT. He proposes a 3-step solution:

First, the governments of the eurozone must agree in principle on a new treaty creating a common treasury for the eurozone. In the meantime, the major banks must be put under European Central Bank direction in return for a temporary guarantee and permanent recapitalisation. The ECB would direct the banks to maintain their credit lines and outstanding loans, while closely monitoring risks taken for their own accounts. Third, the ECB would enable countries such as Italy and Spain to temporarily refinance their debt at a very low cost. These steps would calm the markets and give Europe time to develop a growth strategy, without which the debt problem cannot be solved.

Of course there may be bold and creative solutions to this crisis out there, but what are the chances that politicians everywhere are going to find themselves hamstrung by their parties, their electorates and by the limitations and fundamentally mal-coordinated nature of national and international institutions? Who or what is ever going to regain control?

I'd like to think that 'behind closed doors' the people with the power to act already have a handle on this, but then I am, in spite of the tenor of this series of posts, some sort of optimist.

2012, here we come.... (#7)

It has been reported today that William Hague, Her Majesty's Foreign Secretary, characterised the Euro as a burning building with no exits back in 1998. Others have since deployed the slightly less gruesome comparison with the Hotel California; if there are any exits, suffice to say they have not been clearly marked...

2012, here we come.... (#6)

Dead cats are once more a'bouncing as chatter spreads about a multi-trillion dollar windfall to the European Finances Seriously Fucked (EFSF) fund at some as yet unspecified date in the future.

But lo, who is that yonder complaining that the EU was specifically created in order to undermine the good ol' US of A and that not a penny of hard-earned American money should be 'sent overseas' with the intent of saving the likes of those cheese-eating surrender monkeys once again.

Yes, it's Rep. Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference, who released a statement yesterday saying that she would oppose any effort increase funding for the International Monetary Fund to be used to bail out European banks.

No matter that the US carries a $17bn vulnerability to Greek sovereign debt, $2bn more than the UK, and a total of $187bn of PIIGS exposure.

2012, here we come.... (#5)

When Argentina pulled off the biggest sovereign debt default in history back in 2001, it owed $82bn. Greece owes $500bn. Yikes, eh? Whether we're talking about a neat 50% 'haircut' or a full-on grunt-style buzzcut, it's not going to be especially fetching.

Not without irony, Argentina is now oft-cited as an example of vaguely positive damage limitation. This is partly because some of the pain was shifted from external creditors onto local savers and because, thanks largely to a strong dose of Peronist protectionism, local living standards have rebounded somewhat in the subsequent decade. (Not that international lenders are going to extend them further financing for a very long time.)

Argentina's default should properly be seen as a recent episode within the rather more tragic largometraje tracking the most spectacular decline in comparative affluence in world economic history. Just before WWI Argies enjoyed a higher standard of living than both the French and the Germans. They then spent the better part of half a century slipping from the First World to the Third, the only nation to have ever really accomplished this feat. (So far.)

These days they enjoy a GDP per capita of $15,854 which, in spite of the recent 'resurgence' barely exceeds that of Mexico ($15, 113). The banker bods at UBS recently opined that a Greek default (followed potentially by a Euro-exit) would quickly shave off at least 50% off their GDP. In per capita terms this currently stands at $28,434, so the suggestion is that the most likely scenario would see Greece falling back in line with the likes of near neighbours Bulgaria ($13,563) or even Romania ($11,860), which would leave the EU's southern border looking remarkably like that of the USA.