Friday, September 30, 2011

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."


"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.

Thursday, September 29, 2011

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.

Wednesday, September 28, 2011

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...

Tuesday, September 27, 2011

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.

Rise and shine

I recall now why we tend to avoid going out with the dogs first thing. One has to run the gauntlet of the 7am rush, which can be like playing some weird, live chapin version of Grand Theft Auto.

Outside the front door await the resident early-idling citizenry...consisting to a truly disheartening extent of hipocritas, egoistas, resentidos and free-floating chiribisqueros plus other assorted lifestyle bottom-feeders, and enriched at this hour by clusters of puddle-hopping estudiantes, blithely-urinating albañiles, pinches salariados, and cascades of bicicletistas imprudentes.

Then there's the paranoid poof with his can of Mace, who runs off screaming insults in the American vernacular every time he sees Jin and, if we're really unlucky, the knuckle-dragging brinconcito, who shuffles past gesturing at the ludicrously large gun that he carries under his sweatshirt.

Potentially even more hazardous are the extralegally-hooting madres de la alta suciedad, many still in their night clothes as they undertake their time-trial school runs, handling their vehicles as if any pedestrian in their path is to be swatted aside like a late-shift zancudo.

Better to stay indoors with our platanitos fritos and freshly-brewed coffee. After 11am, the only human obstacles are the shambling undead known locally as bolitos.

Monday, September 26, 2011

2012, here we come.... (#4)

It was amusing to hear Angela Merkel calling this weekend for a 'barrier' to be erected around Greece. Anyone with any sense has to realise that the firewall will have to ultimately extend around the borders of France and Germany itself, at the very least.

But of course managing German expectations is going to be the key to the progress of this particular systemic failure. The Americans in particular have surely already figured out that it will be easier to get the Krouts to cough up if they think they are protecting themselves (via some sort of stop loss provision) than if they think they are bailing out the good-for-nothing Greeks, and transatlantic political discourse over the past week or so has adjusted itself appropriately.

Merkel and co still don't seem to be in any great hurry to sort out the EFSF (European Finances Seriously Fucked?) emergency fund, a permanent 'backstop' which is not due to take proper shape before the mid part of next year.

Saturday, September 24, 2011

2012, here we come.... (#3)

Seemingly also trapped between a rock and a hard place is President Obama.

Specifically he has been boxed in by the people who created the conditions for global economic catastrophe (the free market fundamentalists of the GOP) and the people who are most likely going to get the blame for it (the Europeans, particularly them feckless southern ones).

The President's approval ratings are already low enough to suggest that re-election in 2012 will be an uphill struggle, so you can understand why he's been war-dialling Sarko and Merkel lately in the hope that some sort of firewall can be erected across the Atlantic, strong enough to hold up through the autumn of next year.

As far as the wider institutions of the EU are concerned, the path of least resistance is always going to be a bigger mess rather than a stronger union, especially under the present set of constraints, time in particular. But Obama has to be hoping that the French and the Germans at least can come up with a coordinated approach to bolstering their banks and ring-fencing other vulnerable, yet not entirely bankrupt economies such as Italy and Spain, in the increasingly likely event of the Greeks coming unstuck some time before the US Presidential election.

G20 finance ministers meeting in Washington DC this weekend have been pepped up by US Treasury Secretary Timothy Geithner's calls for a 'decisive signal', but perhaps their minds will have been even more concentrated by the reported remarks of Greek finance minister Evangelos Venizelos, who apparently thinks his country has three options at the moment, and that the best of these is treating its creditors to a 50% 'haircut'.

Meanwhile, surely the best case scenario for the US administration right now is a contained explosion in Athens, which somehow fails to develop into a cataclysmic chain reaction.

2012, here we come.... (#2)

Greece's present predicament is not entirely unlike that of Aron Ralston in 127 Hours. They went for a hazardous trek in the Euro canyon and have ended up trapped between a rock and a hard place.

Ralston survived thanks to the timely realization that only by cutting off his own arm could he hope to break free. The Greeks have reached this point now too, but unfortunately there's an old treaty kicking around which expressly forbids this kind of opportunistic self-amputation.

In fact Greece cannot do anything to alleviate its situation right now without the unanimous support of its sixteen Eurozone cuates, some of whom seem to have switched off their mobile phones (Slovakia, Slovenia...).

Thursday, September 22, 2011

2012, here we come.... (#1)

The American psyche features a unique juxtaposition of unfounded optimism (remember Reagan's "It's still morning in America"?) and latent apocalyptic expectation. There in a nutshell you have your explanation for the recent volatility on US financial markets: it's as if current world conditions have been finely calibrated to set off violent spasms of see-sawing stateside sentiment.

Wednesday, September 21, 2011

Triangle (2009)

Christopher Smith is an English director who specializes in postmodern indie horror movies - films that successfully strive to be a bit more than the sum of their borrowed parts.

This one, made just before Black Death, pointed strongly to his evolution as an interesting 'original' voice in the genre.

It's going to be hard to discuss without laying down a few spoilers, so in this instance I won't try all that hard to avoid it.

First let me say that no matter how bad the movies they feature in, there is something about ghostly empty liners from the 20s or 30s that has always appealed to me. There's inevitably a bit of Shining-au-mer about this particular horror trope, and in Triangle the quotations are explicit. Smith's achievement here is to take a potentially over-familiar format and keep the viewer guessing throughout.

The liner in this story, the Aeolus, becomes the core scenario (and then rather oddly un-becomes it in the third act) for a set of nested repetitions and duplications which appear to revolve around the character Jess, played by Melissa George. In perhaps the movie's most striking scene, a dying woman crawls into a corner of the deck where two dozen or so versions of her dead self lie in various states of decomposition and perforation by seagulls.

The plot is clever enough that Smith probably had to scribble it out diagrammatically before he started typing. Clearly he would have liked it to be a bit more that just structurally clever, but in this there are signs that he struggled a bit. He does after all seem to be a better director than he is a screenwriter, and whilst we had no quibbles with his ability to involve us and occasionally chill us right through to to the conclusion, the narrative has one or two weak points, at least when one pauses to consider it, in the round.

Peter Bradshaw of the Guardian suspects that the premature disappearance of a female character called Heather is a plot hole. No, not really...she just drowned. But why introduce her in the first place if she is going to be demised somewhat contingently before the main engine of the plot has kicked in? (More worrying perhaps is what happened to the character with the hole in the back of his head at the end of the initial repeat.)

The plot doesn't have obvious holes, but Smith had to make a couple of obvious compromises to keep things together. Firstly, although at one point there surely must be three Jesses in operation, we only ever see two. Secondly, the re-initiation of the cycles can only really happen if Jess goes (inexplicably) from full awareness of her predicament to a vague sense of déjà vu.

There is also an apparently throw-away splice point in the narrative, when we see Jess considering her reflection in a cracked mirror and then follow the reflection out onto the deck. If this moment had any significance, it's not something I have sorted out after a single viewing!

And as mentioned above, Jess's assumption that the recapitulations were localised to the liner was one that I think was worth hanging on to, in the name of overall mythological sense, in spite of the mild twisty moment served up by the pile of dead gulls on the beach.

The all-Aussie cast has done a fairly competent job of appearing to be American, unfortunately the same cannot be said of the Australian coast's efforts at resembling Florida.

Still, an impressive, thought-provoking if not resolving chiller flick, which shows the kind of cleverness that can be derived from the UK's stupidity tax (Lottery funding).


Friday, September 09, 2011

Notes on 1Q84: No1

One hundred and fifty pages into the Barcelona edition of Book One, and I think I'm beginning to understand the meaning of the title. This is more than I can say, for example, after completing the first two books of Bolaño's equally voluminous 2666.

I have to say that if I were to be making my living as one of those ghastly editor types, I'd probably have wanted to snip around 10% of the words from every scene I've come across to this point. Heaviness isn't something I have come to associate with Murakami, however much extraneous detail he might seem to willfully introduce into the moment. I suppose the Spanish translation may be partly to blame (the English one is taking its time to reach the shops as publishers promulgate the appropriate volume of buzz), but I do recall noticing that my feet were immersed in treacle at times during The Wind Up Bird Chronicle as well.

Murakami has set about an inherently more ambitious two stream narrative structure in 1Q84. One of these follows a very familiar route: one of the author's notoriously anodyne male leads is lured into mysterious territory by an enigmatic younger female. The other also features an enigmatic lady, Aomame, but she is very much more than the sum of her quirks, an apparently fully rounded feminine protagonist, and one whose day job comes as an unexpected early revelation which surely marked the moment I became fully committed to the novel.

And yet the spice of this precocious twist derives from the fact that Aomame's extraordinary vocation remains an apparently secondary part of the predicament that Murakami has established for her: her dawning realisation that the reality she is experiencing following the impulsive use of an emergency exit on a city highway to escape a major jam, differs in several important respects from the one that she began her day with. This alternative to the 'real' 1984 features the consequences of a couple of localized but significant recent news events of which she has no recollection, plus one potentially major international one, and she has duly dubbed it 1Q84.

At this moment one potential point of intersection between the alternating narrative streams is suggested, but at this stage it is only the vaguest of hints. The male lead, Tengo (an individual whose very name causes a handful of comprehension issues in the Spanish edition), a mathematics professor and would-be novelist, is compulsively pursuing what he suspects is a morally-suspect project suggested by friend and ghastly editor-type Komatsu, which involves re-writing a story conceived by a dyslexic schoolgirl in order to win a major literary prize.

Anyway, the point of connection, however tenuous, has at least temporarily alleviated the sensation of reading two entirely distinct novels concurrently.

I find that the parallel narrative format generally works better for authors of the sort of books that sell well at airports, because the fundamental technique of such writing is to interest the reader so much in the future that they can't wait to rush onwards, barely taking note of the present instant.

Now Murakami is himself no slouch when it comes to asking questions and delaying the answers, but he also has something of the skill of great literary writers (such as the aforementioned Roberto Bolaño) of involving us so much in the details of the present instant that we barely notice the compulsion to turn the page. I can't help feeling that in terms of forward momentum, Murakami has sacrificed something here to his new dual protagonist format; a fine line is being trod, but so far I am not having to work too hard to keep up the trail.

Thor (2011)

I have to admit I really quite enjoyed Branagh's Thor, but then I read Roger Ebert's remarks and felt not a little ashamed!

On further reflection, it occurs to me that many of his criticisms (the profound silliness of Asgard and its occupants for example) could just as readily be directed at many of Wagner's operas without them immediately shedding their status as serious works of art. Not that that is what we have here, but Branagh's sensibility has a high camp operatic quality to it and I'm sure that is why Marvel picked him for this segment of their catalogue, and not because, as Ebert suggests in his one and a half star review, someone screamed "Get Branagh, he deals with that Shakespeare crap."

And so what if the infrastructure in dire peril here consists of a bunch of New Mexico 7-Elevens? The small town, desert location has genre resonance and the silliness would surely have got out of control if larger populations and more recognisable landmarks had been drawn into this ultimately tongue-in-cheek tale of clashing celestial realms.

Grade: B(+)

Sunday, September 04, 2011

Torchwood: Miracle Day

How does Torchwood manage to be so consistently entertaining and so annoying at the same time?

John Barrowman observed that the short five episode season in which we last came across Captain Jack and his mortality issues was too short for his taste. Well, now Starz and the Beeb have finally combined to give us some more Torchwood and this time we get ten whole episodes, though once again with an over-arching theme: one day people just stop dying.

The doubling of time available has however allowed a team of writers and directors to use this as a platform for exploring a range of different themes and parallels including concentration camps, gayness and Catholicism and the evil that is corporate PR.

On top of this one has the inevitably rather awkward transatlanticking of the original rather Welsh format, which seems to have been achieved by snapping on some CIA-types who seem to have been imagined using the remarkably similar FBI-types we came across in the doomed ABC series FlashForward. Viewers will recall that this too had a seemingly straightforward premise which became a bit of a mess across the season, but that was really nothing compared to the dog's dinner we have here.

Behind all the campness Torchwood was always a more intelligent series than FlashForward and there were moments in the first four or so episodes when I was genuinely impressed with the way that the consequences of global non-mortality were being thought through. But then it gradually became clear that, even with just ten episodes, the end product would feature unevenly-developed plotlines and characters, of the sort that we became familiar with in longer running US serials like Heroes and Lost, and where one often had the impression that the production team were making things up as they went along. I do hope there's a point to all this overacting by Bill Pullman for example.

Even the central premise of this new Torchwood has started to drift. A few episodes ago a rogue agent had her neck snapped and yet was still on her feet swiping at a moving vehicle. They have such lust for life, someone then observed, suggesting a zombie strand to the narrative, which never really got going. Yet with two espiodes to go we're now apparently back at a situation where one bullet can remove consciousness permanently, which is basically death, and would surely be recognized as such by any sensible society without the need for ovens.

There's another serious problem. Jorge Luis Borges once said that the key to any crime-mystery is that all the suspects have to be there from the start. The person or persons responsible can't just wander in from stage left at the beginning of Act III, but that is essentially what appears to be happening here.

And yet I am enjoying it so....