Sunday, March 31, 2013

The Colt 45 Chronicle #14

Letter number 14 details my plans for an escape from New York. At this point I had only been in the megalopolis for four months, but I was ready to beat a retreat. I'm trying to get my high school buddy Kevin -- who attended Stanford while I was on the other side of the Bay at Berkeley, and who at the time I was writing lived and worked in Washington, D.C. -- to drive across the country with me in a 1971 Volkswagen bus one chilly December. I didn't have a driver's license. I thought if I had Kevin with me, even if I did the majority of the driving, if we were ever pulled over I could say that I was just giving him a break.

Kevin took a pass. I ended up making the trip by myself. I quit my job at the Foundation Center; and then one Friday evening, I took off across the George Washington Bridge. My biggest concern was a brake light that was out and that I hadn't seen fit to have repaired. I thought that this might very well lead to me being pulled over, and depending on where I was at the time (my plan was to head south to I-40 to get out of the cold December temperatures) and without a valid driver's license, I could end up tossed into some backwater pokey.

After driving for a few hours I had to get off the highway at a town somewhere in the middle of Pennsylvania and find a residential street to park and get some sleep. Despite the fact that I had the heater going full blast, I couldn't feel my feet to operate the pedals; it was well below freezing, in the single digits. Fortunately my wife, right before I left New York City, had pulled the down comforter off our bed and forced it on me. All I had planned on taking with me was a $20 sleeping bag. I might have frozen to death if not for her savvy thoughtfulness.

Things improved from that night on. It was a bitterly cold wherever I went that December, whether it was Pennsylvania, the Southern states traversed by I-40, California or Oregon. But hunkered down at night inside the metal shell of the bus (I couldn't afford motels) with my $20 sleeping bag and the down comforter I made it through.

The next night I spent in parking lot at a rest stop in eastern Tennessee. I got on the road in the early morning dark and considered visiting the Andrew Johnson National Historical Site in Greeneville, but I didn't want to get off I-81; I wanted to get going straight east to west on I-40. I did stop off at the Hermitage in Nashville. A major renovation was underway, but it was open to the public. Andrew Jackson is buried with his wife Rachel Donelson Jackson out back in the garden. It seemed odd that I was able to freely commune with the tomb of one of our greatest presidents. (As a child I had been captivated by Andrew Jackson thanks to a biography by Patricia Miles Martin. Jackson's story is perfect for a boy: it's filled with duels, battles, bloodshed.) I was alone. No one was about. No guards or volunteers, not even any surveillance cameras. But this was 25 years ago. At the Hermitage gift shop I purchased the post card of Rachel below.

I arrived in Los Angeles a few days later. After several sodden days with my friend Shale I drove north to San Francisco where I spent the night with my ex-girlfriend Stacey (who I wrote about in letter number six). It was cold there too. We went to a Mexican restaurant, and Stacey ended up with food poisoning. She was extremely sick all that night, which we spent together on her mattress on the floor. The next morning she still wasn't feeling well; she wanted me to stay. I couldn't; I had to get back on the road. I had to drive to Oregon where I was going to meet my wife and celebrate Christmas with her family. Stacey implored me to at least walk her roommate's dog before I left, which I did. But I made the mistake of taking the pooch, a young boxer, off leash when we got to a small park near Stacey's apartment, and she proceeded to tear holy hell through the flowers and shrubs. Park workers shouted at me to bring her to heel. There were a couple other dog-walkers there who recognized the roommate's dog and knew her by name and eventually got her under control. They scanned me with an appraising eye and barely concealed distaste.

Stacey never forgave me for leaving her that morning, for not staying to make sure that she was going to be okay. Below is the message I wrote on the back of the Rachel post card. As you can see, I never mailed it:

The quote, "I hear the mountains are doing fine," is from Neil Young's song, "Motion Pictures," off On the Beach (1974), one of his Ditch Trilogy albums that was my Bible from 1987 to 1993:

By now, if you've read any of these old letters, you should know that I was sauced when I typed what you find below.
Autumn 1988 
Took the bus in on election day to get the front end aligned and a grease job and new tire. Except for a quick tune and oil change, the stallion is ready to ride. It's heart is strong -- shit, you can feel it rhyme right under you as you ride down the road. (Ashley is actively opposed; but that's to be expected.) The trip I'm talking about is just one of those things that buzzes in the back of your head while you ride the subway to work. I promised myself early on that I wasn't gonna let this daydream die (because, as I know you know, the daydream saves your life). No, we die too many deaths during the day -- this and that little fantasy cruise on in, and, sadly we let them, consciously, premeditatedly, tweet on by. We convince ourselves, "Never mind, just coffee chatter, just that fucking Diet Coke; it can't mean anything about me, about my worklife pattern." I'm tired of crucifying my secret wants. -------------- So this is my manifesto, and it's labelled ration: I must ride the stallion West: behind the wheel, gas and clutch under foot, like Jason behind the sail of Argo: you must, if you would, come with me. 
The earth is supposed to be curved, but we can cut a line across it, like a Roman aqueduct; a skateboard bridge that will shoot us back into the cradle, the West, the land of our inception. -- I got wino trash in my brain and heart, but I'm smart enough to realize that; that the Bible is always a backward look, to home and David and dynasty, and all that unrequited shit. And this isn't bad; it's just some great good mystery, like seeing the ocean at dark. Who knows what'll happen when we get there. I figure we got to hit LA first so we can do Andy and Shale for a few nights. They need and deserve a little of our attention, and we deserve a little of theirs. (My buddy Eric is there and so are Colum and Niall.) We'll get drunk, feel the geography and
time, and maybe even puke, like I did at Stanford that night you guys cut my hair, when you had a different woman. Since then I've puked at least as many times as the pharaohs have died.
(We chopped up Oregon good in high school, thanks to [debate coach] John Treadway. Wow, imagine that. I could always fall asleep the easiest when the debate van was going the fastest; when John T., at three in the morning, was gorging the pedal. Think of that shit we did then as teenagers.) 
-- Every story takes place on the road; and if it's not about the road, it's like a road. Jesus died for our sins, and I believe that. I'm pretty sure he didn't die for our sins, that is, for you and me, but he died for that general idea. Jesus was always on the road.

Easter Sunday Astral Weeks Immersion

This Easter we have a sunny day here in the Emerald City; it pushing 60°F before noon. I went out for a run this morning. The cherry blossom trees and crocus are in bloom and the streets were clear of vehicle traffic, though there were plenty of joggers.

As I set out, Bob Dylan's "Solid Rock," a great Easter song, off Saved (1980), played on my iPod. (I'd post it here, but unfortunately most of Dylan's songs are blocked on YouTube, no doubt at the behest of Sony Music Entertainment.)

By the time I finished the run my iPod nano touch had died. Battery failure. The touch screen had gone dark last week, but it still managed to work; I guess that's an indication of approaching battery failure. Since I begin a long train commute on Tuesday, I promptly ordered a 7th Generation nano touch on Amazon to be delivered tomorrow. Can't be without music.

I'm working through the Van Morrison ouevre this Easter. So far I've listened to Irish Heartbeat (1988), and Astral Weeks, both the 1968 original and Astral Weeks: Live at the Hollywood Bowl (2009).

My favorite cut off Astral Weeks, an album I've been listening to just about my entire life (my father was a Van Morrison devotee), is track #3, "Sweet Thing."

Spielberg's Lincoln

Steven Spielberg's Lincoln was my movie selection last night. The screenplay is written by Tony Kushner based on Doris Kearns Goodwin's 2005 book, Team of Rivals: The Political Genius of Abraham Lincoln. Kushner tells the story of the passage, by a lame duck Congress in January of 1865, of a Constitutional Amendment abolishing slavery. And he does it impeccably. Don't believe any of the blather you might hear about the film being too long; it is not. It clocks in at approximately the same time as Zero Dark Thirty, two-and-a-half hours, and it moves along just as briskly (if not more so).

The opening scene has Lincoln, played by the Oscar-winning Daniel Day-Lewis, meeting troops, both black and white, getting ready to march to battle. It's an incredible scene, understated but tense; I even started to tear up. So right away I knew Spielberg, Kushner and Lewis were going to deliver the goods. And they do -- throughout the entire film.

That Argo won Best Picture and not Lincoln speaks poorly of the voting membership of the Academy. On the one hand you have a historical sideshow from the dawn of the age of neoliberalism and neoconservatism theatrically inflated to make us feel warm and fuzzy about the CIA and imperial America; on the other, you have a taut politico-historical drama that shines a light on an amazing moment, a moment that has run through our politics forever after -- the outlawing of slavery. (It's hard not to think of today's GOP House majority when watching Lincoln; then it was the Copperhead Democrats, led by Congressmen Fernando Wood and George H. Pendleton, standing in the path of change. The problem today is that we have no Lincoln in the White House or Thaddeus Stevens in Congress.)

Even if you're not a student of American political historical, Lincoln deserves a screening for the performance by Daniel Day-Lewis and the writing of Tony Kushner.

Saturday, March 30, 2013

Destruction of the Economy in Cyprus

One small Cyprus story this morning by Landon Thomas Jr., "Some Savers in Cyprus May Lose 60 Percent," buried on page B7 of the New York Times Busines section belies its importance. Deposits above 100,000 euros at the nation's largest bank, the Bank of Cyprus, will be confiscated to the tune of 60% to 77.5%. According to Thomas,
Over the past week, government officials have been saying that depositor losses would not exceed 40 percent — even though bankers and lawyers involved in the negotiations have been warning for some time that the final figure would need to be higher if the bank was to re emerge as a viable entity. 
Under the terms of the transaction, large depositors would have 77.5 percent of their savings turned into different forms of equity. 37.5 percent would be direct equity, in the bank with the rest coming in the form of securities that may convert into shares at a certain period. The remaining 22.5 percent would be a frozen, non-interest-bearing deposit that they would be able to access in the future. 
As a result of this arrangement, the bank’s largest depositors will initially become its major shareholders. 
If the bank does well, depositors would be able to sell their stock. But even in the best case, in which the bank thrives on the back of a quickly recovering economy — a long shot most economists believe — the loss is likely to exceed 60 percent and could well be much more than that. 
Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent.
To get a sense of the implications of this latest development check out today's must-read post by Yves Smith on naked capitalism, "Destruction of Cyprus Economy Proceeding Ahead of Schedule,"  which concludes as follows:

Now remember, Laiki and Bank of Cyprus were the core of the payments system in Cyprus. And it would be very difficult for a business of meaningful size not to have over €100,000 in deposits. If you freeze a significant majority of the commercial balances, how can you operate? How can these businesses even survive and pay each other? By e-mail, Antonis Polemitis of Ledra Capital teased out the implications:
If the Reuters story is correct, for the purposes of liquidity on Tuesday morning, that is a 100% haircut. 
If that is what they do, I am not sure how Cyprus can engage in economic activity on Tuesday without going to barter or scrips. 
I mean, that basically will mean 100% of the large deposits (all the business accounts) at Laiki and BoC are lost or not available as of next week. The Laiki wipe out may have been survivable. If you wipe (for liquidity purposes at least), both Laiki and BoC, then we are not talking about whether or not GDP drops X%, we are talking about ‘how do you actually engage in commerce?’ 
If they do this, there is little chance it can last more than a month — the economy will simply fail at even basic functions…
And if the plan has been accurately reported and plays out as Polemitis fears, it will undermine the “Cyprus is a special case” narrative. This Eurozone fiasco is making Geithner look good. The former Treasury secretary used the need to keep the confidence fairy alive as the excuse for any and every sop to the banks, from coddling miscreant executives to foaming the runway with mortgage borrowers to stealth bailouts. But the Eurocrats have completely ignored the impact of undermining confidence in the banking system. The fact that Cyprus has a decent-sized population of English retirees means that the British media will report on the Cyprus meltdown, which will be a stark contrast with Greece, where the economic devastation has not gotten the coverage it warrants. Grim accounts of the destruction wrought by the tender ministrations of the Troika should strengthen the position of the growing Euroskeptic sentiment in Italy, borne out by the success of Berlusconi and Grillo in the recent elections. Playing into the hands of Italian refuseniks should be the last thing Brussels and Berlin want. The cost of getting tough with Cyprus is likely to be far greater than they anticipate.
It's hard to find fault with this analysis, unless some sort of exception is made for business accounts, which is probably illegal (but capital controls in the eurozone were supposed to be illegal too). Bersani can't form a government in Italy. The next month should be a momentous one for Europe. Get those sell orders in.


Laughter is a salutation, an open door, a call to "Come on in." I realized this today running in the midday sunshine and warmth, taking on the Lake Union Loop for the first time in three weeks. I was bearing down upon the suffering road, which in this case was the long parking lot that parallels Westlake Avenue North as it runs along the lake, when I heard a woman's laugh. My head automatically snapped to the direction from which it came. Our reaction to laughter is hardwired; it has to be.

This is another great cut, the last track, "Sister," off Antibalas' Who is This America? (2004):

Uncanny Avengers #4

I am an adult who reads comic books. For some reason there is opprobrium attached to this distinction. But comic books are no longer the juvenile media they were when I read them as a child. The superhero titles published by the two industry giants, Marvel and DC, are for the most part morally complex, well written and aimed at an adult audience; if they are targeting juveniles, they're juveniles who can, for instance, stomach abstruse details about Norse mythology and comprehend theoretical physics. I've learned a lot about accepting pain and moving forward by reading The Punisher, Marvel's ongoing saga of nihilist vigilante Frank Castle.

But before I say anything else, check out this page, written by Rick Remender with art by John Cassaday, from Uncanny Avengers #4. The Red Skull is breaking it down for Captain America:

This is something that could have only appeared in an underground comic when I was a kid. If the text is too small to read from the scan, here's what the Red Skull is telling Cap:
Seeing your nation with fresh eyes my dear Captain America, I assure you --  
You've lost your war
It just happened so slowly you grew accustomed to it.
But if you look to your heart, you will realize the truth. 
You're no longer fighting to preserve this rancid nation -- 
You're fighting to change it back
To add some semblance of sanity to an incurably sick culture that breeds only parasites, greedy polluters and psychotic madmen. 
A hopeless struggle you continue out of habit.
You imagine that if you fight hard enough, one day you will wrest control from the bankers who own you and return this nation to its former glory
Clean streets. Honest neighbors. Attractive wives. Green lawns. 
But in reality this is, and will remain, your America
An uneducated population fixated on competition, material wealth and voyeurism. 
Violent monsters doused in antibiotics to offset their diet of sugary sweet drink and mounds of carcinogenic cow flesh! 
Damn. That's a fine Marvel comic book.

I started reading comic books again four years ago, around the same time that I started having trouble with my last girlfriend. At first I just wanted to make an inventory of an old comic collection that I had stowed in the closet. I started reading some titles, like the Black Panther vs. Killmonger saga in Jungle Actionthat had left an impression on me growing up in the Bay Area in the 1970's. Next thing I knew I was going to a comic shop. As my relationship imploded it was nice to sojourn with the heroes of my youth.

I'm going to try to make Saturday the day I post about comic books. So far we've got a few regular features on this blog. We've got a Friday evening "Hippies vs. Punks" post; a Sunday morning movie review of a recently-released-to-DVD Hollywood film; a Sunday evening archive project, working through letters I wrote soon after being belched from the academy into New York City in the late 1980's; -- to go along with the daily quotidian commentary of reading the news and listening to music and running and going to work.

I recently caught up on all the back issues of Thor and Journey Into Mystery. It chewed up weekend after weekend in February and March, but I'm glad I took the time. Kieron Gillen's run on Journey Into Mystery was impressive; it featured the reborn boy Loki as the protagonist, and it managed to capture the pure-heart mischievousness of youth; it managed to make the star of the comic book the putative prototypical comic book reader, a boy.

Marvel's Thor turned fifty last year. In this fiftieth anniversary year of the Kennedy assassination I will mention that an epiphany I had during the millennium when I was deep in the reeds of the Kennedy assassination literature is that there is a connection between Jack Kirby's "The Mighty Thor" and Jack Kennedy. Thor's face as drawn by Kirby looks too similar to JFK's for it to be an accident. Kirby is saying something. What?

Friday, March 29, 2013

Hippies vs. Punks: The Jimi-Janis Die-Off Event

Theodore Roszak warned against the Hippies' obsession with drug use in The Making of a Counter Culture; he devoted an entire chapter to it at the very heart of the book, "The Counterfeit Infinity: The Use and Abuse of Psychedelic Experience."

In 1970 the Hippies lost two of their leading lights within a month. Jimi Hendrix loaded on sleeping pills drowned in his own puke in September; Janis Joplin overdosed on heroin in October. I remember when my mother announced the news to the family. We were in the kitchen and it was early morning. I can't differentiate the two announcements. I know she made a separate one for each, but in my memory they are fused as a single moment. The great Jimi-Janis extinction event. It rocked the Hippies to their core.

The die-off due to overdose and burnout has to be considered as a factor in the rapid ascension of the Punks in the late 1970's. Any avant-garde wedded, as most are, to alcohol and drug use has a limited lifespan. If we date the Hippies from the summer of 1964, as we did earlier, that means by the end of 1970 they had been partying hard for seven years. Jimi and Janis certainly had. And they both gave up the ghost at 27 years of age. The body can only take so much. (Twenty-seven is when I first felt the lasting effects of regular, heavy drinking. I got a pair of black eyes that never left.)

You can see from this listless almost self-parodying performance at the Isle of Wight Festival three weeks before his death that Hendrix was spent:

For Hippies who kept at it for another five years, if death didn't result then mental and physical impairment often did. Did George Harrison ever recover creatively from his coked-out Dark Horse tour? One can argue that he did not. By the time the Punks arrive on the scene the Hippies are reeling from the effects of 11 years of drinking, smoking and drugging; they're easy pickings for a pack of "no future" nihilists.

Ten years ago I read Victor Bockris' Patti Smith: An Unauthorized Biography. I had picked it up off a remainder table. In the 1990's Patti Smith's husband, Fred "Sonic" Smith; her original Patti Smith Group keyboard player, Richard Sohl; and her brother, Todd, all died, depending on where you read it, of heart attacks (some sources refer to Todd's cause of death as stroke). The oldest, at 45, was Fred "Sonic" Smith.

The rocker, whether Punk or Hippie, rockin' it true doesn't last long. The proto-Punk avatar poet Arthur Rimbaud is the Romantic model; he only made it to 37. 

Cyprus Temporary Capital Controls Likely To Last a Long Time

Cyprus' capital controls, only to last for one week, will now be in effect for at least a month. This from a story today by Andrew Higgins and Liz Alderman, "Long Lines as Banks Reopen in Cyprus After Freeze":
Not since the introduction of the euro in January 1999 has a European country blocked bank depositors from having full access to their own cash. Under European Union treaties, such restrictions are normally forbidden. But the European Commission, the union’s administrative arm, issued a statement Thursday morning that the Cyprus controls were legal — though urging that they be rescinded as soon as possible. Originally, the controls were to be in place for one week. But on Thursday, the Cypriot foreign minister, Ioannis Kasoulides, said that restrictions on financial transactions would not be lifted for a month.
A naked capitalism cross post from VoxEU today by Jon Danielsson, Director of the ESRC funded Systemic Risk Centre, London School of Economics, argues that the example of Iceland proves that temporary capital controls should, for all intents, be considered permanent:
Another European country was forced to implement `temporary’ capital controls in its crisis – Iceland, as discussed here on Vox (Danielsson and Arnason 2011). 
The Icelandic government, its central bank and the IMF considered the controls necessary because so many foreigners, and the occasional wealthy Icelander, had lost faith in the economy and only wanted to take their money out. While such individuals were considered misguided, their exit would have had disastrous consequences. Hence it was thought necessary to `temporarily’ prevent capital outflows. 
The authorities said at the time the controls would be temporary and limited in scope – lasting a few weeks or, at worst, a month or two. Half a decade later, the capital controls are still in place and getting more and more restrictive. 
This was the second time Iceland had implemented `temporary’ capital controls. The first time it did so, in the 1930s, led to the controls being in place until 1993. This is in line with the historical evidence; once capital controls are imposed, they are really hard to abolish, and a temporary arrangement usually ends up being permanent.
Reporting from Nicosia, Landon Thomas Jr. says the prevailing wisdom appears to be holding. Cyprus is a one-off and will not spread:
“People have lost all their money,” screamed a young financier Wednesday night, as he knocked back drink after drink at a local nightclub — which, despite the earsplitting din of Greek rap music, was half empty. “To me, that feels like war.” 
But on a global scale, investors have refused to panic, other than unloading the risky bonds of second-tier banks in Spain and Italy. 
And while the bond yields of Italian government debt have spiked in recent days, a signal of investor wariness, and the euro has traded down against the dollar, the view, for now, is that even though Europe’s handling of the crisis has been a mess, broader contagion has largely been avoided. 
“This does not worry us at all — Cyprus is just not systemic,” said a senior executive at a large sovereign wealth fund based in the Middle East, who was not authorized to speak publicly. 
Even Cypriot government bonds that are due to reach maturity this June are holding up fairly well, trading at 88 cents, not far from their recent high of 94 cents earlier this week, though a 12 percent discount from their face value.
But Floyd Norris in a High & Low Finance column that appears side by side with Thomas' piece sees signs of a spreading instability:
The fact the hot money stayed even after it became clear the Cypriot banks were in trouble — in large part because of all the Greek bonds they owned — is a testament to the false security the euro provided even after the Greek crisis erupted. That security has faded, at least a little. The cost of credit-default swaps on European banks has been rising since Cyprus got into trouble, suggesting the market thinks bank defaults have grown more likely. That cost continued to rise after the latest plan was announced. It does not help that European leaders seem unable to decide whether the Cypriot deal would set a precedent if banks in other countries get into trouble. It does, whatever they say, or at least it could. 
A few months ago, Europe was supposed to be on the way to a banking union, an arrangement that it was hoped would prevent what has now happened in Cyprus. What happens to those plans will be an indication of whether Europe can continue to hold the euro zone together. 
It may help that Cyprus is so insignificant. Its economy is about one-tenth the size of Ireland’s, which itself is among the smaller economies in the euro zone. It is even smaller than Vermont’s, which is smaller than that of any other state. We can only shudder at what might happen if banks in a big euro zone country got into a lot of trouble.
The next small eurozone country headed to the troika for a bailout, according to naked capitalism's Yves Smith, is Slovenia.

Political Ferment in Karachi

Declan Walsh and Zia ur-Rehman have an interesting story today, "Taliban Spread Terror in Karachi as the New Gang in Town." The Pakistani Taliban is targeting two rival Karachi political parties -- the ethnic Pashtun Awami National Party and the ethnic Mohajir Muttahida Qaumi Movement -- and taking their turf.
Police officials, militant sources and Pashtun residents say that three major Taliban factions operate in Karachi — the most powerful one, which is rooted in South Waziristan and dominated by the Mehsud tribe, and two others from the Swat and Mohmand areas.

A senior city police officer, speaking on the condition of anonymity, said that militant commanders with those factions send operational orders to Karachi from the tribal belt; while some captured militants have tried to justify their activities by citing the authorization of religious clerics in the northwest. 
In cases, he added, regular criminal groups have posed as Taliban fighters in a bid to increase their power of intimidation. 
Just why the Taliban are adopting such an aggressive profile in Karachi right now is unclear. Some cite the greater number of militants fleeing Pakistani military operations in the northwest; others say it may be the product of dwindling funds, as jihadi donors in the Persian Gulf states turn to the Middle East.
Imagine a city like Karachi -- 20 million souls (compared to New York City's 8.3 million) with real political parties (not the completely moribund ones, both ruled by the 1%, that are featured in our dysfunctional duopoly). We bomb countries in the name of democracy, but those countries, at least in the case of Pakistan, often times have more democracy than we do.

For a brief period I attempted a study of Pakistan's politics. I read several books by Tariq Ali; on my web browser I bookmarked Dawn and Foreign Policy's AfPak Daily Brief. But it proved too much to keep up with.

Walsh and ur-Rehman conclude their story by saying that a brake on the Taliban's spread in Karachi could be Mullah Omar himself:
Other factors limit the Pakistani Taliban’s ingress into Karachi. One of the more provocative ones is that allied militants — particularly the Afghan Taliban — might not like the added publicity. The Afghan wing has long used the city as place to rest and resupply. There are longstanding rumors that the movement’s leader, Mullah Muhammad Omar, is taking shelter here, and that his leadership council, known as the Quetta Shura, has met in Karachi.

Thursday, March 28, 2013

Capital Controls in Cyprus, Bank Lines Not as Long as Expected

Banks opened today in Cyprus. There were lines but not as long as some anticipated. The S&P 500 established a new record, 1569.19, breaking the old one set in October of 2007. I'd say it's time to start selling.

The capital controls in Cyprus include the following: funds cannot be electronically transferred to another country; a maximum of 3,000 euros in cash can be taken out of the country; allowable ATM withdrawals have been increased to 300 euros a day from 100 euros; credit and debit card charges are limited to 5,000 euros a person a month; banks will accept payroll checks as deposits but will not cash them. This info can all be found in Liz Alderman's story, "Cyprus Sets Up Tight Controls as Banks Prepare to Reopen," from this morning.

Imagine the same restrictions in the United States. There would be an armed insurrection.

The EU is coming under fire. As Alderman says,
Under European Union treaties, restricting the free movement of capital is forbidden. Critics say that what is happening in Cyprus shows that union rules will be flouted when the International Monetary Fund, the European Central Bank and European Union leaders find it convenient to do so.
By imposing capital controls, European and Cypriot officials have effectively created two classes of euro: cash that can be freely spent, and cash that is locked up by capital controls, effectively diminishing its value.
“It has to be acknowledged that this is something entirely new,” said Nicolas Véron, a senior fellow at Bruegel, a research group in Brussels, and a visiting fellow at the Peterson Institute for International Economics in Washington. “This will shape expectations in other countries, and the issue is whether capital controls can be avoided in future episodes.”
Borrowing rates for Italy and Spain increased yesterday.

Joe Namath's C.C. and Company, an Easy Rider for the Suburbs

As students settled in for another school year the fall of 1970 C.C. and Company was released in American theaters. Starring Joe NamathAnn-Margret and William Smith, it is a fascinating attempt to cash in on the counterculture classic Easy Rider which appeared the year before. (Both "C.C." and "Easy" refer back to the Ma Rainey song "See See Rider.")

C.C. and Company is worth study; it is a classic in cooptation. America is divided. College campuses are aflame with protest. It's the Hippies vs. the Squares, and Joe Namath is the transitional character.

Joe Namath was an American demigod in the late 1960's, early 1970's. He was accepted by both the Hippie and the Square as beatific. He was iconoclastic but a willing and able pitchman for commercial capitalism; he sold everything from Noxzema shaving cream and Hanes pantyhose to his Hamilton Beach Little Mac 60-second Burger Machine. I loved him as a kid, and I remain a true believer and loyal fan as an adult. The broken wrist Namath suffered against the Baltimore Colts at Shea Stadium four days after the opening of C.C. and Company marked the beginning of his end; he never made the playoffs again.

To get a sense of what we're talking about here in terms of the depth of the divide between Hip and Square that C.C. and Company is attempting to bridge, all one need do is look at this clip of Wayne Cochran doing his cracker James Brown act while Joe Willie and Ann-Margret incinerate the dance floor. Notice the fast cutting of lovemaking scenes:

The full film can be seen on YouTube:

Wednesday, March 27, 2013

Cyprus: "The Money is Going to Stay There for a Very Long Time"

Banks are scheduled to open tomorrow in Cyprus and rules outlining how people can access their money are still being promulgated. This is from today's story, "In Cyprus, Big Losses Expected on Deposits," by Landon Thomas Jr.:
The government is also struggling to come up with some form of capital controls in a bid to prevent too much money from draining from the banks and leaving the country. Given that more than 30 percent of the Bank of Cyprus’s 14 billion euros in long-term deposits belongs to foreigners — mostly Russians and Greeks — who would not hesitate to take their money out of the country, the restrictions on those funds are likely to be onerous, bankers say. 
“That money is going to stay there for a very long time,” said one person who has been involved in the discussions, but who requested anonymity because he was not authorized to speak publicly.
Beyond the challenge of dealing with the large depositors is the question of what to do with about 27 billion euros in deposits in accounts under 100,000 euros that now carry the Cypriot government’s full backing, following last weekend’s reversal of the decision to tax those deposits, too. That figure alone exceeds Cyprus’s annual gross domestic product of 18 billion euros. 
If the banks reopen on Thursday, as planned, Cyprus’s shellshocked citizens will have access to their insured deposits for the first time in more than a week. With their bills and fears mounting, it is widely expected that many will immediately seek to remove these funds from the banks. 
For now, officials say, it is likely that uninsured depositors will face stiff restrictions when it comes to withdrawing money from an automated teller machine or sending money abroad. But if a depositor at Bank of Cyprus wanted to transfer funds to, say, Hellenic Bank, a smaller institution that is in better shape, the controls would be less severe because that money would remain within the Cypriot banking system. Such arcane mechanisms are now being thrashed out in Brussels and Frankfurt.
With more time to consider the bailout an assessment has gone from bad to worse. The low end of the haircut, 30%, for uninsured depositors at the Bank of Cyprus has given way to the high end, 40%, because the bailout estimate of a 3% contraction of Cyprus' economy is being reassessed as too modest; now, according to Thomas' story, economists are predicting a shrinkage of 5%-10% within a year.

Andrew Higgins and Liz Alderman have a good "how we got here" story today, "Europeans Planted Seeds of Crisis in Cyprus." The Eurogroup's decision in October 2011 to make private-sector investors take a 50% write-down on Greek government bonds doomed Laiki Bank. Higgins and Alderman conclude their story with seven paragraphs that pretty much sum up the whole story heretofore. And the gist of it is that the eurozone is finished:
After the Greek write-down, Cyprus compounded its problems by dithering on whether to seek a bailout from the European Union. At first, it appealed to Russia, which provided a 2.5 billion-euro loan in December 2011. But this money quickly ran out, and when Cyprus did finally go cap-in-hand to its European partners for a lifeline, it received a rude shock: Germany, already gearing up for an election this year, wanted not just budget cuts and other conventional austerity measures but a complete overhaul of Cyprus’s economic model, built around financial services for foreigners seeking ways to dodge taxes and, Berlin suspected, launder dirty money. 
“They did not want the Cypriot model to exist as it did — they wanted Cyprus to stop being a financial center,” said Pambos Papageorgiou, a former central bank board member who is now a member of parliament and on its finance committee. “It was very brutal, like warfare.” 
Mr. Papageorgiou complained that the European Union had shown “the opposite of solidarity” in its dealings with one of its weakest and most vulnerable members. 
In the three years since Europe’s rolling debt crisis first exploded in Greece, governments and citizens in the hardest-hit nations have fumed that decisions made in Brussels pay little heed to their interests and are dictated instead by the economic concerns and election cycles of Germany. Whether in Athens, Dublin, Rome, Madrid or Nicosia, people increasingly ask whether the European Union serves their own aspirations or those of remote institutions dominated by others, particularly Germans. 
Such questions have grown to a furious pitch in Cyprus, where terms set early Monday for a 10 billion-euro bailout will deepen an already painful recession and send unemployment — now at 15 percent — soaring. They require the dismantling of Laiki Bank, with the loss of around 2,500 jobs, and a significant reduction in the country’s role as an offshore financial center. 
“We are looking at a very grim future for Cyprus,” said Michael Olympios, chairman of the Cyprus Investor Association, a lobbying group. “Even firm believers in European project like myself see now that it was a bad idea and that we should have at least stayed out of the euro.” 
As jobs disappear and the economy contracts, Mr. Olympios said, faith in Europe will wither. “I used to be a believer. Not anymore.”
The eurozone will continue on for some time of course. But this is the beginning of the end. Bigger is not always better. The idea has finally sunk in.

Tuesday, March 26, 2013

"Ohio" + Plastic Paper Clips from the 1980s

I thought I had finally finished my box transport and shelving project today only to find out at 3 PM that I've got a big day ahead of me tomorrow. There turns out to be a closet, a large closet, in the business manager's office filled with boxes of documents that need to be labeled, added to the database, transported to the new building and then shelved. I'd say I'm looking at 30 more boxes.

Today I savored pulling what I thought were the last files out of their banker boxes and placing them on the metal shelving. Modest Mouse's "Ohio" played on the iPod (my touch screen has gone dark, but it still works):

I forgot how good their first album is. I see that Christgau gave This Is a Long Drive for Someone with Nothing to Think About (1996) an A-minus.

One of the joys of my job is finding treasures secreted away for decades in banker boxes. I found a pristine envelope filled with colored plastic paperclips that used to be popular in the 1980's. It provided a window on what the future looked like in the past:

Along with the obsolete colored plastic paperclips was an excellent little brochure on fleas put out in 1985 by Washington State Department of Social & Health Services:

Why did the business representative have a flea pamphlet in his papers? Maybe there was a grievance filed by a union member being forced to work in a flea-invested environment.

Cyprus Augurs End of Euro

Why is Cyprus so important? Because it marks the end of the euro as we know it. This from today's excellent offering from Liz Alderman and Landon Thomas Jr., "With or Without Bailout, Cypriots Lose Trust in Banks":
“For the first time, we have capital controls in the euro zone,” said Nicolas Véron, a senior fellow at Bruegel, a policy research group in Brussels, and a visiting fellow at the Peterson Institute for International Economics in Washington. “The next time there is a crisis somewhere else in the world, people will think of what happened in Cyprus and will try to get their money out much faster. These are the new rules of the game.”
My interest in and concern with Cyprus is what happens to markets once the realization sinks in that the eurozone is starting to disintegrate. Yesterday, after Eurogroup head Jeroen Dijsselbloem said that Cyprus would be a model going forward, European markets dropped. This from Alderman and Thomas:
Stocks were down broadly in Europe on Monday, after the head of the Eurogroup, Jeroen Dijsselbloem, suggested that the idea of skimming savers’ accounts to bail out banks could be considered a “template” for other countries. The borrowing costs of the financially shaky Spain and Italy surged upward as the markets digested the Cyprus news — and the broader implications for the euro currency union.
Dijsselbloem later disavowed this statement, saying that Cyprus was a one-off, and in this he was supported by officials from the ECB (for more, check out the story this morning by Liz Alderman and David Jolly, "Head of Cyprus's Biggest Bank Resigns"). But even if it's not true, and bail-ins are not the new normal, the impression created by the Cyprus bailout negotiations is one of chaos. As the New York Times sums up in an editorial this morning:
Though it is better than the initial plan, the new agreement does not inspire much hope. It represents the latest in a series of slapdash and last-minute European efforts to prevent financial Armageddon in one country or another. Many analysts have noted that this deal leaves the government of Cyprus with an impossibly high debt burden, about 140 percent of its gross domestic product, and will impose many years of hardship and pain on its people and its economy.
For Spain, Italy and other troubled euro zone countries, Cyprus is an unnerving example. Individuals and businesses in those countries will probably split up their savings into smaller accounts or move some of their money to another country. If a lot of depositors withdraw cash from the weakest banks in those countries, Europe could have another crisis on its hands. 
The way to prevent financial catastrophes like this is to impose strong centralized regulations on all banks and recapitalize or restructure weakened ones. Most important, the policy makers need to scrap austerity programs that are making it nearly impossible for the European economy and financial system to recover.
Suffering is certainly ahead for Cypriots as they go the way of Greece and Portugal and Ireland and Spain. The question is whether that pain finds its way to our shores. A scenario that has to be contemplated is one where U.S. markets react negatively as the eurozone's disintegration accelerates. We are not flush with economic health in this country; we cannot sustain another significant market drop. Yesterday at work I saw a Reuter's headline online, "Student loan write-offs hit $3 billion in first two months of year" -- up 36% from the same period last year. More people are going back to school. Why? Because there is nothing else to do. There is not enough work.

Monday, March 25, 2013

"Neon Beanbag" + "Neon Meate Dream of an Octafish"

Today, the sun! I took my first lunch break in three weeks. My chores of transporting boxes to the new building are almost completely finished. I now have only a few more days in the Pratt Park neighborhood before it's an ignominious return to public transportation; in my case, the light rail out to Seatac.

At lunch I walked up to Douglass Truth Library and returned a Clifford Brown and Max Roach CD, and then it was back to my usual bench in Pratt Park facing south. A perfect early spring afternoon. And to top it off I was treated to a majestic alphabetical song title sort combination. First, from Stereolab's Chemical Chords (2008) album, the lead track, "Neon Beanbag":

That got my toes tapping and head bobbing in the noon sunshine. Then, next up, I was showered by Captain Beefheart & The Magic Band's "Neon Meate Dream of an Octafish" off the seminal Trout Mask Replica (1969):

All in the sun. Both songs made great sense being drenched by sunlight while I wore a black fleece. Fiat lux!

Dijsselbloem's Deal with Anastasiades

A deal is reported to have been struck between the Eurogroup, led by Jeroen Dijsselbloem of the Netherlands, and Cyprus President Nicos Anastasiades. Here's how it breaks down, according to a cross post by this morning on naked capitalism:
  1. Laiki is resolved via good bank / bad bank, with uninsured depositors (4.2B) most likely losing everything (along with shareholders and bond holders). 
  2. Bank of Cyprus will have a bail-in of uninsured depositors, with them losing between 30-40% most likely. Shareholders and bond holders will be wiped out. 
  3. Troika will lend 10B to the Cyprus government, solely for fiscal purposes and based on a memorandum to be determined. None of the troika funds will be used for the bank bailout.
  4. Insured depositors will be protected (sub 100K euros). 
  5. The 9B of ELA [Emergency Liquidity Assistance] at Laiki will be transferred to Bank of Cyprus. This is the single most bizarre and unfair part of the agreement. It has not been discussed why the Bank of Cyprus creditors should be paying for the ELA of Laiki and no reporter pressed with a follow-up question. 
  6. Note that for the most part the bailout is NOT hitting the Russian depositors that hard but will hit local Cyprus depositors hard. Russian depositors were not largely at Bank of Cyprus.
Gone is the specific demand that Cyprus raise 5.8 billion euros since none of the 10 billion euros the Troika is lending is going to a bank bailout. There is some question whether the deal needs to be approved by Cyprus' Parliament. Dijsselbloem is quoted in today's New York Times saying that it can implemented immediately. But naked capitalism raises the possibility that this is not the case:
I have been operating on the assumption ... that the deal negotiated in the early AM in Brussels was set because it relied on the bailout provisions already passed by the Cypriot parliament and did not require additional approvals. And of course, one of the biggest tricks in deal land is to act like something is done even if the remaining “technical” details aren’t technical but are actually substantive and could be used to stymie consummation of the transaction. 
However, Richard Smith has found a tweet that suggests otherwise:

If this source is right, it’s still possible for the Parliament to reject the deal. Consistent with that being possible, I noticed how the recent rounds of messaging about the pact considerably downplayed how bad the hits to Cypriot borrower would be (as in it seemed to be more in sales mode than I would have expected). The early estimates (not official, just based on a look at the balance sheet and knowledge of what was on it) was that the Laiki depositors >€100,000 would be very lucky to get anything back, and the Bank of Cyprus losses for the over €100,000 depositors had been 22% to 25%, and that may not include the ELA transfer, which would presumably increase the losses considerably. 
Admittedly, at this point, the inertial course would be to approve the agreement. However, the influential Archbishop of Cyprus advocated leaving the Eurozone over the weekend. That plus a show of outrage from the population could undo what seems to be a settled deal. And that would have more immediate, unexpected ramifications.
Krugman in his column this morning welcomes the imposition of capital controls in Cyprus and provides a little historical perspective:
I am, of course, not the first person to notice the correlation between the freeing up of global capital and the proliferation of financial crises; Harvard’s Dani Rodrik began banging this drum back in the 1990s. Until recently, however, it was possible to argue that the crisis problem was restricted to poorer nations, that wealthy economies were somehow immune to being whipsawed by love-’em-and-leave-’em global investors. That was a comforting thought — but Europe’s travails demonstrate that it was wishful thinking. 
And it’s not just Europe. In the last decade America, too, experienced a huge housing bubble fed by foreign money, followed by a nasty hangover after the bubble burst. The damage was mitigated by the fact that we borrowed in our own currency, but it’s still our worst crisis since the 1930s. 
Now what? I don’t expect to see a wholesale, sudden rejection of the idea that money should be free to go wherever it wants, whenever it wants. There may well, however, be a process of erosion, as governments intervene to limit both the pace at which money comes in and the rate at which it goes out. Global capitalism is, arguably, on track to become substantially less global. 
And that’s O.K. Right now, the bad old days when it wasn’t that easy to move lots of money across borders are looking pretty good.
Predictions are that Cyprus' economy, 45% of which is in financial services, will shrink 20% to 30% in the next two years.

Sunday, March 24, 2013

The Colt 45 Chronicle #13

Letter number 13, from a collection of letters in a string-tie folder with "autumn 1988 to spring 1990" written on the front in pencil, records a Saturday night in the married student housing tower at Columbia Presbyterian Medical School. It's written to my friends Oliver and Lyn back in Berkeley. I am, as usual, drunk. And I'm reminiscing here about the first time I met them. We all worked at a book delivery service called Baker that was and is still located in Doe Library. The T-buildings (temporary buildings from World War II still standing in the 1980's) referred to below used to be right across University Drive from the main library where Memorial Glade is now located.

What I recall about this evening, but fail to mention in the letter, is that I had noticed that my wife displayed a level of familiarity with and affection for one of her male fellow classmate skit performers. This indicated to me that she had likely shared some sort of physical intimacy with him. During the eight years we spent together she was a serial cheater. Eventually she moved out of the apartment we rented together in Berkeley so that she might pursue her sundry romances in an unrestricted fashion. But when it appeared likely she would be relocating East to attend medical school, she moved back in. I think she knew that she would need a reliable caretaker to get her to the Big Apple; and then once there to cook her meals and maintain the household while she studied. So I was reeled back in.

Drinking and typing letters to friends on the West Coast was my summum bonum.
Autumn 1988 
I almost got scared right out of my skin a few hours ago. I went down, twenty-two floors in the elevator, to a congregation hall where Ashley and some of her fellow first-years were putting on a "skit." Much to my surprise the fucking thing was not just for first-years, it was medical-school wide.
I peek my head in the door and it looks like somebody has spilled the Cheerios box: all this simpering student conservative power, muscle money and clean clean, like some grand divine academic senate. A second-year group is on stage doing a rap skit, a fucking rap skit; what else did I expect? I'm getting sick, really scared. The first thing I think of is getting out of there fast: I know my wallet is in my pocket; I know I have enough for a six pack. But what I'm thinking the whole time is this: My God, I forgot, students still exist; and fuck! they look so Godawful powerful -- pretty, beautiful, strong, comfortable -- that is, like they've always looked; I just forgot. I B-lined it for the exit, shot out of the building and up to the Columbia Deli (where we bought our ice cream), and asked the price of a six of talls. $5.50. Great! I walked back home and got into the elevator. 
When I get off at the twenty-second floor, the woman right next to us in apartment B is out in the hall. She had just sold this stationary bike to some nameless son of Israel who is conscientiously wrapping it all over with large stretches of tape. I say to her, "Congratulations!" She says, "It's finally sold! " (You see, it had been sitting out in the hall for a long time with a sign on it -- "$20.") I say, "Wonderful," and then make it inside the door. I imagine that she has seen the paper bag in my arms and has guessed its contents; I imagine that she knows loud music is to follow; and I imagine that she is reaching for prayer beads and television set to wash my callow bullshit from her heart and ears. But she's cool and has never knocked on the door or wall. So I crack my first tall boy and spin some SOFT BOYS
I've finished the six of talls and am now on the tequila, and thinking is very hard. But please, let me try. It's like thinking through several grade-school chalkboards, but let me try; I'll get something eventually.... I had this thought this morning about the first time I went to work at Baker, that is my first day at Baker, and I met you guys for the first time. And when I woke up this morning I was trying to remember those images, of you guys, as they appeared to me then and not as they appear to me now in my memory after all these damn years. First I remember Lyn because I think she came into the office first (but maybe it was because she was a girl -- no, I distinctly have in mind a scene at the fiche readers, which at that time where over by the side of the office that had the windows looking out at the T-buildings, where Lyn came in first and then Oliver followed). Anyway, Lyn came into the office through the only door there was, and I remember before anything I guess that the light in the office that afternoon, like a lot of afternoons that first summer that I worked there, that the light was this deep languid phosphorescent green-blue, like the sun was fighting its way through a dense tropical canopy of foliage while people swung in hammocks sipping mint juleps, you know, like fish in a very nice aquarium. Anyway, Lyn comes into the office and she's wearing, as my memory tells me, this green and blue sweater, which isn't a turtleneck, but a V-neck with one of those mountain high floppy weird collars. And I'm thinking, Wow! Now that's an angular face. I thought she might be a boy -- very vertical, hair short in that big floppy sweater, very up and down. But then I quickly clued in to the fact that she was like my girlfriend -- who you guys hadn't met yet, who was Ashley -- a women-boy, one of those peculiar hybrids. So I'm introduced to her and she's very nice and demure and polite, and I'm watching all of this from a roughly perpendicular angle, sitting in front of that mound of gray metal shit which is Ben's old desk with all the rapidly yellowing Frank Robinson Giants Chronicle cutouts Scotch-taped to the filing cabinet which housed the old Baker requests, and then Oliver walks in with Laurie and sits down in the empty seat in front of the fiche reader next to Lyn. He's got this monk straight haircut and a pair of wonderful glasses -- "A real scholastic," I say to myself; he's kinda tall and pretty damn skinny. And I know right off the bat that he was older than I was. (It was probably your living with a girlfriend, and all those shots and $3.00 club beers.) But there was love -- this real intense energy -- between the two of you right then, and I think I was the only one there just then, or at least the only one paying any attention to it, in that green-blue light. I felt like I was perched on top of a hundred-foot willow tree looking down between these sharp pencils of praying mantis green at two beautiful urchins, one blond and one brunette.

Bailout Agreements Getting Worse

The Cyprus bailout deal seems to have changed from when I posted yesterday. Now what's being reported by James Kanter and Liz Alderman is that the uninsured deposits above 100,000 euros to be hit with a levy are at the Bank of Cyprus not Laiki Bank, and the tax will be 20% not 22% to 25%. There will a 4% tax on all uninsured deposits at all banks; also, gone is the nationalization of pension funds from state-run companies. According to Kanter and Alderman,
The revised terms under discussion would assess a one-time tax of 20 percent on deposits above 100,000 euros at the Bank of Cyprus, which has the largest number of savings accounts on the island. Because the Bank of Cyprus suffered huge losses on reckless bets that it took on Greek bonds, the government appears to be taking depositors’ money to help plug the hole. 
A separate tax of 4 percent would be assessed on uninsured deposits at all other banks, including the 26 foreign banks that operate in Cyprus. 
Under the plan, savings under 100,000 euros would not be touched — a significant difference from the original plan, which not only enraged Cypriot citizens but ignited fear that precedent had been set for euro zone governments to tap insured bank savings in times of a national emergency. 
Cypriot officials have also backed off a proposal that would have sought to raise billions of additional euros by nationalizing state-owned pension funds. Germany, whose political and financial clout dominates euro zone policy, had indicated it opposes the move.
Naked capitalism is keeping it real per usual with a cross post from Professor Yanis Varoufakis, who blogs regularly on the euro crisis, "While waiting for Cyprus' Godot....":
Every bailout agreement, beginning with Greece’s in May 2010, seems less logical and more toxic than the previous one. The culmination was of course Cyprus this past week. Think about it: In one short week, Europe has managed:
  • To put in jeopardy the hitherto sacrosanct concept of state guaranteed deposit insurance
  • The monetary integrity of the Eurozone
  • The European Union’s single market principle according to which capital controls are a no-no.

Zero Dark Thirty

Zero Dark Thirty, the ambitious two hour and 27 minute Kathryn Bigelow film about the hunt for and killing of Osama bin Laden, was my choice for a movie last night.

The first thing that has to be said is that Bigelow is taking on a lot here, basically our present history of the last 12 years. Everything changes after 9/11. The film begins with a black screen and audio of  911 calls and news flashes from that morning and then shifts to a spartan interrogation room at a nameless military camp where we see Dan, played excellently by Jason Clarke, administer the water torture to an al-Qaeda-affiliated sad sack while Maya, played by Jessica Chastain, looks on.

Overall the best thing about Zero Dark Thirty is Chastain. The movie is about her character's obsessive pursuit of bin Laden; and except for the end when the Navy SEAL team assassinates bin Laden at Abbottabad, Chastain is almost always on screen. She is terrific, magnetic, stunning -- all the superlatives. She presents Maya tough as nails yet vulnerable and fragile, a lonely hunter. In fact, all the performances are topnotch. Kyle Chandler as the Islamabad CIA Station Chief is super, as is Mark Strong as a high-up CIA bureaucrat.

One problem I have with the movie is the way it condenses time; it creates the impression that Osama was pulling the strings on the myriad post-9/11 terrorist bombings when I don't think this was the case. I understand this is something that Bigelow has to do to keep a narrative spanning a decade moving along at a clip that sustains the interest of her viewers, and I was struck by the number of attacks, successful and botched, I had forgotten about like the summer 2005 London bombings or the 2010 Times Square car bomb plot, but still it feels like a screenwriter's contrivance.

At the end, watching the lengthy SEAL assault on the bin Laden compound under the cover of darkness after one of the stealthy helicopters crashes, I realized that both Zero Dark Thirty and Argo act as an exorcism from the American psyche of Carter's failed Operation Eagle Claw. Reagan likely would have won anyway in 1980 -- the country was headed fast toward the Right -- but the fatally bungled Delta Force rescue attempt of the hostages in Tehran definitely doomed Carter. In Argo, Ben Affleck's film dramatizes a successful Tehran rescue; in Zero Dark Thirty, Bigelow dramatizes a successful military helicopter raid, crash and all. After more than thirty years, yes, we might still be wrapped up with Afghanistan and Iran, but look, we're really winners.

Zero Dark Thirty is not a perfect film. It's definitely a good one though, and it might even be great. The final scene is of Maya as the sole passenger on an enormous spotless military transport plane. The camera pulls tight on her face, and she cries. The United States is a hollowed-out power animated by elites. That's the message. Everyone in Zero Dark Thirty is an elite, from the Navy SEAL studs with their beards and keffiyeh to the CIA analysts in their futuristic "Predator Bay." Maya herself is the ultimate elite -- smart, beautiful, focused on her career, feared by the bureaucracy. The only time we really see regular people is when the crying bin Laden children and women appear during the final raid.

Saturday, March 23, 2013

Damage to Cyprus Already Done

Once again the news coming out of Cyprus is not encouraging. Yesterday Cyprus' Parliament came up with a new bailout plan to present to the troika Sunday evening, though it still has to vote on one proposal to confiscate a quarter of all bank deposits above the insured amount of 100,000 euros for Laiki Bank account holders. Parts of the plan that passed, as Liz Alderman and James Kanter report today, include capital controls to prevent withdrawals and account closings as well as the shutting down of Laiki, creating a bad bank for the non-performing accounts and rolling its good accounts into the Bank of Cyprus. Parliament also voted to confiscate the pension funds of state-run companies.

I've seen reports that this might not satisfy the troika. The troika wants the legislation to apply to all Cypriot banks not just Laiki. Cypriot president Anastasiasdes jets to Brussels tomorrow to take his lumps.

The message from all of this -- banks have been closed for over a week now in Cyprus -- is that the damage has already been done. Even if the new bailout plan is accepted by the ECB, the IMF and the European Commission, Cyprus' days as a financial hub are over and capital flight from eurozone countries with vulnerable banks like Spain will likely commence posthaste. As naked capitalism opines in "Cyprus Capitulates to Eurozone (Updated)":
The imposition of capital controls has the potential to alarm depositors in periphery countries even more than deposit seizure. While the Eurocrats can try claiming that the deposit grab is a one-off, the result of Cyprus having a huge financial sector that was heavily deposit funded, it was already troubling that they didn’t go after equity or bondholders. But the imposition of capital controls effectively creates another currency without the benefit of allowing the currency to revalue.
As we’ve indicated, the big risk coming out of the cramdown of Cyprus is a resumption of the flow of deposits out of periphery countries, which had been underway last year but was arrested by the introduction of the OMT. You’d be nuts to keep your money in a Spanish bank after the brutal treatment of Cypriot depositors. Expect Swiss, German, American, and, as Dizard put it, “banco de Mattress” to be the beneficiaries.
So far U.S. markets have dismissed Cyprus as inconsequential. Let's see what the prevailing wisdom is next week. The 17-nation eurozone appears about to shrink.

President's Commission on Campus Unrest 1970

To provide some perspective as to the intensity of what was referred to as "a crisis of violence" in the United States in 1970 here are the opening paragraphs to the introduction of the President's Commission on Campus Unrest:
"Tin soldiers and Nixon coming,
We're finally on our own.
This summer I hear the drumming,
Four dead in Ohio. ..."

Lyrics from Ohio written by Neil Young 
On April 30, 1970, President Richard M. Nixon announced that U.S. and South Vietnamese forces were moving against enemy targets in Cambodia. Minutes after the announcement, student-organized protests were underway at Princeton and Oberlin College. Within a few days, strikes and other protests had taken place at scores of colleges and universities throughout the country. Some twenty new student strikes began each day. 
The expanding wave of strikes brought with it some serious disturbances. One of these occurred at Kent State University in Ohio, where the governor sent approximately 750 Ohio National Guardsmen to quell the disorders. On May 2, the Reserve Officer Training Corps (ROTC) building at Kent State was set afire. On May 4, Kent State students attending a rally on the university commons were ordered to disperse by the National Guard. After students failed to comply with the order, National Guardsmen fired tear gas followed by live ammunition into the crowd. After thirteen seconds of shooting, four students were dead and nine were wounded. 
During the four days that followed the Kent State deaths, there were a hundred or more strikes each day. A student strike center located at Brandeis University reported that by May 10, 448 campuses were either still affected by some sort of strike or completely closed down. 
Ten days after the events at Kent State, demonstrations took place at Jackson State College, a black teacher's college in Jackson, Mississippi. On the night of May 14, protesters set fires and overturned a dump truck, while unrelated persons mistaken for students threw bricks and bottles at passing white motorists. Seventy-five city and state policemen arrived to protect the fire fighters, then remained on campus and backed demonstrators up against a women's dormitory. Following a brief confrontation, the officers fired at the students and into the residence hall. According to Federal Bureau of Investigation estimates, over four-hundred rounds hit the building. Two students were killed and at least twelve were wounded. Other schools joined the student strike, and many temporarily suspended classes in memory of those killed and wounded at Jackson State. By the end of May, according to statistics compiled by the Urban Research Corporation, nearly one-third of the approximately 2,500 colleges and universities had experienced some form of protest activity. The high point of the strikes came during the week following the deaths at Kent State.
To be a Hippie in this environment required some true grit, more than your average Punk had to pony up at a Rock Against Reagan show.

Friday, March 22, 2013

HIppies vs. Punks: MC5

Culturally now we have bantustans. It wasn't always this way. Anything out of the mainstream from the middle 1960's until the late 1970's was called "Hippie." Today we call The Stooges and the MC5 proto-Punk bands. But back in 1969 and 1970 when they put out their first couple of albums they were considered by the overwhelming majority of Nixonian America to be nothing but a bunch of dirty, long-haired Hippies. Freaks.

Proto-Punk bands queer the pitch of Hippies vs. Punks. Earlier we briefly raised the possibility that rather than exterminating the Hippies, the Punks were Hippies who cut their hair and their guitar solos (Crass, who we will consider at length on a future Friday evening, for instance). There is no better example of an Uber-Hippie band being a Punk progenitor than the MC5. (Sonic Youth is partly named after MC5 co-founder and guitarist Fred "Sonic" Smith -- Patti Smith's deceased husband.)

The MC5 were radical, the gold standard of radical Leftists. John Sinclair, co-founder of the White Panther Party, was their guru for a spell. The White Panther manifesto is worth quoting here:
  1. Full endorsement and support of the Black Panther Party's 10-point program and platform.
  2. Total assault on the culture by any means necessary, including rock and roll, dope, and fucking in the streets.
  3. Free exchange of energy and materials—we demand the end of money!
  4. Free food, clothes, housing, dope, music, bodies, medical care—everything free for every body!
  5. Free access to information media—free the technology from the greed creeps!
  6. Free time & space for all humans—dissolve all unnatural boundaries!
  7. Free all schools and all structures from corporate rule—turn the buildings over to the people at once!
  8. Free all prisoners everywhere—they are our comrades!
  9. Free all soldiers at once—no more conscripted armies!
  10. Free the people from their phony "leaders"—everyone must be a leader—freedom means free every one! All Power to the People!
When I entered public school in 1970 I was in the first grade. My parents, who were liberal Democrats but not radical and certainly not Marxist, let me grow my hair long; it was past my ears but not quite down to my shoulders. Like every other seven-year-old kid I didn't like to get my hair cut and hated to have my shoes tied. When I got to Charles Wright Elementary I quickly figured out that I was the only kid there with long hair. Most other boys had military-style crew cuts. I was an outlier; subsequently, I fought constantly. The black kids in particular, sensing that I was not like the other white kids -- that I was vulnerable; that I was a reviled longhair -- liked to fight me; and what was unsavory about it was that compared to the crew-cut white yahoos they generally knew how to punch, and when they hit they hit hard.

This was the romantic life of a Hippie kid. Fighting. For the most part I enjoyed myself. I learned a few reliable moves, my favorite of which was the headlock (it ended things quickly and I didn't have to hit anyone).

What I was going through reflected the polarity of the culture nationally. It was a big -- much more blue-collar and homogeneous than today --  and violent country. Assassinations and riots were regular features of the political landscape. To be a Hippie in this environment was not to be a devotee of peace and love; it was more like being a Punk in a slam dance.

Keep that in mind when you look at this clip of MC5 performing "Kick Out the Jams." These were Hippies who kicked ass:

Iggy at Crosley Field

The House of the Rising Punk is a documentary that appeared on German television; directed by Christopher Dreher, it was produced in 1998, and it tells the story of the early days of the New York Punk scene at CBGBs. Part of the documentary has a segment devoted to proto-Punk bands like the New York Dolls and The Stooges. For some reason I have been mesmerized by the old video footage of Iggy Pop's performance of "T.V. Eye" at the Cincinnati Summer Pop Festival in June of 1970. It's common footage; I've seen snippets of it before. The festival took place at Crosley Field right before the Reds moved to Riverfront Stadium. Traffic headlined. Twenty-four thousand concertgoers attended; it concluded with a rock-and-bottle melee and 74 arrests. This is Vietnam-War-Hippie-era America. And it's got an edge:

Cypriot Parliament to Vote on New Bailout

Today the Cypriot Parliament is voting on a replacement bailout plan, swapping the widely-derided deposit confiscation scheme for a nationalization of pensions at state-run companies. The issue now, assuming that parliament passes the new bailout plan, is whether the troika accepts it. This is from Liz Alderman's "Cyprus Lawmakers Prepare to Vote on a New Bailout" article this morning:
Before concrete details emerged, German leaders made it clear they would not back a deal that involved nationalizing the state-owned companies’ pensions, a measure that is rejected in Berlin as more socially dangerous than even the original plan to tax smaller savings. 
In a closed-door meeting with members of her junior coalition partner, the Free Democrats, Chancellor Angela Merkel made clear her impatience with the government in Cyprus, stating that “under no circumstances can we give up our principles,” the public television network ARD reported. 
“When you consider that there was massive resistance against involving the savings, then it is not easy to see how tapping the pension funds, which we view as socially a much more drastic step, is a very good idea,” Steffen Seiber, Ms. Merkel’s spokesman, told reporters. 
Germany is not alone. Luc Frieden, Luxembourg’s finance minister, expressed frustration over a lack of communication in Nicosia, telling Germany’s RBB radio, “It is difficult that we are not getting any details from Cyprus.”
Krugman in his column this morning, "Treasure Island Trauma," predicts that Cyprus will go the way of Iceland -- the banks, swollen by foreign deposits, will collapse and domestic depositors will be protected:
My guess is that, in the end, Cyprus will adopt something like the Icelandic solution, but unless it ends up being forced off the euro in the next few days — a real possibility — it may first waste a lot of time and money on half-measures, trying to avoid facing up to reality while running up huge debts to wealthier nations. We’ll see.
But step back for a minute and consider the incredible fact that tax havens like Cyprus, the Cayman Islands, and many more are still operating pretty much the same way that they did before the global financial crisis. Everyone has seen the damage that runaway bankers can inflict, yet much of the world’s financial business is still routed through jurisdictions that let bankers sidestep even the mild regulations we’ve put in place. Everyone is crying about budget deficits, yet corporations and the wealthy are still freely using tax havens to avoid paying taxes like the little people. 
So don’t cry for Cyprus; cry for all of us, living in a world whose leaders seem determined not to learn from disaster.
A post on naked capitalism responds to Krugman by stressing that Cyprus is not some outlier like the Cayman Islands but very much in tune with old Europe:
As for the size of the banking sector relative to GDP, Krugman seems scandalized that the banking sector is so large relative to its economy. Yes, this is a risky model, and Cyprus made the mistake of being overly dependent on one huge client, Russia. But Cyprus is hardly alone in being a financial center with banks that are a big multiple of GDP. Luxembourg is the really extreme case here, with a banking sector at over 20x GDP. England’s banking sector is 6x GDP. Swiss banks were 6.8x GDP in 2010 (Switzerland has forced much higher equity requirements on its banks, so its balance sheets have shrunk since then). Singapore also has an outsized banking sector. But let us remember that the EU has also set out to trash the Cyprus banking sector pretty much overnight with the deposit garnishing threat. It is important to recognize that while a restructuring was necessary, the severity of the crisis and the degree of damage that will be inflicted on the economy was not.
This is not to underplay Cyprus’s problems. But it would help to depict them accurately.