of mice and men or hoodoo economics

Though it is hard to say how well the experiment's participants were shielded from the fact that they were subject to research, since knowing that one is taking part in a psychological or behavioural study makes people act in strange ways, trying to prove their cleverness or uniqueness—the observer-expectancy effect, sort of like a clinical Stockholm Syndrome, the Frankfurter Rundschau (via the English daily the local) features the work of a sociological battery of test conducted in Bamberg, raising the stakes, to illustrate how a competitive environment can quickly undermine our convictions and values.

It's really horrible to contemplate that human participants were willing to speculate and bargain, a race to the bottom, with the certain death of lab rats (though I am sure no animals were harmed in the name of that particular study and maybe as the opportunists were thinking too), but selling out one's morals, rather than being abetted by an embarrassment of choices and conscientious alternatives, goes unaided and even further compromised by the prospect of a bargain, since even with an extreme example (reductio ad Hitlerum, seriously) we are failing to recognise that our consumer decisions are easily overturned and the consequences of those choices become marginalised, buying known or strongly suspected goods produced under objectionable conditions or taking the more expedient route when we ought to know better. What do you think? The unbraided market and government policies are strong influences but not moral imperatives. Is the chance to make a deal indicative of sellers' remorse and moral bankruptcy?

oh weal, oh woe or ttip—ta ta for now

Watchdog CEO (Corporate Europe Observatory) delves into the details of the US-EU trade agreement that was ratified at the G9 summit and shows how, without much imagination of an embarrassment of gullibility, public welfare is becoming a nuisance easily steamrolled by business interests, constituted in such a way as to give industry carte-blanche to flagrantly ignore established national laws and policies and give pause to governments thinking of championing the common weal.  Of course this development is vying for attention (or rather, seeking cover) with the Conference itself and the effective-date for FATCA in Germany, plus whatever distracting scandal of the day. 

When regulatory climates are seen as damaging to investor profits or acting toward the detriment of health, labour-rights, safety or the environment—depending on one's perspective, both parties are bound to submit their cases before a kangaroo court of arbitrated settlement, the commission for Transatlantic Trade and Investment Partnership (TTIP), headed by a group of lawyers with an established reputation. Lobbyists on both sides of the Atlantic are responsible for crafting these conditions, and thankful activists the world around are keenly aware of the dangers of disincentivizing de-soverigning, too. Unfortunately public service has its price, as well, demonstrated by the precursors to this treaty.

silk road or it happened on the way to mulberry street

Although we did not seen much evidence of this native industry during our recent vacation to the Lombardy region (but it is surely there if one seeks it out and knows where to look), Como and its environs produce an astonishing quarter of the worldwide output of silk.

The top manufacturing country is Brazil, climates being similar and the sheltering cliffs, like this one from the Swiss side of Lake Lugano, evoke a feeling of being in the bay of Rio de Janeiro. Italy was a relative late-comer in the silk business, whose broader history spins intrigue and is the impetus for some unlikely developments. Though robust trade had existed for at least two centuries prior via the Silk Road from the Orient, the material was a costly and mysterious luxury, the process monopolised and kept secret by Chinese exporters.

 Not quite on a mission to save souls, two monks were sent to the Far East, charged by the French monarchy of finding out the secret and bringing back to Europe, in the mid fifteenth century, in what may be the earliest example of industrial espionage. Having learnt the process, the monks smuggled seeds of the mulberry tree and eggs of caterpillars in diplomatic pouches, messenger tubes of bamboo. Mulberry leaves were the exclusive diet of silk-worms, the juvenile form of the moth Bombyx mori who spin cocoons out of silk.

It's sad and unfair that these little hopeful caterpillars are boiled alive in the middle of their metamorphosis in order to harvest their weave and warp, but having mastered the cultivation and working the material, places like Lyon soon became very rich and influential for having broken the cartel. Without the zealous explosion in mills, producing ever more intricate and automated patterns, the industrial and modern computing may have never happened—the looms emerging as something programmable and Turing-complete with cards, instructions for producing designs. The rest of Europe was not content to let the French have all the profits and glory, however, and others learnt the process, including the former Italian and Venetian middle-men in the original and established trade process, sore at having their business suffer.
Prussia's Frederick the Great, whose alchemists are also credited with making the first china, porcelain, outside of China, wanted in on the game too and ordered the cultivation of mulberry trees (Maulbeerbäume) all over Germany—this is why the mulberry is not an exotic plant these days, as fodder for the little caterpillars. This legacy still exists today, and German silk-making, in the interim led to a successful early manned-flight by a certain tinkerer and aviator in Bavaria named Gustave Weißkopf, pre-dating more famous pioneers, with wings made of silk taut on a bamboo frame, intensive war-time production of parachutes for Fallschirmjäger, and a textile export for the DDR that was in demand and a source of pride. What an interesting chain of events the cocoons of a little bug, that is still an ugly duckling afterwards, brings together.

tune-on, turn-in

Last week, the local security apparatchik—well, echo-chamber, redoubled with the various turfs that are the realms of this petty kingdom, the Consulate and the hulking bureau called the Department of Homeland Security did its best to fend off the curious under its protection from the Blockupy rallies being held.
The warning, the issuance read, however, like an open-invitation listing venues and times with a high degree of specificity, even tipping almost towards sympathy for the movement—but still, stay away, move along, nothing to see here. I suppose I was one of those curious ones that the stern warning was intended for—and could rationalize that seeing the spectacle up close was probably another instance of seeking out trouble, since it was not exactly condemned and made Verboten out of hand. The Polizei and the European Central Bank in Frankfurt am Main also in being competently prepared and indulgent of the action that managed to defuse it a bit.

The organizers wanted no violence and the protests were carried out peacefully, without sensationalism that made the public and governments confront some very uncomfortable, impolite truths about the policies of poverty, austerity programmes and corporate welfare, staunch resistance to a clearing-house tax scheme on financial transactions, the spinning of straw into gold that skims money but no wealth out of trade and speculation. The message was delivered and the case pled but whether reforms come out of these rallies is yet to be seen. A little tolerance (which is always a dangerous thing) and some reverse-psychology, I think, coupled with inattentiveness by the press and the show is over make for some deviously powerful opponents.

hard-currency

When my mother and I were together for the first time in Germany, we were bemused by the profileration of what we called cheese-banks, Sparkasse—saving cheese (Käse, we thought). It turns out, via Oddity Central with a bonus report from the BBC, there are such institutions in the Parmesian producing region of Italian, at least, which will larger wheels of cheese as collateral for loans to local businesses at a nominal interest-rate, including a fee for storing their assets in conditions where they will mature properly.

watergate-gate

The American political landscape is really being whipped up into a frothy mess and through the spray and roil, it’s becoming impossible to distinguish among what’s generally and authentically chilling, what’s motivated but isolated, and what’s coloured by two-speed spin. Not that the volume and authorship of past transgressions excuse or assign non-cultural blame to any of current and lingering scandals, but the tempo of the demands are absolutely wilting: the US tax authority targeting conservative groups—be they called patriots or traitors, aggressive wire-tapping of journalists in apparent retribution—be they called patriots or traitors, the laming or disburdening of the functionaries of government—be they worker-bees or drones. This tug-of-war is being waged over the delicate and deliberative field of social reforms, statecraft and choices confounded by economic straits and must surely have a shrill and dulling effect. I think it shows how polarised America is becoming and reaching across the aisle is a quickly receding possibility.

sunday drive or nutbush city limit

On the way back to my workweek apartment, after some nice dwell-time at home, I stopped along the way to explore the Frankfurt am Main suburb of Eschborn. I was surprised by the corporate skyline, heavy with headquarters that I would have thought the immediate proximity of Germany’s financial capital would have simply absorbed.
It turns out this town, displaying quietly all past influences as an agricultural area with ample spacing of field and farm among the skyscrapers, as a military garrison town for different powers (Camp Phönix is a commercial park, which hosted no decent flea-market as advertised, converted from a former US Army base that existed in the area until 1992), and most recently as a business annex of sorts for multi-national concerns, who’ve taken up residence here in order to be close to Frankfurt but avoiding the city’s corporate and property tax rates.
 I’m as likely to find anything by chance but I did stop here to seek out the Sculpture Axis, an exhibition of public modern art, which I was looking to find in some sculpture garden but the display continues in sort of a scavenger-hunt, I saw later, along certain lines of latitude and longitude and I suppose that I’d need to do some geo-caching to find Travel-a-Head, giant chair and the rest of the collection—or maybe just keep on in a straight line but the weather was being a bit dramatic.

solidarity or putting words into your mouth

Amid the backdrops of a book launch and the notable scope of the tax-avoidance affair of one of the major charm-offense. Cooperation tends to rule the days of crisis, but quickly becomes unraveled once a fix, however temporary, and parties repair to former, incompatible ways. Stimmt. But does this frank posture really suggest its sinister antithesis? Surrendering sovereignty and enslavement through predatory-lending are glosses neither said nor implied but that seems to be the take-away. What do you think? Are politics beholden to the past and the suspicion of double-speak exclusively or is there cause to default to what’s honest and bona-fided?
soccer league presidents (not to mention the entire thrust of re-election), Germany’s chancellor is presenting a rather stilted and baiting

who moved my cheese?

Doubtless the governments of Cyprus, Portugal and Spain will accept the extra funds and for the latter the extended repayment periods offered coming out of the summit in Dublin, but in a rare moment of clarity—though mostly ignored I think as disingenuous, there was a lament by the recipients that more money is not what the beneficiaries need in this crisis. It is possible to throw good money after bad, but no one is going to turn down generosities, even when they might lead to greater sorrows later. The plaintive alternative requested was instead for more administrative flexibilities in managing the assets they have, reforming leadership, regulation and enforcement with but not around those initial life-lines before being presented with overtures of more—with new terms and conditions.

This preposterous suggestion, dismissed, made me think of this scholarly interview from Der Spiegel’s International desk examining the rise of anti-German sentiment across Europe over the euro and re-packaged austerity. It is a difficult and probing question, but I think, from these latest rounds of renegotiation, the public protests are a reflection in part at least of frustration that little flexibility—the structural might that Germany appears to have and seems to influence the body politic, that’s not accorded to the people equitably. Unfortunately, more credit does not equal a measure of determined reform, despite similarly deferred wishes for greater alignment.

by hades’ handbag

Of all the gifts—pandora—of the gods of mythology, all the humanizing deifications, it strikes me as strange that the only “professional” endowment that has not be stricken from common-parlance is a plutocrat—though, unlike for the aristocracy, probably not a badge proudly proclaimed.

Prometheus who gave mankind the gift of foresight and the patron of the healing arts Asclepius were basically condemned with extreme prejudice for elevating mortals and challenging supremacy and only their names remain as cautionary tales, however, the acquisitiveness of Pluto, or earlier Hades, remains. The connotation is not an infernal one, necessarily, and is connected with buried mineral wealth. The association developed over the centuries, tending towards greed and inequity, combining the god of the Underworld with the attributes of a minor demi-god, son of the Demeter (Ceres) the goddess of the harvest and more broadly cycles of creation and destruction and Iasion (wiled and then also destroyed with extreme prejudice), called Plutus, whose name carries all the root-meanings. His mother saw to it that Plutus was amazingly wealthy but that left no riches for his twin brother, another figure that seems to not have a contemporary cult-following, Philomelus. Without an inheritance, the brother turned to industry and invented the plough, out of necessity. Very impressed, Demeter made him into a constellation, Boötes, the Plowman and a celestial cue for tilling the fields. I think that there are some more admirable qualities to incorporate into our vocabularies.

lend-lease oder prime-directive

Not to be confused with the Emminger Reforms, an arguably kindred precedent that essentially did away with trial-by-jury for the German justice system, the Emminger Letter (PDF from the investigative memory of the Official Monetary and Financial Institutions Forum) covertly drafted by the then president of the German Bundesbank, Otmar Emminger, to Helmut Schmidt, Chancellor of West Germany, in 1978.

The German banks made the willful decision to breach their rebuilding, reparations agreement to support weaker economies through exchange rate settings (before the common currency), fearful that manipulation would damage the home market through inflation. Haunting and lingering, the resistance was brought to unofficial policy back then over Cyprus, as today, and has been invoked several times during the intervening decades over France and Italy. The truth will out, I suppose. Do you think there are some secret intrigues going on in the European banking community?

mixed metaphor

A brilliant and succinct commentary from Harvard Business Review is a sober reminder that a country and a corporation are not one in the same, just like with people. Bankruptcy is not something without precedence on a national level, as for businesses and households, but stretching, spindling the analogy, this neologism serves no good purpose. Instead the work of civics and the advocacy of the state becomes a nuisance to the metrics of recovery. Debts can be sovereign and governments are stewards of their people’s money and futures and not without exemption, but arrears do not accrue for a whole populace under the same model.

brinksmanship or no quarter

On the surface of things, the evolving situation in Cyprus’ finances does not seem to make complete sense. There was originally a strange sort stoical solidarity as the idea of levying a deposit tax as collateral against the Euro-Group’s line of credit from the island’s government but public outrage and fears of precipitating such seizures ultimately led to the collapse in negotiations. Presently, the Cypriots look poised to renege on the terms of this rescue package, and the EU looks willing to cut its losses, recognizing the grave realities of a marshal-economy. The transformation was quick, from darling of people seeking out a safe berth for the money to anathema, over-exposed—though fundamentally, the shenanigans were no different than what when on in other crisis lands, or for that matter, what is still tolerable, attractive about other safe harbours, like Luxembourg or the Channel Islands.

Further, that stoicism belied a calmness, which was not entirely unheard over the uproar, with the church offering certain securities and pawning pension funds. The Euro-Group rejected these avenues, which seem to be no longer options for the Cypriot administration either, as untenable and just setting up the country for a deferred failure with an unsustainable burden of debt, as well as intervention by the Russians. Though there may be some interest not brought openly to the bargaining-table, Russia seems to be snubbing Cyprus, even with its untapped natural gas reserves, and will let the banking system fail, despite standing to lose a lot of private money and its chief correspondent bank for clearing its transactions with Europe. To be sure, it’s chaotic and the most robust economist probably could not deftly navigate these waters, but things just stopped making sense. It almost seems like warfare-by-proxy, with vested interests in seeing the EU experiment crumble. I suppose too that as the crises initially began to unravel, for example, with the real-estate bubble in Ireland or Spain or the overvaluing of the Swiss franc, could also be shown in the harsh light of conspiracy. Perhaps, hopefully, Cyprus can emerge from this dilemma, bravely and ultimately stronger, like Iceland has done.

and that’s a pretty nice hair cut—charge it like a puzzle, hit men wearing muzzles

Oh dear—this is a potentially disturbing development that is making international markets anxious as well as any and every John Q. Public, Max Mustermann, or Τάδε Ταδόπουλος who’ve brooded any nest-egg. In exchange for a ten-billion euro lifeline to save the country from insolvency, banking and finance accounting for a large proportion of the island nation’s economy, European Union finance ministers are demanding a percentage of the savings deposits of Cypriot citizens.

The government of Cyprus supports this hair cut, which would excise a minimum of a three percent from all accounts. Despite insistence that such an arrangement exceptional and not precedent-setting, with Germany trying to distance itself from the conditions of the swap and Britain going so far as pledging to reimburse the losses incurred by her subjects stationed there as a result of the decision, many are growing nervous about their stashes, however it’s kept. Do you think a move like this opens up the possibility for shearing assets from private people, small-holders but share-holders, nonetheless? Or might having savers participate in the bail-out might inspire overall more pragmatism?  It is happening too often lately, but when decisions and support fail to abide by economic sense (I can’t imagine how the reactions and distress in the streets and in the bourses was unexpected), one should always follow the money and see who stands to gain, and perhaps not ultimately, from this deal.

schuldenbremse

While the slow but inevitable train-wreck of the US economy lurches past more and more whistle-stops with the strange sort of glee of acceptance, and the parliamentarians of the EU’s financial agenda, happy to be upstaged by their American cousins, reflect on how to mitigate national austerities fairly amongst its dues-paying members, Germany has with some quiet deliberation and luxury of discipline has achieved—projected at least, a terrain of a balanced budget. This comes some two years ahead of schedule after the 2009 passage, incorporation into the Basic Law (Gründgesetz) of a structurally reined in fiscal plan. Germany would have been closer to its goal but will maintain its pledge to the European emergency bail-out fund. Debt-holdings are still relatively high but so too conditions that allow a diversified portfolio, which seems kind of naïve or smug like a narrative from a text-book recently made irrelevant. Such an accomplishment is anomalous but definitely not something outmoded.

stella! or fiat means of payment

The EU monetary union and its currency, the euro, has deeper roots, reaching back to the nineteenth century with attendant problems and complications, and was directly inspired by a earlier coalition by the name of the Latin Monetary Union. Founding members Switzerland, Italy, France and Belgium decided in 1865 to tether their respective national coinage to a certain ratio of silver redeemable in gold, which was legal tender among all members.

Later Venezuela, Spain, Greece, the Austro-Hungarian Empire, Romania, Bulgaria and the Holy Sea joined—with even the United States of America seriously considering taking part in the grand experiment. I never realized that the national pride of the franc, peso, drachma and mark was not so long-lived and had been sublimed before. H told me about this earlier attempt but I never knew what the union was called. The currency, however, had barely overcome many structural challenges before its dissolution during the inter-bellum years. The ultimate failure was due, in the main, to an institutionalized practice of and market for debasing. Though the coin’s face value was honoured universally, some mints were debasing their coins (some of the usual suspects were the greatest offenders), using less precious-metal content than prescribed. Other opportunists, notably the Germans, took advantage of this differential in specie, exchanging coins from countries out of compliance for more valuable bullion. By the same reasoning contemporarily if one could have all of one’s wealth expressed with pennies and had a buyer for the zinc and copper, one could see the value almost double. Despite all its failures at conception, the Latin Monetary Union had a long run and I wonder what lessons are applicable to the current situation.

ab in beurlaubt

The US executive and legislative branches were unable to reach or fake a compromise, which triggers a count-down, sort of like a Rube Goldberg contraption, towards budgetary sequestration across most of America’s federal programmes, mandatorily paring funding and raising the spectre of furloughs (unpaid absences) for hundreds of thousands of government workers world-wide.

It is wholly excusable, I think, for most of the international public to be aghast at the dysfunction while thinking that a temporary curtailment of the sticky wickets of bureaucracy won’t cause any significant damage. It’s an embarrassing situation and a disservice to populace, to be sure, but I think blame and hyperbolic overtures to the boogeymen of security and the already prevalent attitude (in perception and in fact) regarding faded glory do really overlook the cascading effects of the situation. Though the expected cost-cutting measures, immediately and projected out over the next decade, represent only a tiny, tiny fraction of the larger deficiency, some 85 billion dollars out of an either four, eleven, 15 (or exponentially higher) trillion dollar debt, cutting back work on the proposed scales could mean a twenty percent drop in the purchasing power of the federal work force and those associated with it, not to mention those indirectly affected by delay and errors, all of whom will probably never be fully redressed.
This fifth does is not a chuck out of the whole of the abstract US economy, mostly conjuring money out of the movement of money and pushing paper, but—and perhaps even more urgently, this reduction is a double-decimation, not just in terms of income and employment and delivery, but a realignment, like annexing twenty percent of the America’s smaller communities, absorbing them into larger neighbours with an even more massive yet over-burdened civil institutions. It is like the pettiness and gridlock of the Congress leaking out of the Beltway and set loose on all aspects of the American public.  The wheels of government will continue to turn with skeleton-crews, more work pressed out of staff remaining, rotating singly through the work week with less continuity and more matters overcome in the transition because it will have to. Authorities, in spite or because of the knock-on effects, may realize that adjustments (austerity American-style) can be accommodated and can make do with a scaled back government—or, and probably heralded by flagging spending and all around timidity, essential and uniting services both will become untenable under a reorganization that excised too much stability, functional determination and assuredness, whether or not misplaced, out of communities too quickly.

exchequer

Lashing out again with a stolid critique of how the kindness of governments to business is less than optimal, like a cornered viper—old and tired but still wanting to show it can strike, one of the credit-rating agencies has stripped the UK of its top-shelf status, over ballooning sovereign debts that are edging to three-quarters of national output. I suppose it is on some level responsible to try and check borrowing and incurring more liabilities with such denouncements but relatively, a lot of economies—though not the physical, functional marketplace (should there be one) necessarily, are in the same boat and Aaα may just be the new top credit score.

across the pond

While the media focus on European economic policies and tax accords from the perspective of the States seems more preoccupied with the potential spillage and knock-on effects of the proposed Tobin Tax, a levy on financial transactions and market trades, the burgeoning talk of a trans-Atlantic Free-Trade-Agreement, urged by both the US administration and European commission president seems an idea comfortably, tantalizingly far away.

Though it is probably true, for both optimists and pessimists, that reaching any kind of meaningful and functional compromise, aligning US and EU standards on safety, quality and transparency, can only be achieved in a receding distant future, displaced by politics and protectionism (by those current players who would be excluded, too), the notion and the will for such an arrangement is not a Fata Morgana that one can never meet. Naïvely, perhaps, but not without hope as there have been plenty of examples of Bridges to Nowhere over trade and tariffs, like the bickering over the aerospace giants or the fact that one cannot purchase a Silver Lady in the States but embassies of genetically modified organisms, untested drugs and wage inequity are equally unwelcomed, the mutual benefits have been articulated, of substantial increases for the gross domestic products of European nations through fewer administrative and process barriers and greater job security for American export industries.
Those sound positive on balance, but I fear that consumer protections will suffer through compromise. Instead of meeting half-way or adopting the more stringent standards of one partner, existing safeguards, like employment rights, food labeling requirements, safety standards and protection for the environment and livestock will be relaxed, diluted in order to meet industry imposed milestones. I hope that this is not the case, because risking health and security is no lubricant for trade, and to prevent these attitudes from prevailing, one cannot take the stance that procrastination and off-putting is acceptable, any more than in the here and now surrendering one’s sovereignty and self-determination to creditors is.

grand coalition or what say you, alcibiades?

Peer Steinbrück, former finance minister to his current rival and Social Democratic Party (SPD) pick for this year’s election for the chancellery, made just be pontificating with a political sound-bite but insists the German government must afford the Greek government the chance to repair its economy and not be made to wither under draconian cost-cutting measures whose long-term effects will surely be the opposite from what’s intended or hoped for. Germany would certainly not abide by such conditions, and should not bully and bait others. Greece’s predicament has not gone away and the full reality of the situation, I think, only comes creepingly in the light—not just in terms of disclosure, which is I think the wrong focus, but also by repercussions to morale and opportunity. Many times, I’ve argued that the tragedy is a manufactured one with no bearing on the people and the country but given how it is quietly escalating and enduring off everyone’s radar, maybe I should revise no bearing to no judgment. Campaigning or not, let’s hope cooler heads prevail and thoughts are not only spared for the convenience of the government.