Daily Office:
Friday
11 December 2009
¶ Matins: "Is this just the beginning of a depression?" asks Felix Salmon, in response to the very bearish forecast of Gluskin Sheff economist David Rosenberg. "I'm not optimistic."
The point here is that while most recessions are cyclical phenomena, this one could mark a secular turning point — the beginning of the end of America’s hegemony in the global economy and the capital markets. And the turning point has come too early, before the rest of the world has generated enough internal momentum to take America’s place.
None of this means that Rosenberg’s market strategies are going to make money: even when economists are right about the economy, they’re often wrong about what that means for asset prices. But if you think that a happy stock market means a happy economy, it’s definitely worth reading Rosenberg to see just how big the disconnect between the two might be.
We can only read so much of this sort of thing before we begin to look for Big Ideas. Our current favorite is the restoration of tariffs, in the form of transportation taxes. We are no longer living in David Ricardo's world: a cask of Portuguese wine may taste (a lot) better than the produce of Long Island's North Fork, but it has to be shipped all the way from Portugal. Once upon a time, the cost of that shipment was negligible. It's not anymore.
We would impose these tariffs universally, without regard for sovereign boundaries. Thus it would be cheaper for the towns along the Rio Grande, on either side of the border, to form a local economy, than for either to draw from distant parts of the United States or Mexico.
(Yes, we would like to see the end of states that are "too big to fail.")
¶ Lauds: A self-portrait by Antony van Dyck, one of the deluxiest Old Masters, sold at auction for a record-breaking price. The auction overall, however, was hardly a success. (Bloomberg; via Arts Journal)
The last self-portrait by Anthony van Dyck doubled its estimate to set an artist auction record at Sotheby’s in London as buyers fought for the best work and rejected other paintings.
The event totaled a mid-estimate 15.1 million pounds ($24.6 million), including fees, with 42 percent of the 50 offered lots failing to sell.
Collectors are being selective as auction estimates for a diminishing supply of Old Masters have shown little change over the last 12 months, said dealers. Valuations for the rarest works have increased, they said. This contrasts with estimates for contemporary art, which have been slashed by as much as 50 percent after the financial crisis.
To quote Sandy Wilson: "But when it comes to love, I say, "You can't beat an Old Master!"
¶ Prime: Jeffrey Pfeffer attributes the "too big to fail" phenomenon to lax enforcement of antitrust laws.
Numerous bad consequences flow from this misguided policy - or absence of policy. One is higher prices. There just might be some connection between the rise in pharmaceutical prices and the fact that this industry has seen mega-mergers among the major players for years.
Another is the recent financial meltdown and the taxpayer funds that have been expended to address it. How did so many financial institutions become “too big to fail” without imposing unreasonable systemic burdens and risks? Because no antitrust oversight precluded the numerous mergers and takeovers that created a financial landscape in which a few behemoths held most of the deposits and made most of the mortgages. And the “solution” to this problem, caused in part by having institutions too big to fail? Combine those entities with other, larger financial organizations - leaving mortgage markets, deposits, commercial loans, and investment banking even more concentrated than before.
The Editor reminds us that, of all the subjects that he studied in law school, antitrust was the most slippery, its principles easily bent to reach whatever outcome the government or the courts desired. We subscribe to Mr Pfeffer's dislike of very large business entities (we don't even like merely big ones), but we don't look to antitrust law for a solution. (The Corner Office)
¶ Tierce: New! A revised deluge hypothesis has been posited for the natural history of the Mediterranean Sea: Why, only 5.6 million years ago...
the Mediterranean Sea almost completely evaporated when it became disconnected from the Atlantic Ocean. This was due to uplift of the Strait of Gibraltar by tectonic activity, combined with a drop in sea level. Further tectonic activity 5.3 million years ago lowered the Strait and reconnected the dry Mediterranean basin with the Atlantic.
Previously it was assumed that it took at least a decade to refill the Mediterranean, via a waterfall over the Strait. Now a new analysis shows that the bulk of the water arrived in less than two years, pouring down a long, shallow ramp.
Why is it that the fun stuff like dinosaurs and such happened long before we were around to take notes? Is it a mad desire to participate in geo-catastrophic events that draws us to the deluge hypothesis of Black Sea flooding? (New Scientist)
¶ Sext: At McSweeney's, "A Former Investment Banker Analyst Falls Back on Plan B," by Helen Coster. Hint: that would be law school. (via Felix Salmon)
The decision to stay at my job did not feel like a mistake at the time, but it does now, since my friends' start-up has 120 million unique users, including, I think, my mother, and is this little thing called Facebook. Right now I have no car service, no assistant, no use for my ties, and no paycheck. So in hindsight, becoming the third employee at Facebook doesn't seem like a bad idea. I believe, though, that this mistake presented an opportunity to explore my passion, which is drafting the constitutions of post-conflict countries.
¶ Nones: Responding to violent protests, India will divide the state of Andhra Pradesh in two, creating the new state of Telangana. Hyderabad, Andhra Pradesh's capital, will probably go Telangana.
On hearing the news, crowds in Hyderabad and nine other districts of Telangana erupted in celebration, reports the BBC's Omer Farooq in the state capital.
Mr Chidambaram said the government had asked for court cases against leaders, students and others "associated with the present agitation" to be dropped.
The BBC's Sanjoy Majumder notes concern that the creation of Telangana will open a Pandora's box of clamoring for further subdivisions within India. In 2000, however, three new states were carved from Uttar Pradesh, Madhya Pradesh, and Bihar. (BBC News)
¶ Vespers: More from Christopher Tayler, this time from a perch at LRB: a reconsideration of Paul Auster.
All the same, I still like to believe that Auster became a different writer in the 1990s, leaving the earlier work unscathed in my memory. A similar rule applies to Morrissey, Prince, The Cure and most of the second season of Twin Peaks, though in Auster’s case I have a half-baked theory to back it up. Auster’s son from his first marriage went badly off the rails at around that time and was given five years, in 1998, for his peripheral role in a famous clubland murder.
It's the autobiographical material that's winning. A guest room in some vaguely hostile household would definitely be the ideal environment for appreciating early Auster.
¶ Compline: The Awl's Abe Sauer went out to visit gay activist Zack P— in Grand Forks, North Dakota, and discovered that Zack is not having an easy time being out there. Overwhelmed by the unfairness of life, Mr Sauer thought of Levi Johnston with outrage.
Levi Johnston's only accomplishment is displeasing a woman that a bunch of so-called free thinkers are displeased by—and he accomplished that largely by not wearing a condom. That is his only real accomplishment. That is his only attempt at a real accomplishment.
Zack P. is not from an out-of-touch family that is famous or rich or of political royalty. He is not a pointy-headed elitist coaster who knows what’s best for everyone. He carries no baggage from the 1960s. He’s young. He’s a hard-working guy from Middle America and he gets down and dirty politically and risks his neck for what he believes in. He should be the left’s future. He should be the left’s poster child, its goddamn sex symbol—not some actor who happens to lend his good looks to whatever “awareness” campaign is hot. Zack is not the future America deserves but he's the one it needs. Zack should be one of this pitiful nation’s sexiest people.
To this end, The Awl has put together a 2010 benefit calendar of sexy Zack goodness.
With his characteristic Internet-publication-good-cause solidarity, the Editor lost no time in placing an order for not one not two but three calendars. What he is going to do with them is hard to tell, since calendars of any kind are not his thing, not to mention sexy Zack goodness. We can't help feeling that the Editor is somewhat credulous, and we will be following Awl dispatches closely for hints of James Freyishness.
Copyright (c) 2009 Pourover Press