Nathan’s Musings

While the ex-Hitler Jugend Pope is visiting  the Middle East, here in Catholic Spain the Zapatero government (which has otherwise been rather useless) is introducing some new laws which, to my delight, have the Church and the right wing in a frenzy. Firstly, a woman’s right to an abortion during the first 14 weeks of pregnancy will be codified as a basic right (and not something that has to be agreed by doctor or judge, as has been the case until now); 16-year old girls will no longer need parents’ consent either. Second, the morning-after pill will be made available here without a prescription.

The bishops must truly be pleased

Just listening to a story on the radio about one sector of the US economy that is doing well: gun manufacturers. Shares in Smith & Wesson are up, brisk sales at gun fairs. One of the buyers in Virginia is being interviewed and says that he wants to make sure he is well-armed so that he can defend himself when the economy collapses completely and society will disintegrate into anarchy.

Shudder.

I love France as a country: its food, its wine, the culture, the language. But I absolutely hate French politicians, from De Gaulle to Sarkozy. They are selfish, arrogant, national chauvinists. As in Sarkozy’s current attempts to help French auto industry at the expense of other EU members, thus bringing the most important achievement of Europe, the Single Market, in danger.

Just heard a great piece on the BBC that gives a historical perspective.

I am spending the holidays in the Polish city of Wrocław. It is Poland’s most dynamic city (along with Warsaw of course). Every time I come here, I see a new shopping mall, new large foreign-owned businesses setting up shop, new hotels, new construction. All of this has given Wrocław and the whole region of Lower Silesia the lowest unemployment rate and the fastest economic growth in Poland.

Wrocław is a fair-sized town with about 650.000 inhabitants, a major university, an international airport and all the other trappings of a major European city. It will host some of the games of the European football championships in 2012, which will lead to still more modernization of the infrastructure: new roads, a new stadium etc.

The people of Wrocław like to compare themselves to Western European cities, and there is a general feeling that, while tremendous progress is being made, there is still a long way to go. But this week, I have discovered one area in which Wrocław leads the world (at least the world as I know it): the cost of using a public toilet.

I was exploring the central station (a classic example of early 20th century railway station design) with my camera when my bladder informed me that it would like to be emptied. No problem: I was in a big train station which of course has public toilets. So I went, relieved myself and all was well. But then I thought about the price of this simple pleasure, 2.50 złoty, and realized that I had just enjoyed the most expensive pee of my life. During the past several years of living and travelling around Europe, I have peed in all the major cities of this continent: London, Paris, Madrid, Barcelona, Frankfurt, Amsterdam, Copenhagen etc. Wrocław easily beats all those cities when it comes to the cost of a public pee. The price I paid here is equivalent to 0.60 €. In comparison, a cost of doing the same at London’s Victoria Station is 20 pence, or 0.21 €; in Copenhagen’s Central Station you can pee for 2 DKK, or 0.27 €. The most expensive toilets I had seen before this week were those in Amsterdam, at 0.50 €. Still, the Netherlands has a much higher per capita income than Poland, so relative to earnings, a Pole has to pay at least twice as much for the privilege as a Dutchman. Another way to look at this is to compare the cost to pee to the cost of a beer (since intake of the latter usually leads to the need for the former). In Poland one can easily buy a 0.5 liter can of beer for the 2.50 złoty it costs to pee. At the other extreme, in England you will never find a beer for anything close to 20 pence.

I shall continue this important research during my travels in 2009. In the meantime, let me wish all readers of this blog a happy and prosperous New Year.

It is a never-ending debate whether the English Premiership or the Spanish Primera Division is the best football league in the world. As a Liverpool supporter, I of course tend towards the Premiership, but since I live in Spain, I get to watch quite a bit of Spanish football, and I must say the two are very close. Last night I watched Real Madrid play Sevilla. When I turned on the game, the second half was just starting and Sevilla was leading 3-1 at the Bernabeu–a surprising result to say the least, and yet another sign of the current problems at Real. A combination injuries, poor defensive play and just bad luck have meant that last season’s champions are in 3rd or 4th place, 9 points behind leaders Barcelona (whom they play at Camp Nou next weekend).

Anyway, within about 10 minutes Real had equalized and for a long time it looked like the game would end in a 3-3 tie. But then Arjen Robben was given a second yellow card for bitching at the referee, hence a red card, so not only did Madrid have to play the rest of the game with 10 men, but Robben, one of their best players, will miss the Barcelona game as well.

And the inevitable happened–with a few minutes left Sevilla scored and won 4-3. What a game this was, though! A great advertisement for Spanish football indeed.

Now to the crisis connection. The word la crisis is now heard many times a day on TV and radio, of course in connection with the current economic situation. By coincidence I was going through some of my 2006 pictures today and came upon this one, of a Sevilla supporter on the day of the UEFA cup final that was held in Eindhoven that year. His banner would be even more applicable today…

BBC’s Panorama is probably the best documentary/reportage television anywhere in the world. Last night they tackled the subject of aid to Africa.

This weekend, a meeting of something called the G20 is taking place in Washington. Here in Spain, this event got a lot of press, because the Americans who are hosting the event (although they really did not want to have this summit in the first place, it was more of a French idea) had not invited the Spanish government. Our ridiculous prime minister, Zapatero (widely nicknamed Bambi here) is not exactly in good graces with George W. Bush, having pulled Spanish troops out of Iraq almost immediately after his first election win in 2004 and having done a number of other things the Bush regime dislikes, like selling arms to Hugo Chavez back in 2004 or 2005. So Bush does not like Zapatero and had not invited him despite the fact that Spain is the world’s 8th largest economy. Finally, after some full-court press by Spanish diplomats, a ruse was found: since France is at the summit both in its capacity as the current holder of EU’s rotating presidency and as France, it had two seats at its disposal, one of which was then ceded to Spain after some phone conversation between Sarkozy and Bush. What an embarassing spectacle!

These are the member countries of the G20: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK, the US and the European Union. Two of the world’s top 20 economies, Spain and the Netherlands, are not included (although they are kind of at the table since both are members of the EU).

So now this group is supposed to “re-found global capitalism” this weekend. The meeting is being compared to the Bretton Woods conference in 1944 which laid the foundation for the Western (and hence global) financial system in the post-war world, and created three major multilateral institutions: the World Bank, the IMF and GATT (since morphed into the WTO).

To compared this weekend’s meeting to Bretton Woods is frankly ridiculous. No gathering of 20 countries as diverse as these can come up with anything useful in one weekend. True, the Bretton Woods conference had 44 participating countries, but it lasted 3 weeks and anyway, the only countries that mattered at that conference were the US and UK and everyone else knew it and just went along. That is why Bretton Woods was successful.
Let us look at the credentials of some of the countries at the Washington. What can, say, Argentina teach the world about how to manage a financial system? Oh yes, they did contribute to the economic history of the 21st century by executing the biggest sovereign default in history. Or Indonesia or Mexico? They’ve got to be kidding! How about Russia and Saudi Arabia? Yes, they have lots of money at the moment because of high oil prices, what else do they have? Any significant banks? Any financial expertise to speak of? These countries are totally dependent on the West. Without us buying their oil, the Saudis would be herding camels in the desert. And now we are supposed to set up a new global financial system with these countries at the table?

Even looking at some of the Western countries, one has to question what exactly they bring to the table. Take Italy, a country that has been in stagnation for most of the past 20 years, with a leader whose main political priority is to pass retroactive laws that keep him and his friends out of jail. Or take Spain, a country where life is very good indeed if you have a steady job with a decent salary but which has the highest unemployment rate in the EU and whose governments have done nothing to reform the sclerotic economy since the reinstatement of democracy 30 years ago. The healthy growth this country has enjoyed during most of the past two decades was entirely fuelled by EU money (that is, transfers from the taxpayers in Northern Europe) and by a construction boom to serve British, German and Dutch homebuyers who wanted to come here to enjoy the sun, sangria and paella. Life is good here indeed, but re-founding global finance on the Spanish model? Please…
Thank God this conference is only a useless photo opportunity and so will not do any harm. The clearest proof of that is the fact the President-Elect of the US, who presumably would want to have some say in how the international financial system is reformed, has chosen not to participate.

So what is useful? Coordinated intervention by the central banks that matter, meaning the US Federal Reserve, the Bank of England, the European Central Bank, the Chinese and Japanese central banks–that is what apparently has staved off the collapse of the global banking system. No doubt the rules of the game will need to be changed following this crisis. But those changes will not be brought about this weekend in Washington.

Zapatero has now had his picture taken with GWB. Now he can go home and get to work here in Spain.

OK, so now Obama has won his landslide. Except that it might help to look at the numbers: 52,7% Obama, 46% McCain. A convincing win, to be sure, but it helps to keep in mind that the 18th century, first-past-the-post US electoral system amplifies small majorities. The country is just as divided as it has been in recent years. Had McCain chosen a running mate who were actually qualified to be president, the result would have been a lot closer. At least one of my family members, a man who usually votes Republican, voted for Obama only because of Sarah Palin’s presence on the Republican ticket. And he lives in Florida, the biggest of the swing states. Surely there must be lots of other Florida Republicans who made a similar choice.

Now Palin seems to be testing the waters for a presidential run in 2012. This would be great. It would be comparable to Barry Goldwater’s 1964 run and would ensure a Democratic 2nd term. There simply are not enough Jesus freaks and crypto-KKK types to vote in such a candidate. She might get 40%.

The hard part for Obama comes now. The US and the world are gripped by an irrational belief that now things will get better just like that. The other day our landlady was visiting, and of course La Crisis was a topic of conversation, given that Spain now has the highest unemployment rate in the EU. After complaining a bit about how business in her shop had slowed down, she expressed the hope that now that Obama is president over there, the good vibes will reach across the Atlantic and improve things here. She is in for a disappointment, I am afraid. George Bush can be blamed for many things (as far as I am concerned, he should be impeached for lying to the American people prior to the Iraq war) but the crisis is not one of them. Logically, therefore, simply replacing Bush with Obama will do little to solve the current economic problems. It is the other way round–the economic problems mean that Obama’s scope for action is severely constrained. With a budget deficit heading for 1 trillion $ and falling tax revenues there is little room for improving social services or extending health insurance to the 50 million Americans who currently do not have it.

As usual, the Spanish weekly satirical magazine El Jueves has the best analysis of Obama’s election.

It is amazing how all those free market types in the worlds of high finance suddenly want government to help their businesses survive. But they want to have their cake and eat it too. So, it is fine for the governments to provide hundreds of billions in liquidity, and even to directly take ownership of financial institutions, as has happened in the US, the UK, Benelux and elsewhere. But God forbid that the new owners should actually exercise some ownership rights, such as limiting salaries and bonuses for the executives who created the mess in the first place. My favourite magazine, The Economist, writes in a recent (October 18th) leader that this would be counterproductive as it would drive some of the best people out of the industry. To which I say: that would be no bad thing! It is a tremendous waste of society’s resources to have some of the smartest, best educated people on Earth devoting their talents to finding new ways of slicing up pools of dubious assets so that someone may make a bit more money from higher leverage. No, let all those PhDs and brilliant executives go back to the real world where they can work on useful thing. A result of this crisis will be a smaller finance sector, hopefully with simpler products that the bank managers (and maybe even the customers) can actually understand.

Here in Spain the crisis has exposed a couple of things: the low quality of public debate and the underlying weakness of the Spanish economy. The public debate first. During the first many months of the crisis there was quite a bit of Schadenfreude in Spanish media; Spanish banks have been much tighter regulated by Banco de España than their British or American counterparts and so had largely escaped the trap of US mortgage-based securities and other toxic assets. As a result, no big Spanish bank has gone bust. This was taken as proof that the Spanish model with its bureaucracy and tight regulation was right and that Anglo-Saxon freewheeling capitalism was on its way out. Now there is a lot of childish anxiety about the fact that Spain has not been invited to the summit in Washington in mid-November where the leading countries are supposed to “re-found global capitalism”. Of course, no such thing will happen. It will just be another useless photo opportunity, especially with a lame-duck US president hosting the event. But commentator after commentator on Spanish radio (I do not watch Spanish TV except when there is football on) moans that Spain is an important country, and why is not at the table at such an important occasion?

I think the reason why Spain has not been invited has partly to do with the generally poor relations between the Bush administration and the Socialist government here, but mainly it reflects the fact that while the Spanish economy is largish and has grown strongly in the decade until 2007, it just is not an important player on the world economic stage. This may be a painful fact for the Spanish to swallow, but it is nevertheless a fact. Spain has fewer multinational companies than the Netherlands, a country 1/3 its size. There is no Spanish equivalent of a Royal Dutch Shell, Unilever or Akzo-Nobel; even more troubling for the future, there is no Spanish Tom-Tom. The stark truth is that, besides its nice beaches and good weather and some agricultural products, Spain makes very few things that the outside world wants to buy.

Spain’s growth since entering the EU in the 1980s has basically been fuelled by EU subsidies to infrastructure (the motorways here are very nice) and by an uncontrolled construction boom which has resulted in hundreds of thousands of unsold beachfront properties now that the Brits no longer can afford to buy second homes here or to retire in the sun. In 2006 fully 1/3 of all residential construction in the EU was taking place in Spain, even though the country only has about 8% of the EU’s population. In 2007 that party came to an abrupt end, and now Spain’s unemployment rate is the highest of any major country in the OECD at 11.3%. Because successive Spanish governments have done little to reform the economy and to promote development of the kind of advanced industries that could have taken up the slack, it is now at the mercy of global trends that for the next couple of years are not going to be favourable. I love living here: the weather is good, the people are nice, the food and drink are excellent, the language is beautiful etc. But the quality of the government and the public institutions is far below what one sees in Northern Europe.

And now the construction companies that have built all those unwanted apartments are coming to the government too, with hat in hand, begging for bailouts. If you are helping the banks, why not us, they ask. I hope that at least here, the government will be able to resist this outrageous demand. The last thing Spain needs is to pump more money into those construction companies so that they can build even more houses that nobody wants to buy. No, let them go bankrupt. Help the unemployed workers, yes, but let the companies fail. That is how capitalism is supposed to work.

Every respectable newspaper, whether in the US or elsewhere, will endorse Obama or Mc Cain some time during the coming few weeks. So I see no reason why this little blog should not also endorse a candidate. After all, I did live in the US for a total of 13 years, both my children were born there, and so I have a more than passing interest in the election. And anyway, even without a personal connection to the country, almost everyone on the planet is affected in some way by the actions of the world’s most powerful country and so should have an interest in the election.

So, to whom should I give my backing? Unfortunately, I cannot support either of the two main candidates. Obama is simply an empty suit. He is undoubtedly intelligent and has had an interesting upbringing, but he is not qualified to be president. During his six years in the Senate he has not sponsored or co-sponsored any significant legislation. This man has no record. In a political campaign this might be convenient since it makes the opponent’s job more difficult (there is nothing concrete to attack). But when choosing a president, surely one should know something about what the candidate really stands for. With Obama, all you get is some eloquent speeches with the word CHANGE as the mantra but precious little in the way of believable policies.

Then there is Mc Cain. Normally I would never support a Republican. The Republican Party is a party of inequality, conservatism, reaction and corruption. Yes, corruption. Just look at the revolving door between big business and the Bush White House and the billions that have been squandered by contractors in Iraq. Despite my general dislike of Republicans, I did initially see a lot to like about Mc Cain. Clearly, here was a man of substance, with many years experience in the Senate, personal integrity, and a set of policy ideas on which he used to stand firm, whether free trade, immigration reform, or indeed his relative indifference to the social conservatism that poisons US politics.

Lamentably, during the past few months Mc Cain has taken on the characteristics of the typical mealy-mouthed Republican politician. He no longer stands firm on anything; like Obama, he says different things to different audiences. Worse still, his pandering to the religious right puts him beyond the pale. Supposedly every Republican candidate has to do that in order to “shore up the base”. But what are the Jesus freaks going to do? Vote Democrat? The fact that Mc Cain feels the need to pander to creationists and all the other assorted loonies on the right fringe of his party says something very unsettling about US politics. And then of course there is choice of running mate, a woman whose government experience consists of some years as mayor of a small town in Alaska and a couple of years as governor of a state with less than 700,000 inhabitants. A right-wing fanatic and the embodiment of the worst kind of US ethnocentrism, Palin did not even have a passport until 2007. Given that Mc Cain is 72, his choice of vice president was particularly important. If he really believes that Palin would be qualified to run the country in the event of his death or incapacitation, then he must already be becoming senile.

There is thus nobody who is running that deserves your vote. My advice to everyone who votes in November is therefore: write yourself in! Think about it: you would be voting for a candidate who is intelligent, good-looking, honest, and with whom you agree 100% on every single issue. It is a bit like Woody Allen’s memorable line from one of his films: “do not knock masturbation, it’s sex with someone you love.”

I have no idea how the political system would deal with such a result, but it sure would be interesting to watch. It would be a truly anarchistic act, in the best sense of the word.