Capitalism in convulsion: Toxic assets head towards the public balance sheet

 

By John Plender
Published: September 19 2008 19:25 | Last updated: September 19 2008 19:25

In the space of just two momentous weeks, the landscape of global finance has been dramatically transformed. President George W. Bush's administration has mounted a multi-billion-dollar rescue of the financial system at the cost of inflicting severe damage on the US model of free-market capitalism.
Heavy costs will be inflicted on the American taxpayer, who is now subsidising Wall Street – and indeed financial institutions around the world – in a bail-out of unprecedented size.
The sequence of events that led to this extraordinary socialisation of finance began with the de facto nationalisation of Fannie Mae and Freddie Mac, the bankrupt government-sponsored mortgage lenders at the heart of the US housing finance system. There followed a rise in the cost of insuring against default in the world's most powerful economy. On some independent estimates, the overall response to crisis could take the outstanding US public sector debt from readily manageable status to a level comparable with such fiscally stretched countries as Italy and Japan.
Concern about the creditworthiness of the US is nonsensical, according to Charles Goodhart of the London School of Economics. It has nonetheless surfaced, along with worried punditry about the dollar's role as a reserve currency.
Then came the absorption of Merrill Lynch by Bank of America and a bold decision by Hank Paulson, US Treasury secretary, to allow Lehman Brothers, the fourth largest US investment bank, to go to the wall. This constrasted with the government orchestrated rescue of the smaller Bear Stearns by JPMorgan Chase earlier this year.
The disappearance of these two Wall Street securities giants raised questions about the durability of the independent model of investment banking. Shares in the two independent survivors, Morgan Stanley and Goldman Sachs, were quickly savaged by short-sellers. In the UK, such short-selling is alleged to have been what pushed HBOS, the country's biggest mortgage lender, into its shotgun marriage with Lloyds TSB.

Still more startling was news that the Federal Reserve was advancing $85bn (€59bn, £47bn) of taxpayers' money to AIG, the world's biggest private insurer. Thanks to its role in the global market for credit insurance, AIG was so interconnected with other financial institutions that its bankruptcy would have been catastrophic for the whole system.
Yet despite the rescue, the festering lack of trust that has dogged the banking system since August last year worsened after this move. On Wednesday, the interest rate on one-month US Treasury bills turned negative, bearing the astonishing message that investors would rather lose money on government paper where repayment was certain than invest in money market funds. The climactic point had been reached where nobody trusted any credit other than the government's.
In such circumstances, experience teaches that central banks have to lend freely. In the event, the Federal Reserve injected $180bn into the markets, while other leading central banks said they were taking co-ordinated measures to help short-term dollar markets.
To round off the week, Mr Paulson announced discussions with political leaders to create a government-sponsored vehicle to take on toxic assets created during the bubble, prompting a manic stock market bounce.
The paradox in this remarkable tale is that extreme illiquidity exists in a world awash with the excess savings of Asia and the petro-economies. Russia illustrates the point. Thanks to the oil windfall, it sports high economic growth, the third largest foreign exchange reserves in the world and low public sector debt. Yet Moscow stocks are collapsing and trust in the financial system has eroded to the point where overstretched Russian investment banks are starved of funds and threatened with bankruptcy.
This is what happens when an overleveraged global financial system unwinds. Borrowing is being forcibly reduced across the world after the greatest credit bubble in history. It amounts, says David Roche of Independent Strategy, a research boutique, to a "tectonic shift from leverage to thrift as the means of financing growth and the concomitant dramatic reduction in global imbalances such as the US current account deficit".
The reality is that the financial system has been operating as if it were an off-balance-sheet vehicle of the government. Private-sector companies and individual bankers have been making huge profits in the bubble. Their risk appetite has been enhanced by previous bail-outs and, in the case of Fannie and Freddie, by the government's implicit guarantee. Yet their market pricing does not reflect the potential cost to the system of their own collapse.
This inability to handle externalities has again been apparent in the markets over the past two weeks as speculators have engaged in short-selling strategies against AIG and the investment banks in the US and HBOS in the UK. This threatens the financial system because the rating agencies respond to the consequent falls in share prices by cutting credit ratings, so jeopardising the victims' ability to fund the business.
Once again, property has been at the heart of a financial debacle, in spite of the assurances of central bankers that a nationwide fall in US house prices was an impossibility. Yet the peculiarity this time lies in property being wrapped in complex financial products that few could understand.
When investors go outside their areas of competence, trouble follows. Walter Bagehot, the 19th-century economist who defined the rules for central bank management of financial crises in his book Lombard Street, said: "Common sense teaches that booksellers should not speculate in hops, or bankers in turpentine; that railways should not be promoted by maiden ladies, or canals by beneficed clergymen ... in the name of common sense, let there be common sense."
The twist in the current decade is that even bank boards and bank executives have failed to understand complex mortgage-backed banking products, as have central bankers, regulators and credit rating agencies.
In this off-balance sheet Alice in Wonderland world, the most absurd feature has been a reward system that has granted huge bonuses to those who peddled toxic mortgage-related products and does not permit much of the money to be clawed back now that the going is bad. Almost as absurd has been the degree of leverage racked up by investment banks.
As Michael Lewitt, the Florida-based money manager, puts it: "Allowing investment banks to be leveraged to the tune of 30 to 1 is the equivalent of playing Russian roulette with five of the six chambers of the gun loaded. If one adds the off-balance-sheet liabilities to this leverage, you might as well fill the sixth chamber with a bullet and pull the trigger."

So what stage in the the crisis have we reached? Bagehot quoted the banker Lord Overstone's description of the progress of an unstable cycle thus: "quiescence, improvement, confidence, prosperity, excitement, overtrading, CONVULSION [Bagehot's capitals], pressure, stagnation, ending again in quiescence".
Over the past two weeks we have experienced convulsion. Yet it ought to be possible to avoid stagnation, because the authorities are following the prescriptions of Hyman Minsky, the economist whose work Stabilizing An Unstable Economy best explains the dynamics of this crisis.
Minsky saw fiscal activism by big government, alongside last-resort lending by central banks, as the modern way of coping with financial distress. That is now taking place. In effect, the US government is replicating what happened in the private banking system earlier in the crisis, when institutions were obliged to take entities they had created, such as structured investment vehicles and conduits, back on to their balance sheets as funding dried up.
Having implicitly guaranteed Fannie and Freddie and underpinned the operations of irresponsible bankers at AIG and elsewhere, the US government is putting bankrupt institutions back on to the public sector balance sheet via nationalisation. Now, Mr Paulson's proposal for the system's toxic assets has the makings of a turning point.
What will the banking landscape look like after this saga? Much depends on the regulatory response. At the very least, tougher capital requirements will be imposed, which could mean the banking system reverts to a lower-risk, utility-like function. Yet one of the most important questions concerns the independence of central banks.
If central banks have to be recapitalised, as seems likely, politicians may want to extract a price that diminishes their operational independence. That could have damaging consequences. For a central point of Minsky's thesis is that fiscal activism and last-resort lending set the stage for serious inflation.
That, together with an increased burden on future generations of taxpayers, could be the cost of the last two weeks' frantic efforts to stave off deflation and keep some semblance of the Anglo-American model of capitalism afloat.
The writer is an FT columnist and chairman of Quintain

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Sweet Time For the Left in India

September, 21 2008

By Badri Raina

 

I

 

This a short and quick one.

 

As the American neocon state borrows a whole sheaf from Chavez and other despised  socialists, and stoops to nationalizing—yes, nationalizing-- the great and invincible bulwarks of American Capitalism, it underscores a theory of state that says government must stay out of business, but be ever and devotedly ready to bail it out of despair when its profit-maximising lust gets the better of it and the whole financial system.

 

In either circumstance, the common citizen must remain the chief guarantor of the profiteer's career. And, in any eventuality, profits must remain privatized, and losses patriotically distributed among the those  that pay the tax dollar. The classes make profits out of the masses, and the masses save the classes when their Mammonite chips desert them.  A man no less than Joseph Stiglitz has drawn the analogy: as the Berlin Wall was to Communism, the Wall Street has yet again proved to Capitalism. Marx, are you there, and chuckling?

 

Whether or not the Indian neocons say it publicly, the shamefaced thought must certainly occur to them how fortuitous, after all, might have been their dependence on the Left parties over some four years of its governance. Indeed, the Indian Prime Minister may privately be thanking his stars that he, in his own words, was a "bonded slave" of the supporting Left parties. 

 

II

 

 Think of what the Indian neocons wished to do when the UPA came to power in 2004, the very same things that the defeated BJP-led NDA regime had been busily doing and wanting to do with greater relish everyday:

 

--in line with the Washington Consensus and the class interest of the corporates, transfer as much national wealth as they rapidly could from public to private control;

 

--throw open the banking sector to foreign "players" (never a more apt discourse than that—they who "play" with people's earnings as children do with  insects);

 

--throw open the Insurance sector similarly;

 

--make ordinary indians' hard-earned savings like Provident Funds available to the private "players" at the stock market;

 

--disinvest government equity from the public sector in manufacturing and other  sectors of the economy, and pass on equity to private investors;

 

--effect the convertibility of the Indian rupee on Capital Account, so that instant hot moneys could be both brought in and taken out of the country as profits stood to be made or not in any part of the world; remember the East Asian bubble burst of 1997?

 

--bring in labour "reform" so that moneys "needlessly" spent on assured work -force  could be cut by billions  through contract hiring and firing, leaving still more for the private profiteer, a measure already in operation in many sectors;

 

--make land and infra-structure available at minimal costs to private builders in Special Economic Zones to do with as they like; a matter of great contention as we write;

 

And then think if all that had been allowed to happen without let or hindrance.

 

And what calumny the supporting Left had to undergo day in and day out from sold-out pundits on sold-out corporate TV channels for standing firm on principle!

 

Which is why, as I said in another  place  recently, the Left was in "knowledgeable" metropolitan  middle-class homes and the "knowledgeable"  media  they frequent called an "ossified" and unpatriotic roadblock to India's tryst with greatness (see my "Conversions", Znet, September 7, 2008).

 

Kudos to the Left-- which  could loudly take credit at this moment for having prevented India from sinking  alongwith the new "strategic partner"--  for not gloating  "we told you so" but,  consistent with its admirable anxiety on behalf of India's national future and well being, simply feeling  happy at duty done. Not that its battles in this regard are by any stretch of the imagination over.

 

III

 

If the neocon Indian leadership indeed has any shame left, or the least strength of mind to embrace some self-criticism, now is the time to acknowledge the above, and, equally importantly, to open its comprador mind to the Left at home on another impending issue.

 

Namely, the matter of the nuclear 123.

 

Once again, after all the disingenuous water has flowed under the Indo-US deal-making bridge, Bush in his now much commented-on letter of determination to the Congress has confirmed to a hilt everything the Left has been saying about the true nature of American intentions. 

 

For a start, Bush makes the brazen declaration that the 123 agreement is merely a "political framework" rather than a "legally binding" document, notwithstanding what the Indian government may think or mouth everyday. 

 

Thus, no assured guarantee of perpetual fuel supply for the reactors that American corporates are  dying to  ink,  no rights of reprocessing spent fuel from such reactors,  and  no reprieve from perpetual safeguards even after the deal may have been terminated. Indeed, the prospect is one of buying another ten barren Tarapurs, if reports that a Letter of Intent has been given by the Indian government already for such purchases are to be believed;

 

Not just that, under pretence of doing India  great and unique favour, the Bush regime  means  only to curtail its sovereignty with respect to nuclear strategic issues and bring it into an internationally-controlled non-proliferation regime.

 

It means  to use this so-called favour to draw the Indian state into a military embrace fraught with the gravest long-term consequences for India, the region, and world balance of power. And, yes, "balance of power" should be seen truly once again the germane way to describe what is rapidly happening to East-West relations and world-wide reverberations thereof. (See "Georgia: the End of Unilateralism," Znet, August 18, 2008). Something Indian policy-makers need to think about with alacrity as well, since it has bearing on the 123 deal and much else besides.

 

IV

 

As the Mariot hotel in Islamabad burns at this very minute, consuming several foreign diplomats,  and as the Indian bear-hug with Bush gets tighter, India-- as much as Pakistan-- needs to understand that such a hug is not a recipe for resolving the "terrorist" problem but  for exacerbating it. 

 

As the Left has consistently pointed out, India's incautiously wholesale tilt to the right is a recipe for comprehensive disaster.

 

It immiserates more and more millions everyday, and simultaneously lends force to racial and religious paradigms of nationalism, a phenomenon alienating in the extreme. And all that in turn fuels concrete  grievances into active explosions of violent resentment.

 

The Indian ostrich had best take its head out of the sands of obdurate imbecility, and revise all its reigning theses as to why these things happen.

 

It is not to the neo-imperialists and its own military and para-military might that it must look to for "crushing" terrorism.

 

The Indian state needs without loss of time to return to its own people and look for a new order of trust and negotiation, bolstered by non-partisan and prompt justice-delivery systems. And, most crucially, to restructure wealth and opportunity through visibly equitous institutional arrangements. Indeed, its covenant with the people must brook no fear, favour, or discrimination on behalf of those segments of the polity who exercise clout of any kind.

 

Most of all, it needs to demonstrate to India's "minorities" that the state is as much theirs' as of the corporates and those others who coerce governance on behalf of  majoritarian  fascists (see my "Fighting Terror the Terrorist Way, Znet, September 18,2008).

 

Thus, just as the Left knew provenly better in the matter of the political economy,  it is equally on the button in the matter of the nuclear deal, its implications for security and sovereignty, and for the social harmony of the  plural nation-state.

 

V

 

When, therefore, the Indian Prime Minister goes to Washington soon, were he to sign on the dotted line of the 123, ignoring what Bush and his minions have openly, candidly, and brazenly averred about what the deal means to them, he would diminish every Indian who is proud of being an Indian and wishes  to remain so.

 

Indeed, even such ones who only till the other day were firmly for the deal—people like the erstwhile, America-friendly, ambassador, Lalit Man Singh—are now saying what we are saying here, and have been saying for more than a year.

Surely, the Indian Prime Minister needs to retain some allegiance, after all,  also to a legacy left to him by many previous incumbents in the matter of sovereignty vis a vis  imperialism.

 

In the meanwhile, it is indeed a sweet time for the Indian Left. The country can use them for a long time to come. May they go from strength to strength.

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Free Market Ideology is Far From Finished

 

September, 22 2008

By Naomi Klein
Source: The Guardian 
 

Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of "free market" ideology. Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests.

 

During boom times, it's profitable to preach laissezfaire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalisation for deep cuts to social programmes, and for a renewed push to privatise what is left of the public sector. We will also be told that our hopes for a green future are, sadly, too costly.

 

What we don't know is how the public will respond. Consider that in North America, everybody under the age of 40 grew up being told that the government can't intervene to improve our lives, that government is the problem not the solution, that laissez faire was the only option. Now, we are suddenly seeing an extremely activist, intensely interventionist government, seemingly willing to do whatever it takes to save investors from themselves.

 

This spectacle necessarily raises the question: if the state can intervene to save corporations that took reckless risks in the housing markets, why can't it intervene to prevent millions of Americans from imminent foreclosure? By the same token, if $85bn can be made instantly available to buy the insurance giant AIG, why is single-payer health care - which would protect Americans from the predatory practices of health-care insurance companies - seemingly such an unattainable dream? And if ever more corporations need taxpayer funds to stay afloat, why can't taxpayers make demands in return - like caps on executive pay, and a guarantee against more job losses?

 

Now that it's clear that governments can indeed act in times of crises, it will become much harder for them to plead powerlessness in the future. Another potential shift has to do with market hopes for future privatisations. For years, the global investment banks have been lobbying politicians for two new markets: one that would come from privatising public pensions and the other that would come from a new wave of privatised or partially privatised roads, bridges and water systems. Both of these dreams have just become much harder to sell: Americans are in no mood to trust more of their individual and collective assets to the reckless gamblers on Wall Street, especially because it seems more than likely that taxpayers will have to pay to buy back their own assets when the next bubble bursts.

 

With the World Trade Organisation talks off the rails, this crisis could also be a catalyst for a radically alternative approach to regulating world markets and financial systems. Already, we are seeing a move towards "food sovereignty" in the developing world, rather than leaving access to food to the whims of commodity traders. The time may finally have come for ideas like taxing trading, which would slow speculative investment, as well as other global capital controls.

 

And now that nationalisation is not a dirty word, the oil and gas companies should watch out: someone needs to pay for the shift to a greener future, and it makes most sense for the bulk of the funds to come from the highly profitable sector that is most responsible for our climate crisis. It certainly makes more sense than creating another dangerous bubble in carbon trading.

 

But the crisis we are seeing calls for even deeper changes than that. The reason these junk loans were allowed to proliferate was not just because the regulators didn't understand the risk. It is because we have an economic system that measures our collective health based exclusively on GDP growth. So long as the junk loans were fuelling economic growth, our governments actively supported them. So what is really being called into question by the crisis is the unquestioned commitment to growth at all costs. Where this crisis should lead us is to a radically different way for our societies to measure health and progress.

 

None of this, however, will happen without huge public pressure placed on politicians in this key period. And not polite lobbying but a return to the streets and the kind of direct action that ushered in the New Deal in the 1930s. Without it, there will be superficial changes and a return, as quickly as possible, to business as usual.  

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What women don't get about men

By Michael Bywater
Monday, 22 September 2008

The answer, for men, would seem to be castration. Better than drink: it takes away both performance and desire. Plato, in The Republic, has Sophocles say that the end of sexual yearning is like escaping from a vicious tyrant, usually quoted as "being unchained from a lunatic". Visions of the madman vary; I always picture him naked, wild-haired and bearded, a bit like Terry Jones in Monty Python, capering and scampering into the distance across a rain-swept Clapham Common. The writer Guy Kennaway, in his memoir Sunbathing Naked, writes: "The chain broke, and I was the madman."
Better have them off. A couple of half-bricks, a moment's exquisite agony and then peace descends.
Because when it comes to desire, we only have two choices now, here in the West at the beginning of the third millennium AD: we're madmen, or we're history.
And if we're madmen, we're one of two sorts: buffoons or psychotics. Men's desire, emotional or sexual, must either mimic women's or be classed as deviant, probably deliberately so. No self-control. Evil instincts. Clumsy. Emotionally inarticulate. Weak. Predatory. A perve.
Let's take my own case. I truly believe that the peak of nubility for a woman is around the age of 12 or 13. I believe that a pubescent boy can only be honoured, and learn from, the erotic attentions of an older man. I believe that it is the natural duty of a woman to serve the sexual needs of her man, and that she must never refuse; if she does, out she goes. As for her own feelings... I believe that a normal woman is little troubled by sexual feelings of any kind; her desires focus upon looking after her man and caring for his children and otherwise just keeping quiet. I can't see what the fuss over prostitutes is all about. I believe that a man is quite entitled to keep a mistress providing that he chooses a social inferior within his financial means and, when he tires of her, helps her find a husband of her own class. I believe that black women are libidinous and immoral. I believe that one of the duties of my female staff is to accommodate my sexual urges whenever required. And I believe that a grown man who allows himself to be buggered is as much of a criminal pervert as one who performs cunnilingus.
And I know nobody who disagrees.
Or, at least, I would have believed all these things had I been born into different societies at different times in history. The existence of sexual and erotic desire is a given; but what it points itself towards seems almost entirely cultural.
It's a mystery, to be honest. Our Renaissance forebears thought nothing of taking a 12-year-old wife, and it didn't occur to their neighbours to dob them in, beat them, bang them up, chip the sods, deport them, make them sign the sex offenders' register and plaster their faces all over the tabloids ("Leering Gary", though the "leer" was the rictus common to all terrified anthropoids). The gentlemen of classical Athens valourised pederasty. Rich men had ceramic jugs, cups and punchbowls decorated, at vast expense, with picture of middle-aged men and beardless (the beardlessness was crucial) "beautiful boys"; Plato (again) named homosexuality as the highest desire in one episode of the Symposium, yet would have been repelled by the civil partnerships (with adopted children) that we now applaud (despite the fact that just over 40 years ago, the same men would have been put in prison).
And those same classical Athenians, as their symposium drew to a close, would have called for the euphemistically named "flute-girls", or tottered off to an expensive hetaira, or perhaps humped the slavey in the peristyle. Romans in their bath-houses bathed promiscuously, and more, and our very word "fornication" comes from the fornices – the arches – of the amphitheatre where low-rent prostitutes plied their trades; the Victorian gentleman-artists who painted them so lovingly also had an eye for a tart, a shop-girl or a pubescent, not to mention the cult of "passionate friendship" with the inevitable mental images of entangled bushy beards and twanging sock-suspenders. Slave-owning Americans extolled the compliancy and enthusiasm of their female property (and, in a curious reversal, contemporary American pornography has a minor obsession with depicting white men watching their wives being transported to bliss by the superior powers and sensual vigour of black men: Google "cuckold" and see for yourself).
On it goes... and the curious thing is that, to our imagination now, so much of it seems horrid. Yet it can't have seemed horrid to them (though there must have been the odd Athenian gentleman who had to grit his teeth to get through the awful pederasty business, and the odd one whose heart sank as the bloody flute-girls appeared just when he wanted to go home to bed) or they wouldn't have done it, let alone made it into the normal, the done thing.
You have to conclude that while our sexual and erotic (they're different, of course) urges are instinctive, their manifestations are as much a matter of time, place and custom as what we eat or how we dress. If everyone else is doing it, one would be a fool to do otherwise. And any sexual behaviour, for men at least, with our relatively easy route to orgasm, is going to be reinforced by pretty powerful rewards.
Yet now we are not guilty until proven innocent, but guilty. Academic tutors are given little lectures on how they mustn't ever let their eyes drop below their students' collarbones, while the 20-year-old woman who faces her, let's say, 30-year-old tutor in a short skirt, plunging neckline, and no underwear (it has happened, and not infrequently) is an innocent victim who will yell the place down if his glance flickers. A friend of mine, at the top of his profession, had to resign because after a couple of drinks over the eight, he flattered a junior colleague on her appearance ("leching").
Not only are our desires wrong, they are also risible. To start at the bottom of the moral chain, in a trade which knows precisely what people want, a porn film of a woman masturbating is considered both erotic and inherently beautiful; a man wanking is risible and vile, conjuring images of the unsprung sofa, the scattered pizza cartons, the solitary sock for afterwards. Almost every woman knows what it is to be desired, in a way that hardly any men ever do. I remember talking to the actress Kathleen Turner about this; on a good day, she said, she knew she could have nine out of 10 men in the room. I pointed out that there are only a few men who could say that, on a good day, they could have one out 10 women. And, of course, most of them are gay, and don't want to have any.
The rest of us are just... baggage. Young men now seem to have reached a sort of affable affectionate ease with women that escaped earlier generations. They share beds happily and chastely. They are best friends. They talk about their feelings. But lust and libido and passion seem strangely absent. They're dreadfully held-in-check, and prey to the body dysmorphias that for so long in the Age of the Image have victimised women. They go to the gym endlessly; they buy magazines devoted to the abdominal muscles; they gel and tan and sack-back-and-crack, vogue and pose, fret and pump iron, eat cabbage leaves and nibble on dry biscuits... but unlike women, who hope that this horror will end with them being desired, the young men just hope, I suspect, to be forgiven. If they can make themselves nice enough, in a parody of manual-labour masculinity plus beauty-salon pubescence (body hair a no-no), it might not be so terrible that, at the end of it all, they are still men.
But how do you get to be a man now? Not by submitting to the embraces of an old dude round the back of the Temple of Hephaistos, for sure, nor by going off and tupping the nubile ancilla. You get to be a man (if you get to be one at all) by acquiring the "virtues" of fidelity, emotional articulacy, sexual discrimination and social co-operating. In other words, you get to be a man by imitating a woman, except with a six-pack. But no body hair.
You do this because, first, the social roles for the "manly" man have faded with our manufacturing economy. It doesn't require courage or physical strength to poke at a computer screen, which is what most work (and much flirtation) now consists of. Aggression and decisiveness count for nothing in a call centre (or at least, not decisiveness).
And you do this, secondly, because masculinity is evil and the phallus – once a symbol of fertility, fun and good fortune – has become a lethal, corrupt and infecting agent of violence. The phallus ravages children. The phallus injects HIV. The phallus, if uncalled for, destroys lives, and never mind how. It injects children who must be borne and nurtured by lone, unsupported women. And – Sophocles's vicious tyrant – it drags its possessors (or its slaves) about the place, heartlessly. Gray Joliffe's Wicked Willy cartoons about sum it up; except, unlike Joliffe's affable, happy little chap, the real thing is vicious and unheeding. A madman.
Any man, then, is a sort of zombie with a loaded revolver. Lock up your wives, your daughters, your sons. Lock up the dog. There may be a man about.
Yet the idea of a man as an imitation woman ignores some fundamental truths. First, that, like any culture, we get the sexuality we deserve. Second, and more importantly, women and men are fulfilling, above all, their evolutionary destiny. Social Darwinism is a horror, but you can say, for sure, that if you're going to evolve an intelligent, sexually reproducing species, the first damn thing you have to evolve is sex. EQ, compassion, quadratic equations and sushi come later; or, if you fail to evolve sex, they don't come at all. The bit of us that has sex isn't the bit of us that thinks, and behind every bishop raving about homosexuality is not only a bishop who hasn't noticed that Jesus says damn-all about sex (and when he does mention it, it's to go against Mosaic law), nor only a bishop who has too much time on his hands, but a bishop who is both culturally and biologically ill-informed.
The odd thing is where this has all come from. I don't know a single woman (except, fleetingly, a couple who were seriously deranged) who hate men or want us to be like them. Most women seem to quite like men, and resent as much as we do the prevailing culture of contempt and suspicion. They don't want articles asking "Are Women Really Bored By Men (Yes Of Course!!!)". They don't like the portrayal of men in the media either as violent, raping, child-abusing, monosyllabic incompetents just waiting to whip out their wangers and wreck someone's lives.
Nor is it simply a matter of intolerance. I don't want you to tolerate me, or anything about me. That's not in your gift; to say you are prepared to tolerate me is simply arrogant. Intolerance? No; though W H Auden, in arguably the most beautiful love-poem of the last hundred years, "Lullaby" (ostensibly a hymn to gay promiscuous sex) speaks to all our erotic hearts when he writes of
...lovers as they lie upon
Her tolerant enchanted slopes
In their ordinary swoon
But that's a different tolerance: a tolerance closer to the original meaning of the word: a bearing of the burden of our common humanity.
Who's doing this? Who's responsible? I don't know, but I don't like it and neither do you and it's not true. We aren't hateful nor are we vile; I don't even think we're particularly ugly, though I wouldn't fancy one myself. Men and women are really quite like each other. The thing is, we're also utterly different. It's the culture's task to negotiate that paradox, and right now I don't think it's doing a very good job.

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What men don't get about women

 

 

By Esther Walker
Monday, 22 September 2008

I am going to tell you a secret. It is one all women – but only a handful of men – know. It is this: most men are awful. And I mean awful: lazy, tedious, defensive, chippy, selfish, patronising, ignorant, insensitive donks, box-fresh from the Planet Clunk.
It's not that women are much better, but the point is that if you want to snare Miss Right (or any old floozy), the first step is to understand the outstanding badness of the competition.
Then all you have to do is not make the same mistakes. You don't need to be the wittiest, the most suave, the best-dressed, the richest or the best-looking to get the girl. You just have to not be a lazy, selfish, thoughtless prick. It is almost always as simple as that.
Let's start at the beginning.
Let's start with you being the One Who Always Rings. At times, nothing beats a little thoughtful text message, but for big things – arranging dates, enquiries after her health, gossip – ring her, for god's sake. Awful Men send a spineless "How RU?" text. Be the one who wants to hear her voice.
And be the one who cares about her well-being. Women are not pathetic, but from time to time we quite enjoy allowing ourselves to be rescued. So, for example, always see her to her door. Awful Men are the sort that happily put their girlfriends on the night bus at the end of an evening. And do you know what? Those girlfriends will, in time, run off with that friend of a friend who once went three miles out of his way to drive her home. If you're in a cab, stop at hers first, then yours (so she isn't lumbered with the fare or the creepy cab driver).
Men who have some sort of appreciation of just how wretched it can be, at times, to be a woman, are always impressive. You don't have to be an expert on oral contraceptives or the Atkins diet, but at the very least do not, as Awful Men do, cringe if she mentions anything to do with her period, do not screw your eyes shut and bare your teeth in nauseated horror at the mention of childbirth.
And, please, do not become angry if she suggests that she looks fat. Fretting aloud about weight is womankind's least charming habit but you can't stop them. Awful Men don't understand this and will either accuse women of fishing for compliments or scream "You're not FAT! For GOD'S SAKE stop going ON ABOUT IT!"
You must, always, simply put your head on one side and say, as if it's the first time you've had the conversation: "You don't look fat to me," and smile.
The best seducers take this appreciation of womanhood one step further with casual unkindness about Awful Men. "He's quite boring," they might say, or, "I don't know how she stands him," or "He forgot her birthday! She should dump him."
It is simply not in the nature of men to do this, which is why doing it will make you seem like such a rare and exquisite creature. It makes women feel like you're on their side, like you understand them. The least sexy thing you can say, as a man, is: "I don't understand women."
But don't make the mistake of gushing about other women; you might think it shows how much you like women, what a feminist you are, but all it does is make women feel bad. "She's a great girl," is the most enthusiastic you should get about another woman. Never say: "She's the funniest girl I've ever met," or "She's a legend" and the worst: "She's so beautiful."
No, pal: we are the funniest girl you've ever met. We are a legend. We are so beautiful.
If you find yourself trying to prise a woman away from her boyfriend, listen carefully to what she says. When women are unhappy with their boyfriends, they will tell everyone exactly what's wrong with them, but you have to know what to listen for.
She will say: "Oh I really wanted to see that film... but Steve said it sounded childish." "I love skinny jeans... but Steve thinks they're ugly." Your job is to be exactly the opposite of whatever desperado she's stuck with, without actually saying: "Your boyfriend is an idiot."
He's too passive? Take charge. He never listens to her? You're all ears! He didn't think her career was important? Women with careers are so sexy!!
The chances are that this Awful Man never does anything for her on Valentine's Day. Your attitude towards romantic gestures, even if you think they are embarrassing and contrived, must be that they are important to women, so they are important to you. Because, you see, something like Valentine's Day is not about you, it is about us. Women are much more sensitive to social embarrassment than men; the thing we dread when February rolls around is watching flowers arrive for everyone else in the office except us, and having to pretend we don't care that you don't care enough to spend £25 on a bunch of flowers.
Listening to women (just generally, not only to find out what she hates about her boyfriend) is the easiest way to earn their adoration. Ask the occasional question and listen dutifully to the answer. That might sound like far too much effort but the alternative – to drone on about your job, your new car, the boys' holiday you're planning – is the date equivalent of anthrax.
So, now we've got the basics out of the way, let's move on to the Restaurant Date, the battlefield upon which most romantic encounters are bayoneted and die writhing in agony.
Don't be late. Just don't; it is the behaviour of Awful Men. But if disaster strikes and you are late, you're in luck, as there is a way to salvage things that is so unbelievably money it's almost worth committing the sin of lateness in order to deploy it.
As soon as you know you're going to be late, ring the restaurant, explain the situation to the maître-d' and ask them to sit your date down and get her a drink. You spare her the embarrassment of fumbling for her phone as she sits alone at the table waiting for your sorry ass. And it is simply immeasurably cool for the maître-d' to arrive at the table, glass of champagne in hand, to pass on your apologies and say discreetly that you're on your way.
If you are shown to your table together, make sure she has the best seat, which is the one with the view of the room.
If you've been paying attention, you will know that, during the date, you should encourage her to talk a lot about herself and listen like a secret agent so you can deduce what she wants from a man and make her believe that you, right there, are he.
Now the tricky part: the bill. With arch-feminism on the wane it's now safer to assume that a man can buy a woman dinner without it being interpreted as an act of gross chauvinist piggery. Most women – not all, but most – are consciously or subconsciously looking for someone who will be supportive. It's not the actual money that's the issue (what self-respecting girl can't buy her own dinner?), and just because she lets you pay doesn't mean she plans to bleed you dry. The point here is what the act represents. It is symbolic and it says "I will care for you in times of need."
If you're not exactly Bernie Ecclestone, take her to an inexpensive restaurant where you won't bite your fist when she orders the steak or pass out on seeing the bill.
During the inevitable paying dance, she will offer to pay and you will refuse once. If she still says "No, no, really: let me pay my half," then you should be cool and let her. She is telling you that she doesn't want to feel beholden to kiss you at the end of the evening. Take the hint but don't take offence.
Only an Awful Man aims to get a woman into bed on the first date. It's just so tacky. Most women sleep with men on the first date (especially in winter) because they are too pissed, cold or lazy to get themselves home. If you make it easy for her to get home, she'll go, and will be impressed and grateful the next morning that you didn't take advantage of her.
Perhaps the most important thing to learn about seducing women is when to give up. Men whose seduction technique is to wear a woman down with constant phone calls, date requests and e-mails may get the girl – but it's never for long.
Two days after your first date, call and ask to see her again the following week. If she says she's busy, she's not interested; if she doesn't return your call, she's not interested. Then leave it; persistence is at first flattering and then annoying. And then creepy.
But, if she says yes to a second date then, my son, it is game on.
And the rest is up to you.

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Oh come all ye unfaithful - In praise of Infidelity!

The world is quick to condemn infidelity for the betrayal and the pain it causes. And yet, argues Terence Blacker, there is something uniquely authentic about love that has to be kept secret

Sunday, 21 September 2008

Even in this knowing, decadent age, infidelity has an image problem. The absurd politician caught with his pants down, the shifty celebrity snapped emerging from a basement flat in the early hours of the morning: these inglorious archetypes of modern adultery tend to represent sex at its saddest, silliest and most furtive.
Almost any other contemporary sin is treated with more respect, either glamorised or demonised but, according to the everyday media which informs our culture, there is nothing tragic or interesting about an affair. Adultery is a low-grade, contemptible form of domestic misbehaviour. Advice columnists, professionally sympathetic about most personal problems, reserve a special brand of scorn for those, particularly men, caught up in an affair. "That's why adultery is called adultery – because it 'adulterates', which literally means to make something poorer in quality by adding another substance," Bel Mooney recently scolded an unfaithful husband who had rashly written to her for guidance.

It is odd, this chilly social disapproval because infidelity is all around us. When, every month or so, a marketing firm or a dirty-minded academic conducts a survey into sexual behaviour, a large proportion of those interviewed, men and women, invariably admit to having strayed at some point in their lives. What the polls fail to reveal, because it is one of domestic life's more unsettling secrets, is that among the virtuous non-strayers, only the dullest and least imaginative will not have dreamed of infidelity at some point in their marriages or relationships. Many, reaching an age when the possibility of illicit romantic adventure seems to have passed, will look back with regret not at opportunities rashly taken, but at those missed. Fidelity causes as many restless and sleepless nights as its more daring polar opposite.

The reason why society is so disrespectful of adultery is fear; its power makes the faithful world tremble and feel insecure. Sexual infidelity stands for everything which undermines and disrupts an ordered domestic life – desire, selfishness, romance, a childish, amoral longing to escape from the world of bills, washing up and responsibility.

So let us try this: infidelity, when it is the real thing, can be a beautiful transgression. It has given meaning to empty lives, made the weak strong, the thick-skinned vulnerable, the stupid wise. It can provide almost the only adventure which modern can life can offer. Our ancestors fought in wars, discovered uncharted parts of the world; we cheat on our spouses.

Novelists and playwrights, who see the world more clearly than journalists, have recognised the power of the affair. In fiction and drama, there is nothing small and sleazy about infidelity; it one of the great tragedies that life has in store for humanity. For the great modern celebrants of sexual betrayal – Graham Greene, Harold Pinter, Iris Murdoch, Kingsley Amis, Philip Roth, John Updike – guilt and jealousy are what make desire interesting.

In the real world, the power of infidelity is a more clandestine thing. Those who behave well, or pretend they do, anxiously disapprove; those who do not are sensible enough to keep quiet. Only prats and slappers boast about sexual betrayal. The rest, a mighty army of secret lovers, remain silent and not only for the obvious, practical reason. An affair is not social. The only reality which matters is that which exists between two people: the dinner in a suitably unfashionable restaurant, the parked car in a dark street, the glass of wine on the bedside table.

There is something oddly pure about this kind of love. It cares nothing for the way it looks to the outside world. It exists in its own bubble, beyond the pressures and compromises of everyday existence. It allows its star performers to step out of the cheap soap opera of real life, with its longueurs, crap production values and predictable dialogue, into a sparkling two-hander where the only plot is about them, their desires, their romantic, tragic plight.

In the perfect affair, desire is never far away, conversation is always interesting and poignant, and jokes – even bad ones – are irresistibly funny. During those snatched hours of the afternoon or evening, there is no time for boredom or over-familiarity to dull its sharp, bright colours into domestic pastel. Differences and incompatibilities, which would irritate in the faithful world, are yet another fascinating topic to explore.
Everything is startlingly new. "With you it was fresh – so fresh I was hypnotized by me," says the female character in Philip Roth's Deception, a novel which consists entirely of the conversations between two adulterous lovers. "There I was, on weekends, still snuggling... under the covers in my bedroom in Bedford, with my ballet shoes in the closet from when I was 10, and then, Monday afternoons, total abandon in some anonymous bed in some anonymous room on some anonymous floor in some anonymous Hilton. And so intimate, it made my head spin – the only familiar thing in that entire hotel was our flesh. I suppose you could call it basic training... Somebody who is disillusioned involved with somebody who is innocent – educational all around."

Lovers caught up in an affair are playing a delicious trick on the outside world. If only X or Y could see them now, they think; how amazed, how shocked they would be at what was going on. In their happiness, they believe that their adulterous selves, living in this parallel world, are more real than the people their family, friends and colleagues see every day.

Yet it suits our ordered, sanctimonious society to re-write the script so that adulterous desire becomes an undignified itch, like something out of a bad Carry On film. Exposed to the light of gossip or news coverage, every affair is trivialised, each act of betrayal is portrayed as the same seedy shuffle down a path made familiar by cliché. When Edwina Currie and John Major, to take an admittedly unglamorous example, were revealed to have had a four-year affair during the Eighties, media commentators pronounced confidently about what had happened. There had been an amoral seductress of a mistress, a weak and befuddled husband, a virtuous betrayed wife. It was pathetic and utterly predictable. To his shame, Major played along with this line.

Perhaps it was true, but it is also true that no one really knows what goes on within a marriage, much less an affair. In this case, it seems at least possible that, without an energising affair between 1984 and 1988, Major might never have even reached Downing Street. For all anyone knows, it could have been the making of him. Who has the right to decide that one kind of love is acceptable while the other is, by its nature, trivial and contemptible?

I wrote a column along these lines at the time and the e-mails in response surprised me. Several were from people who themselves were having, or had had, an affair. One of these secret lovers argued that, as the loving mistress of a married man for several years, she had denied herself the normal rewards of a relationship: children, company, comfort, shared holidays. All that mattered to her was to see her man now and then. In its way, her love was more selfless, less morally compromised, than many marriages are.

The truth is that affairs are never happy. Disappointment is hard-wired into the arrangement from the very first breathless meeting. Guilt plays its damaging part – only a heel or a fool actually enjoys betraying someone else – but, beyond that, an unfaithful relationship of any depth is by its nature tragic. It depends on desire, and desire dies. Once an affair becomes tamed and domesticated, passion making way to friendship and shared interests, it loses its point. It might as well be – and sometimes, in the end, is – marriage.

The alternative to this decline into cosiness is that the fantasy is ratcheted up, rendered more extreme and dangerous through jealousy, perversity – anything to retain that important edge of desire. The enemy of the adulterer is boredom, the banal business of getting from one day to the next. The narrator of Howard Jacobson's new novel The Act of Love, a daring and funny exploration of marital voyeurism, explains his unusual form of infidelity (he is desperate for his wife to be unfaithful to him) by saying that "there is no continuum of aberration, except in the sense that every act of sex sits at a crossroads which leads to every other. We would all perish ecstatically in sex at last if we had the courage to go on travelling."
Some, out of the pages of fiction, do go on travelling. Martin Amis, speaking of his father Kingsley, said "he lived for adultery". The writer Willie Donaldson, who went to unimaginable extremes of erotic betrayal throughout his life, claimed that the problem had begun when he was at Cambridge where he had discovered that sex was the ultimate distraction from responsibility and duty. "I made this disastrous discovery at the age of 21," he wrote later. "We can't organise happiness but we can organise unboredom. It was downhill all the way since then."

The affair has to end. Lying in bed together, the lovers know that already the clock is ticking. Adultery time moves faster than that in the faithful world. The more they talk about what might have been had they met at a different time and under different circumstances, the more aware they become that their fantasy à deux will soon fade.

That is, if they are lucky. Adultery is not famous for its happy endings. In the great novels, it is rewarded with death and shame. For the modern adulterer, things merely decline into murk and misery. Lies are built upon lies, spreading outwards from spouse to children to family to friends to colleagues. The technical aspects of running the affair – so complex that it sometimes seems that organising a small war would be easier – begin to take their toll. The balance between present pleasure and future pain shifts towards guilt-free domestic comfort. Meetings, once so eagerly anticipated, become matters of duty. Adultery fatigue sets in.

It is cruel. It is a mess. The collateral damage to innocent bystanders is considerable. Yet, there is something spirited and alive about those who refuse to play by the conventional rules of love. Adultery does not lend itself to the end-of-term prize-giving which has become part of our lives – the Pride of Britain Awards are unlikely to have a Love Rat of the Year category – but the next time you read a sneering gossip item or hear the scolding tones of a rent-a-gob media moralist, it is worth remembering the words John Dowell, the narrator of Ford Maddox Ford's great novel of betrayal The Good Soldier, "I am not preaching anything contrary to accepted morality. I am not advocating free love in this or any other case. Society must go on, I suppose, and society can only exist if the normal, if the virtuous, and the slightly deceitful flourish, and if the passionate, the headstrong, and the too-truthful are condemned to suicide and to madness."

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Paulson Goes All In

   
By: Peter Schiff, Euro Pacific Capital, Inc.

-- Posted Friday, 19 September 2008   Just three days ago, after looking at the prospect of bailing a string of distressed financial institution in the country, the government seemingly drew a line in the sand, and refused to bail out Lehman Brothers.  The authorities clearly saw Lehman's demise as a trial balloon to see how the markets would react if the government stayed on the sidelines.  That trial balloon quickly turned into the Hindenburg.  Immediately reversing course, the Government has decided to go "all in" and bail out every institution with financial exposure to U.S. mortgages.  Simply put, Americans will not be allowed to visibly suffer losses after the greatest asset bubble in U.S. history.  But make no mistake, the losses are real and Americans will pay one way or another.   Moving beyond the guided munitions of selective bailouts, the Government is now trying the financial equivalent of carpet bombing (for AIG, Merrill Lynch, and especially Lehman Brothers, this gives new meaning to being a day late and a dollar short).  To continue with the military analogies, Paulson's bazooka turned out to be a nuclear tipped ballistic missile.    By committing trillions of tax payer dollars (not the "hundreds of billions" that Paulson predicts), the plan will save commercial and investment banks from certain bankruptcy.  In his statement today, Paulson made clear that Congress must pass new legislation to allow the Government to acquire even those loans too poorly collateralized to currently qualify for GSE or FHA absorption. The losses baked into these mortgage products, which Wall Street has been reluctant to even estimate, will now be borne wholly by taxpayers.    In his press conference, Paulson assured us that this plan was designed to safeguard our savings.  But in typical government fashion, the plan will have the reverse effect as savings is wiped out through inflation.  He also claims that the plan will safeguard home equity by keeping real estate prices high.  Since when did high home prices become a strategic national priority?  If the plan succeeds, the gains for home sellers will simply be matched by losses for homebuyers, who end up paying inflated prices, and taxpayers, who get stuck with the losses when those buyers default.    Paulson's distress and confusion was clearly evident when he fielded questions from reporters.  The first asked Paulson to describe his fears regarding the probable economic consequences of government inaction.  Paulson provided no answer and promptly exited stage right.   When the U.S. government owns all mortgages, the real estate market will be completely subject to political, rather than financial, concerns.  Will foreclosures be outlawed?  Will loan term easements and principal reductions become standard campaign issues?   While it is dizzying to predict how this plan will be implemented, it is fairly simple to foresee the macroeconomic consequences.  The U.S. dollar will be shattered beyond repair.  The government simply has no means to make good on the trillions of new liabilities.  Interestingly, while both Paulson and President Bush acknowledge that the plan will put "significant amounts of taxpayer dollars on the line," they did not mention any tax increases. Given the politics, no such move is forthcoming. The printing press is their only solution.    The government has also decided to insure all money market funds, adding trillions more in unfunded liabilities to the Federal balance sheet in the blink of an eye.  Of course, since bad real estate loans are not the only toxic assets on the balance sheets of financial institution, we will also need to absorb other classes of asset-backed securities, such as those backed by credit card debt and auto loans. So while the move ensures that depositors will not lose money, is does insure that the money itself will lose value.  Is the trade-off really worth it? Washington thinks so.   Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge.  However, once the government takes them off the hook, do not expect them to re-invest the windfall back into other U.S. dollar denominated assets.  This get-out-of-jail free card will likely scare them straight.  The global mass exodus from the U.S. dollar and Treasury debt is about to begin: do not get caught in the stampede.   Although gold initially sold off as the apparent need for a financial safe haven ebbed, look for a spectacular rally to commence as its traditional role as an inflation hedge returns with a vengeance.

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