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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Only a Roosevelt-Scale Counterrevolution Can Prevent Great Depression II

By Robert Kuttner, The American Prospect
Posted on September 18, 2008, Printed on September 19, 2008
http://www.alternet.org/story/99241/
The current carnage on Wall Street, with dire spillover effects on Main Street, is the result of a failed ideology -- the idea that financial markets could regulate themselves. Serial deregulation fed on itself. Deliberate repeal of regulations became entangled with failure to carry out laws still on the books. Corruption mingled with simple incompetence. And though the ideology was largely Republican, it was abetted by Wall Street Democrats.

Why regulate?

As we have seen ever since the sub-prime market blew up in the summer of 2007, government cannot stand by when a financial crash threatens to turn into a general depression -- even a government like the Bush administration that fervently believes in free markets. But if government must act to contain wider damage when large banks fail, then it is obliged to act to prevent damage from occurring in the first place. Otherwise, the result is what economists term "moral hazard"-- an invitation to take excessive risks.

Government, under Franklin Roosevelt, got serious about regulating financial markets after the first cycle of financial bubble and economic ruin in the 1920s. Then, as now, the abuses were complex in their detail but very simple in their essence. They included the sale of complex securities packaged in deceptive and misleading ways; far too much borrowing to finance speculative investments; and gross conflicts of interest on the part of insiders who stood to profit from flim-flams. When the speculative bubble burst in 1929, sellers overwhelmed buyers, many investors were wiped out, and the system of credit contracted, choking the rest of the economy.

In the 1930s, the Roosevelt administration acted to prevent a repetition of the ruinous 1920s. Commercial banks were separated from investment banks, so that bankers could not prosper by underwriting bogus securities and foisting them on retail customers. Leverage was limited in order to rein in speculation with borrowed money. Investment banks, stock exchanges, and companies that publicly traded stocks were required to disclose more information to investors. Pyramid schemes and conflicts of interest were limited. The system worked very nicely until the 1970s -- when financial innovators devised end-runs around the regulated system, and regulators stopped keeping up with them.

Seven Deadly Sins

Sin One: Allowing Mortgage Lending to Become a Casino. Until 1969, Fannie Mae was part of the government. Mortgage lenders were tightly regulated. Homeownership rates soared throughout the postwar era, from about 44 percent on the eve of World War II to 64 percent by the mid-1960s. Nobody in the mortgage business got filthy rich, and hardly anyone lost money. Fannie's job was to buy mortgages from banks and thrift institutions, to replenish their money to make mortgages, and along the way to set standards. Fannie financed its operations by selling bonds. In the late 1970s, private Wall Street firms started emulating Fannie. They packaged mortgages, and converted them into bonds. Over time, their standards deteriorated, because they could make more money creating riskier products. In order to avoid losing market share, Fannie emulated some of the same abuses. Government did not step in to regulate the affair -- which was a time bomb waiting for the creation of the sub-prime mortgage business.

Sin Two: Allowing Unregulated Bond Rating Agencies to Decide What was Safe. Sub-prime is only the best known of a widespread fad known as "securitization." The idea is to turn loans into bonds. Bonds are given ratings by private companies that have official government recognition, such as Moody's and Standard and Poors, but no government regulation. These rating agencies have become thoroughly corrupted by conflicts of interest. If you want to package and sell bonds backed by risky loans, you go to a bond-rating agency and pay it a hefty fee. In return, the agency helps you manipulate the bond so that it qualifies for a triple-A rating, even if the underlying loans include many that are high-risk. Without the collusion of the bond-rating agencies, sub-prime lending never would have gotten off the ground, because it would not have found a mass market. Had regulators looked inside this black box, they would have shut it down. They might have needed new legislation, but they never asked for it. And public-minded regulators might have done a lot under existing law, since banks (which are regulated) were heavily implicated in the financing of sub-prime.

Sin Three: Failing to Police Sub-prime. The core idea of bank regulation is that government inspectors periodically examine the quality of bank assets. If too large a portion of a bank's loan portfolio is behind in its interest payments, the bank is made to raise more capital as a cushion against losses. Problems are nipped in the bud. But complex securities require more sophisticated regulation than simple loans. Regulators basically waived the rule on adequate capital for the new wave of mortgage lenders who created sub-prime. Many mortgage companies were not banks. They made loans only to sell them off to the Wall Street sinners of Deadly Sin No. 1 (see above). So there was no loan portfolio to examine, and no real capital. The Democratic Congress anticipated this problem in 1994, when it passed the Homeownership Opportunity and Equity Protection Act. This prescient law required the Federal Reserve to regulate the loan-origination standards of mortgage companies that were not otherwise government-regulated. But Alan Greenspan, a free-market zealot, never implemented the law. And when Republicans took over Congress in 1995, they never called him on the carpet.

Sin Four: Failure to Stop Excess Leverage. The financial economy is crashing today because so much speculation was done with borrowed money. A typical leverage ratio of a hedge fund or private equity company is 30 to one. That means $30 of debt for $1 of actual capital. If you make one serious miscalculation, you are out of business. And in the case of sub-prime mortgage companies, the leverage ratio was infinite, because they had no capital. The game was entirely based on creating debt. As long as times were good, financial firms could keep borrowing to finance their deals. But once investors looked down, they panicked. Some parts of the system are unregulated, such as hedge funds and private-equity companies. But they all ultimately get a lot of their funding from banks. And regulators do retain the power to look closely at banks' books (see Sin No.3 above). Had they used that power to police the kind of highly risky stuff banks were underwriting, they could have shut it down.

Sin Five: Failure to Police Conflicts of Interest. Remember the accounting scandals of the 1990s? In those scandals, accounting firms were paid once to audit corporate books and then again to help clients cook the books and still pass muster with the audit. That was a sheer conflict of interest. Though accountants were (loosely) regulated, Congress did not crack down until cooked books caused the stock market to crash. A second conflict of interest was the corruption of stock analysts, who were telling customers to buy dubious stocks because their bosses were profiting from underwriting the same stocks. In the aftermath of the dot-com bust, Congress narrowly cracked down on these two abuses with the Sarbanes-Oxley Act but simply ignored others -- such as the role of bond-rating agencies and the habit of basing executive bonuses on stock prices that could easily be manipulated by the same executives.

Sin Six: Failing to Regulate Hedge Funds and Private Equity. When Roosevelt's New Deal acted to rein in the abuses in financial markets, it regulated the major players -- commercial banks, investment banks, stock brokers, holding companies, and stock exchanges. But two of the biggest purveyors of risk today -- hedge funds and private-equity firms -- simply did not exist. Today, private-equity firms and hedge funds do most of the things banks and investment banks do. They basically create credit by making markets in exotic securities. They buy and sell firms. They speculate in financial markets with borrowed money, taking much bigger risks than regulated banks. According to House Banking Committee Chair Barney Frank, more than half the credit created in recent years has been created by essentially unregulated institutions. The people in charge of the government -- conservative Republicans -- took the view that these new-wave financial players offered transactions between consenting adults who needed no special consumer protection. But they were oblivious to the risks to the larger system.

Sin Seven: Repeal of the Glass-Steagall Act. This action, in 1999, was one of two major cases when a cornerstone of New Deal regulation was explicitly repealed. (The other was the repeal of the Public Utility Holding Company Act, and if your utility rates are sky-high, you can thank Congress for that, too.) Glass-Steagall provided that if you wanted to speculate as an investment bank, good luck to you. But commercial banks were part of the banking system. They created credit. They were regulated, supervised, usually enjoyed FDIC insurance, and had access to advances from the Fed in emergencies. So commercial banks and investment banks were two different creatures that should stay out of each other's knitting.

But beginning in the 1980s, regulators who didn't believe in regulation either allowed explicit waivers of some aspects of Glass-Steagall or looked the other way as commercial banks and investment banks became more alike. By 1999, when Citigroup had jumped the gun and assembled a supermarket that included a commercial bank, investment bank, stock brokerage, and insurance company, Glass Steagall was so hollowed out that it was effectively dead. The coup de grace was its official repeal, in the Gramm-Leach-Bliley Act. That's Gramm as in former Sen. Phil Gramm, a deregulation zealot and top adviser to John McCain.

Three Basic Reforms


What all of these sins had in common was that they led financial markets to misprice assets. In plain English, that means buyers were purchasing securities based on bad information, often with borrowed money. When firms started losing money on sub-prime in mid-2007 and other owners decided it was time to get their money out, the whole miracle of leverage went into reverse. And it spilled over into other securities that had been mispriced thanks to all the conflicts of interest tolerated by regulators.

That's why, no matter how much taxpayer money the Federal Reserve and the Treasury keep pumping in, they can't turn dross back into gold. The next administration and the Congress need to return the financial economy to its historic task of supplying capital to the real economy -- of connecting investors to entrepreneurs -- and shut down the purely casino aspects of the system that have only enriched middlemen and passed along huge risks to everyone else.

Reform One: If it Quacks Like a Bank, Regulate it Like a Bank. Barack Obama said it well in his historic speech on the financial emergency last March 27 in New York. "We need to regulate financial institutions for what they do, not what they are." Increasingly, different kinds of financial firms do the same kinds of things, and they are all capable of infusing toxic products into the nation's financial bloodstream. That's why Treasury Secretary Hank Paulson has had to extend the government's financial safety net to all kinds of large financial firms like A.I.G. that have no technical right to the aid and no regulation to keep them from taking outlandish risks. Going forward, all financial firms that buy and sell products in money markets need the same regulation and examination. That will be the essence of the 2009 version of the Glass-Steagall Act.

Reform Two: Limit Leverage. At the very heart of the financial meltdown was extreme speculation with esoteric financial securities, using astronomical rates of leverage. Commercial banks are limited to something like 10 to one, or less, depending on their conditions. These leverage limits need to be extended to all financial players, as part of the same 2009 banking reform.

Reform Three: Police Conflicts of Interest. The conflicts of interest at the core of bond-raising agencies are only one of the conflicts that have been permitted to pervade financial markets. Bond-rating agencies should probably become public institutions. Other conflicts of interest should be made explicitly illegal. Yes, financial markets keep "innovating." But some innovations are good, and some are abusive subterfuges. And if regulators who actually believe in regulation are empowered to examine all financial institutions, they can issue cease-and-desist orders when they encounter dangerous conflicts.

We're talking about a Roosevelt-scale counterrevolution here. But nothing less will prevent the financial collapse from cascading into Great Depression II. And the public should never again forget that this needless collapse was brought to us by free-market extremists.

Robert Kuttner is co-founder and co-editor of The American Prospect magazine, as well as a Distinguished Senior Fellow of the think tank Demos. He was a longtime columnist for Business Week, and continues to write columns in the Boston Globe. He is the author of Obama's Challenge and other books.

Wall Street Socialists

September, 19 2008

By Amy Goodman
Source: Truthdig

 

The financial crisis gripping the U.S. has the largest banks and insurance companies begging for massive government bailouts. The banking, investment, finance and insurance industries, long the foes of taxation, now need money from working-class taxpayers to stay alive. Taxpayers should be in the driver's seat now. Instead, decisions that will cost people for decades are being made behind closed doors, by the wealthy, by the regulators and by those they have failed to regulate.

 

Tuesday, the Federal Reserve and the U.S. Treasury Department agreed to a massive, $85-billion bailout of AIG, the insurance giant. This follows the abrupt bankruptcy of Lehman Brothers, the 158-year-old investment bank; the distressed sale of Merrill Lynch to Bank of America; the bailout of both Fannie Mae and Freddie Mac; the collapse of retail bank IndyMac; and the federally guaranteed buyout of Bear Stearns by JPMorgan Chase. AIG was deemed "too big to fail," with 103,000 employees and more than $1 trillion in assets. According to regulators, an unruly collapse could cause global financial turmoil. U.S. taxpayers now own close to 80 percent of AIG, so the orderly sale of AIG will allow the taxpayers to recoup their money, the theory goes.

 

It's not so easy.

 

The financial crisis will most likely deepen. More banks and giant financial institutions could collapse. Millions of people bought houses with shady subprime mortgages and have already lost or will soon lose their homes. The financiers packaged these mortgages into complex "mortgage-backed securities" and other derivative investment schemes. Investors went hog-wild, buying these derivatives with more and more borrowed money.

 

Nomi Prins used to run the European analytics group at Bear Stearns and also worked at Lehman Brothers. "AIG was acting not simply as an insurance company," she told me. "It was acting as a speculative investment bank/hedge fund, as was Bear Stearns, as was Lehman Brothers, as is what will become Bank of America/Merrill Lynch. So you have a situation where it's [the U.S. government] ... taking on the risk of items it cannot even begin to understand."

 

She went on: "It's about taking on too much leverage and borrowing to take on the risk and borrowing again and borrowing again, 25 to 30 times the amount of capital. ... They had to basically back the borrowing that they were doing. ... There was no transparency to the Fed, to the SEC, to the Treasury, to anyone who would have even bothered to look as to how much of a catastrophe was being created, so that when anything fell, whether it was the subprime mortgage or whether it was a credit complex security, it was all below a pile of immense interlocked, incestuous borrowing, and that's what is bringing down the entire banking system."

 

As these high-rolling gamblers are losing all their banks' money, it comes to the taxpayer to bail them out. A better use of the money, says Michael Hudson, professor of economics at the University of Missouri, Kansas City, and an economic adviser to Rep. Dennis Kucinich, would be to "save these 4 million homeowners from defaulting and being kicked out of their houses. Now they're going to be kicked out of the houses. The houses will be vacant. The cities are going to [lose] property taxes, they're going to have to cut back local expenditures, local infrastructure. The economy is being sacrificed to pay the gamblers."

 

Prins elaborated: "You're nationalizing the worst portion of the banking system. ... You're taking on risk you won't be able to understand. So it's even more dangerous." I asked Prins, in light of all this nationalization, to comment on the prospect of nationalizing health care into a single-payer system. She responded, "You could actually put some money into something that pre-empts a problem happening and helps people get health care."

 

The meltdown is a bipartisan affair. Presidential contenders John McCain and Barack Obama each have received millions of dollars from these very companies that are collapsing and are receiving the corporate welfare. President Clinton and his treasury secretary, Robert Rubin (now an Obama economic adviser), presided over the repeal in 1999 of the Glass-Steagall Act, passed after the 1929 start of the Great Depression to curb speculation that caused that calamity. The repeal was pushed through by former Republican Sen. Phil Gramm, one of McCain's former top advisers. Politicians are too dependent on Wall Street to do anything. The people who vote for them, and whose taxes are being handed over to these failed financiers, need to show their outrage and demand that their leaders truly put "country first" and bring about "change."

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This week's financial crisis marks the end of an epoch

Only rarely is there a palpable public mood swing in Britain; the Winter of Discontent in 1978-9 was one; this is another
Larry Elliott, economics editor guardian.co.uk, Friday September 19 2008 14:52 BST Article historyThis was the week the world changed. It started with the US authorities trying to rescue Lehman Brothers. It ended with the US taxpayer preparing to pick up the tab for the mistakes of Wall Street's elite. It started with the prime minister sipping cocktails with financiers in Canary Wharf.

It ended with the government slapping a ban on short-selling and Gordon Brown pledging to clean up the City. Britain's biggest lender was rescued and the Chinese government lined up to take a 49% stake in Morgan Stanley, one of the last US investment banks left after a week of carnage. Ben Bernanke, the chairman of the Federal Reserve and Hank Paulson, the Goldman Sachs tycoon who became US Treasury secretary, have done more for socialism in the past seven days than anybody since Marx and Engels.

Over and above the extraordinary individual events, there was the capitulation of the prevailing economic model. History will show that the great experiment with financial deregulation lasted from the first post-war oil shock in 1973 to the third oil shock in 2008.

Between those years the constraints on capital that were imposed after the Great Depression were whittled away, leaving a world of easy credit, complex financial instruments, stratospheric salaries and supine regulators. Like a spoiled child, what big finance wanted big finance got. This week saw the arrival on the scene of Supernanny; big finance now faces a long spell on the naughty step.

The revenge of Middle Britain

The changed mood is evident from the media backlash against hedge funds and short-sellers. One headline this week screamed: "Don't let the spivs destroy Britain". It appeared not in the Socialist Worker but in the Daily Express. For Middle Britain, the traders who bragged about their £1,000 bottles of Krug have now become as loathed as the bolshie shop stewards of the 1970s. Only rarely is there a palpable public mood swing in Britain; the Winter of Discontent in 1978-9 was one; this is another.

Brown caught that mood. Having cosied up to the City for more than a decade, the prime minister has belatedly rediscovered his party's social democratic roots. Labour, it seems, no longer believes that the market is king. It no longer assumes that the "masters of the universe" have all the answers. For the first time in living memory it has ceased cringing and sent out the message that finance should be the servant of the people and not vice versa. Let's not get carried away. The new spirit of interventionism remains cautious and cramped, and it was forced on the government by events. But the small print of the Lloyds TSB merger with HBOS included, at the government's insistence, a commitment to helping first-time buyers get access to the mortgage ladder and to safeguarding jobs in Scotland. Such meddling with commercial decisions was off limits until Tuesday this week.

There is no need for caution. The financial system is broken and it was significant today that markets rallied after the smack of firm government. Many of the more thoughtful people working in the markets know that deregulation has led to anarchy not freedom, and that boundaries need to be set. It remains to be seen, however, whether the plan by the US authorities to buy-up all the toxic mortgage-backed derivatives at a knock-down price will have the desired results - an improvement in bank balance sheets, the restoration of market confidence and the resumption of more normal patterns of lending.

As far Paulson and Bernanke are concerned, it is worth a try. Culturally, America is fixated by memories of the Great Depression and when, by Thursday night, it appeared that Goldman Sachs could itself fall victim to the market turmoil, the US treasury and the Fed were starting to conjure up lurid images of dole queues and soup kitchens. The emergency action to shore up the financial system was necessary, perhaps inevitable, but the reality is that it won't save either the US or the UK from recession. What's at stake is just how deep and long those downturns will be. In the meantime, the shift in the economic balance of power leaves the US at the mercy of China's willingness to keep financing its debts.

So how to mark the end of an epoch? In 1976, Jim Callaghan was the undertaker for the post-war social democratic order when he said: "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists." On Tuesday, the prime minister should stand up and say: "We used to think you could borrow your way out of a recession and increase employment by increasing debt and setting the City free. I tell you in all candour that option no longer exists". It would bring the house down.