Say-So

The walloping “once in a century” tsunami of sub-prime mortgage defaults, financial institution collapses and inter-bank lending freezes has swept eastward, rising tall in the United States, gushing forth and toppling the economies of Iceland, Ukraine and Hungary and unhorsing the economies of the EU. The fallout is felt world wide in the form of wildly oscillating currency prices and erratic stock market performances.

At the epicenter of the “submarine quake” triggering the destructive wave - in the United States - the long term and steady deregulation of financial markets which started under the Reagan administration, continued through three Bush terms (George H.W and George W.) and the Clinton years, along with the faulty economic ideology abode by Alan Greenspan was fatally joined in a “menage a trois” by the loosening of the borrowing criteria. The resulting, unbridled growth culminated in the dot-com bubble. With barely 2 year respite the US housing bubble began rising.

Now that the burst of this latest mass delusion is finally history after years of circulating warnings of which perhaps the most famous is the term - Irrational Exuberance - fingers are being pointed back at the man who curiously coined that phrase, the 1987-2006 Chairman of Federal Reserve - Alan Greenspan. Perhaps rightfully so. He held one of the most important economic policy-making jobs in America 19 years out of the last 25 which when looking at the Inflation adjusted S&P 500, 1925-Present were marked by insatiable and unprecedented stock market boom thwarting all previous highs in American economic history.

A self described Libertarian-Republican, a friend and admirer of Ayn Rand who contributed to her non-fiction book Capitalism: the Unknown Ideal, Greenspan admitted in a congressional hearing in October that his free-market anti-regulation ideology was flawed. At the 1996 Annual Dinner lecture of the AEI sounding quite confused and uncertain, he nevertheless thought that it was possible for “financial asset bubble” to be detached from the “real economy”:

But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.

Such mix of sophisticated thinking and naivete is explainable only through one other quite uniquely human but terrifying capacity: faith. Faith in market fundamentalism in this case. It was therefore possible for Greenspan to set forth monetary policies which premeditated or not engineered the housing bubble, possibly to cushion the post dot-com correction and snatch the US economy off the brink of looming 2001-2002 recession. Whether the aggressive and prolonged cut of interest rates was motivated by twisted neo-conservative patriotism in the face of “post 9/11 world”, greed or naivete, is a matter of perspective. What is certain however, is that along with President Bush’s infamous calls “to shop” as part of the civilian sacrifice required at the time of war (”the war on terror”, the war in Afghanistan and the Iraq war), the interest rate cuts were measures to kick-start the American economy at all costs. The bulk of the cost it appears now, was transferred to the overextended borrower who was actively enticed and encouraged to consume beyond his/her means in order to keep the US economy churning.

Catherine Rampell, the author of “How Long Before the Market Bottoms?” which embeds Robert Shiller’s Inflation adjusted S&P 500 graph, summarizes her post by saying:

After the Great Depression, it took 29 years — until 1958 — for the market to reach its pre-Depression, inflation-adjusted peak. After the 1970s recession, it took 24 years — until 1992 — for the market to make a full “recovery” by the same measure. So no matter whether you start from the recent 2007 peak, or from the market’s absolute inflation-adjusted peak during the tech bubble in 2000, we may still have at least a decade to go before full “recovery.”

It rings true, against voices who speak of one, three or even 5 year recovery. Economists describe the depth and breadth of the oncoming recession in terms of alphabet letters V, U, W, or L. The Wall Street Journal (via The Conscience of a Liberal) ironically predicts the “the W recession” to follow the M shape of the preceding boom.

Robert Shiller who’s S&P 500 historical chart provides such strong visual to the present day crisis, is an economist and a Professor of Economics at Yale University as well as a best selling author of “Irrational Exuberance” which was updated and re-released in 2006 and barely off the press “The Subprime Solution“. The Irrational Exuberance book review states:

Shiller amasses impressive evidence to support his argument that the recent housing market boom bears many similarities to the stock market bubble of the late 1990s, and may eventually be followed by declining home prices for years to come. After stocks plummeted when the bubble burst in 2000, investors moved their money into housing. This precipitated the inflated real estate prices not only in America but around the world, Shiller maintains. Hence, irrational exuberance did not disappear—it merely reappeared in other settings.

He studies investor confidence indexes and is one of the key scholars in the field of Behavioral Economics.

Behavioral finance highlights certain inefficiencies and among these inefficiencies are underreactions or overreactions to information, as causes of market trends and in extreme cases of bubbles and crashes). Such misreactions have been attributed to limited investor attention, overconfidence / overoptimism, and mimicry (herding instinct) and noise trading.

The ongoing global economic calamity, deemed the worst since the Great Depression, is a case in point.
The investors’ reactions to the government’s attempts to contain and control the crisis are arbitrary and volatile. The insights of the economists tackling the Subprime Mortgage Crisis/Credit Crisis, most likely go as deep as the studies ran or aknowledged by Improbable Research that is to say they are obvious, unusable and often absurdly funny. The slap on the forehead - “duh” effect - of hind sight into the recent economic events, in a moment of dark humor seemed not very different from the conclusions reached by the 2008 lg Nobel Prize for Physics winners, Dorian Raymer of the Ocean Observatories Initiative at Scripps Institution of Oceanography and Douglas Smith of the University of California, San Diego who mathematically proved that heaps of string or hair or almost anything else will inevitably tangle themselves up in knots.

It is well known that a jostled string tends to become knotted; yet the factors governing the “spontaneous” formation of various knots are unclear. We performed experiments in which a string was tumbled inside a box and found that complex knots often form within seconds. We used mathematical knot theory to analyze the knots. Above a critical string length, the probability P of knotting at first increased sharply with length but then saturated below 100%. This behavior differs from that of mathematical self-avoiding random walks, where P has been proven to approach 100%.

It is not the romantic fog blanketing the hills overlooking the San Francisco bay, or the cafe culture which in truly modernist Parisian way took root here with the Beat generation , nor is it the proximity to highly admired, world class, brilliant and resourceful community of the Silicon Valley . It isn’t the stunning coastal vistas, Victorian “painted ladies” or the murals in the Mission that have left a Cupid’s arrow irretrievably planted in the area of my heart marked by the letters “SF”.
The memory of fog horns breaking through the city’s monotonous traffic hum will forever flood my nervous system with serotonin, generating a pious experience rivaled only by soft snow fall on a winter Friday night in Montreal, when the city is illuminated and silenced while being tucked in by the copious white for the weekend.
The truly significant appreciation of San Francisco is embedded in me thanks to the city’s unrivaled GLBT community.

That strong realization became apparent on one of my usual weekend hunts for street photos last year, first at San Francisco Pride Celebration , and later in the summer at the annual San Francisco Love Fest , where besides the colorful costumes, loud music, alcohol in designated areas, brown bags otherwise, pot cakes and other substances unknown to me and for the most part illegal, the atmosphere was imbued with freedom of self expression in magnitude unprecedented anywhere else in the world. Amongst exhibitionists and fetishists of all possible denominations, were families; a family of two handsome Nordic looking men hand holding a 7 year old boy; a family consisting of two voluptuous black women closely watching over a brood of kids running around. It is at that moment when a transcendent recognition of universality of love as a human experience struck me. The queer and proud community of San Francisco is at the forefront of today’s continuing struggle for civil rights . The emancipation of women and African-Americans is history now, and though there is no national holiday commemorating the 19th amendment , Martin Luther King Day coincides every year with Roe V Wade anniversary, challenged in San Francisco by massive turn outs of anti-abortion activists from the surrounding country side.

This year, the pro-choice activists did more than counter protest. According to indybay.org , they organized a rally of their own. It was a meager gathering. A handful of a couple of hundred San Franciscans vs a healthy few thousand of pro-life attendees, mostly outsiders. I’d like to think that if the United States ever regressed to revoke the legality of women’s right to choose an abortion, the pro-choice attendees would match or outnumber the pro-lifers in head count. As is, the few Roe V Wade supporters, resorted to wonderfully creative tactics to make their voices heard over the repetitive mumblings of prayers of the anti abortion marchers. The “pro-choice” - “pro-life” issue is not isolated or pure in the agenda promoted by either side. Supporting the dichotomy is the massive behemoth of religion and its “anti-” on the opposing side. While the anti abortion slew led by men in long robes, paraded with crosses, Jesuses and images of the Virgin, the counter protesters waving metal coat hangers met them with home fashioned signs saying: “Better aborted than abandoned” and “May the fetus you save be gay”. I was strongly impressed with a very young lesbian couple leading a toddler by hand and carrying a younger baby in a back carrier. They sidelined the politically motivated religious procession along the Embarcadero stretch. At one point the more vocal woman of the couple burst out in random inharmonious vocalizations mimicking the religious chanting of the faithful followers. I thought it was brilliant. The contrast could not have been starker. Ultimately, there is a grand philosophical precipice between the two sides, that of “self-expression” vs. “self-suppression”. Belgian Le Soir in its eurotopics.net english translation speaking of Austrian army recruiting two Imams, used the word “obedience” referring to religious following. Perhaps it was just a slip of a tongue which sometimes plagues multilingual writers. I thought it was very accurate. While the 1000 Genome Project intends to examine and compare 1000 human samples from around the globe in order to help study disease, I hope that in not too far future, genetic sampling can help highlight other pivotal differences between people, such as what makes some of us indiscriminate, blind followers yearning to obey rigid hierarchical structures, and some of us free thinkers and iconoclasts yelling at the top of our lungs in uninhibited self expression.

Last week I flipped through the chapters of “The God Delusion”, a Richard Dawkins book. Most arguments were familiar and I decided not to pick up yet another book to add to my reading list which already magnifies exponentially. Yet, I payed extra attention to the last chapter hoping to get the very general summary of the book’s drift and there I found a very interesting analogy. Dawkins compares religion restricting the viewing field of humanity, to that of a woman peering out from behind a burqa. Both are limiting, and in case of religion deprive the believer from a deeper and fully encompassing view of the world while in case of a burqa deprive the wearer from basking her limbs in the free flow of air. Perhaps because I am more sensitive to the tragedy of limiting a human mind than merely her body, I am not going to argue the first point. The topic of a burqa however, is more complex than it seems at a first glance.

To many in the western world the burqa has become a symbol of female subjugation. Understandably so, a head to toe clad female figure is a powerful image to unaccustomed observer. It is true that women in countries like Saudi Arabia or Iran are required to wear the strictest form of hijab and are discriminated against, their legal rights held in the hands of male relatives. Yet the two are not tied by default. In the majority of Muslim countries modest dress is encouraged, while the full bodied cloaking an option, undeniably reinforced by societal and or family pressures, but a choice nevertheless. What the westerners often ignore in their aversion to hijab, is that denying a woman a right to wear it in public, is an oppression equal to the one exerted by theocratic governing Muslim states which mandate it.

Religion ought not drive legislation and government should not favor any one religion in particular, but we ought to provide room for religious expression in our personal lives if such need exists. By wearing a head scarf, a hijab, or in its extreme form a burqa, a woman guided by her faith asserts in public her modesty, just as another woman by wearing tight fitting clothing chooses to emphasize her femininity. Ironically neither one is freer than her sister.

It is no secret that women in the “free” society spend significant amount of their income on apparel and cosmetic procedures in indirect and for the most part unconscious competition with each other. Competition as always, for resources. The resource being male attention for the purpose of mating and companionship. It used to be a matter of survival or at least of bettering the quality of life for her and her offspring. It has become a luxury since women become providers in addition to being mothers and care takers, one that nevertheless is not trivial to renounce.

The story of a young girl, Cennet Doganay trapped in the clash between two cultures, and her dramatic response to the 2004 french law banning conspicuous religious symbols in schools by shaving her head, is a poignant example of a secular rule perhaps taken a little too far. The French government in an attempt to better integrate the diverse cultural and religious minorities and reinforce the non religious nature of its institutions, has infringed on the personal freedoms of its citizens.
The fact that the citizens in question are minors and their liberties are otherwise fully held by their family members, is another grand topic on to itself. Yet, with the inter-cultural tensions rising in France and Britain in the last few years, it is worrisome that ignorance and xenophobia are excused in the name of secularism as in the more recent example of squabbles over muslim and christian religious symbols in Britain.

The greater picture of a woman in burqa is not the superficial outward appearance of her limited freedom, but that covering or baring her body, is ultimately her very own unadulterated choice. For biological and evolutionary reasons perpetuated into today’s societies a woman’s body has been iconicized and thus in a way made into a domain of public debate. What polemicists of all persuasions ought to remember is that tolerance for variety and furthermore, respect and celebration of our differences, is what brings about harmony and creates a stable society, and not a forced uniformity of dress or suppression of personal expression. What can unite us, despite the myriad of life choices we all make, is the universal ability to chose who we want to be, misguidedly perhaps, but freely.

Religion demands respect. No opinion on other topics has me tip toeing around the speaker with same care. After all, believers of all faiths base their daily and seasonal routines and often their entire lives around “dos” and “don’ts”. They curtail their experiences limiting their range of foods and activities to fit within the constraints of their chosen dogma. Attempting to debunk the existence of God with a theist is an assault on their philosophy threatening to subvert their entire life. How did it come to be? How did a cosmology based on a compilation of self contradicting ancient oral traditions (bible) gain such high degree of respect? This question surfaced for me once again recently while reading a superficial and lighthearted “Marx for Beginners” which fell into my hands as a result of a conversation with a friend. While the book does very little to significantly summarize the Marxist theory, it is a fun, quick, illustrated overview of the western man’s history, from the cavernous times to to the industrial age and society which was a fertile ground for the rise of communism. The simplified format presents the human thought in stark light and brute manner but with fascinating clarity. Religion has been with man since since the beginning of conscious thought. Rius writes:

In the beginning, ignorance and fear predominated. Because they didn’t know the meaning of things, early peoples were afraid of everything which moved, and their first thought was about the supernatural: Who made the noise of thunder? Who moved the earth? Who made it rain? … To provide some kind of explanation of natural events mankind created the gods: the god of rain, of fire, of earth, of sun, the goddess of fertility, the god of hunting… Out of this came the magicians and sorcerers, who exploited the idea of divinity for their own benefit. By using all kinds of cheap tricks they passed themselves off as special delegates of the gods with fantastic powers… This is the way gradually an upper class was formed - or the ruling class, and a lower - or ruled class… As time went on - and profits rose - the ruling class perfected its religion and added more gods, more myths, more rites and ceremonies, temples were built in which gods an goddesses were worshipped, which usually meant donations of money or other things had to be paid up to attract divine favors… At the same time, a divine cast set itself apart. Witch doctors had elevated themselves to priesthood. Their power was so great that together with kings and pharaohs, they created huge empires of faithful slaves “by the will of the supreme gods.”

With the advent of philosophy, logical thought and dialectic exchange gained prominence over the mythical view of the universe yet it seems that the more the idea of god was debated, the more strongly rooted it became in the human psyche. Whether is was Xenophanes who refuted the anthropomorphic gods in favor of “incorporeal eternal being”, or Thales who presumed water to be the primary element in nature and not gods yet believed in “soul (which) was the cause of motion, permeating and enlivening the entire cosmos” or Heraclitus described by some as atheist, who hinted at a presence of element of the “divine” in the world’s order. Since the pre-Socratic times till today, the idea of god has undergone innumerable permutations. It continues to be debated, its essence is attempted to be captured and defined by Kant, Hegel, Nietzsche , and Heidegger and so many more. Admittedly, by now “god” must be the most universally recognizable term yet one that is, despite the eternal length of debate surrounding it, most poorly defined. It is, and here by throwing in my 2 cents I join in with the millions adding to gods superfluous credence, a “carte blanche”, an ace, a joker in the making of our own custom flavored reality, in our own image, according to our very personal tastes.

My commute to work was extra long this morning as I kept getting lost on freeway exits, taking wrong turns, driving in circles. I was distracted. I have been growing progressively atheistic with age, yet today, just as the people gathered at the St. Peter’s square in Rome, I was carried away by the anticipation over the announcement of the new pope elect. The live coverage of NPR filled a lot of the waiting time before the announcement with descriptions of the awaiting crowds, relating the smallest movements behind the window over the balcony draped by a red banner. Every fluttering of a white curtain behind the red drapes, caused exclamatory vocalizations from the gathered below. The tension was clearly mounting with every passing minute. Listening and learning about the papal electoral process had me realize, that most, if not all of the customary procedures are meant to induce awe and mystery, beginning with the seclusion of the cardinals and smoke signaling as the means of communication, through the ceremonial revelation of the new pope and the final procession. The impenetrable and secret nature of the process was what caused the waves of excitement and gasps from the crowds. Maybe it was the allusion to the white curtains tasseled and swaying which had me connote the event with the Victorian excitement men experienced while catching a glimpse of a still fully stockinged female ankle revealed on occasional swaying or lifting of the long skirted dresses. At no point today would such sight induce beads of sweat to roll down any desiring foreheads. Withhold, deny, tease, play - and the crowds will be roaring. Oh why… are we made this way?!