The gold rush: welcome relief for a debt-ridden US economy
As the Eurozone contemplates the possibility of Greek default, American pundits are boasting about US federalism. American states, they say, would never allow the fiscal irresponsibility that plagues Eurozone countries. And when states do lapse, the country’s leaders do a better job of putting accounts back in order.
These pundits ought to know their history. In fact, the US has experienced a very similar crisis, in which one third of state governments defaulted. That crisis only ended after years of wrenching political change.
The trigger was the collapse of a land boom. In the 1830s, Europeans invested on a huge scale in US cotton plantations, banks, canals and railroads. Many state governments served as conduits by borrowing abroad and investing directly in banks and public works. Policymakers stoked the boom with reckless monetary and banking policies.
In 1837, the bubble burst. Banks collapsed, tax revenues evaporated, and improvement projects became white elephants. The first states to renege on their debts were Michigan and Indiana, which defaulted in July 1841. Others—Arkansas, Florida, Illinois, Louisiana, Maryland, Mississippi, and Pennsylvania—soon followed. The federal government refused to bail any of them out.
Damage to the country’s credibility was profound. “The eyes of all capitalists are averted from the United States,” wrote the English clergyman Sydney Smith in 1843. “Great and high-minded merchants loathe the name of America.” When the US government itself attempted to borrow, Europeans gave it the cold shoulder. “You may tell your government,” James de Rothschild told US agents, “that you have seen the man who is at the head of finances of Europe, and that he has told you that you cannot borrow a dollar.”
As the tributes pour in to Michael Foot, who died aged 96 earlier today, it’s worth looking back almost seven decades to the man in his early pomp as editor of the Evening Standard. Here, aged just 28, he speaks in defence of the Daily Mirror’s right to criticise Churchill’s government with one of the greatest weapons in the public speaker’s arsenal—mockery, of the most serious kind. It’s 1942, and this is simply astonishing:
Michael Mackintosh Foot, 23rd July 1913 to 3rd March 2010.
The Polish love their heroes. Milan Kundera once wrote that it was a nation that produced mercurial men, the sort who would mount a horse in defence of their country against the tanks of invading armies. Since the 1960s, journalist Ryszard Kapuscinski has been among them, but now his reputation is unravelling.
Kapuscinski was responsible for producing some of the finest reportage on the post-colonial era. Living on the modest wages and expenses of the Polish Press agency, he covered the Iranian revolution, the Honduras-El Salvador soccer war, and Africa from Angola to Ethiopia. As well as sending regular dispatches back to his homeland, still under the grip of blackout communism at the time, he went on to turn his experiences into expressionist histories that have been read the world over.
Now, however, a new biography by Artur Domoslawski offers evidence that Kapuscinski’s reports about the Mexican student massacre of 1968 were invented. “I was there,” Kapuscinski had claimed. No he wasn’t, says Domoslawski. Yet even if Domoslawski is right, does it matter?
CrocAttack! Gavron's first novel to be translated into English
CrocAttack!, a novel by the Israeli writer Assaf Gavron, published on Thursday, should be particularly interesting for British readers. It tells the story of a young resident of Tel Aviv who narrowly misses being killed in terrorist attacks during the second Palestinian intifada, which began in 2000. Gavron, who is 41, was in London working on the novel when the 7/7 bombings took place, and when I met him in Tel Aviv last year he described how he watched as the bombings began to have the same psychological impact on Londoners that the almost daily attacks had had on Israelis a few years earlier: paranoia side by side with detachment. “We were the professional bomb victims,” he says.
The novel is structured around two converging first-person narratives: Eitan’s, the young Israeli who lives in hip, secular Tel Aviv, and that of Fahmi, a Palestinian of around the same age who lives in a refugee camp and becomes a terrorist. Gavron admits it was easier for him to write Eitan, who is loosely based on himself. To write Fahmi’s sections, he drew on his experiences serving in the Israeli army in Gaza during the first intifada in the late 1980s. “It was the first time that I saw how Palestinians lived,” he said at a reading for Jewish Book Week on Monday. But although it was harder to write Fahmi, Gavron says he felt a need to at least attempt to give a Palestinian perspective. “There is hardly any Israeli literature in which you hear such a voice,” he said.
The grand regency chamber at the heart of Bath’s Guildhall is an incongruous place to be talking about search algorithms and digital privacy. Courtesy of the rather excellent Bath Literature Festival, however, that was exactly where I found myself this Sunday, debating whether Google is good for you in the company of Tim Kelsey, Heather Brooke and our chair, Tiffany Jenkins. I kept expecting to see a bonnet or two nodding in the audience, but no such Austenesque accoutrements were to be found. In fact, there was little technophobia of any kind, with the debate leaning strongly towards the opinion that governments and states were the people you really wanted to worry about—and that the great task is to lobby and scrutinise them mercilessly in the hope that they’ll hold private companies to account in turn.
There was, though, an interesting moment of silence on our part when we were asked what might or can be done to curb Google’s dominance of the search and online advertising industries. In honesty, nothing much at present was about the sum of my answer, although Tim and I agreed that quasi-monopolies have a habit of not lasting. More transparency all round was the battling cry, with the added injunction on Tim’s part that citizens have to realise that their contracts with the welfare state must trump many “privacy” concerns if they wish standards to be upheld and scandals avoided. Heather did not entirely agree on this point: indeed, her next book, The Silent State, will examine the question of just how far the state has encroached on citizens’ privacy and rights in Britain.
I finished off with a meditation on the unintended consequences of one company having so much power—and, as it sometimes seems, so little appreciation of the value and values of the older media whose business models it’s hollowing out. And then I was off for a cup of tea and a blessed afternoon away from the terrors of my inbox…
The Bath literature festival continues until Sunday 7th March, with daily debates sponsored by Prospect exploring everything from high culture to whether the French really are best at everything.
Thanks to freedom of information, we know all about Sarah Palin's tanning habit
Sarah Palin’s book tour got her a lot of publicity, but other Republican hopefuls for the 2012 presidential nomination have been bashing away on their laptops too.
Former Massachusetts governor Mitt Romney is about to publish No Apology: The Case for American Greatness. He plans to use the book tour to reinvent himself as the Republican centrist—which is odd, considering his 2008 campaign was based on him being a conservative. But the new Romney has shunned the populists of the tea party movement and appears to see same-sex marriage and gays in the military as a done deal, with social mores changing too fast for Republicans to reverse the tide.
The Christian evangelical candidate and former Arkansas governor Mike Huckabee published his book, A Simple Christmas: Twelve Stories That Celebrate the True Holiday Spirit, last year. The soggily sentimental tome reached number three in the New York Times bestseller list. And like Sarah Palin, Huckabee appears on television for the Fox network. His radio show, The Huckabee Report, is the fastest growing radio programme of the past decade.
But all their hopes of winning the New Hampshire primary have just been dented by the emergence of an unexpected New England rival. Scott Brown, the new Republican senator from Massachusetts (and former Cosmopolitan nude model) is writing “an inspirational book” and has hired super-lawyer Robert Barnett as his agent.
The pre-campaign will soon start to get dirty. Expect to hear a lot about the 3,000 emails of Palin’s husband Todd, known as “first dude,” recently obtained through a Freedom of Information Act inquiry. Particularly the one about how the Palins coached her staff to disguise the amount of electrical work needed at the Alaska governor’s mansion to hook up her tanning bed.
This article originally appeared in the March 2010 issue of Prospect
John Adams Focus
Barbican Centre, until 25th March, Tel: 0845 120 7500
John Adams is that rare thing, a living composer whose work has struck a chord with audiences well beyond the borders of the “new music” world. One reason for Adams’s eminence is that he spurns the fastidious “apolitical” stance of most composers and tackles big and often contentious themes. This five-concert series at the Barbican in London includes one of them: a symphony drawn from his most recent opera, Dr Atomic, which examines the agonised self-questioning of Robert Oppenheimer, leader of the team that created the first atomic bomb.
But there are more straightforward reasons for Adams’s rise to being the best-known “classical” composer worldwide. One is that he brings back the richly expressive harmonic palette which had long been absent from new music. Another is that his music pulsates with the rhythmic energy of American popular music, filtered through the interlocking patterns of minimalism. Together these create an inimitable relaxed energy and a sense of large spaces unfolding, like a drive down a Californian interstate in sound.
This series includes his latest orchestral score, City Noir, which brilliantly evokes the nocturnal menace and glamour of film noir, plus the British premieres of two new chamber works.
This article originally appeared in the March 2010 edition of Prospect
Bernanke: the sputtering recovery means interest rates will remain low for “an extended period”
The economy was supposed to bound out of a deep recession like a tiger: hungry, with spring in its step, full of pent up demand. But this one looks more like a sickly kitten, its weakness palpable to the men in charge of fixing it. On Wednesday Ben Bernanke told Congress that the sputtering recovery requires interest rates to remain low for “an extended period.” And on Tuesday, Mervyn King told MPs that “the health of the global economy” might require a return to the £200bn emergency quantitative easing programme.
It’s a tough time to be a central banker. Right now, as Bernanke and King admit, the only thing holding up a sputtering world economy is the laxest monetary policy in human memory combined with wartime levels of government deficit. Without these policies, the economy would collapse back into recession, if not depression. Imagine if interest rates were at normal levels. House prices wouldn’t be stabilising, they would be going through the floor. Lower interest payments are invaluable in stoking demand by providing households and business more disposable income. If rates went up, spending would inevitably go down. Also, low interest rates force asset prices higher. Market participants know any rate hike would crush share prices. We are lucky Bernanke plans to keep rates low.
Here at Prospect we eschew the wearisome political cynicism of our age and look forward to the election with a whistle and a skip. Like all national elections it is a festival of democracy—a chance for the country to talk to itself about how to cut the deficit (and whether a hung parliament would make it harder). We have sneaked in with an early “election special” to help to prepare you for the deluge of commentary. But it is not shaping up to be a historic contest.
Indeed, it may be encapsulated by a poignant exchange between a husband and wife (David and Karen) in Luton’s main shopping mall, reported by Sam Knight. “I ask David if he plans to vote Conservative. ‘It’s got to be better than the Labour lot, isn’t it?’ he says. ‘That’s just the way I see it. Maybe it isn’t…’ He is suddenly filled with doubt, and turns to his wife. ‘Karen, if you was voting, who would you vote for? You think they’re probably all the same don’t you.’ Karen looks down the mall. It is full of families. She speaks quietly. ‘I’d give the other ones a bit of a chance,’ she says.”
What makes us laugh in these troubled times? Prospect readers have provided the answer, with their response to the online survey to find Britain’s best sitcom that I invited them to fill out in last month’s column. A very angry man who’s terminally frightened of his wife comes top, a hapless government minister in thrall to scheming civil servants is second, and a rogue for all seasons comes third. Fawlty Towers romped home with a third of the vote, Yes Minister was a clear runner-up and Blackadder got the bronze.
Unsurprisingly, all are more than 25 years old. Familiarity nurtured over a long period is key to a successful sitcom. And John Cleese’s Fawlty Towers is a worthy winner, having established a catch phrase, used in just one edition, which has now entered the national lexicon: “Don’t mention the war.”
The current, exhausted cliché for a thing we’re all thinking but not saying is the “elephant in the room.” Naturally, Basil Fawlty’s take on this is much more politically incorrect and thus, of course, much more funny.
Nigel Warburton's March philosophy column for Prospect explores the friction between law and religion via Kant, Kierkegaard and Britain's first Asian judge
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