2009 February

In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America’s sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets….

Whether it takes months, or just weeks, the world is going to discover that Europe’s financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus

The pinch of salt that should be taken with this article is that its author is a renowned euro-skeptic. For example, Polish mortgages in Swiss Francs are still cheaper than if they had been taken out in Zloty, and the number of people with large levels of housing debt is much less than US or UK.

Link

CNN’s Senior health correspondent, Elizabeth Cohen has some tips about healthcare mistakes to avoid if you fear a layoff. Number 1. is avoiding getting every test out there.

Elizabeth quotes Dr. Delia Chiaramonte, a Baltimore patient advocate: “If a mammogram shows a likely cancer, it will be very hard to get insurance in the future,” she says. “If I knew I was going to start another job with insurance in two months, I might hold off on cancer screening until then.”

In a country where coffee has to have a label warning that it may be dangerous to drink, where buses are evacuated because of a missing peanut and slipping on a wet floor can secure your retirement, all because of people getting sued, a national news outlet can include, what would elsewhere be criminally negligent, advice of a qualified Doctor (who has sworn the hippocratic oath), to avoid prudent screening for a life threatening illness, in a list of health tips.

To add insult to potential injury, this advice concerns an illness whose risk has been diminished by recent health education campaigns consisting of well meaning charity runs, sincere TV hosts and pink ribbon wearers everywhere urging you to screen yourself – on places like CNN. But here we have the farcical situation where a professional patient advocate is telling you not to bother on a news outlet that would be careful not to recommend drinking hot coffee in case it got sued.

Ultimately, all of this stems from the incompatibility of healthcare and capitalism, in a country that has an idealogical attachment to the latter. Capitalism is genuinely ideal for things where there is a level playing field and everyone has an equal opportunity to thrive. But unfortunately not everyone is equal when it comes to health, and therefore, in a free market, insurance companies can’t break even from the unlucky people who are already or are likely to be ill.

Something that is becoming apparent in this recession is that until America has universal healthcare, like nearly all other developed countries, it will be a sick place for the sick.

Link

The front page of the New York Times website features a tribute to Joe Ades, one of New York’s true characters:

“Joe Ades got people’s attention at Union Square: the British man with expensive suits and a radio announcer’s voice — the man selling the $5 peeler. He died on Sunday”.

There is a meme that exists on both sides of the Atlantic about people who beg or sell on the street that they are somehow secretly rich. This is used uncharitably to denounce beggars as frauds and to romanticize the lives of flamboyant and charismatic salesmen.

The rumors about Ades were that he lived with on the Upper East Side and was independently wealthy. Vanity fair describes him as he dines “with his fourth wife at exclusive restaurants, sips Veuve Clicquot at the Pierre, and goes home to a three-bedroom Park Avenue apartment.” Somehow Ades was selling for his love of the job rather than needing the money. If this is entirely true, it is romantic, if not its a bit patronizing. The Joe Ades story has all the ingredients of one which will become embellished as it becomes part of New York folklore, so its worth dissecting in the interests of historical accuracy, and to understand how myths originate.

Ades used to sell on the corner of my street, so I saw him nearly every week day over a period of years. Dave Pell bought me one of his peelers when he came to visit, which made me like Dave even more because he appreciated there was something special about Ades.

The Times story tells us that Ades wore “…expensive European suits and shirts”. European has been dropped on the front page to read “expensive suits”. I suspect that European suits is accurate and via a two step mutation within a single New York Times report, ‘European’ became ‘expensive European’ which became ‘expensive’. In defense, the 2006 Vanity Fair article is specific: “Joe cut a noticeably soigné figure in his classic, British-made Chester Barrie suits and bold shirts and ties from Turnbull & Asser.” However, I’ve witnessed the process of journalistic profiling enough to know that one swallow makes a summer in profiles, and people can become characterized by their Sunday Best rather than their less interesting, everyday attire.

Ades wore suits which were well worn and did not look particularly expensive to me, they also looked like they may have been from the early 80s as can be seen by the width of the lapel in the photo in today’s Times. In addition Ames wore the same suit most of the time (either a gray or tan one) and with mismatching shirts suggesting that he did not or could not spend a fortune on clothes. These suits would surely have been European if they were the same ones he owned when he came to America, but the phrase “expensive European suits” is loaded with different connotations which are misleading, allowing the story to morph into a more exaggerated form. The most noticeable omission from the Times’ description is the fact that Ades wore old beaten up soft shoes or sneakers with his suits, they are absent in the picture but were conspicuously jarring in reality.

The second feature that the Times mentions is Ades’ ‘radio announcer’s voice’. This could mean that he spoke resoundingly clearly but given the focus on the fact that he was British the inference is more likely that he had the antiquated dipthong-ridden vowels of the upper classes as personified by Pathe News reels and the pre-war BBC. To most people, many English accents may sound similar, but to an anally retentive native, like myself, they are an object of endless fascination in both their variety and the obnoxious English attachment of status to them. Although Ades was apparently from Manchester, his accent was neither Mancunian or upper class English, but blue-collar London. In fact Ades had a very interesting and specific accent, one that has become more associated with North London but originated in the East End. To hazard a guess, Ades accent may have been an example of that of Jewish East Enders whose families settled in the UK having fled eastern European pogroms and migrated north as they became more affluent, from Brick Lane to Hackney to Stoke Newington and eventually Hampstead and Golders Green. Many Ashkenazi families who progressed up the London social ladder by hard work, often as street salesmen, have success stories which are familiar in New York and are no doubt why Ades resonated on a subconscious level.

None of this myth busting denigrates the fact that Ades was a charming and charismatic New York character. But if, in future, Ades is remembered as an aristocratic, fancy suited, upper-class English dandy that hawked vegetable peelers as an ironic hobby, that would be wrong and actually less interesting.

Politics, Protectionism and Patriotism.

[despite popular outrage that British workers should have to find work in Europe, as recently as the 80s, this phenomenon was commonplace enough to be the subject of the sitcom above, about migrant UK builders in Germany]

The is alarming evidence building that co-ordinated efforts to ward off a depression could fail because of a political climate which will demand suicidal protectionism.

Here is what looks like a reasonable blog post attacking UK anti-protectionist politician, Peter Mandelson, someone who is certainly worth attacking, but not for these reasons. What I am about to argue seems ridiculous, that the attitude expressed in an innocuous blog post which is entirely representative of the popular mood, is terrifyingly dangerous, points to a political climate which will cause a depression wherever it takes hold and leads to fascism when unchecked. The problem is that this meme will spread through nice enough people.

During the Great Depression American manufacturing slumped causing misery among workers and creating the the political environment for the introduction of the highest import duties in US history. A chain reaction of protectionism spread throughout the world, global industrial production fell 36% in three years and world trade dropped by 62%.

People who know this, such as Britain’s Euro-politician, Peter Mandelson, are panicking. A series of wildcat strikes in the UK against workers from another EU country is feeding populist anger that British jobs should be for British people. This is a reaction which provably leads to less jobs for British people if the trade of workers and capital throughout Europe is stymied. On the other hand, to tell British workers that they should get jobs in Europe and stop being racist (as Mandelson, who is nothing if not a schemer and political animal, and therefore should know better) is politically useless and will deepen that anger, even if it is a fact.

People who try and teach the facts of evolution to religious people often show a similar naivety, thinking that reason is a weapon against a belief held for emotional reasons. We are on a dangerous path that leads to a depression, because of the way people feel when they are suffering, when the root causes are not immediately visible and there is an understandable denial that their previous lifestyle was an unsustainable fiction.

People are currently angry, and human beings are naturally tribal. It is much more likely that a country of angry people will cripple itself attacking trade with other tribes, than accept than suddenly join hands with those of another and accept lower status, working for them. For the UK in particular, the recent past has been forgotten. Migrant British workers were the subject of a popular sitcom, Auf Wiedersehen Pet, as recently as the 80s. The previous reality of British builders working in barracks in Germany was been replaced by migrant Poles coming to a booming UK and living of the fumes of fraudulently leveraged banking and fictitious housing asset prices. With jobs disappearing in Britain, people are less happy about European workers.

The solution to this protectionist climate is to create a scapegoat other than racism. This is obviously playing with fire, but channeling rage against the banking industry may actually be an alternative which has some constructive benefits. Anti-usury legislation, transparency and accountability with risks of over regulation would be preferable to racism and destruction in trade.

If Britain goes down the route of protectionism it may only hurt the UK, but if it shows an inexorable trend capable of spreading worldwide, then a political solution capable of channeling people’s anger and convincing people to avoid protectionism needs to be found. The facts will not speak for themselves in politics, as many scientists know.