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- Xerxes
- New Orleans, Louisiana, United States
- Admire John McPhee, Bill Bryson, David Remnick, Thomas Merton, Richard Rohr and James Martin (and most open and curious minds)
26.9.08
Christianity & Capitalism
Rowan Williams, the Archbishop of Canterbury, says that the financial world needs fresh scrutiny and regulation. In our attitude to the market, we run the risk of idolatry
Readers of Anthony Trollope will remember how thoughtless and greedy young men in the Victorian professions can be lured into ruin by accepting ‘accommodation bills’ from their shifty acquaintances. They make themselves liable for the debts of others; and only too late do they discover that they are trapped in a web of financial mechanics that forces them to pay hugely inflated sums for obligations or services they have had nothing to do with. Their own individual credit-worthiness, their own circumstances, even their own personal choices are all irrelevant: the debt has acquired a life of its own, quite independent of any real transaction they are involved in.
A prescient student of Trollope would have seen that he is identifying an endemic feature of the world of borrowing and lending. A lender takes a calculated risk in offering the use of their money to someone else, and rates of interests express the recognition of this — and the rewards that may be secured for taking such a risk. But it is not too difficult to see how the notional gain involved here can be used as security against a further risk. And so the transaction moves further and further from the original transaction with its realistic assessment of levels of risk within the context of measurable standards of credit-worthiness. Any face-to-face element, any direct calculation of what and who is reasonably worth trusting (which assumes some common frame of reference), fades away. Like Trollope’s hapless young clerics and feckless young landowners, individuals find that their own personal financial decisions and calculations have nothing to do with what is happening to their resources, in a process for which a debt is simply someone else’s wholly disposable asset.
It is a sort of one-syllable nursery parable of what the last couple of weeks have illustrated in the world of global finance and, of course, a reminder that what we have been witnessing is not just the product of a couple of irresponsible decades.
Trading the debts of others without accountability has been the motor of astronomical financial gain for many in recent years. Primitively, a loan transaction is something which enables someone to do what they might not otherwise be able to do — start a business, buy a house. Lenders identify what would count as reasonable security in the present and the future (present assets, future income) and decide accordingly.
But inevitably in complex and large-scale transactions, one person’s debt becomes part of the security which the lender can offer to another potential customer. And a particularly significant line is crossed when the borrowing and lending are no longer to do with any kind of equipping someone to do something specific, but exclusively about enabling profit — sometimes, as with the now banned practice of short-selling, by effectively betting on the failure of a partner in the transaction.
This crisis exposes the element of basic unreality in the situation — the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders. But while we are getting used to this sudden vision of the Emperor’s New Clothes, there are one or two questions that, in government as in society at large, we at last have a chance to ask. Some of these are elementary and practical. Given that the risk to social stability overall in these processes has been shown to be so enormous, it is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to. To grant that without a basis of some common prosperity and stability, no speculative market can long survive is not to argue for rigid Soviet-style centralised direction. Insecure or failed states may provide a brief and golden opportunity for profiteering, but cannot sustain reliable institutions.
Without a background of social stability everyone will eventually suffer, including even the most resourceful, bold and ingenious of speculators. The question is not how to choose between total control and total deregulation, but how to identify the points and practices where social risk becomes unacceptably high. The banning of short-selling is an example of just such a judgment. Governments should not lose their nerve as they look to identify a few more targets.
Behind all this, though, is the deeper moral issue. We find ourselves talking about capital or the market almost as if they were individuals, with purposes and strategies, making choices, deliberating reasonably about how to achieve aims. We lose sight of the fact that they are things that we make. They are sets of practices, habits, agreements which have arisen through a mixture of choice and chance. Once we get used to speaking about any of them as if they had a life independent of actual human practices and relations, we fall into any number of destructive errors. We expect an abstraction called ‘the market’ to produce the common good or to regulate its potential excesses by a sort of natural innate prudence, like a physical organism or ecosystem. We appeal to ‘business’ to acquire public responsibility and moral vision. And so we lose sight of the fact that the market is not like a huge individual consciousness, that business is a practice carried on by persons who have to make decisions about priorities — not a machine governed by inexorable laws.
And this is part of the same mindset that turns the specific, goal-related transactions of borrowing and lending into a process producing pseudo-things, paper assets — but pseudo-things that (when matters do not go well) cause real and crippling damage to actual persons and institutions. The biggest challenge in the present crisis is whether we can recover some sense of the connection between money and material reality — the production of specific things, the achievement of recognisably human goals that have something to do with a shared sense of what is good for the human community in the widest sense.
Of course business is not philanthropy, securing profit is a legitimate (if not a morally supreme) motivation for people, and the definition of what’s good for the human community can be pretty widely drawn. It’s true as well that, in some circumstances, loosening up a financial regime to allow for entrepreneurs and innovators to create wealth is necessary to draw whole populations out of poverty. But it is a sort of fundamentalism to say that this alone will secure stable and just outcomes everywhere.
Fundamentalism is a religious word, not inappropriate to the nature of the problem. Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves; he was right about that, if about little else. And ascribing independent reality to what you have in fact made yourself is a perfect definition of what the Jewish and Christian Scriptures call idolatry. What the present anxieties and disasters should be teaching us is to ‘keep ourselves from idols’, in the biblical phrase. The mythologies and abstractions, the pseudo-objects of much modern financial culture, are in urgent need of their own Dawkins or Hitchens. We need to be reacquainted with our own capacity to choose — which means acquiring some skills in discerning true faith from false, and re-learning some of the inescapable face-to-face dimensions of human trust.
Readers of Anthony Trollope will remember how thoughtless and greedy young men in the Victorian professions can be lured into ruin by accepting ‘accommodation bills’ from their shifty acquaintances. They make themselves liable for the debts of others; and only too late do they discover that they are trapped in a web of financial mechanics that forces them to pay hugely inflated sums for obligations or services they have had nothing to do with. Their own individual credit-worthiness, their own circumstances, even their own personal choices are all irrelevant: the debt has acquired a life of its own, quite independent of any real transaction they are involved in.
A prescient student of Trollope would have seen that he is identifying an endemic feature of the world of borrowing and lending. A lender takes a calculated risk in offering the use of their money to someone else, and rates of interests express the recognition of this — and the rewards that may be secured for taking such a risk. But it is not too difficult to see how the notional gain involved here can be used as security against a further risk. And so the transaction moves further and further from the original transaction with its realistic assessment of levels of risk within the context of measurable standards of credit-worthiness. Any face-to-face element, any direct calculation of what and who is reasonably worth trusting (which assumes some common frame of reference), fades away. Like Trollope’s hapless young clerics and feckless young landowners, individuals find that their own personal financial decisions and calculations have nothing to do with what is happening to their resources, in a process for which a debt is simply someone else’s wholly disposable asset.
It is a sort of one-syllable nursery parable of what the last couple of weeks have illustrated in the world of global finance and, of course, a reminder that what we have been witnessing is not just the product of a couple of irresponsible decades.
Trading the debts of others without accountability has been the motor of astronomical financial gain for many in recent years. Primitively, a loan transaction is something which enables someone to do what they might not otherwise be able to do — start a business, buy a house. Lenders identify what would count as reasonable security in the present and the future (present assets, future income) and decide accordingly.
But inevitably in complex and large-scale transactions, one person’s debt becomes part of the security which the lender can offer to another potential customer. And a particularly significant line is crossed when the borrowing and lending are no longer to do with any kind of equipping someone to do something specific, but exclusively about enabling profit — sometimes, as with the now banned practice of short-selling, by effectively betting on the failure of a partner in the transaction.
This crisis exposes the element of basic unreality in the situation — the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders. But while we are getting used to this sudden vision of the Emperor’s New Clothes, there are one or two questions that, in government as in society at large, we at last have a chance to ask. Some of these are elementary and practical. Given that the risk to social stability overall in these processes has been shown to be so enormous, it is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to. To grant that without a basis of some common prosperity and stability, no speculative market can long survive is not to argue for rigid Soviet-style centralised direction. Insecure or failed states may provide a brief and golden opportunity for profiteering, but cannot sustain reliable institutions.
Without a background of social stability everyone will eventually suffer, including even the most resourceful, bold and ingenious of speculators. The question is not how to choose between total control and total deregulation, but how to identify the points and practices where social risk becomes unacceptably high. The banning of short-selling is an example of just such a judgment. Governments should not lose their nerve as they look to identify a few more targets.
Behind all this, though, is the deeper moral issue. We find ourselves talking about capital or the market almost as if they were individuals, with purposes and strategies, making choices, deliberating reasonably about how to achieve aims. We lose sight of the fact that they are things that we make. They are sets of practices, habits, agreements which have arisen through a mixture of choice and chance. Once we get used to speaking about any of them as if they had a life independent of actual human practices and relations, we fall into any number of destructive errors. We expect an abstraction called ‘the market’ to produce the common good or to regulate its potential excesses by a sort of natural innate prudence, like a physical organism or ecosystem. We appeal to ‘business’ to acquire public responsibility and moral vision. And so we lose sight of the fact that the market is not like a huge individual consciousness, that business is a practice carried on by persons who have to make decisions about priorities — not a machine governed by inexorable laws.
And this is part of the same mindset that turns the specific, goal-related transactions of borrowing and lending into a process producing pseudo-things, paper assets — but pseudo-things that (when matters do not go well) cause real and crippling damage to actual persons and institutions. The biggest challenge in the present crisis is whether we can recover some sense of the connection between money and material reality — the production of specific things, the achievement of recognisably human goals that have something to do with a shared sense of what is good for the human community in the widest sense.
Of course business is not philanthropy, securing profit is a legitimate (if not a morally supreme) motivation for people, and the definition of what’s good for the human community can be pretty widely drawn. It’s true as well that, in some circumstances, loosening up a financial regime to allow for entrepreneurs and innovators to create wealth is necessary to draw whole populations out of poverty. But it is a sort of fundamentalism to say that this alone will secure stable and just outcomes everywhere.
Fundamentalism is a religious word, not inappropriate to the nature of the problem. Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves; he was right about that, if about little else. And ascribing independent reality to what you have in fact made yourself is a perfect definition of what the Jewish and Christian Scriptures call idolatry. What the present anxieties and disasters should be teaching us is to ‘keep ourselves from idols’, in the biblical phrase. The mythologies and abstractions, the pseudo-objects of much modern financial culture, are in urgent need of their own Dawkins or Hitchens. We need to be reacquainted with our own capacity to choose — which means acquiring some skills in discerning true faith from false, and re-learning some of the inescapable face-to-face dimensions of human trust.
The Yankees
According to Buster Olney, the dynasty's real "last night" came seven years ago, in October of 2001 - the night that Luis Gonzalez fisted a Series-winning single over Derek Jeter's head, ending the Yankee streak of consecutive World Championships at three and ringing down the curtain on a particularly indomitable era in Bronxian history. And Olney's right, in a sense: The Yankee teams of 2002-2007 felt at times like a waning shadow of the terrifying squad that came before them - the team of Scott Brosius and Paul O'Neill and Tino Martinez, of El Duque's leg kicks and David Cone's pinpoint control, of Bernie Williams' effortless center fielding and the nasty middle-relief work of Mike Stanton, Jeff Nelson, and Ramiro Mendoza. The pre-2001 Yankees weren't as talented, strictly speaking, as some of the squads New York has fielded in the last five years - O'Neill didn't hit like Gary Sheffield, Brosius was no Alex Rodriguez, El Duque's regular-season record never matched Mike Mussina's - but they were vastly harder to beat than the jury-rigged teams of recent vintage, with their uneasy mix of over-the-hill superstars (Kevin Brown and Randy Johnson, Jason Giambi and Johnny Damon) and unready twentysomethings (Melky Cabrera, Philip Hughes, etc.). The Nineties Yanks were the great exception to the Moneyball rules - the team whose numbers didn't tell the whole story, the team that consistently outperformed its Pythagorean record, the team that you knew was going to find a way to beat you when the chips were down. You knew Derek Jeter would drive in the tying run in the seventh and Williams would homer to win it; you knew Paul O'Neill would get the clutch bloop single and that Mendoza would wriggle out of the bases-loaded jam the following inning to save the game; you knew that they'd capitalize on your team's errors and stifle your last-ditch, eighth-inning comeback attempt. You just knew it. And God, how I hated them.
Those days are long gone. But the streak of post-season appearances went on: Even when the Yankees would struggle early in the season, and people would murmur that this, this at last was finally the year when they wouldn't be playing in October, they always found a way to right the ship, to leave the Jays and Rays and Orioles in the dust and lap the Red Sox - and even last year, when they finally didn't catch us, they still cruised into the playoffs, claiming it as their birthright yet again. And crucial pieces from those old, terrifying teams remained in place - Jeter prancing around shortstop, Posada's hangdog face behind the plate, Andy Pettitte (back after an exile in Houston) sweeping curveballs across the plate, and Mariano Rivera, deadly and elegant, there at the end of every Yankees win. Joe Torre endured as well, until this year, and even then his replacement, Joe Girardi, was a fixture from those great mid-nineties team, Posada's platoon-mate turned Posada's manager, the wheel of Yankee history coming full circle yet again.
And so attention must be paid: Last night, on fields in Boston and Toronto, the amazing run that began when Don Mattingly was still the Yankee first baseman finally ended, and baseball's twentieth century - which was, more than anything else, a pinstriped century - finally, irrevocably, gave way to its twenty-first, in which the role the Yankees filled for generations is very much up for grabs. They will be back, of course, but in a different stadium, under different leadership, and in a different era. And now is the time for their fans and their enemies alike to salute the way they were - a team, and a dynasty, the likes of which we may not see again.
Those days are long gone. But the streak of post-season appearances went on: Even when the Yankees would struggle early in the season, and people would murmur that this, this at last was finally the year when they wouldn't be playing in October, they always found a way to right the ship, to leave the Jays and Rays and Orioles in the dust and lap the Red Sox - and even last year, when they finally didn't catch us, they still cruised into the playoffs, claiming it as their birthright yet again. And crucial pieces from those old, terrifying teams remained in place - Jeter prancing around shortstop, Posada's hangdog face behind the plate, Andy Pettitte (back after an exile in Houston) sweeping curveballs across the plate, and Mariano Rivera, deadly and elegant, there at the end of every Yankees win. Joe Torre endured as well, until this year, and even then his replacement, Joe Girardi, was a fixture from those great mid-nineties team, Posada's platoon-mate turned Posada's manager, the wheel of Yankee history coming full circle yet again.
And so attention must be paid: Last night, on fields in Boston and Toronto, the amazing run that began when Don Mattingly was still the Yankee first baseman finally ended, and baseball's twentieth century - which was, more than anything else, a pinstriped century - finally, irrevocably, gave way to its twenty-first, in which the role the Yankees filled for generations is very much up for grabs. They will be back, of course, but in a different stadium, under different leadership, and in a different era. And now is the time for their fans and their enemies alike to salute the way they were - a team, and a dynasty, the likes of which we may not see again.
25.9.08
The Great Credit Freeze
Of all the phantoms conjured from the financial depths in the past ten days, the most ghastly appeared on the dark Wednesday, 17 September, when interest on the short-term obligations of the United States government, the one-month Treasury bill, turned negative and became a penalty. Such terror had overtaken the markets that they were willing to suffer a loss on their money in the hope that, in the deep bosom of the US Treasury, some of it would be kept safe.
Yet the terror of that day was not just to do with loss: money lost, job gone, wife fled, house foreclosed, sailboat beached. It was an elemental panic, such as overran the financial markets on 19 October 1987, the day the Dow Jones Industrial Average fell 23 per cent. It was a recognition that the world is not as we have been told and that the conception of value that lies at the root of modern society is, and has always been, a fiction.
In this panic, there is no reality in the sense of actual existence to prices and Lehman Brothers Holdings can be worth $15bn on Monday and nothing at the weekend. The world is held together only by instances of agreement between two or more people. It is an education that everybody should pass through, and my generation has done so twice, in 1987 and 2008. It is as if the gods of financial markets have been reading Hegel, and learnt that "through repetition, that which at the beginning appeared as merely accidental or possible, is confirmed as a reality".
Not that governments are thinking much about Hegel. Like generals fighting their grandfathers' wars, policymakers are haunted by the Depression of the 1930s, where a crash in financial markets was transformed by selfish national policies into a collapse in world trade, and unemployed men walked in droves from Sydney to Melborne, shooting rabbits for food.
Andrew Mellon, the former investment banker who was US treasury secretary at that time, thought to break value down to a sort of puritan or moral core. He is said to have burst out to President Hoover: "Liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate! It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
His reincarnation, Henry Paulson (also once a star investment banker), has opted instead for expediency in which pure fear cuts through all moral entanglements. He has won over the administration and some supporters in Congress to his colossal plan to take $700bn or more of bad loans on to the Federal government's books. It is the equivalent of the entire US budget for social security. In promoting his plan, Paulson said: "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion. The financial security of all Americans . . . depends on our ability to restore our financial institutions to a sound footing."
Ben Bernanke, chairman of the Federal Res erve, was crisper: "There are no atheists in foxholes and no ideologues in financial crises."
In effect, the US public will recapitalise the silly bankers at a cost of perhaps $2,000 per American adult and child, maybe much more, maybe much less. In Britain, the authorities are reluctant to wield what Paulson calls the "bazooka", trying to ensure instead that the banks continue to do business with one another. Banks, under the so-called special liquidity scheme, can shore up their creditworthiness by exchanging their questionable mortgage securities for Treasury bills, securities that carry the faith and credit of the UK, which has never failed.
Already, £100bn has been drawn and nobody knows how much more will be required for both schemes. In truth, bankers have little clue now what they have (assets) or what they owe (liabilities). AIG, the insurance group that all but bankrupted itself insuring bank loans against default, asked the US authorities at the weekend of 13-14 September for $20bn, then for $40bn and finally $85bn.
What are we to make of a banking business that must be recapitalised by the public every generation? That, like the nuclear power industry, holds a gun to the public head two or three times each lifetime? And in the intervening periods treats the public like poor relations?
In all the commentary on the crisis, certain facts have been thought too elementary for consideration, so I shall consider them. The first is this: the business of banking is not profitable (as you have been told) but miserably unprofitable. It is this unprofitability rather than the idiocy or wickedness of bankers that makes the enterprise so unstable. The arrogance of bankers, their extravagant rewards and public philanthropy, are the abstract counterparts of the massive architraves and pediments of the old bank architecture, such as the Barclays Bank headquarters in Norwich. How could they not be safe as houses?
The fundamental business of taking in money and putting it out again earns a wafer-thin interest margin and will only keep bankers in luxury if it is conducted on a colossal scale. Even the most prudent banks borrow ten times their own capital, while investment banks (who do not take deposits from the public) borrow very much more: Lehman Brothers 30 times, and even the respectable Goldman Sachs 22 times. At that extent of what is known in the US as leverage, a small fall in values wipes out the bank's capital, leaving its lenders exposed to loss, and their lenders likewise in a daisy chain of failure. Commercial banks are not well-managed institutions and investment banks (with the exception, it is said, of Goldman Sachs) are not managed, in the industrial sense, at all. An unsupervised trader can wipe out a bank's entire capital, as in 1995 at Baring Brothers, or so terrify management that they reverse his trades at fire-sale prices, as at Société Générale last February.
Even at that level of leverage, profitability is still too low and banks have sought ways to ex pand their lending through various legal and quasi-legal means. (J K Galbraith used to say that as the speculative waters subside, all manner of crimes are revealed to an astonished public view.)
In a regulatory filing, AIG made no secret that some of its credit insurance instruments were designed to help banks evade restrictions on their lending. Another tactic was to combine packets of loans into interest-bearing securities and sell them on to other investors. This allowed banks to replenish their funds and originate more loans, but at the risk of spreading the default far and wide - which is why bad debts in run-down cities in the Midwest affected investors in London, Frankfurt and Tokyo.
Too many banks
The second point follows from that. The banking system is not undercapitalised for the ordinary purposes of trade, as Paulson would have us believe, but overcapitalised to the point of obesity. A brief walk down the high street of a county town reveals that. It was the genius of the short-sellers, or bears, to recognise that there are far too many banks and bankers for the use of the public - and for this insight, like Cassandra, they are hated and shunned. Paulson wants to maintain the banking industry in its bloated condition for fear that an orderly reduction in banking will turn into a rout. We will then be plunged back into the days of the Hoover administration, when 11,000 banks closed their doors for ever and business simply stopped. Yet Paulson's attempt to maintain the banking system at the extent or level of 2005 or 2006 may not be successful.
The reason is that the run on the banks which started at Northern Rock in Newcastle in September 2007 has unfolded at a time of rising, not falling, incomes and profits. The last phase of mortgage lending in the US and UK, and also in countries such as Spain and Ireland, was never likely to be repaid even in golden days. In the ordinary rhythm of trade and business, business activity will eventually contract or already is contracting. As industrial companies fall into loss and individuals lose their jobs, debts of a more solid character than 110 per cent loan-to-value mortgages will fall into arrears. Unable to raise capital in the markets, banks will once more need public support, or will fail. The Paulson "bazooka" and the swap arrangements at the Bank of Eng land may expand to the point when they impair the credit of the nation, expressed in its currency's exchange-rate. And what of poorer or less sophisticated countries who are also unable to borrow? While all eyes have been on London and New York, the Russian stock market has halved. This is the nightmare of the 1930s where the engine of world trade simply peters out.
Yet policymakers are constrained by their ignorance of financial markets, have no ideas of their own, and must take the poacher-turned-gamekeeper Paulson at his word. In Britain, new Labour shed its ancestral scepticism of the City more comprehensively than, say, the reformed German Social Democrats. As the intoxication recedes, Labour must recall in hot flushes its excruciating naivety. Peter Mandelson's "We are intensely relaxed about people getting filthy rich" is as embarrassing as Gordon Brown's hero-worship of the US central banker, Alan Greenspan, whose stock has fallen faster than Lehman Brothers common.
Yet if the financial chaos spreads out into the tangible world of job centres and shuttered factories and empty office blocks - a world where men and women, unlike bankers, must live with the consequences of their folly - politicians will demand their pound of flesh. In the US, both presidential candidates Barack Obama and John McCain are mining a popular hatred of the East Coast money men that goes back deep into the 19th century. They will place restrictions on bank lending and securities underwriting just at the point where there is no lending or underwriting of securities. Bowing to the winds of change, both Goldman Sachs and Morgan Stanley have abandoned their privileged position as investment banks and submitted to regulation by the Federal Reserve, right there alongside First Farmers & Merchants of South Succotash with its 600 checking accounts.
William McChesney Martin, the Federal Reserve chairman in the 1950s and 1960s, used to say that the job of the central banker is "to take away the punch bowl just as the party gets going". Greenspan, who at two decades at the Federal Reserve accommodated the banks in all they required, conspicuously failed to do so. In these circumstances, there will be a call for returning central banks to political control. Margaret Thatcher always opposed independence of the Bank of England, because it seemed to her an admission of political failure. She also doubted - and even her enemies would not disagree - "whether we had people of the right calibre to run such an institution". These central banks, once returned to political control, will find it hard to resist a little inflation to lighten the burden of public and private debt.
The melancholy aspect of the crisis lies not in the humbling of proud men such as Dick Fuld of Lehman Brothers or Greenspan himself, but in our ignorance. An entire epoch of finance passes in which we lived, but did not understand. Truly, as Hegel said, philosophy comes too late to teach the world how it should be, and Minerva's owl begins her flight into gathering darkness.
James Buchan is the author of "Frozen Desire: an Inquiry into the Meaning of Money" (1997)
Yet the terror of that day was not just to do with loss: money lost, job gone, wife fled, house foreclosed, sailboat beached. It was an elemental panic, such as overran the financial markets on 19 October 1987, the day the Dow Jones Industrial Average fell 23 per cent. It was a recognition that the world is not as we have been told and that the conception of value that lies at the root of modern society is, and has always been, a fiction.
In this panic, there is no reality in the sense of actual existence to prices and Lehman Brothers Holdings can be worth $15bn on Monday and nothing at the weekend. The world is held together only by instances of agreement between two or more people. It is an education that everybody should pass through, and my generation has done so twice, in 1987 and 2008. It is as if the gods of financial markets have been reading Hegel, and learnt that "through repetition, that which at the beginning appeared as merely accidental or possible, is confirmed as a reality".
Not that governments are thinking much about Hegel. Like generals fighting their grandfathers' wars, policymakers are haunted by the Depression of the 1930s, where a crash in financial markets was transformed by selfish national policies into a collapse in world trade, and unemployed men walked in droves from Sydney to Melborne, shooting rabbits for food.
Andrew Mellon, the former investment banker who was US treasury secretary at that time, thought to break value down to a sort of puritan or moral core. He is said to have burst out to President Hoover: "Liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate! It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
His reincarnation, Henry Paulson (also once a star investment banker), has opted instead for expediency in which pure fear cuts through all moral entanglements. He has won over the administration and some supporters in Congress to his colossal plan to take $700bn or more of bad loans on to the Federal government's books. It is the equivalent of the entire US budget for social security. In promoting his plan, Paulson said: "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion. The financial security of all Americans . . . depends on our ability to restore our financial institutions to a sound footing."
Ben Bernanke, chairman of the Federal Res erve, was crisper: "There are no atheists in foxholes and no ideologues in financial crises."
In effect, the US public will recapitalise the silly bankers at a cost of perhaps $2,000 per American adult and child, maybe much more, maybe much less. In Britain, the authorities are reluctant to wield what Paulson calls the "bazooka", trying to ensure instead that the banks continue to do business with one another. Banks, under the so-called special liquidity scheme, can shore up their creditworthiness by exchanging their questionable mortgage securities for Treasury bills, securities that carry the faith and credit of the UK, which has never failed.
Already, £100bn has been drawn and nobody knows how much more will be required for both schemes. In truth, bankers have little clue now what they have (assets) or what they owe (liabilities). AIG, the insurance group that all but bankrupted itself insuring bank loans against default, asked the US authorities at the weekend of 13-14 September for $20bn, then for $40bn and finally $85bn.
What are we to make of a banking business that must be recapitalised by the public every generation? That, like the nuclear power industry, holds a gun to the public head two or three times each lifetime? And in the intervening periods treats the public like poor relations?
In all the commentary on the crisis, certain facts have been thought too elementary for consideration, so I shall consider them. The first is this: the business of banking is not profitable (as you have been told) but miserably unprofitable. It is this unprofitability rather than the idiocy or wickedness of bankers that makes the enterprise so unstable. The arrogance of bankers, their extravagant rewards and public philanthropy, are the abstract counterparts of the massive architraves and pediments of the old bank architecture, such as the Barclays Bank headquarters in Norwich. How could they not be safe as houses?
The fundamental business of taking in money and putting it out again earns a wafer-thin interest margin and will only keep bankers in luxury if it is conducted on a colossal scale. Even the most prudent banks borrow ten times their own capital, while investment banks (who do not take deposits from the public) borrow very much more: Lehman Brothers 30 times, and even the respectable Goldman Sachs 22 times. At that extent of what is known in the US as leverage, a small fall in values wipes out the bank's capital, leaving its lenders exposed to loss, and their lenders likewise in a daisy chain of failure. Commercial banks are not well-managed institutions and investment banks (with the exception, it is said, of Goldman Sachs) are not managed, in the industrial sense, at all. An unsupervised trader can wipe out a bank's entire capital, as in 1995 at Baring Brothers, or so terrify management that they reverse his trades at fire-sale prices, as at Société Générale last February.
Even at that level of leverage, profitability is still too low and banks have sought ways to ex pand their lending through various legal and quasi-legal means. (J K Galbraith used to say that as the speculative waters subside, all manner of crimes are revealed to an astonished public view.)
In a regulatory filing, AIG made no secret that some of its credit insurance instruments were designed to help banks evade restrictions on their lending. Another tactic was to combine packets of loans into interest-bearing securities and sell them on to other investors. This allowed banks to replenish their funds and originate more loans, but at the risk of spreading the default far and wide - which is why bad debts in run-down cities in the Midwest affected investors in London, Frankfurt and Tokyo.
Too many banks
The second point follows from that. The banking system is not undercapitalised for the ordinary purposes of trade, as Paulson would have us believe, but overcapitalised to the point of obesity. A brief walk down the high street of a county town reveals that. It was the genius of the short-sellers, or bears, to recognise that there are far too many banks and bankers for the use of the public - and for this insight, like Cassandra, they are hated and shunned. Paulson wants to maintain the banking industry in its bloated condition for fear that an orderly reduction in banking will turn into a rout. We will then be plunged back into the days of the Hoover administration, when 11,000 banks closed their doors for ever and business simply stopped. Yet Paulson's attempt to maintain the banking system at the extent or level of 2005 or 2006 may not be successful.
The reason is that the run on the banks which started at Northern Rock in Newcastle in September 2007 has unfolded at a time of rising, not falling, incomes and profits. The last phase of mortgage lending in the US and UK, and also in countries such as Spain and Ireland, was never likely to be repaid even in golden days. In the ordinary rhythm of trade and business, business activity will eventually contract or already is contracting. As industrial companies fall into loss and individuals lose their jobs, debts of a more solid character than 110 per cent loan-to-value mortgages will fall into arrears. Unable to raise capital in the markets, banks will once more need public support, or will fail. The Paulson "bazooka" and the swap arrangements at the Bank of Eng land may expand to the point when they impair the credit of the nation, expressed in its currency's exchange-rate. And what of poorer or less sophisticated countries who are also unable to borrow? While all eyes have been on London and New York, the Russian stock market has halved. This is the nightmare of the 1930s where the engine of world trade simply peters out.
Yet policymakers are constrained by their ignorance of financial markets, have no ideas of their own, and must take the poacher-turned-gamekeeper Paulson at his word. In Britain, new Labour shed its ancestral scepticism of the City more comprehensively than, say, the reformed German Social Democrats. As the intoxication recedes, Labour must recall in hot flushes its excruciating naivety. Peter Mandelson's "We are intensely relaxed about people getting filthy rich" is as embarrassing as Gordon Brown's hero-worship of the US central banker, Alan Greenspan, whose stock has fallen faster than Lehman Brothers common.
Yet if the financial chaos spreads out into the tangible world of job centres and shuttered factories and empty office blocks - a world where men and women, unlike bankers, must live with the consequences of their folly - politicians will demand their pound of flesh. In the US, both presidential candidates Barack Obama and John McCain are mining a popular hatred of the East Coast money men that goes back deep into the 19th century. They will place restrictions on bank lending and securities underwriting just at the point where there is no lending or underwriting of securities. Bowing to the winds of change, both Goldman Sachs and Morgan Stanley have abandoned their privileged position as investment banks and submitted to regulation by the Federal Reserve, right there alongside First Farmers & Merchants of South Succotash with its 600 checking accounts.
William McChesney Martin, the Federal Reserve chairman in the 1950s and 1960s, used to say that the job of the central banker is "to take away the punch bowl just as the party gets going". Greenspan, who at two decades at the Federal Reserve accommodated the banks in all they required, conspicuously failed to do so. In these circumstances, there will be a call for returning central banks to political control. Margaret Thatcher always opposed independence of the Bank of England, because it seemed to her an admission of political failure. She also doubted - and even her enemies would not disagree - "whether we had people of the right calibre to run such an institution". These central banks, once returned to political control, will find it hard to resist a little inflation to lighten the burden of public and private debt.
The melancholy aspect of the crisis lies not in the humbling of proud men such as Dick Fuld of Lehman Brothers or Greenspan himself, but in our ignorance. An entire epoch of finance passes in which we lived, but did not understand. Truly, as Hegel said, philosophy comes too late to teach the world how it should be, and Minerva's owl begins her flight into gathering darkness.
James Buchan is the author of "Frozen Desire: an Inquiry into the Meaning of Money" (1997)
24.9.08
.........and then, none
The radical overhaul of Britain’s financial sector in 1986 was dubbed the Big Bang. The brutal, unplanned reshaping of Wall Street might be better described as the Big Implosion. As if too ashamed to go on after the humbling of the country’s mortgage agencies and its largest insurer, the “bulge-bracket” brokerage model has collapsed in on itself. Even more humiliating for the erstwhile masters of the universe, the new force in finance is now the government.
The last remaining investment banks, Goldman Sachs and Morgan Stanley, were forced to seek sanctuary by converting into bank holding companies after the trampling of Lehman Brothers turned into a full-scale run on the industry. Though neither was particularly sickly, markets could no longer stomach their potentially lethal combination of illiquid assets and skittish wholesale liabilities.
Both will now start gathering large amounts of deposits, a more stable form of funding. Signing up strong partners should also help. Mitsubishi UFJ, a giant Japanese bank, will buy up to 20% of Morgan. Late on Tuesday September 23rd Goldman went one better, coaxing $5 billion from Warren Buffett, an investing legend. This endorsement helped Goldman to raise a further $5 billion in a share offering the next day.
Mr Buffett, no idle flatterer, describes Goldman as “exceptional”. But some doubt that it can adapt and thrive. As a bank it faces more intrusive supervision from the Federal Reserve, tougher capital requirements and restrictions on investing. Universal banks, such as Citigroup and Bank of America, long dismissed as stodgy, argue that their vast balance sheets and wide range of businesses, from cards to capital markets, give them an edge in trying times. The head of one bank suggests that the golden times enjoyed by investment banks in 2003-06 were an “aberration”, fuelled by a global liquidity glut big enough to hide a multitude of risk-taking sins.
Private-equity firms and hedge funds spy opportunity. The buyout barons got good news this week, when the Fed relaxed its rules on their ownership of banks. These investors are also going after the investment banks’ “talent”. Hedge funds will be particularly keen to get their hands on cutting-edge risk-takers who fret that new regulation will clip their wings.
Power may shift in two other directions: abroad and, to a lesser extent, to boutique investment banks. Mitsubishi is not the only foreign bank making a move. After a brief wrangle in the bankruptcy courts, Britain’s Barclays has taken over Lehman’s American operations.
But all is not lost for the former investment banks. For one thing, they may not have to cut leverage by as much as feared. Though their overall leverage ratios are high, their risk-adjusted capital ratios under the Basel 2 rules are stronger than those of most commercial banks.
Moreover, there are some advantages to becoming a bank now. Dozens of regional lenders are expected to fail in the coming months. Goldman and Morgan should thus be able to amass deposits on the cheap, and without the headaches that would accompany a merger with a big commercial bank. As two of the sharpest distressed-debt investors, they will also be looking to pick up assets from the government’s giant loan-buying entity when it gets going.
Given the acute stress in money markets, however, the accent for the time being is more on survival than grabbing opportunities. Banks continue to treat each other with suspicion in interbank loan markets.
Financial firms fear further fallout from the recent, potentially catastrophic run on money-market funds that prompted the government to step in with guarantees. “Prime” money funds, which are important buyers of corporate debt, remain under pressure and are pulling away from anything deemed risky. This is a big problem for banks, since money funds hold up to $1.3 trillion of their short-term debt. As the funds retreat, the banks will be forced to turn to longer-term (and more expensive) funding markets.
Once markets stabilise, Wall Street will start to wonder if it is better or worse off without its standalone investment banks. They may leave behind a vacuum. As broker-dealers, regulated more lightly by the Securities and Exchange Commission, they were free to put large dollops of capital to work, providing liquidity, making markets and assuming risk. As banks, they may find the Fed takes a more restrictive view.
The last remaining investment banks, Goldman Sachs and Morgan Stanley, were forced to seek sanctuary by converting into bank holding companies after the trampling of Lehman Brothers turned into a full-scale run on the industry. Though neither was particularly sickly, markets could no longer stomach their potentially lethal combination of illiquid assets and skittish wholesale liabilities.
Both will now start gathering large amounts of deposits, a more stable form of funding. Signing up strong partners should also help. Mitsubishi UFJ, a giant Japanese bank, will buy up to 20% of Morgan. Late on Tuesday September 23rd Goldman went one better, coaxing $5 billion from Warren Buffett, an investing legend. This endorsement helped Goldman to raise a further $5 billion in a share offering the next day.
Mr Buffett, no idle flatterer, describes Goldman as “exceptional”. But some doubt that it can adapt and thrive. As a bank it faces more intrusive supervision from the Federal Reserve, tougher capital requirements and restrictions on investing. Universal banks, such as Citigroup and Bank of America, long dismissed as stodgy, argue that their vast balance sheets and wide range of businesses, from cards to capital markets, give them an edge in trying times. The head of one bank suggests that the golden times enjoyed by investment banks in 2003-06 were an “aberration”, fuelled by a global liquidity glut big enough to hide a multitude of risk-taking sins.
Private-equity firms and hedge funds spy opportunity. The buyout barons got good news this week, when the Fed relaxed its rules on their ownership of banks. These investors are also going after the investment banks’ “talent”. Hedge funds will be particularly keen to get their hands on cutting-edge risk-takers who fret that new regulation will clip their wings.
Power may shift in two other directions: abroad and, to a lesser extent, to boutique investment banks. Mitsubishi is not the only foreign bank making a move. After a brief wrangle in the bankruptcy courts, Britain’s Barclays has taken over Lehman’s American operations.
But all is not lost for the former investment banks. For one thing, they may not have to cut leverage by as much as feared. Though their overall leverage ratios are high, their risk-adjusted capital ratios under the Basel 2 rules are stronger than those of most commercial banks.
Moreover, there are some advantages to becoming a bank now. Dozens of regional lenders are expected to fail in the coming months. Goldman and Morgan should thus be able to amass deposits on the cheap, and without the headaches that would accompany a merger with a big commercial bank. As two of the sharpest distressed-debt investors, they will also be looking to pick up assets from the government’s giant loan-buying entity when it gets going.
Given the acute stress in money markets, however, the accent for the time being is more on survival than grabbing opportunities. Banks continue to treat each other with suspicion in interbank loan markets.
Financial firms fear further fallout from the recent, potentially catastrophic run on money-market funds that prompted the government to step in with guarantees. “Prime” money funds, which are important buyers of corporate debt, remain under pressure and are pulling away from anything deemed risky. This is a big problem for banks, since money funds hold up to $1.3 trillion of their short-term debt. As the funds retreat, the banks will be forced to turn to longer-term (and more expensive) funding markets.
Once markets stabilise, Wall Street will start to wonder if it is better or worse off without its standalone investment banks. They may leave behind a vacuum. As broker-dealers, regulated more lightly by the Securities and Exchange Commission, they were free to put large dollops of capital to work, providing liquidity, making markets and assuming risk. As banks, they may find the Fed takes a more restrictive view.
Big Day Today!
It's the birthday of F. Scott Fitzgerald, (books by this author) born in St. Paul, Minnesota (1896), who said, "All good writing is swimming under water and holding your breath."
This week, we continue to celebrate the anniversary of the Norman invasion of 1066. It was this week in 1066 that William the Conqueror of Normandy first arrived on British soil. The French-speaking Normans eventually defeated Old English-speaking Saxons at the Battle of Hastings on October 14, 1066 — which had a larger and more pronounced effect on the development of the English language than any other event in history. Within the course of a few centuries, English went from being a strictly Germanic language to one infused with a large Latinate vocabulary, which came via French.
The French brought us all sorts of words that surround cooking, including the word gourmet, which in Old French was gromet, a wine-taster's assistant. At first, the term was used in jest, a satirical way to describe persons overly preoccupied with food, but the term became respectable and then even fashionable. Gourmand, French for glutton, is from the same root — and in early use, it carried with it a sense of moral disapproval, because food was often in short supply and so gluttony was hence deemed to be a serious transgression.
From the Norman invasion we get the word for supper — super, "to take one's evening meal" — as well as the word for dinner. In Old French, the word was disner, which evolved from a Latin word meaning "to break fast." A dinner entrée might feature any of these types of meat whose English names were derived from French:
Beef — from Old French boef, meaning "bull." The name for the farm animal, cow, remained in use from Old English.
Mutton — from Old French muton. The sheep, which gave its flesh, also maintained its Old English name.
Pork — from Old French porc, from Latin porcus. The Old English name again remains for the farm animal — swine — and we again use the French-derived name for what's served at the table.
The meat could be served in the form of a cutlet, a word stemming from the French côtelette, "little rib." Perhaps the meat is roasted, from the Old French rostir. It originally meant to cook before a fire; now, it has evolved so that it generally means to "cook in an oven." The verb grill, which people now often use to refer to cooking over a fire, comes from the French word for grate, the metal grid that separates the flame from the food. In the early 1700s, roast came to take on the meaning of "ridicule" or "criticize" — and today, we see celebrities and politicians roasted on late-night television.
And if you'd like a salad with that, you're asking for something derived from a French word — salade — from Latin salata, meaning "that which is salted." Although vinegar and oil were already available and used as condiments, early dressings for leaves of lettuce were often comprised of salt water.
Salt is also firmly rooted in the words salsa, sauce and saucy, and in the word salary. Before technology revolutionized the harvesting of salt into a cheap and easy process, salt was extremely precious, and soldiers of the Roman Empire were often paid part of their wages — that is, their salary — in the form of measured amounts of salt. Salt's ancient value as an important commodity also helps to explain the phrase "worth [his] salt."
This week, we continue to celebrate the anniversary of the Norman invasion of 1066. It was this week in 1066 that William the Conqueror of Normandy first arrived on British soil. The French-speaking Normans eventually defeated Old English-speaking Saxons at the Battle of Hastings on October 14, 1066 — which had a larger and more pronounced effect on the development of the English language than any other event in history. Within the course of a few centuries, English went from being a strictly Germanic language to one infused with a large Latinate vocabulary, which came via French.
The French brought us all sorts of words that surround cooking, including the word gourmet, which in Old French was gromet, a wine-taster's assistant. At first, the term was used in jest, a satirical way to describe persons overly preoccupied with food, but the term became respectable and then even fashionable. Gourmand, French for glutton, is from the same root — and in early use, it carried with it a sense of moral disapproval, because food was often in short supply and so gluttony was hence deemed to be a serious transgression.
From the Norman invasion we get the word for supper — super, "to take one's evening meal" — as well as the word for dinner. In Old French, the word was disner, which evolved from a Latin word meaning "to break fast." A dinner entrée might feature any of these types of meat whose English names were derived from French:
Beef — from Old French boef, meaning "bull." The name for the farm animal, cow, remained in use from Old English.
Mutton — from Old French muton. The sheep, which gave its flesh, also maintained its Old English name.
Pork — from Old French porc, from Latin porcus. The Old English name again remains for the farm animal — swine — and we again use the French-derived name for what's served at the table.
The meat could be served in the form of a cutlet, a word stemming from the French côtelette, "little rib." Perhaps the meat is roasted, from the Old French rostir. It originally meant to cook before a fire; now, it has evolved so that it generally means to "cook in an oven." The verb grill, which people now often use to refer to cooking over a fire, comes from the French word for grate, the metal grid that separates the flame from the food. In the early 1700s, roast came to take on the meaning of "ridicule" or "criticize" — and today, we see celebrities and politicians roasted on late-night television.
And if you'd like a salad with that, you're asking for something derived from a French word — salade — from Latin salata, meaning "that which is salted." Although vinegar and oil were already available and used as condiments, early dressings for leaves of lettuce were often comprised of salt water.
Salt is also firmly rooted in the words salsa, sauce and saucy, and in the word salary. Before technology revolutionized the harvesting of salt into a cheap and easy process, salt was extremely precious, and soldiers of the Roman Empire were often paid part of their wages — that is, their salary — in the form of measured amounts of salt. Salt's ancient value as an important commodity also helps to explain the phrase "worth [his] salt."
David Foster Wallace
Ideas & Trends
The Best Mind of His Generation
By A. O. SCOTT
Reviewing a biography of Jorge Luis Borges in The New York Times Book Review a few years back, David Foster Wallace attacked the standard biographical procedure of mining the lives of writers for clues to their work, and vice versa. Borges’s stories, he insisted, “so completely transcend their motive cause that the biographical facts become, in the deepest and most literal way, irrelevant.”
What’s true of writers’ lives is also, surely, true of their deaths. The temptation to regard Mr. Wallace’s suicide last weekend as anything other than a private tragedy must be resisted. But the strength of the temptation should nonetheless be acknowledged. Mr. Wallace was hardly one to conceal himself within his work; on the contrary, his personality is stamped on every page — so much so that the life and the work can seem not just connected but continuous.
Beyond this, Mr. Wallace was the kind of literary figure whose career was emblematic of his age. He may not have been the most famous novelist of his time, but more than anyone else, he exemplified and articulated the defining anxieties and attitudes of his generation.
Mr. Wallace’s vibrant body of work — reportage and criticism as well as two novels and three volumes of shorter fiction — pursued themes that in retrospect look uncomfortably like portents. His last book of stories was called “Oblivion,” and an earlier collection included the stories “Death Is Not the End,” “Suicide as a Sort of Present” and “The Depressed Person.” Even his most exuberant explorations of absurdity are edged with melancholy. “Infinite Jest,” the enormous, zeitgeist-gobbling novel that set his generation’s benchmark for literary ambition, is, for all its humor, an encyclopedia of phobia, anxiety, compulsion and mania.
The moods that Mr. Wallace distilled so vividly on the page — the gradations of sadness and madness embedded in the obsessive, recursive, exhausting prose style that characterized both his journalism and his fiction — crystallized an unhappy collective consciousness. And it came through most vividly in his voice. Hyperarticulate, plaintive, self-mocking, diffident, overbearing, needy, ironical, almost pathologically self-aware (and nearly impossible to quote in increments smaller than a thousand words) — it was something you instantly recognized even hearing it for the first time. It was — is — the voice in your own head.
Or mine, at any rate. When, as an undergraduate with a head full of literary theory and a heartsick longing for authenticity, I first encountered David Foster Wallace, I experienced what is commonly called the shock of recognition. Actually, shock is too clean, too safe a word for my uncomfortable sense that not only did I know this guy, but he knew me. He could have been a T.A. in one of my college courses, or the slightly older guy in Advanced Approaches to Interpretation who sat slightly aloof from the others and had not only mastered the abstruse and trendy texts everyone else was reading, but also skipped backward, sideways and ahead. It was impressive enough that he could do philosophy — the mathematical kind, not just the French kind. But he also played tennis — Mr. Wallace, in fact, had competed seriously in the sport — and could quote lyrics from bands you only pretended you’d heard of. Without even trying, he was cooler than everyone else.
All this shone through Mr. Wallace’s fiction. He had the intellectual moves and literary tricks diagrammed in advance: the raised-eyebrow, mock-earnest references to old TV shows and comic books; the acknowledgment that truth was a language game. He was smarter than anyone else, but also poignantly aware that being smart didn’t necessarily get you very far, and that the most visible manifestations of smartness — wide erudition, mastery of trivia, rhetorical facility, love of argument for its own sake — could leave you feeling empty, baffled and dumb.
Another way of saying this is that Mr. Wallace, born in 1962 and the author of an acclaimed first novel at age 24, anchored his work in an acute sense of generational crisis. None of his peers were preoccupied so explicitly with how it felt to arrive on the scene as a young, male American novelist dreaming of glory, late in the 20th century and haunted by a ridiculous, poignant question: what if it’s too late? What am I supposed to do now?
This is a common feeling for those of us born in the 1960s (for the record, I’m four years younger than Mr. Wallace). If you were, let’s say, a faculty brat in the 1970s, living in a provincial college town — Champaign, Ill., in Mr. Wallace’s case or Chapel Hill, N.C., in mine — you felt a weird post-traumatic vibe from many of the adults you met. And, if, as an adolescent or an undergraduate, you found your way into books, you kept seeing — on syllabuses, at the campus bookstore, on your parents’ shelves — the monuments of the previous era, most intriguingly the masterworks laid down by brave exemplars of experimentalism, iconoclasts who disassembled the worn machinery of the novel and put it back together in crazy, ingenious ways: William Gaddis and John Barth, Thomas Pynchon and Kurt Vonnegut. These guys — and most were guys — pointed the way forward.
But they also blocked the path. Mr. Wallace knew this very well. He regarded the lions of postmodernism as heroes, but also as obstacles. “If I have an enemy,” he said in the early 1990s, “a patriarch for my patricide, it’s probably Barth and Coover and Burroughs, even Nabokov and Pynchon.” That’s a lot of fathers for one Oedipal struggle, and Wallace expended a lot of energy trying to assimilate and overcome their influences.
But he was not only preoccupied with staking out a position in relation to other writers. Again and again, he returned to a basic, perhaps the basic, philosophical question facing anyone with a blank screen and a story to tell. What am I going to say? How am I going to say it? It’s never an easy question, but perhaps no one illustrated its difficulty with so much energy, good humor and conceptual rigor. In the story “Octet,” a section begins “you are, unfortunately, a fiction writer” and then proceeds, hilariously and infuriatingly, to diagram the dimensions of that misfortune. One long, brilliant, crazy footnote ends: “None of that was very clearly put and might well ought to get cut. It may be that none of this real-narrative-honesty-v.-sham-narrative-honesty stuff can even be talked about up front.”
And yet Mr. Wallace never stopped trying. Even when his subject matter took him outside himself — into the world of lobsters, tennis players, cruise-ship vacationers or presidential campaigners — the fundamental problems of writing remained in the foreground. I suspect that Mr. Wallace’s persona — at once unbearably sophisticated and hopelessly naïve, infinitely knowing and endlessly curious — will be his most durable creation.
“Infinite Jest” is a masterpiece that’s also a monster — nearly 1,100 pages of mind-blowing inventiveness and disarming sweetness. Its size and complexity make it forbidding and esoteric. The other big books published since by members of Mr. Wallace’s age cohort — “Middlesex,” by Jeffrey Eugenides; “The Corrections,” by Jonathan Franzen; “The Fortress of Solitude,” by Jonathan Lethem; “The Amazing Adventures of Kavalier & Clay,” by Michael Chabon — are more accessible, easier to connect with and to give prizes to. They are family chronicles, congenial hybrids of domestic melodrama, immigrant chronicle, magic realism as well as the more traditional kind. Not easy books, necessarily, but not aggressively difficult, either.
In their different ways, though, these novels and their authors — along with other itchy late- and post-boomer white guys like Richard Powers, Rick Moody and Dave Eggers — stand in Mr. Wallace’s shadow. Not because his version of their generational crisis was better or truer than theirs, but rather because it was purer and more rigorous. In some ways, the figure he resembles most is Ezra Pound. Not the loony, ranting figure Pound eventually became, but rather the innovative and uncompromising modernist he was in his prime. Pound, in the teens and 1920s, understood the literary logic of modernism, with its poetics of difficulty and allusiveness, more clearly than any of his contemporaries. He pushed his insights further, into an extreme, enormous, all-but-unreadable book — the “Cantos” — that is to high modernism what “Infinite Jest” is to late postmodernism.
Outside of graduate classrooms, not many readers swallow the “Cantos” whole, and a similar fate may lie in store for “Infinite Jest.” Mr. Wallace is likely to remain available to general readers in the smaller, less daunting doses of his stories and journalism. He will also survive as an ally and an influence, a link between the giants who inspired and enraged him and whoever comes next. But he will be terribly missed by those of us who were lost with him in the maze of self-consciousness and self-doubt that defined our peculiar destiny. He illuminated the maze brilliantly, even if he couldn’t show us the way out.
The Best Mind of His Generation
By A. O. SCOTT
Reviewing a biography of Jorge Luis Borges in The New York Times Book Review a few years back, David Foster Wallace attacked the standard biographical procedure of mining the lives of writers for clues to their work, and vice versa. Borges’s stories, he insisted, “so completely transcend their motive cause that the biographical facts become, in the deepest and most literal way, irrelevant.”
What’s true of writers’ lives is also, surely, true of their deaths. The temptation to regard Mr. Wallace’s suicide last weekend as anything other than a private tragedy must be resisted. But the strength of the temptation should nonetheless be acknowledged. Mr. Wallace was hardly one to conceal himself within his work; on the contrary, his personality is stamped on every page — so much so that the life and the work can seem not just connected but continuous.
Beyond this, Mr. Wallace was the kind of literary figure whose career was emblematic of his age. He may not have been the most famous novelist of his time, but more than anyone else, he exemplified and articulated the defining anxieties and attitudes of his generation.
Mr. Wallace’s vibrant body of work — reportage and criticism as well as two novels and three volumes of shorter fiction — pursued themes that in retrospect look uncomfortably like portents. His last book of stories was called “Oblivion,” and an earlier collection included the stories “Death Is Not the End,” “Suicide as a Sort of Present” and “The Depressed Person.” Even his most exuberant explorations of absurdity are edged with melancholy. “Infinite Jest,” the enormous, zeitgeist-gobbling novel that set his generation’s benchmark for literary ambition, is, for all its humor, an encyclopedia of phobia, anxiety, compulsion and mania.
The moods that Mr. Wallace distilled so vividly on the page — the gradations of sadness and madness embedded in the obsessive, recursive, exhausting prose style that characterized both his journalism and his fiction — crystallized an unhappy collective consciousness. And it came through most vividly in his voice. Hyperarticulate, plaintive, self-mocking, diffident, overbearing, needy, ironical, almost pathologically self-aware (and nearly impossible to quote in increments smaller than a thousand words) — it was something you instantly recognized even hearing it for the first time. It was — is — the voice in your own head.
Or mine, at any rate. When, as an undergraduate with a head full of literary theory and a heartsick longing for authenticity, I first encountered David Foster Wallace, I experienced what is commonly called the shock of recognition. Actually, shock is too clean, too safe a word for my uncomfortable sense that not only did I know this guy, but he knew me. He could have been a T.A. in one of my college courses, or the slightly older guy in Advanced Approaches to Interpretation who sat slightly aloof from the others and had not only mastered the abstruse and trendy texts everyone else was reading, but also skipped backward, sideways and ahead. It was impressive enough that he could do philosophy — the mathematical kind, not just the French kind. But he also played tennis — Mr. Wallace, in fact, had competed seriously in the sport — and could quote lyrics from bands you only pretended you’d heard of. Without even trying, he was cooler than everyone else.
All this shone through Mr. Wallace’s fiction. He had the intellectual moves and literary tricks diagrammed in advance: the raised-eyebrow, mock-earnest references to old TV shows and comic books; the acknowledgment that truth was a language game. He was smarter than anyone else, but also poignantly aware that being smart didn’t necessarily get you very far, and that the most visible manifestations of smartness — wide erudition, mastery of trivia, rhetorical facility, love of argument for its own sake — could leave you feeling empty, baffled and dumb.
Another way of saying this is that Mr. Wallace, born in 1962 and the author of an acclaimed first novel at age 24, anchored his work in an acute sense of generational crisis. None of his peers were preoccupied so explicitly with how it felt to arrive on the scene as a young, male American novelist dreaming of glory, late in the 20th century and haunted by a ridiculous, poignant question: what if it’s too late? What am I supposed to do now?
This is a common feeling for those of us born in the 1960s (for the record, I’m four years younger than Mr. Wallace). If you were, let’s say, a faculty brat in the 1970s, living in a provincial college town — Champaign, Ill., in Mr. Wallace’s case or Chapel Hill, N.C., in mine — you felt a weird post-traumatic vibe from many of the adults you met. And, if, as an adolescent or an undergraduate, you found your way into books, you kept seeing — on syllabuses, at the campus bookstore, on your parents’ shelves — the monuments of the previous era, most intriguingly the masterworks laid down by brave exemplars of experimentalism, iconoclasts who disassembled the worn machinery of the novel and put it back together in crazy, ingenious ways: William Gaddis and John Barth, Thomas Pynchon and Kurt Vonnegut. These guys — and most were guys — pointed the way forward.
But they also blocked the path. Mr. Wallace knew this very well. He regarded the lions of postmodernism as heroes, but also as obstacles. “If I have an enemy,” he said in the early 1990s, “a patriarch for my patricide, it’s probably Barth and Coover and Burroughs, even Nabokov and Pynchon.” That’s a lot of fathers for one Oedipal struggle, and Wallace expended a lot of energy trying to assimilate and overcome their influences.
But he was not only preoccupied with staking out a position in relation to other writers. Again and again, he returned to a basic, perhaps the basic, philosophical question facing anyone with a blank screen and a story to tell. What am I going to say? How am I going to say it? It’s never an easy question, but perhaps no one illustrated its difficulty with so much energy, good humor and conceptual rigor. In the story “Octet,” a section begins “you are, unfortunately, a fiction writer” and then proceeds, hilariously and infuriatingly, to diagram the dimensions of that misfortune. One long, brilliant, crazy footnote ends: “None of that was very clearly put and might well ought to get cut. It may be that none of this real-narrative-honesty-v.-sham-narrative-honesty stuff can even be talked about up front.”
And yet Mr. Wallace never stopped trying. Even when his subject matter took him outside himself — into the world of lobsters, tennis players, cruise-ship vacationers or presidential campaigners — the fundamental problems of writing remained in the foreground. I suspect that Mr. Wallace’s persona — at once unbearably sophisticated and hopelessly naïve, infinitely knowing and endlessly curious — will be his most durable creation.
“Infinite Jest” is a masterpiece that’s also a monster — nearly 1,100 pages of mind-blowing inventiveness and disarming sweetness. Its size and complexity make it forbidding and esoteric. The other big books published since by members of Mr. Wallace’s age cohort — “Middlesex,” by Jeffrey Eugenides; “The Corrections,” by Jonathan Franzen; “The Fortress of Solitude,” by Jonathan Lethem; “The Amazing Adventures of Kavalier & Clay,” by Michael Chabon — are more accessible, easier to connect with and to give prizes to. They are family chronicles, congenial hybrids of domestic melodrama, immigrant chronicle, magic realism as well as the more traditional kind. Not easy books, necessarily, but not aggressively difficult, either.
In their different ways, though, these novels and their authors — along with other itchy late- and post-boomer white guys like Richard Powers, Rick Moody and Dave Eggers — stand in Mr. Wallace’s shadow. Not because his version of their generational crisis was better or truer than theirs, but rather because it was purer and more rigorous. In some ways, the figure he resembles most is Ezra Pound. Not the loony, ranting figure Pound eventually became, but rather the innovative and uncompromising modernist he was in his prime. Pound, in the teens and 1920s, understood the literary logic of modernism, with its poetics of difficulty and allusiveness, more clearly than any of his contemporaries. He pushed his insights further, into an extreme, enormous, all-but-unreadable book — the “Cantos” — that is to high modernism what “Infinite Jest” is to late postmodernism.
Outside of graduate classrooms, not many readers swallow the “Cantos” whole, and a similar fate may lie in store for “Infinite Jest.” Mr. Wallace is likely to remain available to general readers in the smaller, less daunting doses of his stories and journalism. He will also survive as an ally and an influence, a link between the giants who inspired and enraged him and whoever comes next. But he will be terribly missed by those of us who were lost with him in the maze of self-consciousness and self-doubt that defined our peculiar destiny. He illuminated the maze brilliantly, even if he couldn’t show us the way out.
State Personalities
Researchers created the first ever map of its kind is based on the results of a six year online survey of 620,000 people.
They claim it reveals how certain types of people are more likely to live and flourish in different parts of the country and showed links between personality traits and social phenomenon, like crime rates.
American-born Dr Jason Rentfrow, lecturer in social and political sciences at the University of Cambridge, led the study.
He is from Louisiana where, according to his work, people are friendly but have high stress levels.
He said: "Although these are preliminary findings and require more evaluation, they did throw up some striking geographical trends.
"We did find pretty clear signs that there are meaningful differences in the personalities of people living in different areas of the United States.
"What is particularly impressive is that the results show the effects of personality on people's social habits, values and lifestyles are so pronounced that they have an impact on much bigger social forces."
The findings show that people living in eastern states such as New York are likely to be anxious, stressed, impulsive and prone to heart disease and cancer.
Religious fervour is most prevalent in states such as Kansas, Florida, Arizona, Missouri and Utah, where residents mostly exhibit the conscientious personality trait.
Rates of robbery and murder are highest in states populated by people with the openness personality trait such as Columbia, New York, Oregon, and California.
However, the openness trait also encourages curiosity, creativeness and people living in these states have the most liberal, tolerant values on marijuana, abortion and gay marriage.
The nicest Americans, who share the agreeableness personality trait and are said to be warm, co-operative and friendly, are from States such as North Dakota, North Carolina and Georgia.
The survey asked people from the US to read 44 short statements such as "I see myself as someone who is very religious" and mark their level of agreement on a scale of one to five.
The impact of personality traits was then matched with social trends such as religiosity, health, crime, employment and tolerance.
The results revealed clear patterns of personalities - neuroticism is highest in the east along a line stretching from Maine to Louisiana - the "stress belt".
The report, "The Geography Of Personality; A Theory of the Emergence, Persistence and Expression of Geographic Variation in Basic Traits" is published in the journal, Perspectives On Psychological Science.
Key findings:
EXTRAVERSION
Personality traits: Sociable, energetic and enthusiastic
High-scoring states: North Dakota, Wisconsin, District of Columbia, Nebraska, Minnesota, Georgia, South Dakota, Utah, Illinois, Florida
Low-scoring states: Vermont, Washington, Alaska, New Hampshire, Maryland, Idaho, Virginia, Oregon, Montana, Massachusetts
AGREEABLENESS
Personality traits: Warm, compassionate, co-operative and friendly.
Highest-scoring states: North Dakota, Minnesota, Mississippi, Utah, Wisconsin, Tennessee, North Carolina, Georgia, Oklahoma, Nebraska.
Lowest-scoring states: New York, Nevada, Wyoming, District of Columbia, Alaska, Maine, Rhode Island, Virginia, Connecticut, Montana.
CONSCIENTIOUSNESS
Personality traits: Dutiful, responsible, self-disciplined.
Highest-scoring states: New Mexico, North Carolina, Georgia, Utah, Kansas, Oklahoma, Nebraska, Florida, Arizona, Missouri.
Lowest-scoring states: Wyoming, Rhode Island, Hawaii, Maine, Alaska, Connecticut, New Jersey, New Hampshire, Massachusetts, New York.
NEUROTICISM
Personality traits: Anxious, stressful and impulsive.
Highest-scoring states: West Virginia, Rhode Island, New York, Mississippi, New Jersey, Pennsylvania, Kentucky, Louisiana, Ohio, Arkansas.
Lowest-scoring states: Alaska, Oregon, South Dakota, Colorado, Utah, Washington, Arizona, Nebraska, North Dakota, Nevada.
OPENNESS
Personality traits: Curious, intellectual, creative.
Highest-scoring states: District of Columbia, New York, Oregon, Massachusetts, Washington, California, Vermont, Colorado, Nevada, Maryland.
Lowest-scoring states: Wisconsin, Alabama, Alaska, Wyoming, North Dakota, Hawaii, Kentucky, Nebraska, Iowa, Delaware.
They claim it reveals how certain types of people are more likely to live and flourish in different parts of the country and showed links between personality traits and social phenomenon, like crime rates.
American-born Dr Jason Rentfrow, lecturer in social and political sciences at the University of Cambridge, led the study.
He is from Louisiana where, according to his work, people are friendly but have high stress levels.
He said: "Although these are preliminary findings and require more evaluation, they did throw up some striking geographical trends.
"We did find pretty clear signs that there are meaningful differences in the personalities of people living in different areas of the United States.
"What is particularly impressive is that the results show the effects of personality on people's social habits, values and lifestyles are so pronounced that they have an impact on much bigger social forces."
The findings show that people living in eastern states such as New York are likely to be anxious, stressed, impulsive and prone to heart disease and cancer.
Religious fervour is most prevalent in states such as Kansas, Florida, Arizona, Missouri and Utah, where residents mostly exhibit the conscientious personality trait.
Rates of robbery and murder are highest in states populated by people with the openness personality trait such as Columbia, New York, Oregon, and California.
However, the openness trait also encourages curiosity, creativeness and people living in these states have the most liberal, tolerant values on marijuana, abortion and gay marriage.
The nicest Americans, who share the agreeableness personality trait and are said to be warm, co-operative and friendly, are from States such as North Dakota, North Carolina and Georgia.
The survey asked people from the US to read 44 short statements such as "I see myself as someone who is very religious" and mark their level of agreement on a scale of one to five.
The impact of personality traits was then matched with social trends such as religiosity, health, crime, employment and tolerance.
The results revealed clear patterns of personalities - neuroticism is highest in the east along a line stretching from Maine to Louisiana - the "stress belt".
The report, "The Geography Of Personality; A Theory of the Emergence, Persistence and Expression of Geographic Variation in Basic Traits" is published in the journal, Perspectives On Psychological Science.
Key findings:
EXTRAVERSION
Personality traits: Sociable, energetic and enthusiastic
High-scoring states: North Dakota, Wisconsin, District of Columbia, Nebraska, Minnesota, Georgia, South Dakota, Utah, Illinois, Florida
Low-scoring states: Vermont, Washington, Alaska, New Hampshire, Maryland, Idaho, Virginia, Oregon, Montana, Massachusetts
AGREEABLENESS
Personality traits: Warm, compassionate, co-operative and friendly.
Highest-scoring states: North Dakota, Minnesota, Mississippi, Utah, Wisconsin, Tennessee, North Carolina, Georgia, Oklahoma, Nebraska.
Lowest-scoring states: New York, Nevada, Wyoming, District of Columbia, Alaska, Maine, Rhode Island, Virginia, Connecticut, Montana.
CONSCIENTIOUSNESS
Personality traits: Dutiful, responsible, self-disciplined.
Highest-scoring states: New Mexico, North Carolina, Georgia, Utah, Kansas, Oklahoma, Nebraska, Florida, Arizona, Missouri.
Lowest-scoring states: Wyoming, Rhode Island, Hawaii, Maine, Alaska, Connecticut, New Jersey, New Hampshire, Massachusetts, New York.
NEUROTICISM
Personality traits: Anxious, stressful and impulsive.
Highest-scoring states: West Virginia, Rhode Island, New York, Mississippi, New Jersey, Pennsylvania, Kentucky, Louisiana, Ohio, Arkansas.
Lowest-scoring states: Alaska, Oregon, South Dakota, Colorado, Utah, Washington, Arizona, Nebraska, North Dakota, Nevada.
OPENNESS
Personality traits: Curious, intellectual, creative.
Highest-scoring states: District of Columbia, New York, Oregon, Massachusetts, Washington, California, Vermont, Colorado, Nevada, Maryland.
Lowest-scoring states: Wisconsin, Alabama, Alaska, Wyoming, North Dakota, Hawaii, Kentucky, Nebraska, Iowa, Delaware.
The Bubble
Punctured
Bubblenomics
By DAVID LEONHARDT
The past week, by any standard, has been an extraordinary one for America’s economy and its financial system. Merrill Lynch, which was founded during Woodrow Wilson’s administration, agreed to be bought for a bargain-basement price, while Lehman Brothers, which dates back to John Tyler’s presidency, simply collapsed.
By the end of the week, the federal government was preparing to buy hundreds of billions of dollars in securities that no bank wanted. It appears to be the government’s biggest fiscal intervention since the Great Depression, designed to get the financial markets working again and keep a credit freeze from sending the economy into a deep recession.
The announcement of the plan changed the mood on Wall Street and sent stocks soaring at the end of the week. But even if the economy avoids a tailspin, the next couple of years aren’t likely to feel especially good. It’s been a long period of excess, and the hangover could be long, as well. For the near future, the most likely outcome remains slow economic growth, scant income gains for most workers and, for investors, disappointing returns from stocks and real estate. If consumers begin to cut back on their debt-fueled spending things could get worse.
On Friday morning, the economists at Lehman Brothers sent out their usual weekly roundup of the news, but it came this time with a short, italicized note, explaining that the report would be the final one to appear under the Lehman banner. That bit of understatement preceded some more: “This episode of financial crisis,” Lehman’s economists explained, “appears to be much deeper and more serious than we and most observers thought it likely to be. And it is by no means clear that it is over.”
Yet, historic though this week has been, there is something familiar about what is happening. Once again, we are seeing the puncturing of a speculative bubble that was the result of asset prices soaring high above the underlying value of the assets. For as long as markets have existed, bubbles have formed. And whenever one of those bubbles begins to leak, it typically needs years to deflate, causing enormous economic damage as it does.
Only now, for instance, are the bubbles of the past decade and a half, first in the stock market and then in real estate, starting to go away. It’s easy to think of the turmoil of the past 13 months as being unconnected to the stock bubble of the 1990s, which appeared to end with the dot-com crash of 2000 and 2001. That crash brought down the overall stock market by more than a third, its worst drop since the 1970s oil crisis. Corporate spending on new equipment then plunged and employment fell for three straight years.
But dramatic though it was, the dot-com crash did not actually come close to erasing the excesses of the 1990s. Indeed, by some of the most meaningful measures, Wall Street after the crash looked a lot more like it was in a bubble than a bust.
As late as 2004, financial services firms earned 28.3 percent of corporate America’s total profits, according to Moody’s Economy.com. That was somewhat lower than it had been over the previous few years, but still almost double the financial sector’s average share of profits throughout the 1970s and ’80s. By 2007, the share had fallen only marginally, to 27.4 percent.
Meanwhile, the share of wages and salaries earned by employees of financial services firms continued to climb and reached a peak last year. Of every dollar paid to the American work force in 2008, almost 10 cents went to people working at investment banks and other finance companies, up from about 6 cents or 7 cents throughout the 1970s and ’80s.
How did this happen? For one thing, the population of the United States (and most of the industrialized world) was aging and had built up savings. This created greater need for financial services. In addition, the economic rise of Asia — and, in recent years, the increase in oil prices — gave overseas governments more money to invest. Many turned to Wall Street.
Nonetheless, a significant portion of the finance boom also seems to have been unrelated to economic performance and thus unsustainable. Benjamin M. Friedman, author of “The Moral Consequences of Economic Growth,” recalled that when he worked at Morgan Stanley in the early 1970s, the firm’s annual reports were filled with photographs of factories and other tangible businesses. More recently, Wall Street’s annual reports tend to highlight not the businesses that firms were advising so much as finance for the sake of finance, showing upward-sloping graphs and photographs of traders.
“I have the sense that in many of these firms,” Mr. Friedman said, “the activity has become further and further divorced from actual economic activity.”
Which might serve as a summary of how the current crisis came to pass. Wall Street traders began to believe that the values they had assigned to all sorts of assets were rational because, well, they had assigned them.
Traders sliced mortgages into so many little pieces that they forgot what they were really trading: contracts based on increasingly shaky loans. As the crisis has spread, other loans have started going bad as well. Hyun Song Shin, an economist at Princeton, estimates that banks have thus far absorbed only about one-third to one-half of the losses they will eventually be forced to take.
One of the few pieces of good news is that Wall Street finally seems to be coming to grips with the depth of its problems. You can see that most clearly, perhaps, in stock prices, which have at long last fallen from the stratospheric levels of the past decade.
The classic measure of whether the stock market is overvalued is the price-earnings ratio, which divides stock prices by annual corporate earnings. At the height of the bubble, in 2000, companies in the Standard & Poor’s 500 Index were trading at 36 times their average earnings over the previous five years. It was the highest valuation since at least the 1880s, according to the economist Robert Shiller.
By 2004, surprisingly enough, the ratio had dropped only to about 26, still higher than at any point since the 1930s. At the start of last year, it was still 26.
But after the market closed on Friday, the ratio was down to roughly 17, which happens to be about its post-World War II average. At least by this one measure, stocks are no longer blatantly overvalued.
This doesn’t necessarily mean they are done falling. For one thing, corporate profits could decline, particularly if households begin pulling back on spending. The unusually rapid rise of consumer spending over the past two decades is arguably the third bubble confronting the economy. It has happened thanks in part to a huge increase in debt, which may now be coming to an end, just as Wall Street’s love affair with debt appears to be ending as well.
And even if the economy does better than expected, investors may still turn pessimistic. “We tend to go through pendulum swings,” said Joel Seligman, the president of the University of Rochester, a longtime Wall Street observer. There are long periods of overexuberance, in which investors worry that they are missing the next great thing, followed by crises that make those same investors fear that the world as they know it is coming to an end.
That seemed to be the case last Wednesday, when share prices of Goldman Sachs and Morgan Stanley plunged even though the firms were still making money. Glenn Schorr, a UBS analyst, wrote an e-mail message to clients saying, “Stop the Insanity.”
But bubbles inevitably produce insanity, both on the way up and the way down. On Friday, the formerly laissez-faire Bush administration, along with the Federal Reserve, announced that the only way to restore sanity to the markets was for the government to buy an enormous pile of mortgage-related securities. Theoretically, the government could turn a profit on the securities if they can be sold for higher prices when normal conditions return.
But few expect that outcome. Senator Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, estimated that the ultimate cost to taxpayers could be in the range of $1 trillion, or about two-and-a-half times as large as this year’s federal budget deficit.
A guiding principle of economic policy in recent years has been that nobody is smart enough to diagnose a bubble until it has already deflated. This was one of Alan Greenspan’s mantras during his tenure as the chairman of the Fed. His successor, Ben Bernanke, said much the same thing when he took office in 2006. As they saw it, no matter how high stock prices rose relative to profits, or no matter how high house prices rose relative to rents, regulators deferred to the collective wisdom of the market.
The market is usually right, after all. Even when it isn’t, Mr. Greenspan maintained, pricking a bubble before it grew too large could stifle innovation and hurt other parts of the economy. Cleaning up the aftermath of a bubble is easier and less expensive, he argued. We’re living through that cleanup now.
Bubblenomics
By DAVID LEONHARDT
The past week, by any standard, has been an extraordinary one for America’s economy and its financial system. Merrill Lynch, which was founded during Woodrow Wilson’s administration, agreed to be bought for a bargain-basement price, while Lehman Brothers, which dates back to John Tyler’s presidency, simply collapsed.
By the end of the week, the federal government was preparing to buy hundreds of billions of dollars in securities that no bank wanted. It appears to be the government’s biggest fiscal intervention since the Great Depression, designed to get the financial markets working again and keep a credit freeze from sending the economy into a deep recession.
The announcement of the plan changed the mood on Wall Street and sent stocks soaring at the end of the week. But even if the economy avoids a tailspin, the next couple of years aren’t likely to feel especially good. It’s been a long period of excess, and the hangover could be long, as well. For the near future, the most likely outcome remains slow economic growth, scant income gains for most workers and, for investors, disappointing returns from stocks and real estate. If consumers begin to cut back on their debt-fueled spending things could get worse.
On Friday morning, the economists at Lehman Brothers sent out their usual weekly roundup of the news, but it came this time with a short, italicized note, explaining that the report would be the final one to appear under the Lehman banner. That bit of understatement preceded some more: “This episode of financial crisis,” Lehman’s economists explained, “appears to be much deeper and more serious than we and most observers thought it likely to be. And it is by no means clear that it is over.”
Yet, historic though this week has been, there is something familiar about what is happening. Once again, we are seeing the puncturing of a speculative bubble that was the result of asset prices soaring high above the underlying value of the assets. For as long as markets have existed, bubbles have formed. And whenever one of those bubbles begins to leak, it typically needs years to deflate, causing enormous economic damage as it does.
Only now, for instance, are the bubbles of the past decade and a half, first in the stock market and then in real estate, starting to go away. It’s easy to think of the turmoil of the past 13 months as being unconnected to the stock bubble of the 1990s, which appeared to end with the dot-com crash of 2000 and 2001. That crash brought down the overall stock market by more than a third, its worst drop since the 1970s oil crisis. Corporate spending on new equipment then plunged and employment fell for three straight years.
But dramatic though it was, the dot-com crash did not actually come close to erasing the excesses of the 1990s. Indeed, by some of the most meaningful measures, Wall Street after the crash looked a lot more like it was in a bubble than a bust.
As late as 2004, financial services firms earned 28.3 percent of corporate America’s total profits, according to Moody’s Economy.com. That was somewhat lower than it had been over the previous few years, but still almost double the financial sector’s average share of profits throughout the 1970s and ’80s. By 2007, the share had fallen only marginally, to 27.4 percent.
Meanwhile, the share of wages and salaries earned by employees of financial services firms continued to climb and reached a peak last year. Of every dollar paid to the American work force in 2008, almost 10 cents went to people working at investment banks and other finance companies, up from about 6 cents or 7 cents throughout the 1970s and ’80s.
How did this happen? For one thing, the population of the United States (and most of the industrialized world) was aging and had built up savings. This created greater need for financial services. In addition, the economic rise of Asia — and, in recent years, the increase in oil prices — gave overseas governments more money to invest. Many turned to Wall Street.
Nonetheless, a significant portion of the finance boom also seems to have been unrelated to economic performance and thus unsustainable. Benjamin M. Friedman, author of “The Moral Consequences of Economic Growth,” recalled that when he worked at Morgan Stanley in the early 1970s, the firm’s annual reports were filled with photographs of factories and other tangible businesses. More recently, Wall Street’s annual reports tend to highlight not the businesses that firms were advising so much as finance for the sake of finance, showing upward-sloping graphs and photographs of traders.
“I have the sense that in many of these firms,” Mr. Friedman said, “the activity has become further and further divorced from actual economic activity.”
Which might serve as a summary of how the current crisis came to pass. Wall Street traders began to believe that the values they had assigned to all sorts of assets were rational because, well, they had assigned them.
Traders sliced mortgages into so many little pieces that they forgot what they were really trading: contracts based on increasingly shaky loans. As the crisis has spread, other loans have started going bad as well. Hyun Song Shin, an economist at Princeton, estimates that banks have thus far absorbed only about one-third to one-half of the losses they will eventually be forced to take.
One of the few pieces of good news is that Wall Street finally seems to be coming to grips with the depth of its problems. You can see that most clearly, perhaps, in stock prices, which have at long last fallen from the stratospheric levels of the past decade.
The classic measure of whether the stock market is overvalued is the price-earnings ratio, which divides stock prices by annual corporate earnings. At the height of the bubble, in 2000, companies in the Standard & Poor’s 500 Index were trading at 36 times their average earnings over the previous five years. It was the highest valuation since at least the 1880s, according to the economist Robert Shiller.
By 2004, surprisingly enough, the ratio had dropped only to about 26, still higher than at any point since the 1930s. At the start of last year, it was still 26.
But after the market closed on Friday, the ratio was down to roughly 17, which happens to be about its post-World War II average. At least by this one measure, stocks are no longer blatantly overvalued.
This doesn’t necessarily mean they are done falling. For one thing, corporate profits could decline, particularly if households begin pulling back on spending. The unusually rapid rise of consumer spending over the past two decades is arguably the third bubble confronting the economy. It has happened thanks in part to a huge increase in debt, which may now be coming to an end, just as Wall Street’s love affair with debt appears to be ending as well.
And even if the economy does better than expected, investors may still turn pessimistic. “We tend to go through pendulum swings,” said Joel Seligman, the president of the University of Rochester, a longtime Wall Street observer. There are long periods of overexuberance, in which investors worry that they are missing the next great thing, followed by crises that make those same investors fear that the world as they know it is coming to an end.
That seemed to be the case last Wednesday, when share prices of Goldman Sachs and Morgan Stanley plunged even though the firms were still making money. Glenn Schorr, a UBS analyst, wrote an e-mail message to clients saying, “Stop the Insanity.”
But bubbles inevitably produce insanity, both on the way up and the way down. On Friday, the formerly laissez-faire Bush administration, along with the Federal Reserve, announced that the only way to restore sanity to the markets was for the government to buy an enormous pile of mortgage-related securities. Theoretically, the government could turn a profit on the securities if they can be sold for higher prices when normal conditions return.
But few expect that outcome. Senator Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, estimated that the ultimate cost to taxpayers could be in the range of $1 trillion, or about two-and-a-half times as large as this year’s federal budget deficit.
A guiding principle of economic policy in recent years has been that nobody is smart enough to diagnose a bubble until it has already deflated. This was one of Alan Greenspan’s mantras during his tenure as the chairman of the Fed. His successor, Ben Bernanke, said much the same thing when he took office in 2006. As they saw it, no matter how high stock prices rose relative to profits, or no matter how high house prices rose relative to rents, regulators deferred to the collective wisdom of the market.
The market is usually right, after all. Even when it isn’t, Mr. Greenspan maintained, pricking a bubble before it grew too large could stifle innovation and hurt other parts of the economy. Cleaning up the aftermath of a bubble is easier and less expensive, he argued. We’re living through that cleanup now.
Oscar Wilde and His Books
Attempting to tell an author's life through the books he read is a risky enterprise. In this remarkable new biography of Oscar Wilde, Thomas Wright makes a convincing start with his claim that books were the greatest single influence on his subject's life. Wilde's first reading of some of his favourites was, says Wright, 'as significant as his first meetings with friends and lovers'. Indeed, he later used gifts of books to seduce young men.
Wilde, born in 1854 and raised in a well-to-do, book-filled house in Dublin's Merrion Square by a literary mother who called herself Speranza and performed public recitations of poetry, devoured the printed word from an early age. At his Enniskillen boarding school, Portora, he ran up a staggering book-bill of £11 5s 9d. The autograph and date (2 September 1865) on his copy of Voltaire's L'Histoire de Charles XII make it the one book known to have been in his possession at the age of eleven, and mark his excellence in French. At Portora he also mastered the King James Bible, won a prize for Scripture and became a fine classical scholar, preferring Greek to Latin.
The most unconventional aspect of Wilde's adolescent taste, in Wright's view, was his love of French fiction. His passion was Balzac. He later said he wept 'tears of blood' when he read of the death in prison of the poet Lucien de Rubempré: 'I was never so affected by any book.'
After Trinity College, Dublin he went on to Magdalen College, Oxford. There, in 1874, Walter Pater's Studies in the History of the Renaissance struck him with the force of a revelation and he claimed never to travel without this book 'which has had such a strange influence over my life'.
When disaster struck in 1895 and he was tried and found guilty of 'gross indecency', it struck his books too. Auctioneers descended on the house in Tite Street, Chelsea that Wilde shared with his wife Constance and their two sons. His cherished book collection was sold at auction to pay his creditors. According to Wright, who has consulted the 'Tite Street Catalogue', Lot 114 included 'about' 100 unidentified French novels.
Among the humiliations Wilde suffered after being sent to prison were not only compulsory silence - prisoners were forbidden to speak to one another - but deprivation of books. All he had in his cell at Pentonville, apart from his bed (a plank laid across two trestles), were a Bible, a prayer book and a hymnal. When at last his sympathetic MP won him permission to have more books, Wilde nominated Pater's The Renaissance along with the works of Flaubert and some by Cardinal Newman. These were allowed, but only at the rate of one a week. Moved to Reading Gaol, he found himself under a more sympathetic prison governor. His book request lists after July 1896 show him developing an interest in more recently published titles, including novels by George Meredith and Thomas Hardy. Wilde later said that he also read Dante every day in prison and that Dante had saved his reason.
When he was discharged in May 1897, he was not allowed to take his accumulated books with him and faced what he called the horror of 'going out into the world without a single book'. But friends rallied round. Entering the hotel room in Dieppe where he was to begin his exile, he found it full of books furnished by his friends and he broke down and wept. He soon received a copy of Poems by his old lover, Alfred Douglas, and their relationship resumed. Wilde, after being received into the Roman Catholic church, died in a Paris hotel on 30 November 1900.
In a moving Afterword, Wright gives what might have served better as an introduction. Besotted with Wilde, he had read The Portrait of Dorian Gray fifteen or twenty times by the age of fifteen. As a young man he began a literary mission and tried to read every book Wilde ever read. He covered Plato, Keats, Shakespeare, Flaubert, the Greek tragedians, Dante, Pater, Rossetti, Ruskin and others. He went up as a student to Magdalen College, which holds the manuscripts of some of Wilde's witty undergraduate letters.
Wanting to touch every book Wilde had ever touched, he took the £5,000 prize he won from the Royal Society of Literature/Jerwood Foundation for his proposal for a work of non-fiction and blew it all at Sotheby's on Wilde's copy of Swinburne's Essays and Studies. He 'savoured the musty smell of its foxed and yellowed pages' and the inscription 'Oscar Wilde Magdalen College July 1877', and saw it as a talisman to complete his work.
The result is an original and compelling book. Wright completely makes his case: the range of Wilde's reading is staggering. It even included an English edition of the Kalevala, the Finnish national epic.
But Oscar's Books contains a grievous flaw: reliance on conjecture. All biographers have to struggle with what is not known. There are various tactics for skirting the missing fact but 'the writing-desk was probably placed in front of the window' is not the way to do it. Wright's pages are spattered with 'probablys', 'perhapses', and invitations to speculate: 'The exact moment Wilde dedicated himself, with vows, to poetry, is unknown to us, but it is pleasant to imagine it having occurred during one of Speranza's recitations.'
No, it is not pleasant to imagine. It is far more satisfying to read Wright's Appendix II, retrieved from archives, which lists the books requested by Wilde during his imprisonment from 1895 to 1897. Such facts speak for themselves.
Wilde, born in 1854 and raised in a well-to-do, book-filled house in Dublin's Merrion Square by a literary mother who called herself Speranza and performed public recitations of poetry, devoured the printed word from an early age. At his Enniskillen boarding school, Portora, he ran up a staggering book-bill of £11 5s 9d. The autograph and date (2 September 1865) on his copy of Voltaire's L'Histoire de Charles XII make it the one book known to have been in his possession at the age of eleven, and mark his excellence in French. At Portora he also mastered the King James Bible, won a prize for Scripture and became a fine classical scholar, preferring Greek to Latin.
The most unconventional aspect of Wilde's adolescent taste, in Wright's view, was his love of French fiction. His passion was Balzac. He later said he wept 'tears of blood' when he read of the death in prison of the poet Lucien de Rubempré: 'I was never so affected by any book.'
After Trinity College, Dublin he went on to Magdalen College, Oxford. There, in 1874, Walter Pater's Studies in the History of the Renaissance struck him with the force of a revelation and he claimed never to travel without this book 'which has had such a strange influence over my life'.
When disaster struck in 1895 and he was tried and found guilty of 'gross indecency', it struck his books too. Auctioneers descended on the house in Tite Street, Chelsea that Wilde shared with his wife Constance and their two sons. His cherished book collection was sold at auction to pay his creditors. According to Wright, who has consulted the 'Tite Street Catalogue', Lot 114 included 'about' 100 unidentified French novels.
Among the humiliations Wilde suffered after being sent to prison were not only compulsory silence - prisoners were forbidden to speak to one another - but deprivation of books. All he had in his cell at Pentonville, apart from his bed (a plank laid across two trestles), were a Bible, a prayer book and a hymnal. When at last his sympathetic MP won him permission to have more books, Wilde nominated Pater's The Renaissance along with the works of Flaubert and some by Cardinal Newman. These were allowed, but only at the rate of one a week. Moved to Reading Gaol, he found himself under a more sympathetic prison governor. His book request lists after July 1896 show him developing an interest in more recently published titles, including novels by George Meredith and Thomas Hardy. Wilde later said that he also read Dante every day in prison and that Dante had saved his reason.
When he was discharged in May 1897, he was not allowed to take his accumulated books with him and faced what he called the horror of 'going out into the world without a single book'. But friends rallied round. Entering the hotel room in Dieppe where he was to begin his exile, he found it full of books furnished by his friends and he broke down and wept. He soon received a copy of Poems by his old lover, Alfred Douglas, and their relationship resumed. Wilde, after being received into the Roman Catholic church, died in a Paris hotel on 30 November 1900.
In a moving Afterword, Wright gives what might have served better as an introduction. Besotted with Wilde, he had read The Portrait of Dorian Gray fifteen or twenty times by the age of fifteen. As a young man he began a literary mission and tried to read every book Wilde ever read. He covered Plato, Keats, Shakespeare, Flaubert, the Greek tragedians, Dante, Pater, Rossetti, Ruskin and others. He went up as a student to Magdalen College, which holds the manuscripts of some of Wilde's witty undergraduate letters.
Wanting to touch every book Wilde had ever touched, he took the £5,000 prize he won from the Royal Society of Literature/Jerwood Foundation for his proposal for a work of non-fiction and blew it all at Sotheby's on Wilde's copy of Swinburne's Essays and Studies. He 'savoured the musty smell of its foxed and yellowed pages' and the inscription 'Oscar Wilde Magdalen College July 1877', and saw it as a talisman to complete his work.
The result is an original and compelling book. Wright completely makes his case: the range of Wilde's reading is staggering. It even included an English edition of the Kalevala, the Finnish national epic.
But Oscar's Books contains a grievous flaw: reliance on conjecture. All biographers have to struggle with what is not known. There are various tactics for skirting the missing fact but 'the writing-desk was probably placed in front of the window' is not the way to do it. Wright's pages are spattered with 'probablys', 'perhapses', and invitations to speculate: 'The exact moment Wilde dedicated himself, with vows, to poetry, is unknown to us, but it is pleasant to imagine it having occurred during one of Speranza's recitations.'
No, it is not pleasant to imagine. It is far more satisfying to read Wright's Appendix II, retrieved from archives, which lists the books requested by Wilde during his imprisonment from 1895 to 1897. Such facts speak for themselves.
23.9.08
Life is a Verb!
Life Is a Verb: 37 Days to Wake Up, Be Mindful, and Live Intentionally
Patti Digh
In the beginning, this book annoyed the hell out of me.
Here's the set-up: “In October of 2003, my stepfather was diagnosed with lung cancer. He died 37 days later.”
Tragic. Though I can't imagine, I can empathize. But then comes the goopy stuff:
The time frame of 37 days made an impression on me. We often live as if we have all the time in the world, but the definite-ness of 37 days was striking. So short a time, as if all the regrets and joys of a life would barely have time to register before time was up....
I tried to reconcile the fact that this fearful death was happening with the understanding that I needed to make something good out of it. What emerged was a commitment to ask myself this question every morning: What would I be doing today if I only had 37 days to live?
Well, you know the answer. Savor every second. “Enjoy every sandwich,” as the dying Warren Zevon put it. Buddhism 101. The punch line of a million self-help books.
So was I moved by Ms. Digh's approach to her theoretical last 37 days in Life Is a Verb --- pumping out reams of writing so her young daughters would have some idea who Mom was? No. And not because I'm hard-hearted. It's just that I've heard all this. Many times, most recently in Improv Wisdom, which I consider the last word on Showing Up and Being Here.
But I stumbled on, past the beautifully designed pages with the lovely art and the super-sincere poems by poets I'd never heard of, until I achieved the entrance to Part One. “Inhabit Your Story.” The predictable moral arrived on schedule: “Find the change you can make and make it.”
On to Part Two: “The Six Practices for Intentional Living.” Which includes: “Dance in your car”, followed by “carry a small grape” and “always rent the red convertible” and “say wow when you see as bus”.
What was I doing in this Birkenstock gulag, surrounded by Good Thoughts?
But then I hit the story of Ms. Digh sitting on a plane next to a boor, and how they became close friends. The next page brought another compelling story. The Jungian analyst Marion Woodman, sick in India, is bothered by a large brown woman who crowds her on the couch of the hotel lobby. For days. On the fourth day, the woman's husband shows up to say he had been sending his wife there to pour her warmth and life energy into the body of the dying Woodman. The woman had, Woodman decided, saved her life. And then came the story of Digh's college lover, back in 1978. Richard was African-American. Patti's parents were less than thrilled. The relationship withered. Flash-cut to now. Richard is now Amanda. He wears his old girlfriend's earrings.
Tell me enough stories, and one will be an arrow to the heart. Richard-and-Patti was, and then, suddenly, they all were --- and advice like “Go to a black barbershop to get your hair cut if you're a Caucasian” no longer seemed monumentally trite. Reading on, I learned about hikaru dorodango --- shiny Japanese mud balls --- and how to make better ones simply by making more. I learned how to disagree by saying, elegantly, “I don't see the truth in that.” I was reminded what a dollar can mean to the person ahead of you in the supermarket line. I encountered some very wise quotations, like this, from Eric Hoffer: “You can discover what your enemy fears by observing the means he uses to frighten you.”
In short, as I read on, I found myself getting sharper and smarter. I considered why it might be better to make a mistake --- and learn from it --- than strain to get everything right. And I read the obituary Patti Digh wrote recently for her father --- who died in 1980, when she was in her teens --- and misted over.
The stories in the news these days are so big. Tectonic plates are moving. History is being made. But then, it always is. “Life is a Verb” is a reminder that our lives are bigger than the stories in the headlines. A small thought? Not to me. Now I have to go back to the beginning and start again....
Patti Digh
In the beginning, this book annoyed the hell out of me.
Here's the set-up: “In October of 2003, my stepfather was diagnosed with lung cancer. He died 37 days later.”
Tragic. Though I can't imagine, I can empathize. But then comes the goopy stuff:
The time frame of 37 days made an impression on me. We often live as if we have all the time in the world, but the definite-ness of 37 days was striking. So short a time, as if all the regrets and joys of a life would barely have time to register before time was up....
I tried to reconcile the fact that this fearful death was happening with the understanding that I needed to make something good out of it. What emerged was a commitment to ask myself this question every morning: What would I be doing today if I only had 37 days to live?
Well, you know the answer. Savor every second. “Enjoy every sandwich,” as the dying Warren Zevon put it. Buddhism 101. The punch line of a million self-help books.
So was I moved by Ms. Digh's approach to her theoretical last 37 days in Life Is a Verb --- pumping out reams of writing so her young daughters would have some idea who Mom was? No. And not because I'm hard-hearted. It's just that I've heard all this. Many times, most recently in Improv Wisdom, which I consider the last word on Showing Up and Being Here.
But I stumbled on, past the beautifully designed pages with the lovely art and the super-sincere poems by poets I'd never heard of, until I achieved the entrance to Part One. “Inhabit Your Story.” The predictable moral arrived on schedule: “Find the change you can make and make it.”
On to Part Two: “The Six Practices for Intentional Living.” Which includes: “Dance in your car”, followed by “carry a small grape” and “always rent the red convertible” and “say wow when you see as bus”.
What was I doing in this Birkenstock gulag, surrounded by Good Thoughts?
But then I hit the story of Ms. Digh sitting on a plane next to a boor, and how they became close friends. The next page brought another compelling story. The Jungian analyst Marion Woodman, sick in India, is bothered by a large brown woman who crowds her on the couch of the hotel lobby. For days. On the fourth day, the woman's husband shows up to say he had been sending his wife there to pour her warmth and life energy into the body of the dying Woodman. The woman had, Woodman decided, saved her life. And then came the story of Digh's college lover, back in 1978. Richard was African-American. Patti's parents were less than thrilled. The relationship withered. Flash-cut to now. Richard is now Amanda. He wears his old girlfriend's earrings.
Tell me enough stories, and one will be an arrow to the heart. Richard-and-Patti was, and then, suddenly, they all were --- and advice like “Go to a black barbershop to get your hair cut if you're a Caucasian” no longer seemed monumentally trite. Reading on, I learned about hikaru dorodango --- shiny Japanese mud balls --- and how to make better ones simply by making more. I learned how to disagree by saying, elegantly, “I don't see the truth in that.” I was reminded what a dollar can mean to the person ahead of you in the supermarket line. I encountered some very wise quotations, like this, from Eric Hoffer: “You can discover what your enemy fears by observing the means he uses to frighten you.”
In short, as I read on, I found myself getting sharper and smarter. I considered why it might be better to make a mistake --- and learn from it --- than strain to get everything right. And I read the obituary Patti Digh wrote recently for her father --- who died in 1980, when she was in her teens --- and misted over.
The stories in the news these days are so big. Tectonic plates are moving. History is being made. But then, it always is. “Life is a Verb” is a reminder that our lives are bigger than the stories in the headlines. A small thought? Not to me. Now I have to go back to the beginning and start again....
22.9.08
How about Some Good Cash?
Dear Secretary Paulson and Chairman Bernake,
As long as you are bailing out the trash, how about some some good stuff!
A New Bank to Save Our Infrastructure
By Felix Rohatyn and Everett Ehrlich
These are rare times of ferment in one of the most neglected fields of public policy—the nation’s infrastructure, or what used to be known as public works, including roads, mass transit, bridges, ports and airports, flood control systems, and much else. We have been confronted with spectacular and tragic evidence of the inadequacy of these facilities in the failure of the levees in New Orleans and in the collapse of the I-35 bridge in Minneapolis. More generally, a recent report by the American Society of Civil Engineers concludes that America’s infrastructure overall is close to “failing” and deserves a grade of “D.” It estimates that an investment of $1.6 trillion will be needed to bring it up to working order.
As long as you are bailing out the trash, how about some some good stuff!
A New Bank to Save Our Infrastructure
By Felix Rohatyn and Everett Ehrlich
These are rare times of ferment in one of the most neglected fields of public policy—the nation’s infrastructure, or what used to be known as public works, including roads, mass transit, bridges, ports and airports, flood control systems, and much else. We have been confronted with spectacular and tragic evidence of the inadequacy of these facilities in the failure of the levees in New Orleans and in the collapse of the I-35 bridge in Minneapolis. More generally, a recent report by the American Society of Civil Engineers concludes that America’s infrastructure overall is close to “failing” and deserves a grade of “D.” It estimates that an investment of $1.6 trillion will be needed to bring it up to working order.
21.9.08
Yankee Stadium
Here's what I'll miss most about going to Yankee Stadium: The little slice of right field you see from the 4 train just after it rises out of the tunnel and onto the elevated tracks. It's like a quick taste, an appetizer -- one fast flash of grass and then it's gone. I've been marking my visits here by that tiny vista ever since I first started riding the subway to the ballpark in the 1970s; before that, I don't remember how we got there, just that we did.
I went to my first game at Yankee Stadium on Sept. 20, 1968 -- a Friday night, Yankees-Red Sox, Fritz Peterson against Jim Lonborg. I was 7 years old. My father, 32 at the time, took me, and we sat on the first base side, mezzanine level, and saw Boston win, 4-3.
Other than the score, it was an almost perfect evening, one I remember vividly.
Carl Yastrzemski went deep for the Red Sox; the Yankees' Bill Robinson hit an inside-the-park homer (still the only one I've seen live) and Mickey Mantle hit his final major league home run.
My memories are so sharp that, at one point, I began to doubt them; recollection usually doesn't remain that clear. Eventually, I looked up the box score of the game and discovered that it had happened just as I'd recalled it, that the experience really had been etched that deep.
Forty years later, I'm visiting the Stadium for the last time, on the first night of the old ballpark's final homestand, which concludes today. Next season, the Yankees will move to an all-new Yankee Stadium across the street, designed to look like the original before it was renovated in the mid-1970s, although every true fan understands this is a sham.
The new stadium is a money grab, an attempt to cash in on the revenue potential of luxury boxes and boutique shopping, the distractions that have come to define the new face of baseball as a corporate game. The Steinbrenners can talk about tradition all they want, but the only tradition served here is the age-old one of "to the victors go the spoils."
The irony is that the Yankees aren't victors any longer; for the first time in 15 years, they aren't even in contention. As I enter the ballpark, they are mired in fourth place in the American League East and playing out the string.
And yet, here I am, on another Friday night, on my way to a Yankees game with my father, just like when I was a kid. It has been raining since about 3 p.m., but we've decided to come anyway, walking to the subway, going four stops north to the Stadium, a route I know so well I can anticipate every curve of track as the train crosses from Manhattan into the Bronx.
I've made this journey hundreds of times, good seasons and bad, night games and weekday afternoons.
In 1986, during another game with Boston, I got the entire left-field stands to salaam my then-girlfriend (now-wife) Rae after Don Mattingly led the Yankees back from a nine-run deficit to beat the Red Sox; Mattingly always played well when Rae was around, as if she were his good-luck charm.
In 1981, my father and I watched Ron Guidry and Goose Gossage beat the Dodgers in Game 1 of the World Series, after Pearl Bailey sang the national anthem and James Cagney threw out the first pitch.
I've been to bat day, ball day, helmet day, sat in the bleachers and taunted opposing players, chanted and screamed and high-fived with people I'd probably never otherwise talk to, listened to old-timers talk about Joe DiMaggio's grace as a center fielder, Yogi Berra's ability to hit bad balls.
This is the cliche about baseball, that it's a fabric, woven equally from experience and myth.
This tapestry, or so the story goes, extends through the generations, but if that's true in a certain sense, it's a personal heritage, as well.
Despite the rain, the Stadium's gates are open; as we go up the ramp, my father asks if I remember the night he lost the car. In fact, I tell him, I was just sharing that very story with a friend.
It's an interesting dynamic, fanhood, in which memories and anecdotes become a way of fitting yourself into something larger, identifying through the filter of a team.
When it comes to the Yankees, of course, such a process has long been institutionalized, as tonight's rain delay goes to show.
Above right-center field, the Jumbotron shows a succession of great Yankee Stadium moments -- Mickey Mantle Day; Babe Ruth's farewell; Lou Gehrig's iconic mantra, "Today, I consider myself the luckiest man on the face of the Earth," booming out through the public address system one last time.
There is a video about Thurman Munson, and then, as the rain becomes a steady downpour and my father and I huddle beneath the overhang of the upper deck, a documentary about Babe Ruth.
Once again, we get the story of his called shot, hear about the bellyache heard 'round the world, watch the home runs that transformed the baseball of another era and helped to usher in the modern game.
On the one hand, this is ancient history, as Yankee Stadium itself will shortly be. On the other, sitting here, knowing there will be no game, feels like the purest sort of experience, the sprawling ballpark full of memories, my father next to me.
I can see the seats in left field where, in 1971, we watched a doubleheader with the Washington Senators, rooting for Frank Howard to hit a home run because he was the only player with the power to drive a ball to where we were.
Or the upper deck in right field where my brother and I cheered for Willie Randolph after he had six RBIs on opening day 1987.
There's a through line here, and it has little to do with official Yankees history, for these are small moments, insignificant, much as this rainout is. And yet, in these instants, connection is created, a connection as much about place -- the Stadium -- as about what happens on the field.
After an hour and a half, my father turns to me and gently suggests that it is time to go. He's 72 and I am 47, but briefly, it's as if we've been telescoped to that young man and boy we were the first time I ever came here, 40 years ago.
I nod, a bit reluctant, and on our way out of the Stadium, stare hard at everything, as if to fix it in my mind.
But it is only when we are back on the subway, and I see that flash of green for the last time, briefly catching, that it truly hits me that this has been goodbye.
19.9.08
Kerry Kennedy/Being Catholic Now
Kerry Kennedy, the seventh child of Robert F. Kennedy and a human rights lawyer, spoke to Globe religion reporter Michael Paulson about her new book, "Being Catholic Now." The interview took place Aug. 22 in Hyannis Port. Below is an edited transcript of the interview:
Q: What inspired this?
A: So, what happened is that I was feeling conflicted because my Catholicism is so deeply important to me -- it was my sense of connection to the almighty, to humanity, to my heritage, my upbringing. And my Catholicism informed my view of the world, and the work that I do every day on social justice issues. And yet, so often when I went to church, I was confronted with words and symbols that were anathema to my values. I was in a, for many years, in a northern Virginia parish which didn't allow girls as altar servers, and in which every Sunday, in the midst of horrendous poverty, and living in a world where a billion people live on less than a dollar a day, the only thing we seemed to be praying for was that women would stop having abortions, and it just didn't seem right. And then there was the whole pedophile scandal, and the mishandling of that by the bishops. So this was all sort of brewing. It wasn't something that I was very conscious of, or focused on, particularly, but at a certain point I thought, I need to resolve this issue. And I looked at my three daughters, and the way I was raising them, and I wanted them to have this tremendous gift of faith that I really do view as a gift, but I also want to feel comfortable with saying they ought to be catholic. So I thought it was time to take some time and reflect more deeply on these issues.
Q: This was recently, that a parish allowed no girl altar servers?
A: This is now. There is only two bishops in the country which did not allow girls as altar servers, and one of them is northern Virginia.
Q: I have a sense of you parents as very devotional. Where does your Catholicism come from? What role did it play in your upbringing?
A: Well, it was central to my upbringing. I mean, we woke up in the morning and we were down on our knees consecrating the day to Lord Jesus. Then we'd go down for breakfast, and we'd say prayers before breakfast. Then we'd finish breakfast, we'd say prayers after breakfast. Prayers before and after lunch. Prayers before and after dinner. Read the Bible after dinner out loud. And then before bed spend about 20 minutes with the entire family saying prayers together. Church every Sunday. After my father died, we went to church for a long time every day, and then every other day during the summer. And we said prayers in between those times. Prayers for things, to St. Anthony to help find something that was lost. Prayers to St. Christopher when we got on a boat or in a car or in a plane to go someplace. There were St. Christopher medals around all of our necks. There were statues of Our Mother, and in every room of our house were a cross, the Bible, and then all sorts of religious books. And in the dining room, in the kitchen, and on every single bedside in my mother's house, there is not one but two Mass schedules. So this is very present. And Bobby (Robert F. Kennedy Jr.) probably told you this, but his entire bedroom was decorated with the life of St. Francis, with a book that had been cut out and had been framed -- the life of St. Francis. So it was very, very present.
Q: Was this from your mother or your father?
A: Both. You know, my father thought about being a priest. And my mother -- and I think everyone who spends 12 years in Catholic school thinks about being a nun -- actually more than that because she went to Manhattanville College as well. My mother goes -- she's a daily communicant. So I think on both sides.
Q: What was your relationship to Catholicism as you grew up?
A: I went to the Convent of the Sacred Heart for four years. It was interesting to me because, in a family where men were clearly favored over women, this was an atmosphere, a world, run by strong, determined, smart women in leadership, who had high expectations of the girls, and this tremendous sense of love and commitment to the wider world. We had a nun -- the head of the order there, was the reverend mother, was called mother Mouton, and she was this wonderful French woman, and there was a rule at Sacred Heart that you weren't allowed to talk in the halls, and I was forever talking in the hall and always being sent to her, and she always did the same thing, which was that she would wrap her arm around me, give me a lollipop, and said, 'Jesus loves you, no matter how you misbehave,' which was pretty wonderful, and then she would talk about the war in Vietnam. And it was a very different form of discipline and sort of vision of the world, and one that was full of love and outrage at injustice, and that had a great influence on me. This was fourth, fifth, sixth and seventh grade, and then I went to Putney School in Vermont.
Q: Did you go to a Catholic college?
A: No, I went to Brown and then I went to Boston College Law School.
Q: And did you continue, once you were not living at home, practicing Catholicism?
A: No, when I was in high school I went to Mass every once in a while, and certainly anytime I was at home, but on my own, every once in a while. My roommate in high school was also very, came from a very traditional Catholic family, so we would go off together to church on occasion. And then when I was in college, I went through confirmation, and then when I got married I really went to church every Sunday, and have basically done that since then, which was 1990, when I was 30.
Q: And why did you return?
A: I returned because I wanted to have a stronger relationship with God, and a deeper sense of spirituality.
Q: And did you find that at church?
A: Sometimes. As I say, I was conflicted, and increasingly conflicted, because sometimes I would leave church feeling elated, and sometimes I would leave church feeling very angry and frustrated by the insensitivity to social justice issues that to me are part and parcel of Catholicism, of our faith. On the other hand, that was sort of what was happening on the home front, but my work is in international human rights, so I was in Poland at the height of the Solidarity movement and witnessed the tremendous influence of the Catholic church giving refuge to Solidarity activists, and encouragement, and the tremendous role of the pope in encouraging that movement for freedom. And then I worked in El Salvador and Guatemala, Mexico, all of these places during the 80s when there was so much violence, and when the church again was just this tremendous sanctuary, and where Archbishop Romero, for instance, really led, was the spiritual force behind so much of the movement for freedom. And again, in Korea, South Korea, where the combination of the Catholic church and other Christian churches gave sanctuary, strength to the democracy movement there. And a few years ago, 2003, I went to Liberia. I have to tell you, virtually every country I've gone to, the Catholic church is on the cutting edge of social change. Really extraordinary. And I can tell you so many stories about that. But in Liberia, the Catholics account for about 7 percent of that population, and during the 14 year civil war, when Charles Taylor was the dictator, the Catholic church was the only institution that kept schools open and kept hospitals open. And this is in a country that is maybe 70 percent Methodists, and they had a lot of missionaries there, but they weren't able to keep those institutions open, and the government institutions closed down, but the Catholics kept them open, and so it has just played this enormously important role. And I saw the, you know, I went to the Catholic church program, which was rehabilitating child soldiers, and another Catholic church program, this was so incredibly moving, where they were bringing together people from two communities who had basically slaughtered each another. And that, and the Catholic church there also started their peace and justice program on the Catholic radio station, (which) was really the only voice of opposition throughout the Taylor regime, and the fellow who ran it was a guy called Kofi Woods, he was, because of his work, on those issues, with the Catholic church. He was picked up by the minister of justice and his three thugs during the Doe regime and tortured and left to rot in a prison cell, and then when the Taylor regime came into power...that minister of justice and those three thugs were picked up by Taylor, and thrown into the same prison cell he had been in. And he (Woods) had been freed, and he was a lawyer, and went to visit them, and he said, 'I've come to see if you've been mistreated,' and he said, 'I will take your case for free,' because there is no lawyer in the country who would defend them. So he went to defend his own torturers, and that was his sense of faith. So for me, I was witnessing the mighty spirit, and the tremendous capacity of this institution which was so much a part of my history, and my family, and my sense of spirituality and my vision of social justice in the world, and then coming back and hearing bishops who were protecting their turf instead of protecting children and playing three-card monte with the pedophile priests and blaming it on people who are gay. So it was important to me to resolve that.
Q: So when the sex abuse crisis exploded, were you surprised?
A: I guess I wasn't so surprised that it was going on, because I think so many of us knew, or had heard stories, or had friends who that had happened to. The thing that was surprising to me in the sex abuse scandal was not that children were being abused by priests, but that the bishops were protecting them, and that the bishops were refusing to take responsibility for their own failure to protect. I think that was surprising and enormously disappointing and disturbing. But the thing that I came to realize in writing this book is that the church is not the candles and the robes and the beautiful cathedrals, and it's not the bishops and what they do or don't do, or the proclamations that come down from the Vatican on occasion, but it's all of us. That's the meaning of Catholicism -- universal -- and there are a billion Catholics. So it's the community, a Catholicism based on the idea that we should love God and we should love one another. So, as Robert Drinan in this book pointed out, the pope apologized for 92 things that the Catholic church had done wrong, and he (Drinan) said, 'These are fallible people and I expect them to do fallible things in the future as well.' And so I think that that is a source of comfort for me, to view it sort of in that way, that we're all fallible, and we'll all make mistakes, but that this is an important institution to be part of.
Q: Did you ever toy with leaving the church?
A: No. Not precisely. There was a time, as I said, in between high school and when I got married, I guess, where it just wasn't very central to my life, the church itself. But I was still always praying. So it was not, there wasn't a time when I said, OK, I'm not going to be Catholic anymore. I think that's a very, very, very difficult thing to do.
Q: Are you raising your daughters in the church?
A: Yeah, and I teach CCD at our local church, St. Patrick's in Armonk, NY.
Q: You go to Mass?
A: Yeah.
Q: When did you start working on this project?
A: In November 2005.
Q: You could have written a memoir or something more journalistic. How did you think, I'm going to go talk to other people?
A: Well there were two ways that I thought about that. One is I wrote another book, called Speak Truth to Power, and that is interviews with human rights defenders around the world, and I greatly enjoyed that and I learned a lot from talking to other people, and so that's why I chose to approach it in this particular way.
Q: Do you think you did it because you hungered to do another book, or was there something personally you were hoping to get?
A: I was trying to resolve that issue, of how do people who disagree with what the institutional church is saying to them look themselves in the mirror and say, 'I am a Catholic.' And what I found is that absolutely everybody disagrees with the church. The cardinals disagree with the church, and the nuns and the priests, and even Tom Monaghan disagrees with the church, so everybody has a disagreement, which is interesting to me. It's just not a monolith at all. It's an enormous organism with a lot of moving parts and people with strong opinions and I think that that's good. I also think that Catholicism is inherently about contradiction. So much of the New Testament is about Christ arguing with the Pharisees and with the scribes and with the Jewish leaders of the day, and as Pope Benedict said, it's a quest for the truth. And so if you're going to have a quest for the truth, you're going to have a lot of questioning of authority. And we're taught to have obedience to authority, but we're also taught to revere saints, so many of whom were burnt at the stake or martyred because they questioned authority. And then we are told that Christ has died but Christ is coming again. And when Catholics say I don't understand this, how can this really be transformed into the blood of Christ, is this really the body of Christ that we are eating now, they are told, 'That's the mystery,' and 'Go in peace,' and that's sort of it. And so I think that, in a way, I think it's good, because it prepares us to deal with so many other parts of life, where there are conflicting emotions. At the moment of greatest love, there is greatest fear, and at the moment of enormous repression, there is resistance, and therefore a chance at revolutionary change. And so I think our lives are full of contradictions.
Q: How did you come up with the list of who you wanted to talk to?
A: Well, I wanted a diversity of people, from a lot of different professions, so there's historians and doctors and comedians, political commentators and politicians, and so a diversity of professions. And I wanted people who are known to have a strong intellectual sensibility on some issue, not necessarily on this one, and then I wanted a mix of men and women.
Q: Were most of them people you already knew?
A: It was a combination, and there's also people who are conservative, from the conservative side of the church, and more progressive side of the church, and then there are also Democrats and Republicans, you know, Bill O'Reilly to Bill Maher.
Q: Did anybody turn you down?
A: One person.
Q: Do you want to tell me who?
A: No.
Q: And how did people respond when you said, 'I want to explore with you how you relate to this faith'?
A: They were very open about it, and enthusiastic about talking about it, and it was kind of great, because a lot of the people I talked to are used to interviews -- you must find this as well -- but they're not used to interviews about this. And so there's a kind of raw honesty that you get in discussing this subject with people who don't discuss it professionally, and insight that you might not otherwise get. And a lot of them were very funny, and wonderful. Nancy Pelosi saying, 'My mother always wanted me to be a nun,' and then I said, 'But did you want to be a nun?' and she said, 'No, I wanted to be a priest.' And Susan Sarandon, who said that during her first days at Catholic school, she was told that she had an overabundance of original sin. And Bill Maher, who is so, basically he said 'I'm on a mission, I've been given this gift, to stop organized religion.' He's very funny, in talking about the number of people who God slaughtered in the Old Testament, Sodom and Gomorrah alone...Some of it is kind of funny and ridiculous like that, and then a lot of it was very deep. One of the people who I was surprised by in my interview was Andrew Sullivan, because I disagree with almost everything he's ever said or written politically, and yet, on this subject, he was so deep and passionate and reflective -- it was very, very interesting to me, about what it means to be a devoted Catholic and gay and HIV-positive, and how he grapples with that. And then some of them were deeply moving. Gabriel Byrne talking about being a victim of pedophilia when he was a child, and how he attempted to grapple with that, and Danny McNevin, talking about the same issue, and then of course Anne Burke who led the independent audit committee was fascinating about her frustration with the bishops in trying to get them to take responsibility for the crisis, and yet how that experience really deepened her faith.
Q: How did you choose Cardinal McCarrick?
A: I have always deeply admired him, and it was actually kind of interesting, because I think he's mentioned in four different interviews in my book as somebody who others admired -- John Sweeney and E.J. Dionne and Andrew Sullivan. So there you go -- for Cardinal McCarrick to be admired by that diversity of people is pretty extraordinary. So I went to talk to him and you know what's amazing is he said that he started school in a classroom where they had three kids to a bench and 70 kids in his class -- I think that was first grade or kindergarten -- can you imagine? How -- I mean, if you spend even five minutes with six year olds, trying to imagine organizing 70 of them, it's pretty incredible.
Q: What surprised you?
A: There were pleasant surprises, moments of laughter in interviews that were unexpected, and moments of insight, for instance, talking to Andrew Sullivan as I just mentioned, or when Bob Drinan was talking about abortion rights, and in the midst of this discussion he was having with me, we were in his office and the phone started to ring, and he said, 'Oh, that's the pope, telling me to shut up.' And so that was kind of funny. And different things were sort of wonderful. Donna Brazile...told a very, very moving story about her wanting as a child, knowing as a child, that she'd grow up to be a priest, and that in her youngest years the black kids, the black families had to stay in the back of the church, and then after Martin Luther King died they could move more and more forward, and then she, at a certain point, would get to the church, she'd make sure she was in the front row, because she had to see what the priest was going to do, because she was going to be a priest, and she had to know what he was doing up there. And how when he would preach, she would listen to what he'd say, and then go back and read the Bible passage and see if she agreed with him or not, and come back and ask him questions. A very active, involved and engaged child. And when her mother asked her in passing one day what she was going to do, and she mentioned she was going to be a priest, (she learned) to her shock, that women couldn't be priests, it's just not possible...So there were things like that, that were very moving. And again, I think Danny McNevin's story about the impact of being a victim of pedophilia, on him and his family, is deeply moving, and his quest to seek justice, and how difficult that has been.
Q: So how did all this affect your faith?
A: You know, it deepened it tremendously. And the sense of spirituality, I think primarily because I started thinking about it. You're writing a book about something, you start thinking about it a lot more, and talking to people about it a lot more, and learning about it, and that has been a wonderful experience. I also happen to belong to a fantastic parish in Armonk, New York, and I have a great, great, great, great pastor, who is always quoting Dorothy Day, and puts a picture of Gandhi with a halo over his head on the altar.
Q: You say it deepened your faith but also you were confronted by so much injury -- these girls who wanted to be priests, these boys who were abused, the gay man -- over and over again you ran into people who have conflict with the church in some way. How do you think about that?
A: I think that the church has done enormous harm over the years, and continues to do enormous harm to people in different ways. The institutional church does that. But that is separate and apart from my sense of connection to the Almighty, when I pray. And that is something that I think is part of the mission of being a Catholic is to expose those areas of injustice, and try to confront them, and I hope through this book I have advanced that in some small way.
Q: What is your hope that readers will take away from this?
A: I hope that they'll feel like they're not alone...I hope that people will feel that there are a lot of others out there who are grappling with the same issues: Should I raise my children Catholic? What does that mean? Am I a good Catholic? What does it mean to be a good Catholic today? If I'm not following the way I was taught as a child, or that my parents approached the religion, does that mean that I'm somehow missing something, or that I'm bad? And I hope also that others might feel a sense that the essence, the goodness of Catholicism, of that relationship with God, of that sense of love, can be embraced without embracing the parts of the institutional church which are anathema to your values, to one's values.
Q: You work in the human rights world, you live in the Democratic political orbit, do you find that you have to defend being Catholic?
A: Sometimes, yes. I mean, people aren't openly aggressive about it, but there is, yes, skepticism, and sort of, sometimes a look of confusion.
Q: How do you think being a Kennedy affects your relationship to the Catholic Church?
A: Traditionally there was a very strong one, I think, in my grandparents era, and in my parents. I don't have a particular relationship with the hierarchy of the church. I have wonderfully important relationships with people who are at different stages of that hierarchy -- some higher and some lower, but it's not an institutional relationship. But I'm also not in political office, so it's just a little bit different.
Q: What inspired this?
A: So, what happened is that I was feeling conflicted because my Catholicism is so deeply important to me -- it was my sense of connection to the almighty, to humanity, to my heritage, my upbringing. And my Catholicism informed my view of the world, and the work that I do every day on social justice issues. And yet, so often when I went to church, I was confronted with words and symbols that were anathema to my values. I was in a, for many years, in a northern Virginia parish which didn't allow girls as altar servers, and in which every Sunday, in the midst of horrendous poverty, and living in a world where a billion people live on less than a dollar a day, the only thing we seemed to be praying for was that women would stop having abortions, and it just didn't seem right. And then there was the whole pedophile scandal, and the mishandling of that by the bishops. So this was all sort of brewing. It wasn't something that I was very conscious of, or focused on, particularly, but at a certain point I thought, I need to resolve this issue. And I looked at my three daughters, and the way I was raising them, and I wanted them to have this tremendous gift of faith that I really do view as a gift, but I also want to feel comfortable with saying they ought to be catholic. So I thought it was time to take some time and reflect more deeply on these issues.
Q: This was recently, that a parish allowed no girl altar servers?
A: This is now. There is only two bishops in the country which did not allow girls as altar servers, and one of them is northern Virginia.
Q: I have a sense of you parents as very devotional. Where does your Catholicism come from? What role did it play in your upbringing?
A: Well, it was central to my upbringing. I mean, we woke up in the morning and we were down on our knees consecrating the day to Lord Jesus. Then we'd go down for breakfast, and we'd say prayers before breakfast. Then we'd finish breakfast, we'd say prayers after breakfast. Prayers before and after lunch. Prayers before and after dinner. Read the Bible after dinner out loud. And then before bed spend about 20 minutes with the entire family saying prayers together. Church every Sunday. After my father died, we went to church for a long time every day, and then every other day during the summer. And we said prayers in between those times. Prayers for things, to St. Anthony to help find something that was lost. Prayers to St. Christopher when we got on a boat or in a car or in a plane to go someplace. There were St. Christopher medals around all of our necks. There were statues of Our Mother, and in every room of our house were a cross, the Bible, and then all sorts of religious books. And in the dining room, in the kitchen, and on every single bedside in my mother's house, there is not one but two Mass schedules. So this is very present. And Bobby (Robert F. Kennedy Jr.) probably told you this, but his entire bedroom was decorated with the life of St. Francis, with a book that had been cut out and had been framed -- the life of St. Francis. So it was very, very present.
Q: Was this from your mother or your father?
A: Both. You know, my father thought about being a priest. And my mother -- and I think everyone who spends 12 years in Catholic school thinks about being a nun -- actually more than that because she went to Manhattanville College as well. My mother goes -- she's a daily communicant. So I think on both sides.
Q: What was your relationship to Catholicism as you grew up?
A: I went to the Convent of the Sacred Heart for four years. It was interesting to me because, in a family where men were clearly favored over women, this was an atmosphere, a world, run by strong, determined, smart women in leadership, who had high expectations of the girls, and this tremendous sense of love and commitment to the wider world. We had a nun -- the head of the order there, was the reverend mother, was called mother Mouton, and she was this wonderful French woman, and there was a rule at Sacred Heart that you weren't allowed to talk in the halls, and I was forever talking in the hall and always being sent to her, and she always did the same thing, which was that she would wrap her arm around me, give me a lollipop, and said, 'Jesus loves you, no matter how you misbehave,' which was pretty wonderful, and then she would talk about the war in Vietnam. And it was a very different form of discipline and sort of vision of the world, and one that was full of love and outrage at injustice, and that had a great influence on me. This was fourth, fifth, sixth and seventh grade, and then I went to Putney School in Vermont.
Q: Did you go to a Catholic college?
A: No, I went to Brown and then I went to Boston College Law School.
Q: And did you continue, once you were not living at home, practicing Catholicism?
A: No, when I was in high school I went to Mass every once in a while, and certainly anytime I was at home, but on my own, every once in a while. My roommate in high school was also very, came from a very traditional Catholic family, so we would go off together to church on occasion. And then when I was in college, I went through confirmation, and then when I got married I really went to church every Sunday, and have basically done that since then, which was 1990, when I was 30.
Q: And why did you return?
A: I returned because I wanted to have a stronger relationship with God, and a deeper sense of spirituality.
Q: And did you find that at church?
A: Sometimes. As I say, I was conflicted, and increasingly conflicted, because sometimes I would leave church feeling elated, and sometimes I would leave church feeling very angry and frustrated by the insensitivity to social justice issues that to me are part and parcel of Catholicism, of our faith. On the other hand, that was sort of what was happening on the home front, but my work is in international human rights, so I was in Poland at the height of the Solidarity movement and witnessed the tremendous influence of the Catholic church giving refuge to Solidarity activists, and encouragement, and the tremendous role of the pope in encouraging that movement for freedom. And then I worked in El Salvador and Guatemala, Mexico, all of these places during the 80s when there was so much violence, and when the church again was just this tremendous sanctuary, and where Archbishop Romero, for instance, really led, was the spiritual force behind so much of the movement for freedom. And again, in Korea, South Korea, where the combination of the Catholic church and other Christian churches gave sanctuary, strength to the democracy movement there. And a few years ago, 2003, I went to Liberia. I have to tell you, virtually every country I've gone to, the Catholic church is on the cutting edge of social change. Really extraordinary. And I can tell you so many stories about that. But in Liberia, the Catholics account for about 7 percent of that population, and during the 14 year civil war, when Charles Taylor was the dictator, the Catholic church was the only institution that kept schools open and kept hospitals open. And this is in a country that is maybe 70 percent Methodists, and they had a lot of missionaries there, but they weren't able to keep those institutions open, and the government institutions closed down, but the Catholics kept them open, and so it has just played this enormously important role. And I saw the, you know, I went to the Catholic church program, which was rehabilitating child soldiers, and another Catholic church program, this was so incredibly moving, where they were bringing together people from two communities who had basically slaughtered each another. And that, and the Catholic church there also started their peace and justice program on the Catholic radio station, (which) was really the only voice of opposition throughout the Taylor regime, and the fellow who ran it was a guy called Kofi Woods, he was, because of his work, on those issues, with the Catholic church. He was picked up by the minister of justice and his three thugs during the Doe regime and tortured and left to rot in a prison cell, and then when the Taylor regime came into power...that minister of justice and those three thugs were picked up by Taylor, and thrown into the same prison cell he had been in. And he (Woods) had been freed, and he was a lawyer, and went to visit them, and he said, 'I've come to see if you've been mistreated,' and he said, 'I will take your case for free,' because there is no lawyer in the country who would defend them. So he went to defend his own torturers, and that was his sense of faith. So for me, I was witnessing the mighty spirit, and the tremendous capacity of this institution which was so much a part of my history, and my family, and my sense of spirituality and my vision of social justice in the world, and then coming back and hearing bishops who were protecting their turf instead of protecting children and playing three-card monte with the pedophile priests and blaming it on people who are gay. So it was important to me to resolve that.
Q: So when the sex abuse crisis exploded, were you surprised?
A: I guess I wasn't so surprised that it was going on, because I think so many of us knew, or had heard stories, or had friends who that had happened to. The thing that was surprising to me in the sex abuse scandal was not that children were being abused by priests, but that the bishops were protecting them, and that the bishops were refusing to take responsibility for their own failure to protect. I think that was surprising and enormously disappointing and disturbing. But the thing that I came to realize in writing this book is that the church is not the candles and the robes and the beautiful cathedrals, and it's not the bishops and what they do or don't do, or the proclamations that come down from the Vatican on occasion, but it's all of us. That's the meaning of Catholicism -- universal -- and there are a billion Catholics. So it's the community, a Catholicism based on the idea that we should love God and we should love one another. So, as Robert Drinan in this book pointed out, the pope apologized for 92 things that the Catholic church had done wrong, and he (Drinan) said, 'These are fallible people and I expect them to do fallible things in the future as well.' And so I think that that is a source of comfort for me, to view it sort of in that way, that we're all fallible, and we'll all make mistakes, but that this is an important institution to be part of.
Q: Did you ever toy with leaving the church?
A: No. Not precisely. There was a time, as I said, in between high school and when I got married, I guess, where it just wasn't very central to my life, the church itself. But I was still always praying. So it was not, there wasn't a time when I said, OK, I'm not going to be Catholic anymore. I think that's a very, very, very difficult thing to do.
Q: Are you raising your daughters in the church?
A: Yeah, and I teach CCD at our local church, St. Patrick's in Armonk, NY.
Q: You go to Mass?
A: Yeah.
Q: When did you start working on this project?
A: In November 2005.
Q: You could have written a memoir or something more journalistic. How did you think, I'm going to go talk to other people?
A: Well there were two ways that I thought about that. One is I wrote another book, called Speak Truth to Power, and that is interviews with human rights defenders around the world, and I greatly enjoyed that and I learned a lot from talking to other people, and so that's why I chose to approach it in this particular way.
Q: Do you think you did it because you hungered to do another book, or was there something personally you were hoping to get?
A: I was trying to resolve that issue, of how do people who disagree with what the institutional church is saying to them look themselves in the mirror and say, 'I am a Catholic.' And what I found is that absolutely everybody disagrees with the church. The cardinals disagree with the church, and the nuns and the priests, and even Tom Monaghan disagrees with the church, so everybody has a disagreement, which is interesting to me. It's just not a monolith at all. It's an enormous organism with a lot of moving parts and people with strong opinions and I think that that's good. I also think that Catholicism is inherently about contradiction. So much of the New Testament is about Christ arguing with the Pharisees and with the scribes and with the Jewish leaders of the day, and as Pope Benedict said, it's a quest for the truth. And so if you're going to have a quest for the truth, you're going to have a lot of questioning of authority. And we're taught to have obedience to authority, but we're also taught to revere saints, so many of whom were burnt at the stake or martyred because they questioned authority. And then we are told that Christ has died but Christ is coming again. And when Catholics say I don't understand this, how can this really be transformed into the blood of Christ, is this really the body of Christ that we are eating now, they are told, 'That's the mystery,' and 'Go in peace,' and that's sort of it. And so I think that, in a way, I think it's good, because it prepares us to deal with so many other parts of life, where there are conflicting emotions. At the moment of greatest love, there is greatest fear, and at the moment of enormous repression, there is resistance, and therefore a chance at revolutionary change. And so I think our lives are full of contradictions.
Q: How did you come up with the list of who you wanted to talk to?
A: Well, I wanted a diversity of people, from a lot of different professions, so there's historians and doctors and comedians, political commentators and politicians, and so a diversity of professions. And I wanted people who are known to have a strong intellectual sensibility on some issue, not necessarily on this one, and then I wanted a mix of men and women.
Q: Were most of them people you already knew?
A: It was a combination, and there's also people who are conservative, from the conservative side of the church, and more progressive side of the church, and then there are also Democrats and Republicans, you know, Bill O'Reilly to Bill Maher.
Q: Did anybody turn you down?
A: One person.
Q: Do you want to tell me who?
A: No.
Q: And how did people respond when you said, 'I want to explore with you how you relate to this faith'?
A: They were very open about it, and enthusiastic about talking about it, and it was kind of great, because a lot of the people I talked to are used to interviews -- you must find this as well -- but they're not used to interviews about this. And so there's a kind of raw honesty that you get in discussing this subject with people who don't discuss it professionally, and insight that you might not otherwise get. And a lot of them were very funny, and wonderful. Nancy Pelosi saying, 'My mother always wanted me to be a nun,' and then I said, 'But did you want to be a nun?' and she said, 'No, I wanted to be a priest.' And Susan Sarandon, who said that during her first days at Catholic school, she was told that she had an overabundance of original sin. And Bill Maher, who is so, basically he said 'I'm on a mission, I've been given this gift, to stop organized religion.' He's very funny, in talking about the number of people who God slaughtered in the Old Testament, Sodom and Gomorrah alone...Some of it is kind of funny and ridiculous like that, and then a lot of it was very deep. One of the people who I was surprised by in my interview was Andrew Sullivan, because I disagree with almost everything he's ever said or written politically, and yet, on this subject, he was so deep and passionate and reflective -- it was very, very interesting to me, about what it means to be a devoted Catholic and gay and HIV-positive, and how he grapples with that. And then some of them were deeply moving. Gabriel Byrne talking about being a victim of pedophilia when he was a child, and how he attempted to grapple with that, and Danny McNevin, talking about the same issue, and then of course Anne Burke who led the independent audit committee was fascinating about her frustration with the bishops in trying to get them to take responsibility for the crisis, and yet how that experience really deepened her faith.
Q: How did you choose Cardinal McCarrick?
A: I have always deeply admired him, and it was actually kind of interesting, because I think he's mentioned in four different interviews in my book as somebody who others admired -- John Sweeney and E.J. Dionne and Andrew Sullivan. So there you go -- for Cardinal McCarrick to be admired by that diversity of people is pretty extraordinary. So I went to talk to him and you know what's amazing is he said that he started school in a classroom where they had three kids to a bench and 70 kids in his class -- I think that was first grade or kindergarten -- can you imagine? How -- I mean, if you spend even five minutes with six year olds, trying to imagine organizing 70 of them, it's pretty incredible.
Q: What surprised you?
A: There were pleasant surprises, moments of laughter in interviews that were unexpected, and moments of insight, for instance, talking to Andrew Sullivan as I just mentioned, or when Bob Drinan was talking about abortion rights, and in the midst of this discussion he was having with me, we were in his office and the phone started to ring, and he said, 'Oh, that's the pope, telling me to shut up.' And so that was kind of funny. And different things were sort of wonderful. Donna Brazile...told a very, very moving story about her wanting as a child, knowing as a child, that she'd grow up to be a priest, and that in her youngest years the black kids, the black families had to stay in the back of the church, and then after Martin Luther King died they could move more and more forward, and then she, at a certain point, would get to the church, she'd make sure she was in the front row, because she had to see what the priest was going to do, because she was going to be a priest, and she had to know what he was doing up there. And how when he would preach, she would listen to what he'd say, and then go back and read the Bible passage and see if she agreed with him or not, and come back and ask him questions. A very active, involved and engaged child. And when her mother asked her in passing one day what she was going to do, and she mentioned she was going to be a priest, (she learned) to her shock, that women couldn't be priests, it's just not possible...So there were things like that, that were very moving. And again, I think Danny McNevin's story about the impact of being a victim of pedophilia, on him and his family, is deeply moving, and his quest to seek justice, and how difficult that has been.
Q: So how did all this affect your faith?
A: You know, it deepened it tremendously. And the sense of spirituality, I think primarily because I started thinking about it. You're writing a book about something, you start thinking about it a lot more, and talking to people about it a lot more, and learning about it, and that has been a wonderful experience. I also happen to belong to a fantastic parish in Armonk, New York, and I have a great, great, great, great pastor, who is always quoting Dorothy Day, and puts a picture of Gandhi with a halo over his head on the altar.
Q: You say it deepened your faith but also you were confronted by so much injury -- these girls who wanted to be priests, these boys who were abused, the gay man -- over and over again you ran into people who have conflict with the church in some way. How do you think about that?
A: I think that the church has done enormous harm over the years, and continues to do enormous harm to people in different ways. The institutional church does that. But that is separate and apart from my sense of connection to the Almighty, when I pray. And that is something that I think is part of the mission of being a Catholic is to expose those areas of injustice, and try to confront them, and I hope through this book I have advanced that in some small way.
Q: What is your hope that readers will take away from this?
A: I hope that they'll feel like they're not alone...I hope that people will feel that there are a lot of others out there who are grappling with the same issues: Should I raise my children Catholic? What does that mean? Am I a good Catholic? What does it mean to be a good Catholic today? If I'm not following the way I was taught as a child, or that my parents approached the religion, does that mean that I'm somehow missing something, or that I'm bad? And I hope also that others might feel a sense that the essence, the goodness of Catholicism, of that relationship with God, of that sense of love, can be embraced without embracing the parts of the institutional church which are anathema to your values, to one's values.
Q: You work in the human rights world, you live in the Democratic political orbit, do you find that you have to defend being Catholic?
A: Sometimes, yes. I mean, people aren't openly aggressive about it, but there is, yes, skepticism, and sort of, sometimes a look of confusion.
Q: How do you think being a Kennedy affects your relationship to the Catholic Church?
A: Traditionally there was a very strong one, I think, in my grandparents era, and in my parents. I don't have a particular relationship with the hierarchy of the church. I have wonderfully important relationships with people who are at different stages of that hierarchy -- some higher and some lower, but it's not an institutional relationship. But I'm also not in political office, so it's just a little bit different.
The Arts (of Necessity)
It is 30 years since Alan Ayckbourn’s The Norman Conquests were performed in London. Now they have returned to an Old Vic that has been dramatically reshaped so the plays can be staged, as they originally were, “in-the-round”. Earlier this month at the theatre, actor/director Kevin Spacey, the Old Vic’s artistic director since 2004, and Michael Hintze, who heads hedge fund CQS and whose money has helped finance the project, spoke to the FT’s arts writer Peter Aspden.
Peter Aspden: Michael, this is an era of great wealth, a lot of it quite ostentatious wealth. You’ve gone on record as saying it’s important to give something back. Where does that imperative come from? What is the justification for cultural philanthropy?
Michael Hintze: Well, it’s something that feels right – and it’s fun initially. And, philosophically, it’s very, very important that people grab hold of their own lives. Whether that is in a political sense or in a society sense, I think it’s important. It’s important to support your hospitals, to support your cultural heritage, to support the theatre and museums. It’s something that’s crucial, I think, to the health of our society.
PA: Kevin, this kind of thinking is quite common in the US I think, and the received wisdom is that in Britain we’re a little bit behind. Did you notice that at all?
Kevin Spacey: There is without question a great deal of philanthropy in the United States but they also face a different tax situation to British citizens ... though I doubt that is a leading motivation. I also think it’s important that those who are in a position to do so – corporations or individuals, foundations or charitable trusts – should not look at giving as empty philanthropy. It is actually good for business. This is not an argument you hear a lot but I personally don’t want to see another regeneration plan that doesn’t have some kind of cultural centre at its heart. Human beings need shared experience and there is nowhere greater to have a shared experience than when you actually bring people together. A concert hall, a ballet, a music festival, a theatre, a jazz club, a comedy store. People come together. And, from a business point of view, if you regenerate Peckham, if you regenerate Elephant and Castle and you don’t have places where people can gather, it doesn’t help business.
The difference between the Old Vic and other theatres is that we don’t get any public subsidy. We get no subsidy from the government ... So we could not do what we’re doing unless there were corporations, individuals and donors stepping up and saying we believe in what you’re doing as a company, in your ethos. We want to be supportive.
PA: Your new production is Alan Ayckbourn’s The Norman Conquests, which, thanks to a donation from Michael’s company and his foundation, is going to be performed “in-the-round”. Tell me about that.
KS: When I started [at the Old Vic] one of the first plays I put on my list was The Norman Conquests. And Alan Ayckbourn had never given the rights in 30-something years. So I began a process of trying to convince Alan that they should be brought back to London. They are, in many ways I think, his crown jewels and I can understand why he’d been reluctant to give them but, finally, after a lot of cajoling and a lot of e-mails, he allowed us to do these plays. He gave them to us without knowing, because we didn’t know at the time, that we’d end up honouring the way they were originally done [in the round]. What happened is that about eight years ago, when I was on the board of the Old Vic, I said that we as a theatre have to think about what we can do to make this theatre elastic, not on a permanent basis but on a temporary basis. So we hired architects and designers and we did a big model, literally a model you can stick your head in and sort of move seats about, and came up with four or five different ideas of what we could possibly do to make this space just stretch and move.
Eventually that went into a closet until last October, when Matthew Warchus, the director, said, “The more I spend time with the players, the more I’m thinking, gosh, I just wish we could do these plays in the round, the way they were originally done because when you remove the wallpaper, when you remove the setting, they suddenly become very modern. It’s just about people and space and their relationships, but not only that, it’s the relationship that the audience has with each other while they’re watching the play.” And I said, “Matthew, I love you. We can do it.” And then I went to Michael and essentially laid out this idea and he thought it was a terrific idea.
PA: You’d had contact with each other already?
MH: Yes, we’d been supporters of the Old Vic and we’d been having fun together for a long while. When we first started talking, one of the things he showed me was this idea [to reconfigure the theatre] and I thought it was a cockamamie thing. But to see it today, it’s great. It works.
KS: It does work. Obviously, the most important thing is not just the space but what’s going to happen to the space. And watching this company develop these plays and seeing the way Matthew has directed them is the most thrilling thing for me because the players are being served. And by doing the plays in the round, it also allows our audience an entirely new perspective on the Old Vic.
PA: OK, it’s a lovely story, but we are in an uncertain economic climate and a lot of people might think that philanthropy is the first thing that people look to save on. Do you think that is true?
KS: What I’m experiencing personally, with how I raise money for the Old Vic, is that the opposite is happening. We have had places like Bank of America stepping up. They’re going to be one of the major funders of The Bridge Project – which is the Sam Mendes project over the next three seasons where Sam’s directing a transatlantic company of actors who are 50 per cent Americans, 50 per cent Europeans – and that’s a major thing for a bank to do in these times, to say, “We are confident enough that we are going to get through this and as a bank we’re going to be better off at the end of this. We believe it’s important to show that this kind of support is valuable. We’re not afraid of it, we’re not pulling back, we’re saying this is important for our social lives.” It’s the same with American Airlines, who have stepped up to be our airline and to support The Bridge Project, which is incredibly important because we’re going to be flying actors back and forth and that’s a major thing for us.
So I look at these as indications that even in this moment, when everyone’s being a bit cautious, corporations and individuals are stepping forward and saying we still believe this is important. And that to me is a sign that people are not looking at the future bleakly. They believe, as I think we all do, that we will get through this but that at the same time let’s not make our culture suffer.
MH: What I will say, Kevin, is that you were very cautious and careful with the money you got us to spend.
KS: Well, we’re in this weird hybrid because we’re not a subsidised theatre but everybody thinks we are. So we had to come up with an economic model that works for us in terms of what we put into our productions and what we put into the work that we want to do around the community with young people. This is in some ways the stuff that people do to get subsidy to prove that they’re worth their subsidy. But we’re doing it because it’s our ethos as a company because, for me, I wouldn’t have a career if it weren’t for the opportunities and experiences that I had as a young kid when I was at school. Right up until the end of my high school years in southern California I was exposed to professional productions, workshops with professional actors, going to see things, going to festivals, doing Shakespeare festivals, doing this incredible amount of stuff as a young kid and I can tell you what it meant to me at 13 to be in a workshop with Jack Lemmon and do a little scene and have him walk up to me and put his hand on my shoulder and say, “That was terrific kid, you ought to be an actor.”
The confidence that gave me has stayed with me my entire life, you know. Jack always had this philosophy that I have adopted, which is that if you’ve done well in the business you wanted to do well at, then it is your obligation to send the elevator back down, and that’s what we’re doing. It’s the most satisfying experience because you see these kids come in who are unsure of themselves, who are shy, who have never been on stage before. If a kid wants to go into the arts, they will because there’ll be nothing that can stop that passion. But it’s also about what happens to somebody who’s young, who stands on the stage in front of their peers, or colleagues, or friends, or teachers, or parents, and what they walk away having learnt; and that leads right to how people deal with each other in society, in any business, in any job.
PA: It’s often said that in the arts it’s important to have the freedom to fail. And the arts world was once considered quite radical and very unlike the corporate world, which was safe and conservative. Could too much corporate involvement mean that people go for soft options and keep things quite secure?
KS: Well, I think that companies that do have subsidy are given the ability to fail. They can risk failure and it won’t hurt them. They’ll be able to go on. If we have a failure, it can hurt us. But I still want to take risks and perhaps not having subsidy allows me to take risks that I might not otherwise take because there’s a lot of hoops that you’ve got to jump through, a lot of boxes you have to tick and I’m not interested in having to, you know, satisfy targets.
To me, if the government believes in supporting culture and the arts, then they should trust the practitioners. I believe that most people who are in positions of artistic leadership in London love the fact that London is one of the most diverse cities in the world. We want our audience to be broad. We want to reach out to as many people as possible. We want different cultures to come. That’s our desire. So trust that. Don’t make us have to count heads.
MH: In fact, corporates can be a little more daring. I think that frankly the corporate money can take risks because it’s a broader church. They have to answer in a very different way.
PA: Contemporary art is one of the great buzz areas right now. Do you think there’s any synergy between theatre and art?
KS: That’s why I’m doing Drama Queens [where famous works of art come to life] because you’ve started to see over the past couple of years, sometimes there’ll be a performance in an art gallery or something happening where these worlds are beginning to kind of collide. And people are beginning to realise that, in fact, we’re not separate, we have lots of interlocking things and ideas.
What’s interesting is you bring someone from that world together with a director and you start talking about how you can create something that is different and exciting. And I just think that there are a whole lot of people in the art world who don’t go to theatre. And there are a whole lot of people in theatres who don’t go to galleries; and let’s see whether we can bring these audiences together and realise that in fact they have a lot more in common than they may have ever thought.
PA: Are you interested in contemporary art, Michael?
MH: Well, I’m a trustee at the National Gallery and I’m definitely interested in art. For me, though, contemporary art is interesting but it’s a huge conceit. Personally I would rather give to the V&A or the Old Vic.
PA: Kevin, quite apart from having ambitious artistic programmes, there’s a lot of hustle involved in your job. Do you enjoy that?
KS: Well, I like to call it the song and dance. Occasionally it’s the hustle. I mean, it’s true sometimes you can take somebody to dinner and you can do your whole song and dance and you give them a tour of the theatre and they don’t write a cheque at all.
The best fundraiser I ever saw was Nelson Mandela because nobody sees him coming. I was in South Africa, with President Clinton on this trip for his Aids foundation, and he leaned over as Mandela was talking to two or three potential donors and said, “Watch him, he’s so good.”
And he was because they looked at him as a kind of saint. And he was saying, “No, you must write the cheque now, you cannot leave the room until I get a cheque.” There was something kind of inspiring about that and, perhaps because I’m an American, I’m not shy about asking for money because it’s not for me, it’s for what I know it will do for this community because I believe very strongly that as world famous as the Old Vic is, it also needs to be a community theatre. So that’s an exciting thing to be able to try to convince people of.
PA: I was going to ask what your next big project might be Michael, but also how you decide. I mean, there’s a huge array of things you could give money to and I’m sure you get a lot of approaches.
MH: And obviously there’s an enormous amount of money to give, you know, to various other good things. But how do I decide? I decide, frankly, to make sure it’s not wasted and to make sure that it somehow connects with me in one way or another. What’s my next big one? (Laughs) I need to make some more money...
‘The Norman Conquests’ is in preview at the Old Vic and runs until December 20, box office tel: +44 (0)870-060 6628; www.oldvictheatre.com
Peter Aspden: Michael, this is an era of great wealth, a lot of it quite ostentatious wealth. You’ve gone on record as saying it’s important to give something back. Where does that imperative come from? What is the justification for cultural philanthropy?
Michael Hintze: Well, it’s something that feels right – and it’s fun initially. And, philosophically, it’s very, very important that people grab hold of their own lives. Whether that is in a political sense or in a society sense, I think it’s important. It’s important to support your hospitals, to support your cultural heritage, to support the theatre and museums. It’s something that’s crucial, I think, to the health of our society.
PA: Kevin, this kind of thinking is quite common in the US I think, and the received wisdom is that in Britain we’re a little bit behind. Did you notice that at all?
Kevin Spacey: There is without question a great deal of philanthropy in the United States but they also face a different tax situation to British citizens ... though I doubt that is a leading motivation. I also think it’s important that those who are in a position to do so – corporations or individuals, foundations or charitable trusts – should not look at giving as empty philanthropy. It is actually good for business. This is not an argument you hear a lot but I personally don’t want to see another regeneration plan that doesn’t have some kind of cultural centre at its heart. Human beings need shared experience and there is nowhere greater to have a shared experience than when you actually bring people together. A concert hall, a ballet, a music festival, a theatre, a jazz club, a comedy store. People come together. And, from a business point of view, if you regenerate Peckham, if you regenerate Elephant and Castle and you don’t have places where people can gather, it doesn’t help business.
The difference between the Old Vic and other theatres is that we don’t get any public subsidy. We get no subsidy from the government ... So we could not do what we’re doing unless there were corporations, individuals and donors stepping up and saying we believe in what you’re doing as a company, in your ethos. We want to be supportive.
PA: Your new production is Alan Ayckbourn’s The Norman Conquests, which, thanks to a donation from Michael’s company and his foundation, is going to be performed “in-the-round”. Tell me about that.
KS: When I started [at the Old Vic] one of the first plays I put on my list was The Norman Conquests. And Alan Ayckbourn had never given the rights in 30-something years. So I began a process of trying to convince Alan that they should be brought back to London. They are, in many ways I think, his crown jewels and I can understand why he’d been reluctant to give them but, finally, after a lot of cajoling and a lot of e-mails, he allowed us to do these plays. He gave them to us without knowing, because we didn’t know at the time, that we’d end up honouring the way they were originally done [in the round]. What happened is that about eight years ago, when I was on the board of the Old Vic, I said that we as a theatre have to think about what we can do to make this theatre elastic, not on a permanent basis but on a temporary basis. So we hired architects and designers and we did a big model, literally a model you can stick your head in and sort of move seats about, and came up with four or five different ideas of what we could possibly do to make this space just stretch and move.
Eventually that went into a closet until last October, when Matthew Warchus, the director, said, “The more I spend time with the players, the more I’m thinking, gosh, I just wish we could do these plays in the round, the way they were originally done because when you remove the wallpaper, when you remove the setting, they suddenly become very modern. It’s just about people and space and their relationships, but not only that, it’s the relationship that the audience has with each other while they’re watching the play.” And I said, “Matthew, I love you. We can do it.” And then I went to Michael and essentially laid out this idea and he thought it was a terrific idea.
PA: You’d had contact with each other already?
MH: Yes, we’d been supporters of the Old Vic and we’d been having fun together for a long while. When we first started talking, one of the things he showed me was this idea [to reconfigure the theatre] and I thought it was a cockamamie thing. But to see it today, it’s great. It works.
KS: It does work. Obviously, the most important thing is not just the space but what’s going to happen to the space. And watching this company develop these plays and seeing the way Matthew has directed them is the most thrilling thing for me because the players are being served. And by doing the plays in the round, it also allows our audience an entirely new perspective on the Old Vic.
PA: OK, it’s a lovely story, but we are in an uncertain economic climate and a lot of people might think that philanthropy is the first thing that people look to save on. Do you think that is true?
KS: What I’m experiencing personally, with how I raise money for the Old Vic, is that the opposite is happening. We have had places like Bank of America stepping up. They’re going to be one of the major funders of The Bridge Project – which is the Sam Mendes project over the next three seasons where Sam’s directing a transatlantic company of actors who are 50 per cent Americans, 50 per cent Europeans – and that’s a major thing for a bank to do in these times, to say, “We are confident enough that we are going to get through this and as a bank we’re going to be better off at the end of this. We believe it’s important to show that this kind of support is valuable. We’re not afraid of it, we’re not pulling back, we’re saying this is important for our social lives.” It’s the same with American Airlines, who have stepped up to be our airline and to support The Bridge Project, which is incredibly important because we’re going to be flying actors back and forth and that’s a major thing for us.
So I look at these as indications that even in this moment, when everyone’s being a bit cautious, corporations and individuals are stepping forward and saying we still believe this is important. And that to me is a sign that people are not looking at the future bleakly. They believe, as I think we all do, that we will get through this but that at the same time let’s not make our culture suffer.
MH: What I will say, Kevin, is that you were very cautious and careful with the money you got us to spend.
KS: Well, we’re in this weird hybrid because we’re not a subsidised theatre but everybody thinks we are. So we had to come up with an economic model that works for us in terms of what we put into our productions and what we put into the work that we want to do around the community with young people. This is in some ways the stuff that people do to get subsidy to prove that they’re worth their subsidy. But we’re doing it because it’s our ethos as a company because, for me, I wouldn’t have a career if it weren’t for the opportunities and experiences that I had as a young kid when I was at school. Right up until the end of my high school years in southern California I was exposed to professional productions, workshops with professional actors, going to see things, going to festivals, doing Shakespeare festivals, doing this incredible amount of stuff as a young kid and I can tell you what it meant to me at 13 to be in a workshop with Jack Lemmon and do a little scene and have him walk up to me and put his hand on my shoulder and say, “That was terrific kid, you ought to be an actor.”
The confidence that gave me has stayed with me my entire life, you know. Jack always had this philosophy that I have adopted, which is that if you’ve done well in the business you wanted to do well at, then it is your obligation to send the elevator back down, and that’s what we’re doing. It’s the most satisfying experience because you see these kids come in who are unsure of themselves, who are shy, who have never been on stage before. If a kid wants to go into the arts, they will because there’ll be nothing that can stop that passion. But it’s also about what happens to somebody who’s young, who stands on the stage in front of their peers, or colleagues, or friends, or teachers, or parents, and what they walk away having learnt; and that leads right to how people deal with each other in society, in any business, in any job.
PA: It’s often said that in the arts it’s important to have the freedom to fail. And the arts world was once considered quite radical and very unlike the corporate world, which was safe and conservative. Could too much corporate involvement mean that people go for soft options and keep things quite secure?
KS: Well, I think that companies that do have subsidy are given the ability to fail. They can risk failure and it won’t hurt them. They’ll be able to go on. If we have a failure, it can hurt us. But I still want to take risks and perhaps not having subsidy allows me to take risks that I might not otherwise take because there’s a lot of hoops that you’ve got to jump through, a lot of boxes you have to tick and I’m not interested in having to, you know, satisfy targets.
To me, if the government believes in supporting culture and the arts, then they should trust the practitioners. I believe that most people who are in positions of artistic leadership in London love the fact that London is one of the most diverse cities in the world. We want our audience to be broad. We want to reach out to as many people as possible. We want different cultures to come. That’s our desire. So trust that. Don’t make us have to count heads.
MH: In fact, corporates can be a little more daring. I think that frankly the corporate money can take risks because it’s a broader church. They have to answer in a very different way.
PA: Contemporary art is one of the great buzz areas right now. Do you think there’s any synergy between theatre and art?
KS: That’s why I’m doing Drama Queens [where famous works of art come to life] because you’ve started to see over the past couple of years, sometimes there’ll be a performance in an art gallery or something happening where these worlds are beginning to kind of collide. And people are beginning to realise that, in fact, we’re not separate, we have lots of interlocking things and ideas.
What’s interesting is you bring someone from that world together with a director and you start talking about how you can create something that is different and exciting. And I just think that there are a whole lot of people in the art world who don’t go to theatre. And there are a whole lot of people in theatres who don’t go to galleries; and let’s see whether we can bring these audiences together and realise that in fact they have a lot more in common than they may have ever thought.
PA: Are you interested in contemporary art, Michael?
MH: Well, I’m a trustee at the National Gallery and I’m definitely interested in art. For me, though, contemporary art is interesting but it’s a huge conceit. Personally I would rather give to the V&A or the Old Vic.
PA: Kevin, quite apart from having ambitious artistic programmes, there’s a lot of hustle involved in your job. Do you enjoy that?
KS: Well, I like to call it the song and dance. Occasionally it’s the hustle. I mean, it’s true sometimes you can take somebody to dinner and you can do your whole song and dance and you give them a tour of the theatre and they don’t write a cheque at all.
The best fundraiser I ever saw was Nelson Mandela because nobody sees him coming. I was in South Africa, with President Clinton on this trip for his Aids foundation, and he leaned over as Mandela was talking to two or three potential donors and said, “Watch him, he’s so good.”
And he was because they looked at him as a kind of saint. And he was saying, “No, you must write the cheque now, you cannot leave the room until I get a cheque.” There was something kind of inspiring about that and, perhaps because I’m an American, I’m not shy about asking for money because it’s not for me, it’s for what I know it will do for this community because I believe very strongly that as world famous as the Old Vic is, it also needs to be a community theatre. So that’s an exciting thing to be able to try to convince people of.
PA: I was going to ask what your next big project might be Michael, but also how you decide. I mean, there’s a huge array of things you could give money to and I’m sure you get a lot of approaches.
MH: And obviously there’s an enormous amount of money to give, you know, to various other good things. But how do I decide? I decide, frankly, to make sure it’s not wasted and to make sure that it somehow connects with me in one way or another. What’s my next big one? (Laughs) I need to make some more money...
‘The Norman Conquests’ is in preview at the Old Vic and runs until December 20, box office tel: +44 (0)870-060 6628; www.oldvictheatre.com
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