There is a spectre
Following the recent news it is hard not to notice the growing demands to curb the payments of bonuses to bankers – to do away with what is now being called “bonus culture”. It got started when it became evident, both in London and the United States, that a part of the bailout money went to pay out bonuses to investment bankers who, according to the popular view, were instrumental in creating the problem to begin with. By now, the issue has grown out of its initial confines of how the taxpayer’s money is used and has became an issue of perceived justice – Wall Street paying out bonuses that are out of this world by the standards of 99% of the population in the times when people on the Main Street are having some toughest times anyone remembers. It simply is not fair, even if it’s not the government money.
But guess what – it hasn’t been fair for a long long time.
UBS report recently described this time of ours as a “golden age of profitability”. According to the US statistics, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s. And, not surprisingly but even more importantly, the average nominal salary has in fact fallen over the same period. Here it has to be kept in mind that those statistics operate with a concept of “average wage” which, while meaningful as an aggregate figure for the economy as a whole, is not very useful metric for describing the lot of an average worker – median rather than mean salary would do much better here. The reason for this being that a lion’s share of pay increases have gone to top 1 or 2 per cent of the wage earners, with people in the top 0.1% having seen their income risen about 500 times over the last forty years. Although the wage stagnation figures have been debated in case of other major economies (there seems to be pretty strong consensus regarding the US), I would be very much surprised if the situation was fundamentally different there. After all, both the overarching economic processes, such as globalisation, technology and outsourcing, as well as the rise of corporate profitability are substantially the same.
Consumption now stands for about two thirds of GDP in developed countries, having increased from below 60% four decades ago, with each percentage point being worth more than $130 billion in today’s money. Middle-class people have been able to increase their consumption due to two main reasons – the growing inclusion of women into workforce (which has increased the average aggregate household income) and proliferation of credit (which has enabled to consume now and pay later). This means that, at least on paper, average middle-class person can both own and consume more than his or her mother and father could at the same age, although their wages were actually worth more in today’s funds. It also pays to dig a little bit deeper in the second part of the equation – proliferation of credit.
The growth of economy that substantially outpaced increases of income for most people became possible only due to an application of leverage that, as Martin Wolf of Financial Times has put it, turned huge parts of population into “highly leveraged speculators in a fixed asset”, the fixed asset in question being the real estate. By being able to set their home up as a security and borrow money against their future income, people now had “equity” just as companies did, and as long as asset prices kept on climbing (with an occasional hiccup along the way), people’s equity also kept rising and they could borrow more and more money. This clever sleight of hand achieved two things at the same time: first it abolished the proletariat and class society the way it was known in Europe at the beginning of the 20th century; secondly it became an engine to the steady economic growth and increase in corporate profits. As already the demonstrators on the streets of Paris in 1968 were fully aware, the working class was no longer required to just produce but also to consume.
Only that the class society was gone nowhere. The European working class of mid-twentieth century was like Hamlet’s mother who was told to assume a virtue if she had it not and become capitalist even if it had no capital. And as such it is a huge meta-bubble, in a way similar to usual cycles of boom and bust that are based on the asset price inflation of a specific asset class such as the real estate or dot-com shares, only that this particular one cuts through to the bone. And now that things are falling apart and the centre cannot hold it becomes evident that the wealthy middle class king is clad in bikinis, if not completely naked – the society of haves and have-nots was transformed into one of haves and those who borrowed from them to pass on as haves too.
This all leads us to one certain bearded gentleman who, after having been rather unpopular for the better part of the last half a century, is in all likelihood staging a major comeback, and on several fronts. In 2000 Francis Fukuyama, author of The End of History, wrote in Time magazine:
If socialism signifies a political and economic system in which the government controls a large part of the economy and redistributes wealth to produce social equality, then I think it is safe to say the likelihood of its making a comeback any time in the next generation is close to zero.
Not as close as he thought. It took less than a decade for Alan Greenspan, out of all people, back the bank nationalisation in, out of all places, the United States. The president of the United States has capped the maximum salary of senior bankers and is injecting astronomical amounts of the government money into private sector. And, what is possibly even more important, people all over the Western world feel that the system we’ve been running, and advocating others to run, over the last half a century is simply unfair.
I can see Marx nodding in approval.
Värsket metalugemist
Sõber Marek lükkas sel nädalal käima Varraku raamatublogi mille ambitsioonikalt laiaks eesmärgiks on “vahendada teateid ja muljeid raamatuelust üldisemalt, nii uutest kui vanadest teostest, nii raamatute kirjutamisest kui kirjastamisest, nii kriitikast kui tõlkimisest, nii tõsisematest kui kerglasematest teemadest, piiramata ennast seajuures ainult Eestiga”. Vaadates kaasautorite nimekirja (kuhu kuulub ka yours truly) tõotab sealt tulla päris huvitavat ja erineva nurga alt lugemist. Arvestades mu järgmise poole aasta plaanidega ei ole kuigi tõenäoline, et mulle eriti eestikeelset kirjandust näppu satuks ning seetõttu saavad minu kontributsioonid olema kas üldist laadi või siis muu maailma kirjandusest – ning tegelikult oleks olukord kodus olles ka ilmselt vaid marginaalselt erinev. Ühtlasi tähendab see ilmselt ka, et mingi hulk kirjanduse ja lugemisteemalist materjali millest ma muidu siin oleks kirjutanud saab ilmuma Varraku blogis.
Well-deserved break
After a grueling day and night of flying we (I was joined by Helelyn in London) touched down in Mauritius early this morning. The landing was one of the roughest I’ve had anywhere but nonetheless managed to evoke a hearty applause – which left me wondering about what the local standard might be.
A short compulsory round of bargaining over the taxi fare and the subsequent one hour drive later we found ourselves at La Maison D’Été, in Post Lafayette, North Mauritius, that is going to be our home for the next week or so. As the picture attests, it’s a thoroughly lovable place – we have a small house that opens straight to the booming surf and a lagoon just about 50 meters away. In addition to the ceiling fan, kitchenette and plenty of thoughtful and nice touches, we also have a big button with letters PANIC written on it. Jean-Claude, the owner of the place, promised to “come running” whenever we press it – assuming that other rooms are similarly equipped it probably explains why he looks as fit as he does.
Jean-Claude and his wife also keep an acclaimed restaurant in premises that, based on tonight’s sampling, got high marks from us too. I will have to look up what is French for dolce far niente as it seems that there is quite a bit of that coming up.
Rocky Horrors of Milan
Last night Carlo (a friend of mine I’m staying with in Milan) took me out to see the Rocky Horror Picture Show. Weird doesn’t begin to describe it.
I had so far never been to a midnight movie – in fact, had I been asked I could have given only a very vague answer of what it is. And basically what it is is a screening of some usually pretty bad (a.k.a. “cult”) movies, preferably at midnight and somewhere slightly out of the way to a bunch of people who are doing their best to enjoy the occasion to the fullest. The way how Rocky Horror Picture Show runs is that there is a movie running on a screen while it is also simultaneously acted word-by-word on stage, right before the screen. And the public is very much part of the act.
Carlo tells me that the venue was originally a porn cinema whose owner had first screened the Rocky Horror Picture Show without quite knowing what it was – misjudging the content of the movie by the fact that a central character in the movie is certain Dr. Frank N. Furter, a “sweet transvestite from Transsexual, Transylvania”. Anyway, it turned out pretty good for Cinema Mexico as the show has now ran in Milan for last 28 years, and the theater itself has became a kind of an art house cinema, one of the few places in Milan where you can see movies in screened in their original language. There are people who have seen the show for tens of times, and apparently few ones who come every Friday. And the place is packed after thirty years. The ticket is €6 and you can get a €2 discount if you show up properly dressed – something that quite many people were taking an advantage of. Normally you have to show up well before the start of the show as it is by no means certain that you will get in if you arrive right on time. Carlo was able to get us on the guestlist as the guy who is playing the part of Dr. Frank N. Furter is his neighbour.
So if you happen to be in Milan and have a free Friday night I wholeheartedly recommend looking up Cinema Mexico and see the thing. Also, by all means buy the €3 kit that you get offered – it consists of a lot of stuff such as a latex glove, sheet of newspaper, a small bag of rice, some confetti, etc. Don’t worry about how to use all of it – in all likelihood the person sitting next to will let you know when to get out any particular item and how to put it in use. It all adds up to a rather interactive and engaging movie experience. Or, as the slogan goes: DON’T DREAM IT, BE IT!
City of rebirth
I have a newfound appreciation towards Elizabeth Gilbert and Frances Mayes as it is indeed tough to sit down and start describing my two days in Siena and Firenze without going all misty-eyed and beginning to sound an awful lot like “Eat, Pray, Love” or “Under the Tuscan Sun”. So I cut it short before starting to believe myself that I am here on some kind of a journey of spiritual and culinary awakening.
Speaking of which – I don’t know about high season, but at least in February the impact of those two books (and no doubt a few more that I am simply not aware of) is clearly observable in Siena. There is a distinctive contingent of American (and to a lesser degree British) women in their second if not third youth with a conspicuous lack of unadorned golden rings on their fingers, traveling in groups of two to four. They while away their evenings at cafes and restaurants with some food and wine, checking pictures from each other’s cameras and discussing the finer points of life such as the proper spelling of “tiramisu”. Every now and then the whole group erupts into giggles while everyone is trying to decently cover their teeth that have a distinct bluish hue, another if rather more unfortunate effect of the plentiful Chianti.
The Carnevale of Venice is on and, being as close to it as I am, it certainly is tempting to make the trip. Finding the accommodation will surely be painful and expensive at such a short notice. There is still a few days for me to make up my mind. I will probably try to get a second opinion from someone local and decide then. And tonight I will tackle the famous bistecca alla florentina – a task made daunting by fact that it is served by a minimum of one kilogram and I have no-one to share it with.
Barely hanging on
The summit of G7 finance ministers here in Rome has spoken out rather strongly against the protectionism. The new US Treasury Secretary has also downplayed the ‘Buy American’ clause that is in the stimulus package that finally got approved by the US Senate and stated that “All countries need to sustain a commitment to open trade and investment policies”. Roger that.
However, following the news one would get a feeling of suffering from some kind of a double vision. Because there IS the ‘Buy American’ clause in the US stimulus package. Because while the French and UK finance ministers nod their heads in approval in Rome, Sarkozy calls for the French car makers to repatriate their manufacturing plants from Czech Republic and Gordon Brown is being pressed ever harder to deliver upon his “British jobs for British workers” pledge, which was one of the things that got him elected. The common open European market and the principle of the free movement of labour seems to be hanging on by fingertips.
Paul Krugman has made a point that there actually is an economic case for protectionism and, though it does take an eye off the larger ball, it is going to be very alluring in short term for a great number of people. I too think that it is extremely important to be intellectually honest about this, as the pressure to go protectionist is only going to increase in richer countries who are coughing up huge amounts in stimulus packages that is essentially taxpayers’ money. It is likely that the industrial nations will try to avoid sparking trade wars amongst themselves as this is in all likelihood a zero-sum game in terms of potential benefits and would only stand to unravel decades worth of negotiations which would be extremely painful to put together again once the storm has passed.
However, concerning the dealing with rest of the world is a somewhat different set of propositions. The US and big EU nations have little immediate interest for bailing out the economies and financial systems of smaller nations – and the downside of cutting them out of the deal is a lot smaller. At the same time – if they DON’T do it (by virtue of limiting the benefits of stimulus to their own economy) it spells the end of the principle of single Europe. And indeed, the “new Europe” is crying foul – protectionism was something you were supposed to do to Africa. Hey, we’ve got people here!
So it is a real conundrum and politicians are caught between the rock and a hard place.
When in Rome
In February there are some fabulous deals to be had accommodation-wise in Rome. For a mere €10 more than what I had to dish out for a rather bare room 15 minutes walk from the center in Amsterdam, I stay here in a truly stylish Relais’ boutique hotel right in centro storico, between Piazzi Navona and Vatican, both just a short walk away. The sky is cloudless and the smell of freshly roasted coffee and chestnuts permeates the crisp morning air. The place is hardly devoid of tourists though. When I made it to St. Peter’s at around 10 am, the queue for basilica already ran about two thirds way along the colonnade – and that means several hundred meters. Skipped it for now but I will probably try again tomorrow; if Ratzinger is in town it’s a good chance to get blessed by the highest authority on earth at the same time.
And food, of course, is seriously tasty. I had already grown accustomed to eating just twice a day and rather lightly so that I suspect having already lost most of that ten pounds that I set as a target at the beginning of the year – I’m afraid this is going to change here, especially with places as Bologna, Modena and possibly Parma coming up.
I just had my finger-lickingly good lunch and now it seems to be a pretty good time for some dolce far niente - sweet doing nothing.
Where all the roads lead to
My arrival at the terminal yesterday caused a huge confusion. Numerous men in different uniforms were examining my ticket and came to a surprising amount of different conclusions over what should I do next or where should I go with it. The only thing that they all seemed to agree on was that in order to get on board my “agent” will need to show up and check me in. At 3 o’clock things were starting to get a bit nervous as the ship was leaving soon while the jury was still very much out on how to deal with an unexpected passenger – and then suddenly, in walks my friend from the day before. He recognises me, comes to shake my hand and inquire about my health and whether I managed to get the ticket. Upon my explanation that I do have a ticket but this doesn’t seem to be of much help Paulo seemed to take personal offense. “Wait here, no problem, I fix it”, he told me, walked straight to the bunch of men in navy-coloured sweaters brandishing signs such as “Customs” and “Pulizija”, said a few sentences in maltese, turned around on his heel and walked back to me. “It’s all right, all right” he confirmed, took me firmly by my sleeve again and, waving off all the guys in navy sweaters, he proceeds to walk me straight past customs and passport control to the quay and points to a ship. “I told them to fuck off” he announces with a broad smile and wishes me bon voyage. I wonder why didn’t I try that myself.
At the ferry I had to wait for five minutes for someone higher up the food chain to come down and examine my ticket once more, and as everything seemed to be in oder I was finally admitted to board. The ship was positively huge. The elevator took me a few decks higher where I arrived at the reception, manned with three people in green waistcoats. My ticket was once again scrutinised and graciously accepted and I was shown to a very spooky-looking “business lounge” – a room with about thirty blue leather business-class seats and a dusty flatscreen TV attached to the wall. I opted for a sunny restaurant down the corridor – it has about a hundred seats and I was the only passenger. It felt like Twin Peaks. Just before taking off two Italian truck-drivers arrived, so I wasn’t completely alone.
Once we got out the the harbour the ride became quite choppy for a couple of hours and at one point I was closer to throwing up than I have been since the first acquaintance with alcohol back in the high school. Luckily the last leg of the trip was in the shade of Sicily so there was some time to recover before we pulled into the Catania port almost at midnight. I got royally ripped off by a taxi that took me to the center and after being booted by two hotels I finally got a room at third, close to 1 o’clock at night.
The morning was sunny but the forecast promised some rather miserable weather for the next few days, confirmed by some ominous-looking clouds gathering at the horizon. After taking a short walk I decided to flee the weather and head north.
Catania and other settlements along the eastern coast of Sicily look literally dark as they have built out of black rock that Mt. Etna has, often to the despair of the local population, graciously distributed for centuries over the whole area. In Catania, somebody has carved a huge block of volcanic rock into a statue of elephant and impaled it on a tall pillar on the Piazza del Duomo, around which old men gather to sit and socialize. Compared to Malta, the quality of food and espresso at street-side cafeterias has increased by the same order of magnitude as driving habits have deteriorated. There is also an obvious and drastic increase of obsession over how one looks – the jeans are ripped, jackets are hooded and sunglasses cover the whole upper half of face.
Getting to Messina and crossing over to the mainland was a straightforward affair and after another short walk in Reggio di Calabria I waved goodbye to snowcapped hills of Sicily and narrowly escaped the arriving rain by boarding another train. And now, some 8 hours later, I am where all the roads and railways lead to – in Rome.
And Royal Mail never made it. Pfffft.
Oops..
Having made it to the port in good time I was told by an assiduous girl at the counter that, unfortunately, the ferry to Sicily has been cancelled due to the bad weather and that, to be honest, things do not look good for tomorrow morning either. I took a seat in order to evaluate my options and in about ten minutes came the confirmation – tomorrow’s ferry is cancelled too and that the captain will re-evaluate on Friday. Bummer.
On my way back to the town I noticed a steady stream of German pensioners heading for a huge cruise ship moored at the quay right next to the ferry terminal – and that gave me an idea. Not something very likely to work, but what have I got to lose by trying. At the gate I was stopped by a strict-looking grey haired security guard who was quite obviously in no mood to get distracted in his task of checking the plastic boarding passes. When I enquired about the destination of the ship he stated first dryly “Don’t know” but then, after a moment, motioned me to move closer and then whispered confidingly ”Actually we DO know, but we cannot tell”, and returned to checking the passes. Somewhat bemused, I then stopped the next German couple asking them what is the next port of call – to which they reported “Tunis!”
This seemed to amuse the security guy to no end. “Do you want to go to Tunis?” he asked and then proceeded to explain where can I find the agent in Valletta selling the tickets. For a moment it actually didn’t sound a bad idea at all, but once I had explained that I was actually trying to get to Sicily and that the ferries were cancelled my newfound friend got very agitated and, now simply waving the tourists through, started phoning different places while explaining me at the same time “I think there is a ship coming in tomorrow, let’s see, let’s see.. I will try to help you – if I can! – let’s see”. In a couple of minutes he apparently got a positive response from somewhere and became even more excited, dragging me outside by my sleeve and pointing me off towards an embankment further away. We parted great friends.
The offices of Sullivan Maritime were clearly geared towards freight rather than passenger traffic – the ticket consists of five A4 pages of fine print coming straight from maritime law and took about 15 minutes to produce. But for €40 I now have a place on a ship leaving tomorrow at 4pm for Catania and arriving six hours later (compared to 90 minutes with the fast ferry). Apparently the weather is expected to get quite a bit worse so it looks likely that the fast boats won’t leave before the next week.
The upshot of the whole affair is that the friggin’ Royal Mail will get another chance tomorrow to deliver my belongings and that I will have another tough choice to make tonight amongst all the fabulous restaurants of Valletta.
Moving on
It is no wonder the hotel was fully booked.
Malta is staunchly catholic, evidenced by a fact that it is the only EU country where divorce is not legal. Every nook and cranny in Valletta bears a name of some saint and churches receive a steady stream of worshippers. Now, as it turns out, Apostle Paul is apparently the most revered saint in the country and therefore the commemoration of his shipwreck along the shores of Malta is no small thing. In fact, I would say that it is worth coming here for this day alone.
The celebration starts building up already a couple of days in advance but really kicks into the gear on February 10th. It is after the sunset that the three hour procession starts which reaches its frenetic height at around 10pm, when the relic finally makes it to the door of St. Paul’s cathedral and gets rushed in on the shoulders of young men dressed in all white. The streets are absolutely packed few blocks in either direction from the cathedral, bells toll intermittently, brass bands bands erupt into a march every now and then and children pour loads of shredded paper on the heads of the crowds from windows high above the streets that look like they are covered in ankle-deep snow. It truly is a sight to behold – all the magic you’d expect from Malta, and then some. I certainly hadn’t seen anything of the kind before.
However, my parcel has still not arrived and I really can’t sit here waiting for it any longer. I dropped some books and clothes at the post office today and agreed with Carla at Castille reception that they will mail my stuff to Estonia once it gets here. There isn’t anything really indispensable in that package anyway, some things I can simply live without and others I will have to buy anew. Now I have a couple of hours to kill before the ferry will leave for Pozzallo, Sicily.
