El Norte

El Norte, a.k.a The United States, has been the promised land for citizens of Mexico. Families regularly pool their resources and support their children's attempts to succeed in the U.S. In return, the children have sent part of their income back to Mexico in order to supplement their parents' income. These transfer payments have been a lucrative business for Western Union (WU), as I have mentioned in a prior post on First Data (FDC).

Monday's NYT has a fascinating article discussing signs of a reversal in payments. As the U.S. economic crisis increases unemployment, the U.S.-based children not only can't send funds back to Mexico, but the families are now sending funds to support children living in the U.S. This reversal is astonishing given the disparaties in economies and cost structures. Having taken the steps towards a U.S.-based future, these families are now increasing their commitment to the U.S.

Radical Economics

Bruce Greenwald, professor of investing at Columbia, has analyzed the current crisis and developed conclusions which contradict those of just about every known economist. His contrarian streak alone is a joy to my rebellious, defiant and profit-seeking heart.

Since most economists describe the innovative, but untested financing of subprime housing as the cause of the current crisis, the logical approach to fixing the crisis is twofold: re-regulate so that such "nonsense" never occurs again and use monetary tools (i.e., get interest rates down to zero) to revive the economy so that banks are allowed to make high spreads between the borrowing costs (now zero) and lending income.

Greenwald essentially debunks the use of monetary tools as the solution. He argues that dropping interest rates to zero did not work in Japan, did not work in the Asian crisis and did not work in the German crisis. Rather, he argues that building the equity capital of the banking system is the only solid approach. He demonstrates that Malaysia and Sweden used recapitalization of banking as the basis for a rapid recovery.

He theorizes that the deregulation of the banking industry removed an effective means of recapitalizing banks from the economic system. Prior to deregulation, monetary tools were effective because the increase in zero interest demand deposits created a de facto equity class for the banks. Since deregulation, raising equity, at the time needed, has become extraordinarily difficult for banks.

He posits that the availability of such de facto equity prior to deregulation was responsible for the effectiveness of monetary tools, demonstrating the closeness of monetary impulses and economic outcomes. After deregulation, monetary policy and economic outcomes have little correlation.

All of this is news to us, because, as Professor Greenwald says, "Chairman Greenspan is given credit for steering the economy, but, in reality, the steering wheel was disconnected from the economy and moved of its own accord." If Professor Greenwald is correct, re-regulation and monetary tools will not produce the rapid recovery that all would like to see.

House Repairs

The past year was one of continuous house repair. When my wife recently requested another repair, I had a momentary relapse into "old Scott" (the one who rants and raves). While our 100-year old house is charming, each repair is a custom process (and an opportunity for personal growth). The service professional's response is typically, "Wow. I haven't seen one of those in years." As they say, misery loves company. In my case, the company is the Royals of England. Here's their to-do list:

Urgent repairs: Palace costs
£18.3m Fix lead and slate roofs at Windsor Castle and Buckingham Palace
£5.5m Replace heating and electrics at Buckingham Palace and remove asbestos
£4.2m Replace cast iron and lead Victorian water main at Windsor
£3m Refurbish St James's Palace
£3m Conservation work at the V&A Mausoleum

Perspectival Shift

Stephen Fry recently said, "I asked a Kenyan with whom we were working whether he was pleased that America looked to be about to have its first black president, and one of Kenyan extraction at that? ‘Very pleased,’ he replied. ‘But you must remember Mr. Obama’s mother is of European extraction. If Barack Obama had stayed here and been elected as our leader, he could have become Kenya’s first white president.’"

Increasing Complexity

In Spinoza's Ethics, he writes, "Things could not have been produced by God in any way or in any order other than that in which they have been produced." (I, P33). One implication of this statement is a necessary movement towards increasing complexity.

As God unfolds, the permutations increase in what appears a Bach-like set of fugues. These permutations unfold in a specific order, despite the seeming randomness. Further, the unfolding is constructive for the specificity that follows.

As a person who is drawn to simplicity, I am at odds with God - not my best stance. The increased complexity that I see as a characteristic of evolution is not some mistake; the increased complexity allows for that occasional quantum leap that we see in physics, biology, invention and art.

While there is nothing wrong with my desire to rely on proven formulae, there is everything wrong with my occasional desire to go back to the "white picket fences of the 50s "- as it is based in my desire to "play God."

Moses's Spiritual Experience

I am very interested in spiritual experiences, both for their power and for their poetry. One of the most well-known spiritual experiences is that of Moses. As he was tending to his father-in-law's flock of sheep, he noticed a burning bush. Initially his curiosity drove him closer. What followed changed his life.

His spiritual experience, that is, his communication with God was filled with certain critical elements. First, he was in a place of dislocation. He was a city boy living a country life. He was at loose ends without a sense of significance. Then, he came to a sense of location through a struggle. After his dialogue, or quasi-debate, with God, he moves to surrender to his mission: "I will send you to Pharaoh, and take My people, the children of Israel, out of Egypt."

What I find really fascinating about this encounter was when Moses asks God's name. God answers, "I shall be As I shall be." What a name! Some scholars debate the term, but to me it implies the No Free Will Universe. Much is made of free will, a concept I find increasingly vain and arrogant. Here, God reveals the essence: God is not only what God is, but God will be as God will be. If God is everything, then the future is laid out with our "free will" being either to enjoy it or be miserable about it.

A confirmation of this interpretation is what God tells Moses. He describes to Moses precisely what will take place. Interestingly, exact knowledge of what is going to happen does nothing to ease Moses's surrender. Instead Moses surrenders like all of us - imperfectly and unwillingly.