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The theme of this year’s Wisconsin Book Festival is “Changing Places.” What does that phrase mean to you?
It means to me something about travel and migration. And displacement, as in become an exile or a refugee. But, more profoundly still, it suggests to me a quality that is at the heart of the act of reading and writing. It evokes the use of imagination to step into another’s shoes. To grasp a different point of view or a different existence. Or approach the subjectivity of the other.
By Clive James
The book of my enemy has been remaindered
And I am pleased.
In vast quantities it has been remaindered
Like a van-load of counterfeit that has been seized
And sits in piles in a police warehouse,
My enemy’s much-prized effort sits in piles
In the kind of bookshop where remaindering occurs.
Great, square stacks of rejected books and, between them, aisles
One passes down reflecting on life’s vanities,
Pausing to remember all those thoughtful reviews
Lavished to no avail upon one’s enemy’s book —
For behold, here is that book
Among these ranks and banks of duds,
These ponderous and seeminly irreducible cairns
Of complete stiffs.
The book of my enemy has been remaindered
And I rejoice.
It has gone with bowed head like a defeated legion
Beneath the yoke.
What avail him now his awards and prizes,
The praise expended upon his meticulous technique,
His individual new voice?
Knocked into the middle of next week
His brainchild now consorts with the bad buys
The sinker, clinkers, dogs and dregs,
The Edsels of the world of moveable type,
The bummers that no amount of hype could shift,
The unbudgeable turkeys.
Yea, his slim volume with its understated wrapper
Bathes in the blare of the brightly jacketed Hitler’s War Machine,
His unmistakably individual new voice
Shares the same scrapyart with a forlorn skyscraper
Of The Kung-Fu Cookbook,
His honesty, proclaimed by himself and believed by others,
His renowned abhorrence of all posturing and pretense,
Is there with Pertwee’s Promenades and Pierrots–
One Hundred Years of Seaside Entertainment,
And (oh, this above all) his sensibility,
His sensibility and its hair-like filaments,
His delicate, quivering sensibility is now as one
With Barbara Windsor’s Book of Boobs,
A volume graced by the descriptive rubric
“My boobs will give everyone hours of fun”.
Soon now a book of mine could be remaindered also,
Though not to the monumental extent
In which the chastisement of remaindering has been meted out
To the book of my enemy,
Since in the case of my own book it will be due
To a miscalculated print run, a marketing error–
Nothing to do with merit.
But just supposing that such an event should hold
Some slight element of sadness, it will be offset
By the memory of this sweet moment.
Chill the champagne and polish the crystal goblets!
The book of my enemy has been remaindered
And I am glad.
I learned about the poem by flipping through the NYTBR where David Orr notes:
The key here is James’s smartly judged tone — one half pompous belletrist, one half Robert E. Howard. (“Conan, what is best in life?” “To crush your enemies, see them driven before you and see their short story collections listed for 75 cents at Half .com.”) As you might expect, when a subject allows him to engage his wit, James is a formidable satirist; he’s also a surprisingly good love poet, especially when he’s able to insulate himself with literature (“You, Mark Antony”) or another art (“Woman Resting” turns on a Mancini painting). If that sounds like saying that James is often at his best as a poet whenever he’s also being a critic, well, the two roles are perhaps not as separate as one might think.
For all those who found the debate uninteresting, here’s a delectable memo on McCain’s refusal to make eye contact with Obama. Among other things, the memo notes McCain’s status as a “low-ranking monkey”:
Here’s one comment we got from TPM Reader EO …
As a psychotherapist and someone who treats people with anger management problems, we typically try to educate people that anger is often an emotion that masks other emotions. I think it’s significant that McCain didn’t make much, if any, eye contact because it suggests one of two things to me; he doesn’t want to make eye contact because he is prone to losing control of his emotions if he deals directly with the other person, or, his anger masks fear and the eye contact may increase or substantiate the fear.
I noticed him doing the same thing in the Republican primary debates. The perception observers are likely to have is that he is unwilling to acknowledge the opponent’s legitimacy and/or is contemptuous of the opponent.
And here’s another note from TPM Reader TB. I guess I’m really not sure quite how to characterize it …
I think people really are missing the point about McCain’s failure to look at Obama. McCain was afraid of Obama. It was really clear–look at how much McCain blinked in the first half hour. I study monkey behavior–low ranking monkeys don’t look at high ranking monkeys. In a physical, instinctive sense, Obama owned McCain tonight and I think the instant polling reflects that.
Ali Mir, Professor of Business at Wayne Paterson and acclaimed lyricist for films like “Dor,” has produced a quick guide to the financial mess we are in:
If you don’t understand the financial crisis on Wall Street, don’t fret. No one does, least of all the experts. What we do know is that it is an unholy mess, which is about to get worse. Here’s my quick FAQ for those who don’t wish to wade through dense treatises on collateralized debt obligations, asset backed commercial papers, and blah-blah-blah. It’s hardly comprehensive, but it can serve as a starting point for engaging with the issues surrounding the greatest financial debacle since the Great Depression. Let me know if any of this doesn’t make sense. AM.
Do the roots of this crisis lie in the housing bubble?
The roots are all over the place (in the absence of regulation and oversight, for instance), but for the sake of simplicity, let’s say yes. After 2001, the Fed kept its interest rates low in order to increase liquidity and encourage spending. Financial institutions offered easy credit to those who wanted to borrow money to buy a house. Many who did not qualify for loans at regular market rates – the subprime borrowers – were persuaded to take out mortgages despite the fact that their income level, ability to make a down payment, and credit history made them high-risk debtors.
Why did so many borrowers take out mortgages?
As the number of buyers increased, the values of homes started going up. And as the values of homes started going up, the number of buyers increased. Everyone wanted to jump on the gravy train. In 2005 and 2006, 40% of homes sold in the U.S. were purchased as either investment or vacation homes. Financial institutions offered subprime borrowers “teaser rates” which were scheduled to go up after a period of time (these were the so-called ARMs – adjustable rate mortgages). Existing homeowners assumed that the value of their principal asset – their home – had increased (when they noticed, for example, what their neighbors’ home was selling for) and refinanced their mortgages, spending the borrowed money.
Why did the financial institutions lend so much money to these “subprime” borrowers? Weren’t they worried about defaults?
Not really. For one, most mortgage brokers do not lend money of their own; they merely collect commissions. Besides, the system is geared towards increasing revenues and profits in the short run. Bonuses are linked to current performance. But more importantly, many of these institutions were not planning to take much of a risk. Because of a lax regulatory system, these loans were allowed to be “securitized”. In other words, the rights to these mortgage payments along with the accompanying credit risks were sold to third-parties.
So the risk passed on to the third parties then?
In some cases, yes. But for the most part, these third parties cut up these securities, mixed them up, repackaged them, and sold them down the line in the form of Mortgage Backed Securities (MBS) or Collateralized Debt Obligations (CDO). There was little, if any, regulatory oversight. At each step, the parties in this chain collected profits, and believed they were handing off the risk.
What was the role of AIG?
AIG offered insurance to those who bought MBSs and CDOs in exchange for a fee. Credit rating agencies such as Moody’s and Standard and Poor’s gave a high grade to these securities, thus reducing the amount of collateral that AIG was required to post in order to demonstrate that it had the ability to make payments in case there were defaults.
I am not sure I understand.
Assume that you bought $1 million worth of securities. You are worried that the assets behind these securities are not a sure bet. So you hedge by buying $1 million insurance from AIG. If there is a default on the payment, AIG pays you your $1 million. These are the so-called “credit-default swaps”. Pay attention to that term. We will hear a lot about it in the near future. There is currently a $62 trillion (yes, that’s a trillion) market for these swaps which is absolutely unregulated.
How much is a trillion anyway? Apart from being a really large sum of money?
As figures keep getting tossed around, one begins to suffer from number fatigue. How does one make sense of these large values? Here’s one way to imagine a trillion dollars. Let’s say you have a magic machine that spits out a $100 bill every second, all day and all night long. In the first minute, you’d have $6,000. In the first hour, $360,000. In the first 24-hour day, you will possess more than $8.6 million. A year later, you’ll have a little more than $3.15 billion. In other words, it will take you and your machine more than 317 years to produce a trillion dollars.
So, back to our story. Wasn’t everyone making money?
Until a certain point in time. But as usually happens with a bubble, the quid came calling for the quo. Subprime borrowers defaulted on their loans when the higher ARM rates kicked in. Foreclosures increased, putting a pressure on the now heavily inflated home prices. Excess inventory created by builders and speculators during the boom started to mount. As prices began to deflate, owners found it increasingly difficult to refinance their homes. The MBSs were not so attractive any more.
So institutions that owned MBSs were in trouble?
Exactly. Bear Sterns was the first to crash. The Feds had to step in and facilitate its “sale” to JP Morgan at the cost of $29 billion to the taxpayers.
And why did AIG stumble?
Credit rating agencies woke up to the fact that they had assigned AAA ratings to relatively worthless securities, so they downgraded the credit of AIG, requiring it to post additional collateral. Since AIG didn’t have the billions it would have taken to do this, it had to be rescued if it was to be prevented from declaring bankruptcy.
Why would that have been such a terrible thing?
If AIG went under, all those who had hedged their bets would have suddenly found themselves in a heap of trouble. They would have most likely gone belly-up too.
So AIG was too important to allow it to fail?
That is the narrative being bandied about. But the bailout wasn’t about AIG. It was done in order to save its “counterparties”, the ones who had bought insurance.
Who were these counterparties?
We are not sure. But most of them (around three-quarters) were probably European banks.
Why wasn’t Lehman bailed out?
We don’t know. Perhaps it was the luck of the draw. It came second in line (after Bear Sterns) and maybe the government wanted to play it tough. Or perhaps its counterparties were not important enough to rescue.
What was the story with Freddie and Fannie?
Mae ‘n Mac owned or guaranteed many of the MBSs and several mortgages that were subsequently bought by foreign banks (China was a big player), who assumed that these government sponsored enterprises (GSEs) would not be allowed to fail. Since foreign funding (those trade surpluses China has with the U.S.) are essential to making up budget (and trade) deficits, the government had to step in and rescue the GSEs, lest foreign capital wander off elsewhere.
The U.S. government is planning to bail out the financial institutions whose reckless greed produced the mess in the first place.
What if it doesn’t?
Financial institutions devastated by this crisis have very little capital to lend. Without the credit that they provide, the economy will suffer. How much is unclear, but the impact is likely to be quite severe.
What does the administration want?
The Treasury secretary is asking for unfettered access to $700 billion in order to buy any asset from any institution at any price he thinks is right. Further, the Secretary says that his decisions will be “non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The government plans to buy up the MBSs at a price it determines (critics worry that lobbyists of the financial institutions will play a role in this), thus freeing the institutions to infuse credit into the markets.
Who will foot the bill?
Ordinary citizens – the taxpayers – who will see a skyrocketing deficit, and most likely, shrinking investments in public goods, dwindling retirement accounts, and greater inflation.
Is there any alternative?
If it doesn’t want to think outside the box (and it is clear that it doesn’t), the least the government should do, in my opinion, is to demand an ownership stake in the companies it bails out. That way, if they recover, the bailout money can be returned to the treasury. The current plan only rewards those who drove the economy into the ground, and who made a lot of money during the good times.
So one final question. Was the crisis primarily caused by irresponsible borrowers who took on loans that they did not have the ability to repay?
No. It’s true that defaults on mortgage payments, especially in the subprime segment triggered this crisis-in-waiting. It is also true that borrowers, both prime and subprime, failed to read the fine print, took out larger loans than they could afford to repay, and got carried away by the thought of buying property that was supposed to keep increasing in value. But the subprime loans were pushed by an unscrupulous industry, which preyed on a population that did not have the wherewithal to figure out the swindle before it was too late. A lot of educated, middle-class Americans lost out too, but the subprime crisis represents the greatest transfer of wealth from the poor to the rich in recent times, and the greatest loss of wealth for communities of color in the post Civil War period.
Mark Sarvas, author of the debut novel Harry, Revised, will be reading tomorrow, Wednesday, at 5.30 PM. The reading will take place in the Class of ‘51 Reading Room in the library. Here are more details. About the novel, the LA Times wrote: “Self-loathing was never so funny, and Sarvas’s depiction of his downward spiraling anti-hero is spot-on.” And I hope everyone knows about Mark’s blog which is a Forbes magazine “Best of the Web” pick and Guardian “Top 10 Literary Blog.” For all my literary blog needs, I go to Mark and Maud; for brownness, there is Manish; and, for essential vitamins, always 3QD.
And when, in the city in which I love you,
even my most excellent song goes unanswered,
andI mount the scabbed streets,
the long shouts of avenues,
and tunnel sunken night in search of you…
That I negotiate fog, bituminous
rain rining like teeth into the beggar’s tin,
or two men jackaling a third in some alley
weirdly lit by a couch on fire, that I
drag my extinction in search of you…
Past the guarded schoolyards, the boarded-up churches, swastikaed
synagogues, defended houses of worship, past
newspapered windows of tenements, along the violated,
the prosecuted citizenry, throughout this
storied, buttressed, scavenged, policed
city I call home, in which I am a guest…
a bruise, blue
in the muscle, you
impinge upon me.
As bone hugs the ache home, so
I’m vexed to love you, your body
Reading at Vassar tomorrow, Tuesday, poet Li-Young Lee. Sanders Auditorium, 5.30 PM.
Hear him read The Hour and What is Dead.
One of the very best: a rejection note sent by the writer Stefan Merken to an editor who had rejected one of his short stories. “Please forgive me for not accepting your rejection letter,” wrote Merken. “At this time I cannot accept a rejection of my short story. I accept more than 99 percent of the rejections I receive. Many I don’t agree with, but I realize that accepting a piece of fiction for publication is a very subjective judgment call. My acceptance of your rejection letter is also a subjective process and therefore I am returning your letter to you. I did read your letter. I read every letter I receive. Your letter was well-written, but due to time constraints from my own writing schedule, I am unable to make editorial comments. I do make mistakes. Don’t you, as an editor, be disheartened by this role reversal. The road of publishing is long and tedious. You need successful publications and I need for successful publications to print my stories. I will expect to see my story in your next publication. Good luck in the future.”
People should stop picking on vice-presidential nominee Sarah Palin because she hired a high school classmate to oversee the state agriculture division, a woman who said she was qualified for the job because she liked cows when she was a kid. And they should lay off the governor for choosing another childhood friend to oversee a failing state-run dairy, allowing the Soviet-style business to ding taxpayers for $800,000 in additional losses.
What these critics don’t understand is that crony capitalism is how things are done in Alaska. They reward failure in the Last Frontier state. In that sense, it’s not unlike like Wall Street’s treatment of C.E.O.’s who run companies into the ground.
Timothy Egan on the Northern Exposure, Sarah Palin-style.
(Thanks, Liz Blum)
(P.S. Also this on McCain. Thanks, Anil Kalhan)