If Greece Had Not Existed, Europe’s Leaders Would Have Had to Invent It

He must be chosen from among you as a scapegoat. Hipponax

One of the more intriguing aspects of the whole modern Greek drama is the tragicomic way the country seems to be constantly condemned to live out well known themes which come from its own mythology. The latest example is the way what was once the cradle of European civilization has allowed itself to be converted into the role model for everything its fellow Europeans are not. Or at least, this is the story we are supposed to believe. Continue reading

Just Send Me Word by Orlando Figes

From the Preface to Just Send Me Word: A True Story of Love and Survival in the Gulag, by Orlando Figes:

Three old trunks had just been delivered. They were sitting in a doorway, blocking people’s way into the busy room where members of the public and historical researchers were received in the Moscow offices of Memorial. … Noticing my interest in the trunks, they told me they contained the biggest private archive given to Memorial in its twenty years of existence. It belonged to Lev and Svetlana Mishchenko, a couple who had met as students in the 1930s, only to be separated by the war of 1941-5 and Lev’s subsequent imprisonment in the Gulag. …
We opened up the largest of the trunks. I had never seen anything like it: several thousand letters tightly stacked in bundles tied with string and rubber bands, notebooks, diaries, documents and photographs. The most valuable section of the archive was in the third and smallest of the trunks, a brown plywood case with leather trim and three metal locks that clicked open easily. We couldn’t say how many letters it contained – we guessed perhaps 2,000 – only how much the case weighed (37 kilograms). They were all love letters Lev and Svetlana had exchanged while he was a prisoner in Pechora, one of Stalin’s most notorious labour camps in the far north of Russia. The first was by Svetlana in July 1946, the last by Lev in July 1954. They were writing to each other at least twice a week. This was by far the largest cache of Gulag letters ever found. But what made them so remarkable was not just their quantity; it was the fact that nobody had censored them. They were smuggled in and out of the labour camp by voluntary workers and officials who sympathized with Lev. Rumours about the smuggling of letters were part of the Gulag’s rich folklore but nobody had ever imagined an illegal postbag of this size. …
As I leafed through the letters, my excitement grew. Lev’s were rich in details of the labour camp. They were possibly the only major contemporary record of daily life in the Gulag that would ever come to light. Many memoirs of the labour camps by former prisoners had appeared, but nothing to compare with these uncensored letters, composed at the time inside the barbed-wire zone. Written to explain to his sole intended reader what he was going through, Lev’s letters became, over the years, increasingly revealing about conditions in the camp. Svetlana’s letters were meant to support him in the camp, to give him hope, but, as I soon realized, they also told the story of her own struggle to keep her love for him alive.
Perhaps 20 million people, mostly men, endured Stalin’s labour camps. Prisoners, on average, were allowed to write and receive letters once a month, but all their correspondence was censored. It was difficult to maintain an intimate connection when all communication was first read by the police. An eight- or ten-year sentence almost always meant the breakings of relationships: girlfriends, wives or husbands, whole families, were lost by prisoners. Lev and Svetlana were exceptional. Not only did they find a way to write and even meet illegally – an extraordinary breach of Gulag rules that invited severe punishment – but they kept every precious letter (putting them at even greater risk) as a record of their love story.
There turned out to be almost 1,500 letters in that smallest trunk. … These letters are the documentary basis of Just Send Me Word, which also draws from the rich archive in the other trunks, from extensive interviews with Lev and Svetlana, their relatives and their friends, from the writings of other prisoners in Pechora, from visits to the town and interviews with its inhabitants and from the archives of the labour camp itself.

Does the book live up to the promise of its preface? Yes. Yes, it does.

(Cross-posted to The Frumious Consortium.)

Buy Me Some Peanuts and Cracker Jacks

Once upon a time, there was a lovely newspaper known as the International Herald Tribune. Each year on baseball’s opening day, the paper would publish its late sports editor Dick Roraback’s poem recalling what it was like to be Over Here when the season was starting Over There.

Its language is sliding toward the archaic, its references even more so — although while Forbes and Griffith have been gone for decades, the Nats are back and playing their 10th season — but since the international edition of the New York Times (the Hairy Trib’s successor) won’t be putting any rhymes on its sports page today, we might as well.

Under the fold, “The Crack of the Bat.”
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Premature evaluation: when local relationship banking attacks!

Following up on the last post, here’s a quick review of Simon Carswell’s Anglo Republic: The Bank that Broke Ireland.

Anglo Irish Bank was the biggest, noisiest, brashest, and most extreme representative of the financial crisis in Ireland, and Anglo Republic is a carefully reported history of the bank and how it got that way. One of the real standout points in it is that Anglo was the relationship bank par excellence.

Relationship banking is often seen as a good thing that we need more of, counterpoised to faceless trading-floor turbo-finance. But relationship banking was precisely what Anglo did. Anglo tended to keep clients for many years, to involve itself deeply in their businesses, and to go to extraordinary lengths to serve them. It would also take risks to win or retain them. Its unique selling point was that it would do anything to get your deal done, and it would do it quickly. They frequently closed property transactions up to a billion euros within the week. In exchange for this, its clients put up with interest rate spreads and fees that were much higher than its competitors’.

This raises a second point, which is that you know it’s a bubble when capital gains come in so fast that changing the interest rate is irrelevant.

The relationships it served so fanatically were, to the exclusion of almost all else, with property developers. Anglo bankers may have thought they were something like a local German or Italian bank serving the local speciality industry. From the outside, though, the bank was a ferociously geared-up bet on property in general, and Irish residential and UK commercial property in particular.

There was also another kind of relationship they carefully cultivated, specifically, corrupt ones. There is just an endless flow of people whose relatives turned up on the other side of the table, or in politics, or in the regulator or the central bank. Carswell tackles this with understated sarcasm and careful inquiry. He also deals with the political, class, and sectarian issues involved with delicacy and good prose. I liked the remark about the bank’s brand, in which he notes that although Anglo’s advertising sometimes implied it was an Anglo-Irish, and therefore aristocratic, company, “Anglo Irish in fact never used the hyphen”.

Its CEO, Sean Fitzpatrick, may have resisted selling the bank to Bank of Ireland because BoI was, in fact, an Anglo-Irish or at least Protestant company. However, the source for this is the same guy who suggested guaranteeing the whole liabilities of the banks, so take it as you will.

Carswell is also good on the financial guts, for example, on the key relationship with Sean Quinn, property developer and their whale client. Quinn was a huge borrower from the bank, under several different company names, a major depositor in the bank, and a shareholder in the bank. After his disastrous speculation in contracts for difference on the bank’s shares went wrong, Anglo was lending him money to meet margin calls, while at the same time worrying that he might no longer be good for the property loans, and also that if his broker had to sell him out, the stock overhang was so monumental that it might finish off the company.

Another detail that sticks out was that their private client operation largely existed to recycle some of the property capital gains into the bank’s funding, in essence juicing it with even more leverage, as most of its clients were themselves Irish property developers. If they weren’t the bank’s own executives, that is. The bank often structured property transactions so that some of its private clients could take some of the equity, somewhere between an investment banking and a brokered deposit model. This helped set up some of the transactions for tax purposes, but it mostly created an opportunity for Anglo executives to buy in. Inevitably, they tended to do so by borrowing from the bank.

Golf plays a special role in the book. Anglo was dedicated to the belief that nothing built relationships like golf, and it constantly took borrowers, depositors, competitors, regulators, analysts, journalists, and random members of Westlife* golfing. It took Irish-American clients and investors to Ireland to play golf, on courses owned by other clients, and then took its Irish clients to meet them while golfing. It gave away as much as €200,000 worth of golf balls a year. Carswell includes a table of spending on hospitality by type. Golf even surpasses drink in it, and there was plenty of that too – one banker recalls deciding to drink only bottled beer at Anglo events in order to stay relatively sober, and being told that “This is Anglo and you drink pints.” That said, at least Sean Fitz didn’t prepare for an appearance before parliament by following a vapour trail of meth and crack all the way around Grindr, like the CEO of the Co-Operative Bank, or if he did we don’t know.

Very often, the business discussed on the golf course was the creation of further golf courses. Not rarely, the clients who golfed their way to a giant loan to build a golf course got the loan because they also played golf with Bertie Ahern and could therefore help Anglo with other issues, for example, getting planning permission for golf courses. One wonders if the point of golf, anthropologically speaking, is to demonstrate that you have well-watered land to waste on totally unproductive activity.

Another interesting point is the role of good old Rabobank, famously the safest and most conservative financial institution in Europe and possibly the world, and all savey and nearly German to boot. Except when it spent ages and millions of money trying to buy not just Anglo but other gamey Irish property lenders as well, and in retrospect only avoided pulling an RBS by good fortune.

*Not actually random at all, but you’ll have to read the book.

High-Trust and Low-Trust Societies, Banks, and Europe

Pawel Morski:

A “banking system responsive to local needs” quickly becomes “piggy bank for local politicians”.

Well, local politicians are elected, after all. Democracy is a thing. But I know what he means. That Spanish caja that was run, into the ground, by the Catholic Church. That kind of thing. WestLB back in the day when it financed William Hague’s best friend buying all the pubs and the Ministry of Defence married quarters and Peer Steinbrück was its regulator, before it blew up and the explosion threw him all the way from Hannover to Berlin and he got to be federal finance minister, SPD leader, Mr Prudent McBluebollocks an’all.

Does Neal Ascherson really not know about HypoVereinsbank?

I think the operational question here, certainly as far as the UK is concerned, is “are we a low-trust or a high-trust society?” It works for the Germans (for some values of works, and except when it doesn’t work), it doesn’t work for the Spanish (except of course when it did).

Sparks = high trust, cajas = low trust. We like to think we are a high-trust, low-corruption north European country, but I often think the history of the UK post-1979 is the history of an emerging low-trust society.

Of course, when we were canonically much more trust-y, Jimmy Savile was raping everything in sight, the Met Police was basically our biggest organised crime gang, and the MOD was perfectly happy to test nuclear weapons on our own soldiers. But then, trustful Germany has had some pretty decent scandals. Do you remember before Wolfgang Schäuble was All Better Now, when he was responsible for a massive illegal party financing system linked with the Elf-Aquitaine scandal? ‘Course you do. And further back, when he did precisely the same thing with German arms manufacturers?

But trust is an interesting concept. If you knew for a fact the people you dealt with were honest, you wouldn’t need to trust them. Trust and betrayal go together. High-trust societies are ones where people behave as if they could trust each other, and that choose to deal with the inevitable abuses of trust in certain ways. Low-trust societies are ones in which people behave as if they cannot trust each other, and especially, as if there was no realistic hope of sorting out abuses of trust later.

I actually wonder if the distinction is really about what happens after a breach of trust is discovered. J.K. Galbraith’s bezzle, the inventory of undiscovered embezzlement in an economy, is a universal phenomenon but the means of dealing with it differ dramatically. When an aeroplane crashes into the ground, in the UK or, say, the Netherlands, the first people on the scene after the fire brigade are the AAIB inspectors, whose mission is to establish the facts. In Italy, or Greece, the first people after the fire brigade are the police, come to arrest any of the crew who survived. The distinction is telling. If you can’t expect justice, and you can’t expect the truth, you might as well practice cynicism like you practice an instrument, as a skill or even an art.

In a sense, social trust is an ideology. We choose to believe that our neighbours are basically decent people in a civilised society, or that of course they’re all the same and all crooked, but wouldn’t you be if you had the chance, and so you better look after number one. And if it is an ideology, it is part of the political sphere and it can be changed. Now there’s something for you – hope. But I fucking hate hope and hope-mongers, so…ah.

One way of looking at Francois Hollande’s campaign for the “moralisation of politics” is an effort to do just that, to keep France from becoming even more of a low-trust society than it already is. Of course, whether France is a Latin country (stereotypes: Catholics, inflation, tourists, Picasso, bureaucracy, conspiracy politics) or a northern one (stereotypes: Vikings, Gothic buildings, electrical engineering, the Republic, international modernism, ENA) is a cliche up there with whether Britain is facing Europe or the high seas or whether Russia is in Europe. But perhaps there’s some truth to it. Is it…spreading?

Low-trust societies, I think, emerge when the norms imposed by the elite are both compulsory and also impossible, and especially when the elite doesn’t seem to practice them itself. You could put it another way: it’s Berlusconi’s Europe, and we’re just living in it.


I’ve recently been reading Peter Longerich’s biography of Heinrich Himmler (disclosure: I was Longerich’s student) and one thing that stuck out was that his translator seems to have solved a longstanding problem in Nazi-era translations, but not to have noticed. The problem is this: what do you do with völkisch?

This adjective was widely used as a self-identification by Nazis, and also by all sorts of people in the wider extreme-right movement in the German-speaking world from the late 19th century onwards. It’s sometimes translated as “nationalist”, but this is widely considered inadequate. Consider the main Nazi newspaper: Nationalist Observer is both clunky and also too harmless. It sounds like it might be a paper in provincial Ireland, competing with the famous Impartial Reporter of Enniskillen.

The problem is that the adjective is derived from das Volk, the people or the nation or the race or even the tribe or host, depending on context. The Warsaw Pact countries tended to describe themselves as People’s Republics, which translates as Volksrepublik. A Völkische Republik would have been a very different animal. Bees, in German, live in Bienenvölker – bee nations or bee tribes.

But this only expresses the incoherence of the content behind the name. To be völkisch is not the same as being nationalist. It wasn’t bound to a state or a government, or to a particular physical territory. Although it rejected civic nationalism, it excluded some members of the nation on the ground that they disagreed with it purely in terms of political opinion. It also included some foreigners, and never quite decided whether it wanted to include people who adopted German culture and served German interests, or to exclude them on essentialist grounds of race.

When the Nazis took over Alsace-Lorraine, they decided early on to reintegrate the provinces into Germany-proper, but they got hugely confused dealing with the people. If you were a blonde, German-looking, person with a German surname, but you opted to remain a French citizen, racial examiners might classify you as especially German precisely because of the stubbornness and determination you exhibited in insisting on Frenchness. Depending on who was politically in charge at that moment, they might either decide that you must be denied to the French enemy and reintegrated into the German nation, or else that you were racially German but politically probably a communist, and therefore you should be sent to a concentration camp. On the other hand, if you weren’t blonde enough but you insisted on Germanness you might be deported to France, which all things considered might have been the best thing that could have happened to you, while heaven help you if you were an unblonde who opted for France, and therefore both racially unworthy and a traitor to boot. But sometimes these last options were swapped, depending on power politics in Germany.

It wasn’t equivalent to “fascist” either. Unlike Italian fascism, a lot of völkisch people despised modernity. Unlike Spanish, Latin American, or Austrian versions of fascism, they tended to consider Catholicism the enemy. And it wasn’t even equivalent to “Nazi”. Albert Speer or Hermann Göring didn’t really fit with it, especially when the bit about hating modernity came around.

But Longerich’s translator briefly hit it out of the park by translating it as “racist”. The leading Nazi newspaper Racist Observer sounds just right to me. Although völkischkeit wanders about all over the place, race is always central to it. The varying worldviews on history, culture, policy, etc. are all organised around race and racism. An important point about völkischkeit is that it always had pretensions to the status of science, and the source of this pretended authority was the concept of race. It was racist in the sense that it demanded discrimination, apartheid, slavery, and eventually genocide. It was racist in that it claimed inspiration from other regimes it considered racist.

Of course, the notion of race is itself incoherent and pseudo-scientific. Völkischkeit incorporated poorly understood concepts from genetics, physiology, and statistics. The genetics was usually pre-Mendelian, the statistics pre-Fisherian (even if RA Fisher himself was more than a little racist), and the physiology already overtaken by genetics. Himmler, for one, had started looking for an escape-hatch by 1942 or thereabouts through vague notions of recessive genes and spontaneously emerging leaders among the subhumans. In many ways, this reminds me of bad science-fiction.

Völkischkeit might well be considered a genre fiction more than anything else. It consisted of poorly understood, not-quite cutting edge scientific concepts, plus a variety of myths and aesthetic tropes, organised into narratives by wishful thinking. This may remind you of H.P. Lovecraft, and it probably should as he was a prize racist. It should come as no surprise that, according to Longerich, Himmler was addicted not just to pseudo-science of every sort, but also to crappy genre fiction, consuming vast quantities of both.

Some French links

Here’s a really interesting piece about French interior minister Manuel Valls and the network of friends around him from his days as a student activist. They include Alain Bauer, Nicolas Sarkozy’s security adviser and the man who got the contract to install Vitrolles’ CCTV surveillance network for its FN mayor.

Hubert Vedrine, former minister, was asked to prepare a report on NATO and France’s return to the integrated command structure. Olivier Kempf blogs it. The recommendations are that NATO stays very much in its classical form, a military alliance with a nuclear dimension centred in Europe and the North Atlantic, that France assert itself in the alliance more, and that the European Defence Agency and NATO Supreme Allied Command-Transformation, which are both headed by French officers, should coordinate more closely on industrial and scientific issues.

He seems to be more suspicious of the UK than of NATO as such, and is very critical of the EU defence initiatives as mostly creating duplication, committees, and complexity.

History is made at night records the moment when “discotheque” became a word in English.

Review: in which modern science finally explains the economics profession

Daniel Kahneman, the cognitive psychologist who with Amos Tversky won the Nobel Prize for Economics, has a major book out. Thinking, Fast and Slow is basically an effort at a popular synthesis of the state of research into human cognition and specifically into the heuristics-and-biases approach he and Tversky founded. It’s also a memoir of Tversky, a look over the debates between the cognitive psychologists and the economists, between the heuristics-and-biases school and their rivals (who Kahneman thinks have a point), and an attempt to operationalise some of this stuff.

This could easily have been a book that would have been worth mocking. A worse writer could have made it an annoying exercise in Enlightenment fetishism, an airport brick about how you too can get smarter by being more like Homo economicus through these three simple techniques everyone should know. I should know – I bought it in an airport, on a business trip, and read it on a plane. Fortunately, though, rather than one of Robin Hanson’s pals at a Koch Industries economics department near you, it’s by a proper scientist in a hard science, where being wrong is something that actually matters.

Wrongness is a major theme in the book, although not necessarily in the way you’d expect. Kahneman and Tversky’s research was based on the notion that people are wrong in regular and predictable ways, and studying these predictable errors of reasoning would cast light on the nature of intelligence, as well as perhaps helping to avoid them. These are the famous cognitive biases they listed in the classic article Judgment under Uncertainty, which is reprinted as an appendix to the book (it would be worth the price of the book in itself). On the other hand, the naturalistic decision-making school around Gary Klein argued that although people may well be reliably wrong in some ways, they make many more right decisions than wrong ones, and it ought to be worth knowing how. (This reminded me of Johan Galtung’s crack that plenty of people study the causes of war, but perhaps they ought to look at the causes of peace.)

The two schools of thought developed a hearty loathing, distinctive tone and style, and distinctive methodologies – Kahneman, whose training in psychology was in the highly experimentalist and numerical field of human performance and perception, tended to rely on carefully designed experiments with endless students staring into high-speed cameras while doing mental arithmetic against the clock, while Klein and his colleagues were keen on anthropological fieldwork, shadowing fire chiefs around New York City in an effort to document how experts made intuitive judgments of complex problems.

Thinking, Fast and Slow is a shot at synthesis between the two. Kahneman argues that although we are dogged by the reliable biases of intuition, we also tend to undervalue the power of the quick, parallel, associative, social, physically embodied, and effortless computation going on in what he (quoting Canadian psychologists Keith Stanovic and Richard West) calls System One. System One, among other things, is the home of genuine expertise – the coup d’oeil Klein’s firemen had gained through long practice and nasty surprises. It also knows how to empathise with others, operate the human body and every tool we use to extend it, and monitor our environments for the unusual with uncanny attention.

Unfortunately, it’s also systematically dreadful with numbers, in subtle and annoying ways (statistics in general stump it, but it likes to work with averages, its assessments of probability overweight both rare and certain outcomes, while also ignoring quite big differences in likelihood in the middle of the range), it hoovers up every scrap of information it can regardless of source or plausibility and works it into its judgments, and the cornucopia of processing power its massive parallelism provides means that it will work out all the possible answers with the information it has, for good or ill. It’s a sucker for a good story, and it has a tendency to answer the questions it can rather than the ones it’s asked.

System Two is the unified, serial, individual, disembodied, algorithmic mind we call “I”. It can do sums and apply general intelligence to new problems, and it can intervene in the activity of System One. However, it’s not much for the physical world, and its resources are strictly limited. Using it rapidly burns up actual physical fuel, running down the stock of glucose in the blood – as we tire, we rely more on System One, and we make more mistakes. Judges are more likely to grant prisoners parole if they’ve just had their breakfast. (If you want an airport factoid, Kahneman says eat a good breakfast.) Of course, if he’s right, this says some worrying things about the quality of the original judgments.

Thinking, Fast and Slow also says a lot of worrying things about the quality of economics, going right back to the 1950s. Kahneman provides a fantastic anecdote about how Paul Samuelson and Kenneth Arrow (among an impressive list of economists) were fooled by the Allais paradox, an experiment which reliably makes a large majority of people behave not just irrationally in terms of expected value, but inconsistently – they or rather we act in one question as if we were picking the biggest potential pay-off, but in the second as if we were opting for certainty above all. Its inventor, Maurice Allais, apparently expected the demonstration to collapse the whole project of rational choice economics, but the economists simply confessed their bafflement and proceeded to completely ignore the whole issue.

Kahneman is also pleasantly tough on some of his own ideas. In the 1950s, he was assigned by the Israeli army to devise psychometric assessments to choose potential leaders from the annual classes of conscripts. The ones they were already using, based on a structured interview with psychodynamic principles, had turned out to be completely unpredictive of future performance. He invented a system based on a list of factual questions designed to score the recruit against a number of qualities. The interviewers were outraged, feeling themselves deskilled and insulted. As a sop, he included a new question which asked them to dismiss the recruit, shut their eyes, and give a purely subjective rating on a scale of 1 to 10.

The subjective score turned out to be as good as any of the factual questions in predicting their later performance, and in the final version, it was assigned an equal weighting with them. You don’t often meet a book about being more rational that is sceptical of classical rationality; this one is, and as such it is worth reading. Some readers will note an echo of the Freudian view of the mind in the two-systems concept, and I think they would be right. Psychoanalysis may be a shadow-influence on the whole book, in fact – Kahneman is clear that part of his purpose is to provide language, a form of words, to express these problems in conversation. Jacques Lacan argued that the unconscious has the structure of a language, and it is worth noting that it is System One that deals in words. However, I’m not convinced by the talking-points that close each chapter, probably where the book gets closest to its friends on the airport bookshelf.

It is probably worth mentioning, as a finish, the fascinating idea that there may be a difference between intelligence and rationality – that the two are independent vectors. Kahneman gets this from Stanovic and West, who theorise that as well as intelligence in the raw-smarts sense, there is a further independent quality of reason that denotes executive function, kinaesthetic skill, and meta-cognition, the awareness of one’s own thinking and its limits (the inverse of the famous Dunning-Kruger effect). If this is so, we might imagine four groups of people – those unfortunate enough to end up without much of either, who are stupid but so much so that they can’t do too much damage, the geniuses blessed with both, the great competent majority with more rationality than intelligence, and a fourth category, those people who are impressively intelligent but somehow manage to be terribly wrong when it matters and a real pain in the arse to boot.

These men are dangerous – they think too much, or perhaps they reason or feel or whatever the right word is too little. And their intelligence means that their errors can be unusually disastrous, especially as it can lead them into positions of power and responsibility. Further, they are easily mistaken for eccentric geniuses, just as snobbery and racism lead people to confuse groups three and one.

The best thing I can say about Thinking, Fast and Slow is that a Nobel Prizewinner in Economics has successfully explained Larry Summers.