Sunday, August 26, 2007

The Challenges Facing North America

The creation of the Free Trade Agreement and later NAFTA was a reaction to underlying structural integration that occurred without government involvement. Leading up to free trade, US companies that had once had Canadian branch plants and then Canadian subsidiaries were moving to an integrated US-Canada corporate model. Since the free trade agreement structural integration has continued to grow, notably in supply chains. For example, the power supply in the US and Canada is more integrated even than in Europe; and railroads and other freight haulage now have a north-south orientation, rather than east-west.

NAFTA brought trade laws up to date with business reality, but it failed to create institutions that could provide a vision for our future. We face a bunch of major issues that we are currently unequipped, as a continent, to face. These include:

* security issues
* environmental issues
* energy issues
* transportation issues
* planning infrastructure such as more deep ports to trade with Asia

Another area in which North American trade cooperation is failing miserably is the nuts-and-bolts details of commerce. The Globe & Mail had a front-page article last week about the hurdles facing a maker of jelly beans: for example, the US and Canada have different regulations about the font used for nutritional information, so they have to spend a lot of extra money producing two sets of packaging that is otherwise identical.

The need for institutional infrastructure to deal with our existence as a continent includes the need for a voice for groups other than business and government. Even academics are mostly left out of current free trade talks, much less NGOs and other community groups.

Having wider input will help the mainstream business and government interests as well as make the whole process more productive. It would also avert dangers (such as the poor southern Mexicans who are not being helped by NAFTA and in consequence are becoming more nationalistic).

In terms of business regulations, the US is taking the lead and setting standards on its own. Canada's lagging on the regulatory front is hurting us economically - many corporations (including banks, CN Rail and other service companies) have moved their headquarters to the US to be closer to the effective regulators. Countries in Europe don't have this problem because they don't have one dominant market and they have a say in multilateral discussions via the EU.

In all the areas I mention above, the US will forge ahead on its own if Canada and Mexico don't find a way to more effectively influence the process. A full tripartite effort in all of those areas will benefit the US more than a unilateral approach. For example, the US focuses on its porous southern border, but perhaps more importantly it should be worried about Mexico's porous southern border and what threats might emerge from it.

The recent talks in Montebello were part of an ongoing, inadequate process for dealing with our common economic and security issues (see the Security and Prosperity Partnership). We need to do so much more. I recently heard Stephen Blank argue that mayors should take up the challenge and forge tri-country discussion groups; while mayors don't have a legislative mandate they are very influential. Others have argued that we need an annual forum of all federally elected representatives in the three countries.

I hate to say it (since that ship, apparently, has sailed) but what we need is Bob Rae to run our country and bring his intelligence and vision to forge a new continental relationship. Compare the EU to North American free trade and our inadequacy is especially apparent. There are issues of huge importance to all citizens of North America that we just aren't dealing with.

(Some of this information is from a recent panel discussion at CIGI involving Ginny Dybenko, Daniel Schwanen, Stephen Blank and Duncan Wood.)


Are you sleeping, Hagen my son?

I'm a big fan of Wagner's Ring Cycle, and if I had to pick one moment in the 17-hour, four opera marathon to call my favorite, it would be the weird, creepy conversation between Alberich and his son Hagen in the final opera, Gotterdammerung.

Alberich (a powerful dwarf from deep in the earth) and Wotan (the chief of the Norse gods) are in a multi-generational battle to obtain the Ring of the Nibelung and gain ultimate power. They have both sired off-spring to unwittingly act as their agents. Alberich's son is Hagen, and one night while Hagen is sleeping Alberich creeps up to him to give him instructions. Hagen is not in a natural sleep. He answers Alberich, and in his sleep he promises to steal the ring for his father. Several times during the conversation Alberich asks, "Are you sleeping, Hagen my son?" (Schlafst du, Hagen mein Sohn?)

The father-son conversation (with beautiful bass/baritone singing) has a languorous, almost lullabye aspect, except that the father is making his unconscious son swear to do monstrous acts. (Lack of free will is a recurring theme in Wagner, and in this case Alberich can beat Wotan because Alberich has the free will to make his son the tool of his bidding, while Wotan is constrained to let his offspring act freely.)

In the Ring Cycle, Wotan's agent (his grandson Siegfried) is powerful because he is fearless. But Alberich's agent, his son Hagen, is powerful because of his hatred. In the end hatred beats fearlessness, but hatred also kills itself. Hagen literally stabs Siegfried in the back, but the result is that the ring is lost to Alberich forever. in addition Valhalla burns and there are no gods left to replace it, so the next era of history begins.

I was thinking of all this while reading James Benjamin over at Left End of the Dial v2.0; he has written a series of posts about Dolchstosslegende as practiced by supporters of the Bush government. The Dolchstosslegende propaganda technique was used in Germany during its two world wars and deliberately references the legends Wagner based the Ring Cycle on. It blames failure in war on a populace that is insufficiently patriotic: it implies that the government, like the hero Siegfried, has been stabbed in the back by factions that questioned government policies for their own ends.

I think we're all aware that Dolchstosslegende has been a big part of the Bush spin about the US invasion of Iraq. There has been nothing subtle about it. (Benjamin's posts are still well worth reading.) The Bush government feels that it has been stabbed in the back by Democrats who have questioned its policies. It alleges that the troops have been stabbed in the back by anti-war protestors. Debate is reduced to the unproductive question: Who is a patriot and who is a traitor?

Dolchstosslegende propaganda can only reference the legends Wagner based his tale on, and not the Ring Cycle itself, because Wagner (for whom the term "moral ambiguity" was coined) paints a much less black-and-white picture of the back-stabbers and the back-stabbed. None of that directly applies to the Bush use of the propaganda technique... except in that Bush is unwittingly referencing the end of World War 2 and the new world that never would have emerged without it, and similarly is referencing the result of the fall of Valhalla - the rise of humanity. The Wagnerian conclusion may be that our only hope is the fall of Superpower-America and the beginning of the next era.


Saturday, August 25, 2007


The crash of the sub-prime lending market (due to loan defaults that by definition should have been expected) is being spun in the US as just another case of greedy people wanting to live above their means and rapacious lenders who dangled the carrot and enticed them into financial ruin.

The Globe & Mail presented a rather different case history last week in its front-page article about an American widow who lives on Social Security. When she got sick and needed $50,000 for medical bills, her only choice (besides dying) was to take out a sub-prime mortgage on her house. Now she has defaulted.

Of course sub-prime mortgages have been around for a long time, and exist in Canada (to a much smaller extent), but the sub-prime crisis going on now is brought on by a new kind of mortgage that was introduced (or at least took off) in the US in 2004, and might more accurately be called "predatory sub-prime mortgages." This new type of mortgage is not just targeted at low-income borrowers, but also has a gimmick to get people to sign up: an initial period in which the borrower makes reduced payments. (This might be caused by a temporarily reduced interest rate or by not having to pay towards the principal for the first few years.) Unless their income rises by the time Part 2 of their repayment kicks in, borrowers are going to be in trouble.

As long as the housing bubble grew there was a certain logic to predatory mortgages. If I rent in an unregulated market and housing prices continue to rise, my rent will probably rise. If I buy a house I can stabilize my housing costs. My mortgage might be large, but if the value of my house continues to rise my debt-to-asset ratio declines. That sort of logic may be part of why so many people in the US (an estimated 20% of mortgage holders) took out predatory mortgages.

But when housing prices stop rising, when the insidious Part 2 of the predatory mortgage kicks in and your mortgage payments shoot up, when you've been making payments for a couple of years and now owe more than you did at the start - when the future is here and the extra money isn't in your pocket, then things don't work out so well.

It's all a lot like those late-night furniture ads that promise "No down payment! No interest until 2009!" It always struck me as ludicrous that someone would think that was actually a good deal, and yet those places are very popular. But in a world of high annual inflation (such as the housing market has been the last few years), buying now and paying later makes more sense.

This crisis brings back the farm crashes in the 1980s. If I recall correctly, farmers across North America had been courted by lenders to borrow money to buy expensive farm machinery. They were convinced by banks that small family farms couldn't be competitive unless they mechanized. Then interest rates went up and commodity prices fell, resulting in foreclosures. Agribusiness moved in and farming has changed forever.

It also brings to mind the burst of the high tech bubble a few years ago, which bit a lot of people badly. Before the crash, I remember reading in the business news that you were losing money if you didn't invest in high tech - the calculation went something like: a regular investment is paying 5% and investment in high tech is paying 30%, so if you put your money in regular investments you're losing 25%. We were led by the nose into losses.

I heard an anchor on CNN this week say that the collapse of the sub-prime market was completely unexpected. Of course this is completely false. In the last year there have been numerous media stories about the dangers of predatory loans. I saw one show last year that detailed exactly how the loans work, including predicting when the Part 2s would start to kick in (causing payments to rise). Pundits estimated exactly when the sub-prime market would collapse and their estimates turned out to be correct. (And for heaven's sake, Paul Krugman has been railing about the housing bubble for years.)

The reason we have a world-wide problem is that the sub-prime lenders sold the debt around the world. Why would anyone buy this dodgy sub-prime debt? Apparently part of the problem was that they didn't always know it was sub-prime. Mortgage lending is generally relatively low-risk, and hedge funds (which are notoriously untransparent) didn't spell out the details. But part of it must have been pure speculation: call it irresponsible investing or just plain gambling - with other people's money.

Should central banks have bailed out the speculators by lowering interest rates? On the one hand, I think of course they should, because a global financial crash will hurt all of us. On the other hand they keep bailing out the speculators (think 1998 when dodgy Russian debt collapsed) and the speculators know it.

Where are we now? Not at the end of the crisis, certainly. There will be more defaults (2 million are predicted) and this may cause a decline in housing prices. The impact on financial markets will continue, resulting in who-knows-what losses. And once the financial crisis has passed, there will be repercussions - possibly softer stock prices due to reduced trust in the markets, probably other things. If US consumer confidence falls too far, we could be in for another recession.

This is happening in a world in which fewer and fewer people have company pensions. We rely on the financial markets to invest for our retirement. (President Bush even tried to totally scrap Social Security and move all retirement funds into private self-directed investments.) We need credible and safe financial markets.

Governments need to act to devise far, far stronger financial regulations: on hedge funds, credit-rating agencies, banks, advertising, and a host of other areas. We need a financial press that does more investigative journalism. We need a public commitment on the part of central banks and financial market regulators to protect small-time investors. And the US should look at alternative ways to help the poor afford their own homes, such as a government mortgage corporation. (Bush has boasted that home ownership grew to 70% under his watch. He should put his money where his mouth is and help keep millions from being repossessed.)


Thursday, August 23, 2007

China Bashing

Recently the news has been full of scary articles about recalls of products made in China. From toys for toddlers to dog food, the message is that China is so backward or corrupt that everything made there is suspect.

People who understand the world of cross-border manufacturing know that this news angle is rubbish. Matel, Fisher-Price and the other multinationals are responsible for providing detailed specs to manufacturing plants. The plants don't know the safety rules in the country the goods are shipped to; they might not even know where the goods are destined. The company that hires them is responsible for telling them exactly which paint to use - they can't just leave it up to the Chinese plant manager and hope he doesn't decide to use leaded paint. They can't just accept goods without testing. If they do, then it's their fault.

Maybe this is just another case of the media getting a story wrong. Coincidentally though, the US government seems obsessed with China as the only threat to American world supremacy. China is too strong, too robust economically, and too damn big. Whenever I hear a story that bashes China, I take a long breath and wonder who initiated it.

See also: Climate Wars


Sunday, August 19, 2007

Some Thoughts on the Democratic Race

Hillary is suffering from front-runner syndrome: she's taking all the heat. She's standing up to it with strength and aplomb, so maybe that will catapult her into a win... or maybe it's a poor strategy based on her husband's success in taking a lot of hits early and becoming seemingly "teflon." It might backfire and leave her too scarred to continue. I heard a pundit recently refer to her as "a flawed candidate" as if she is heavily tarnished, and this seems to be a growing conventional wisdom.

(I keep saying this but I'll say it again: After we were hoodwinked on Gore in 2000 and Kerry in 2004, it seems impossible that we could let ourselves be hoodwinked about another good Democratic candidate -- and yet we're letting it happen again with the lies and innuendo about Hillary. Is politics so partisan these days that we can never see things clearly - even in a primary? I'm not saying that there are no reasons to prefer another candidate over Hillary, but those reasons are invalid if they include sentiments that she's too "cold"; she's ugly; she's tainted by having a husband who had affairs; or she's a hypocrite because she changes her clothes or hair-do. There are also untrue claims that she supports the war in Iraq, is in the pockets of the lobbyists, and does not support universal health care. (If you read the comments on political columns on the Huffington Post or Washington Post web site, that about sums up opposition to Hillary.) If you're a Democrat and you oppose Hillary, then do some honest thinking and let us know what valid reasons you have for opposing her.)

And yet I can't ignore Obama's low negative ratings. I don't think you can just pass it off to being a newcomer with a brief public record. When there's an issue I'm puzzled by, I want to hear what Obama has to say. There's one thing that bothers me about Obama: sometimes when he's answering a question he has a little hint of a grin like he's about to stop mid-sentence and say, "Aw, I'm just kidding." Maybe they're all thinking that and the others just hide it better.

Edwards, in third place, is free to ignore the two frontrunners and take on the Right. He has taken on Anne Coulter, Fox News, the current administration, and probably a lot more that I haven't followed. He has got himself in the news by doing this and generated a lot of controversy (and criticism). I'm listening to the George Stephanopoulis Democratic primary debate as I write this, and Edwards has just entered a debate about how to end the war in Iraq by saying, "Any Democratic president will end the war in Iraq." He is taking an interestingly unifying role. He is also speaking out quite bravely to stand up for progressive issues like regulations that help citizens. I'm glad he's taking this course because it all needs to be said at this high level, but I'm not sure what his game is. Another run at VP? Staying out of the fray because his only hope is to have Hillary and Obama implode? Trying on something new because he doesn't want to just repeat the campaign of 2004? Or is it not pure strategy... perhaps in this, his second run at presidential candidate, with a wife whose cancer has returned, he is doing a Bullworth and using his candidate status to say what he thinks needs to be said. I'm not convinced that Edwards is the best candidate for president but I'm impressed as hell by him.

As to the other five candidates, all of whom are at 2% or less (at least in this Iowa debate), I'm puzzled. They are so vigilantly negative: a bunch of old men who want to tear down the system for their own political benefit. I wish they would go away.

And finally, the flies. I know Iowa is an agricultural state, but it's freaky watching the candidates try to ignore the flies that are crawling all over their heads.


Friday, August 17, 2007

Stardust (Review)... and associated thoughts

(No spoilers)

I mostly enjoyed the film Stardust, which stars Claire Danes, Charlie Cox, Michelle Pfeiffer and Robert De Niro. All the acting is very good. Most of all, this is my kind of movie. My heart's with Jules Verne, Ray Bradbury, JP Blaylock, Tim Powers and Tim Burton - people whose fantasies are primal battles that evoke nostalgic longing, who create adventures that include the Royal Academy of Science and dirigibles and 6" high elephants. There simply isn't enough of this type of fantasy, and it's hard to get right in film - Big Fish being a recent notable success and The League of Extraordinary Gentlemen being a recent notable failure.

Part of the problem with Stardust may be the author who wrote the original novel. The only book I've read of Neil Gaiman's was American Gods and I found it derivative and unsatisfying. It was a Tim Powers book rewritten as an airport bestseller: it had all the trappings but it rang false. Stardust occasionally rings clangingly false as well, partly because of some glaring plot holes and partly due to some corny premises. (Writer/director Matthew Vaughn covers up some of it pretty well, but a star who falls from the sky and is rescued by a unicorn... c'mon guys.) Yet parts of the plot are charming, like pirates who fish for lightning in the clouds.

Another problem with Stardust is an issue of post-production: the music sucks. The music was hackneyed, overly manipulative, too loud and unpleasant to the ear. There were no subtleties like leitmotifs, just heart-pounding chase music and heart-warming romance music and other annoying movie cliches. That made me think how often it's happened to me in the last few years that bad music has soured a movie for me. It's like watching a sitcom that's funny but has an obnoxious laugh track. It's a mystery why so many films are meticulous about special effects but throw away the sound track. We have several powerhouse movie score composers these days, such as Howard Shore and Danny Elfman - it's a puzzle why so many movies (even good ones) have godawful annoying music. If they're going to be derivative, why not copy the film scores that work?


Sunday, August 12, 2007

Noel Edison

When he who dreams the music rules the barn
"Come hither" fingers flutter his intent
And those who watch the dreamer, sing his song
Bring life to mind's imaginings again.

The sound that grows to fill the arching hall
Has currents deep and fast and transient
That warm not cool the inner core of life
And flow to places nothing else can find.

Four hundred creaking softly in the dark
Are we who watch the back of this event.
The sound sublime revives our tired souls
We dream the dream together in content.


Saturday, August 04, 2007

Russell Braun (Review)

I fell in love with the lyric baritone of Russell Braun after hearing his Papageno in the Magic Flute at Opera Atelier in Toronto. That was in the early '90s. Soon after he moved on to the Canadian Opera Company and then to world opera stages, but he still holds recitals with his wife and accompanist, Carolyn Maule, in southern Ontario.

I have heard Braun sing recitals a few times and have always been bowled over. Tonight I heard him again in recital at the Elora Festival, singing with Noel Edison's Elora Festival Singers in the Gambrel Barn.

Braun is a master of technique, making sounds that sometimes seem impossible to make - impossible to do the breathing, impossible to have the range from light tenorish highs down down down to baritone, impossible to evoke the poignant tone, impossible to sing so softly, impossible to project so powerfully.

And yet the magic of his singing isn't really about technique - it's about the intelligence behind the words and the sensitivity of his phrasing. He brings lyrics to life in a way that most people just can't do. Tonight a highlight for me was his rendition of The Brown Girl (also a highlight of Carolyn Maule's beautiful piano playing). Here are the words that I found online, and I'm not sure that they're exactly what Braun sang. The sad regret in the last verse permeated his rendition.

The Brown Girl

When first to this country I came as a stranger
I placed my affection on a handsome young girl
She being young and tender, her waist slim and slender
She appeared like an angel or some gypsy queen.

On the banks of the river where first I beheld her
She appeared like an angel or some Grecian queen.
Her eyes shone like diamonds, her hair gently waving
Her cheeks bloomed like roses or blood on the snow.

It was your cruel father who caused this disturbance
He said you were of a higher degree.
But I am determined now all for to gain you
Though he says I belong to a low family.

She cries "Charming Johnny, don't be melancholy
There is never no other my favor will gain
There's no other creature will e'er gain my favor
On the banks of the Burborne, I'll wander with thee."

Since I have gained you, my bride I will make you
I'll put rings on your fingers and drops in your ears.
With diamonds and pearls I'll deck my brown girl
With all sorts of grandeur, I'll deck you my dear.

My name is Delaney, no blemish can shame me
I might have had riches had I stayed at home.
But drinking and gambling, night walking and courting
Was the cause of my ruin and absence from home.


Wednesday, August 01, 2007

Commander's Palace, New Orleans (Review)

I was in New Orleans in June for the first time since Katrina. The French Quarter is as lovely as ever but a lot of restaurants have not been able to hire their pre-Katrina quota of staff yet, and there were some slight glitches because of that: a young waiter at Antoine's who called my mother and I "you guys" repeatedly, restaurants that have had to remove time-consuming dishes from their menus, some restricted hours.

I enjoyed Antoine's (I had two starters - Bisque d'ecrevisses with a stuffed crawfish on top, followed by Chair de crabes ravigote; and then Cafe Brulot - it was a really good meal) and Sunday jazz brunch at Arnaud's (the band was more the highlight than the food, but the food was good) and Coop's Place (all I had time for was their superb gumbo and a beer). One afternoon I ran out of the rain into some touristy-looking place on Decatur and had great crab cakes - way better than a fancy restaurant would serve where I live.

But the gastronomic highlight of the trip was Commander's Palace. I had never been there before. I knew it was a serious restaurant so I didn't want to go there for lunch or brunch when the food would be cheap but less spectacular. We went for supper and ordered the tasting menu with the wine tasting menu. It was worth it! In fact, at $290 for two (including tax and a good tip), I thought it was very good value. (The seven course tasting menu was $70 and the wine tasting menu was an additional $35.) As a great restaurant should be, our meal was more than eating: it was theater. We each had the same menu. This is what we had:

Drinks: Bourbon milk punch for one; a glass of Viognier for the other. (In retrospect, ordering a pre-meal drink was a mistake, as the amount of wine in the tasting wine menu was very generous, and I was feeling very happy by the time we rolled out of there, hours later.)

Course 1: Shrimp and green chili ceviche. Shrimp, roasted chilis, mango, cilantro and lime, served with fried plantain. It was very good - not brilliant. Served with yummy champagne (Commander's Palace Cuvee).

Course 2: Truffled Maine lobster bisque. It was a small bowl, which was good because I don't like these tasting menus to be too much food. I ate tiny bites to make it last. What can I say - it was a perfect use of lobster and truffles. Heavenly. Served with an unoaked 2005 Chardonnay by Trefethan.

Course 3: Fois gras "P B & J" - A very light-hearted take on fois gras! It worked completely. The bread was toasted brioche. The Hudson Valley fois gras was barely cooked. The tart homemade blackberry jelly was on the side (which I appreciated, since I don't like sweet with meat). This meal was building in quality in a way that was almost dramatic. As a sort of joke we got a tiny glass of milk with our "P B & J". Also served with a glass of 2004 Chateau Camplazens Viognier.

Coup de Milieu - a small glass of Brazilian sugar cane alcohol (ypioca cachaca) with blueberries and lime. Delicioius!

Course 4: Speckled trout with caviar and caramelized red pepper. I couldn't detect the caviar, but I wasn't complaining. The trout was the tenderest and sweetest I've ever tasted. This was a truly memorable dish. Served with a 2005 Eola Hills Pinot Noir.

Course 5: Veal tenderloin injected with sour cherry juice and butter, served with perserved lemons and vegetables. Before this came out I was feeling that the last thing I needed at that moment was a hunk of meat, but this was actually the highlight of a great meal. It was served with a 2004 Archetype Shiraz.

Course 6: Pineapple upside-down cake with coconut, served with Creole cream cheese ice cream. Another light-hearted note that worked perfectly. I wish I could make that ice cream as it was like nothing I have eaten. Dessert was served with "J" Rose Brut NV which was the only off note in the meal - it didn't taste very good. (Which was just as well as I didn't need any more alcohol.)

The service was impeccable, but not at all like what you'd get in France (or even NYC). The staff was chatty - several people came around and chatted with us (but never while we were eating, so it wasn't intrusive). One waiter told us part of his life story. That's not what I'd generally want in a restaurant, but it was all part of the amazing experience and was a wonderful, memorable evening.

This post was originally published (in a slightly different form) on Chowhound.

For my report on the state of New Orleans' post-Katrina reconstruction, see here.