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Ways of the World

Carol Stone, business economist & active Episcopalian, brings you "Ways of the World". Exploring business & consumers & stewardship, we'll discuss everyday issues: kids & finances, gas prices, & some larger issues: what if foreigners start dumping our debt? And so on. We can provide answers & seek out sources for others. We'll talk about current events & perhaps get different perspectives from what the media says. Write to Carol. Let her know what's important to you:

Monday, December 29, 2008

Christmas Presents

Did you get a Wii for Christmas? Or a new computer? Maybe a cashmere sweater. These are all nice, but there are other Christmas presents. These can give even more pleasure and it won't fade with the fad. Here are several we enjoyed this year~

Pictures from family and friends. I love Christmas cards and the annual correspondence. My best friend from childhood had her entire family together for Thanksgiving and sent a marvelous group picture with a brief profile of each person and what their lives are about, from her 6-year-old grandson to her 97-year-old mother. My mother's best friend's daughter (got that?) sent a picture of herself with her seven grandchildren, ranging in age from about 9 to 22. My own cousin, from whom I rarely get mail, sent a splendid Christmas card with an American flag hanging next to a front-door wreath. Good year for that remembrance. How special are these?!

Worship. Churches always look lovely and services are always beautiful. But special touches can stand out. By dint of totally accidental circumstances, I happened to hear two renditions of one of my favorite anthems, Biebl's "Ave Maria", one by an all male choir, similar to the well-known Chanticleer version, and the other with mixed voices, the solo coming from a sweet lilting soprano. Close your eyes and float up on its theme to the peak of the high Gothic ceiling. No tangible object can ever yield such a lift.

Hints of peace – or at least of what is possible when peace happens. Gaza is full of violence yet again, but the West Bank, where Bethlehem is located, was calm for Christmas. Tourists flocked to the town, by some estimates four times as many as last year, lifting the spirits of the locals and filling their pockets with badly needed revenues. Prime Minister Abbas participated in one of the services. A new website – note for next year –, streamed Midnight Mass live from the Church of the Nativity. Does this warm your heart?

Precursors of economic recovery. Gas is cheaper and mortgage rates are lower. These may be mundane, but they're not trivial nor out of place. Economic hardship strains everyone and can make the season burdensome instead of light-hearted. So we are grateful for the 60% plunge in the retail price of regular gasoline since mid-July, with about one-fifth of this in just the last four weeks. Then too, back in the summer, we talked here about how important it would be if mortgage rates could come down. Finally, after the government bailers-out began the "toxic asset" buying of mortgage-related bonds they originally promised, mortgage rates themselves dropped sharply. This can help many current borrowers soon as they are able to refinance; applications to do so have skyrocketed. While other government stimulus programs will help eventually, these factors lift great weights from consumers' shoulders right away. These are great Christmas presents, I'd say.

And the New Year promises to start off with a bang, even in the face of the continuing economic adversity. January 20 will, of course, bring the Inauguration of the first African-American President. And February 12 carries double significance. It will be the 200th Anniversary of the birth of Abraham Lincoln and also the 200th Anniversary of the birth of Charles Darwin. More, The Origin of Species was published in 1859, so this coming year will mark the 150th anniversary of the whole story of evolution. We'll hear lots more about all of these presents yet to come!

We'll close with one note on the Inauguration. Billy Graham is a great religious leader in this country; perhaps we can call him God's spokesman to the American public and to American government officials. I've occasionally wondered what would happen when he would become too elderly and infirm to continue this work, as he has, God bless him. But it seems now that there is someone for the role, Rick Warren. We do not all agree with Rev. Warren's interpretations of all lessons of Scripture. But nearly everyone agrees that the most thoughtful discussion during the entire Election season occurred in his church. I am personally thankful that a religious figure has emerged, one our new President has confidence in, who can provide pastoral care for the nation. It suggests strongly to me that God is watching out for us and continues to give to American society the same kinds of presents that I believe we just got for Christmas. And they mean a whole lot more than a new Xbox game or Neiman-Marcus gift card!

Merry Christmas! Happy New Year!

Friday, December 19, 2008

The Grinch Steals the Economy

Who says Wall Streeters can't laugh? Here is the annual poetic offering of David Resler, Chief Economist of Nomura Securities International, the New York outpost of Nomura Holdings, Japan's largest securities brokerage. I worked there with Dave for nearly 17 years to mid-2003. He and his family are parishioners at Grace Church, Madison, New Jersey.
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I have made it a holiday tradition to write a “review and outlook” for the economy set to the rhythm and meter of Clement Moore’s classic, “A Visit from St. Nicholas.” Under present circumstances, it also seemed fitting for my 25th rendition to draw on another Christmastime classic -- from Dr. Seuss.

’Twas the Night Before Christmas
(The Year of the Grinch)

David H. Resler

‘’Twas the night before Christmas, my shopping was done
I’d gotten great bargains, gee, aren’t low prices fun!
But less costly gifts are but small consolation
For my four-o-one K’s brutal devastation.

This year of o-eight ranks surely one of the worst!
It all started when the housing bubble did burst.
How could such a mess happen? And, who should we blame?
The fault lies with culprits far too many to name.

But my rhyme needs a villain, and for me that’s a cinch.
It’s none else but that vandal -- the nasty old Grinch,
Who’d slinked into town for some real mischief making
And our long expansion he planned to be breaking.

From that first day on, he was brewing up trouble,
Aiming his sights first on the housing price bubble.
So the Grinch posed first as a home mortgage lender
His too easy loan terms sent some on a bender.

Prudence and judgment the Grinch deemed simply passé
Neither income nor job would stand in his loans’ way.
For a Grinch-loan nothing had to be verified.
‘Cause in MBS bundles these risks would he hide.

When agencies scored these loan pools triple-A sound
Investors chased his high yields like fox-hunting hounds.
All this was part of the Grinch’s mean little scheme,
Popping the bubble, he wrecked the home owner’s dream.

With his handiwork done, the Grinch felt elated
He knew what came next as these assets deflated.
The fortunes amassed in the boom years just vanished,
And Wall Street’s wizards from their boardrooms were banished.

Then the Grinch plot did from Wall Street so quickly spread
As surging gasoline prices deepened the dread.
And though the oil price upsurge had no lasting cause,
It surely led soon to a severe spending pause.

When Lehman House failed and the markets did seize
Nothing the Fed did could halt the deep credit freeze.
Though the Treasury and Fed tried ev’ry trick,
Nothing could stop the markets from growing more sick.

There’s not any doubt we’re the grip of recession
That doomsayers warn we’ll lead soon to depression.
With bus’nesses shutting ’and big banks a-failing,
The Grinch felt pure joy and his spirits were sailing.

But that nasty old Grinch shall not our Christmas steal,
We’ll drive him from town or we’ll cut him a deal.
We’ll line up for some help from Tim, Ben and Hank..
We’ll use the might of the Federal Reserve Bank.

Since not all the problems are to Wall Street confined
Some fiscal injections too must now be designed.
The president in waiting has named his new team
And shown us the outlines of a grand fiscal scheme.

A middle class tax cut plays a very key part
In hopes it will give spending a hefty jump-start
On new infrastructure too much more must we spend
“This plan will bring” so he says, “this slump to an end.”

New regs for markets will stop all Grinch-like deceivin’
“This,” says Obama, “will be change you can believe-in.”

In the end we know too the Grinch will change his way,
So a brighter future will start this Christmas Day.

Monday, December 15, 2008

You Can't Make This Stuff Up

Actually, I'm relieved that I can't make up the stuff we've been hearing about this past week; my imagination doesn't seem to be developed enough to conjure the incredible schemes that have come to light from the soon-to-be-former Governor of Illinois and from the manager of a formerly exclusive investment organization.

Corruption in Government
Rod Blagojevich, whose name we have all just learned to spell, will be long remembered as the Governor who tried to sell the Senate seat of the President-Elect of the United States. Among numerous other allegations of graft and corruption, he is said to have threatened to withhold public financial support for the sale of the Chicago Cubs stadium and, perhaps most distasteful, threatened to rescind a grant to Chicago's Children's Memorial Hospital unless its board produced a sizable campaign contribution.

Paying off politicians to gain access to the public coffers for public works projects is such an old practice that it's almost an American tradition. But these recent acts take such methods to new depths.

A Trusted Adviser Lets Us Down – Hard
Gaining access to Bernard Madoff's investment funds presumed a depth of social connection and position that merited a private invitation to place your funds under his management. This Wall Street mogul, one-time chairman of NASDAQ, had been around for half-a-century, and his closely held funds earned remarkably steady returns for years, even during the recent plunge in stock prices.

You didn't go to your stockbroker to inquire about buying shares in Madoff's products. Someone you respected would approach you at a cocktail party or country club event and ask if you were interested. "The funds are really closed to new investors," the person might tell you, "but I might be able to get you in." Well, it turns out that new investors really were needed, because their new funds were the resource that paid the dividends to the old investors. It was a Ponzi scheme, a classic fraud.

Mr. Madoff finally gave it up last week as he was out of cash and generally strung out from trying to keep the whole thing afloat. Press reports explain that he told his own sons, who had not really known; they then arranged for him to be arrested. He guesses that the clients are out about $50 billion. Among them are Yeshiva University, the Elie Wiesel Foundation for Humanity, the owner of the New York Mets, a Senator from New Jersey and many other prominent public figures.

Who Redeems the Debt?
Coincidentally, we began just last Monday to read a new book about debt, this one by an unlikely expert, Margaret Atwood. You might know of her, the Canadian writer, author of A Handmaid's Tale, The Blind Assassin, books of poetry and numerous other works in a variety of literary genres. This one is Payback: Debt and the Shadow Side of Wealth. As soon as we started through it last Monday, we knew we wanted to bring it to your attention. Then the very next morning, we heard about Governor Blagojevich and two days later about Mr. Madoff. Now we really think it's a good read for you – and lots of other people!

Just in October and November, Ms. Atwood delivered a group of radio addresses on CBC known as the Massey Lectures. This is an annual series on the Canadian radio network produced with the University of Toronto. They feature "distinguished authorities" who "communicate the results of original study on important subjects of contemporary interest." Doris Lessing, Conor Cruise O'Brien, R. D. Laing and Noam Chomsky have been among these "distinguished authorities" and most of the lectures are published in book form by the House of Anansi Press. Samples are available for listening on the CBC website: All of the Atwood lectures will be available until December 19. The book is offered widely in bookstores, especially including Geranium Farm partner VivaBooks of San Antonio. See it here:

Atwood construes debt "as a human construct – thus an imaginative construct – and [she describes] how this construct mirrors and magnifies both voracious human desire and ferocious human fear." [page 2] The individual lectures are titled "Ancient Balances", "Debt and Sin", "Debt as Plot", "The Shadow Side" and "Payback".

She explains that her initial interest in the topic arose out of speculation over real money versus imaginary money. At age 8, she got her first paying job, wheeling a baby around in the snow. She understood the money she received at the completion of each excursion; she did work and she received pay. Then she got a bank account with a passbook (remember passbooks?). Once in a while, an extra amount appeared in the passbook. She had received money, but she had done no work. Was the money – the interest, we would understand – real? It came from some invisible source, not unlike the Tooth Fairy. "I knew from fairy tales . . . that if you ceased to believe in fairies they would drop dead: if I stopped believing in banks, would they too expire?" [page 6] Don't miss the Endnotes to the book. There's one for this: "It is in fact true that if you stop believing in banks they will expire." [page 205] Indeed.

In "Debt and Sin", we meet a "Sin-Eater", a character from several periods in history and literature. If you die without confessing your sins, you are doomed. But there's a way out, a way to be redeemed. Someone else eats your sins: Atwood cites Precious Bane, a novel by Mary Webb that is set in 19th Century Shropshire. The main character's father dies unrepentant. What to do? "Now it was still the custom at that time . . . to give a fee to some poor man . . . and he would take bread and wine handed to him over the coffin, and eat and drink, saying, 'I give easement and rest now to thee, dear man . . . . And for thy peace I pawn my own soul.'" [page 61] The pawnbroker is the Devil, and as you might surmise, being a Sin-Eater is risky in itself. Possibly, the Sin-Eater could ultimately have the misfortune to die unredeemed, and then he would be stuck with his own sins and those of others which he has eaten. There is also another form of Sin-Eater: someone who offers to substitute in death to save the victim from eternal punishment. Atwood tells us about a character in Sumerian legend, Geshtinanna, who volunteers to do just this. The gods are so impressed with her self-sacrifice that they find a way to ease the price for Geshtinanna, reducing her term of punishment in death. The underlying principle: "something is owed; the person who owes it can't pay; then someone steps forward and pays the debt or takes the place of the indebted one." [page 64] A redeemer, then. Hmmm.

What Have We Learned? Not Much!
What have we learned here, between Blagojevich, Madoff and Atwood's book? There are obvious lessons: invest with caution, don't be greedy, go to Confession with some frequency. But the aspect of these circumstances that strikes me is that through them all, we seem not to have learned very much. Whether it's last month in Illinois, 150 years ago in England or 5,000 years ago in Sumer, we make the same mistakes over and over again in money and in life. But, you know, God knows this. He understands it and He tries to help. He sends us Sin-Eaters and Gates-for-the-Sheepfold and Wonderful Counselors and Princes of Peace. That's food for thought for the rest of Advent, isn't it?

Tuesday, December 02, 2008

Is Scooping Up a Bargain Worth the Loss of Someone's Life?

We write today to remember someone you've probably never heard of, a faceless guy, just one of the staff members at some 4,000 Wal-Mart stores across the country last Friday morning at 5:00AM, standing at the ready to unlock the doors and let the hoards of waiting customers in for their annual Black Friday shopping bash. The early-morning, pre-dawn crowds at Wal-Marts and other stores were chompin' at the bit to get inside to grab one of those name-brand flat-screen HDTV for "just" $798 or a compact vacuum cleaner going for only $28 or the just-released DVD of The Incredible Hulk at a mere 9 bucks! You'd be excited too and want to be sure you were one of the lucky 100 or 200 to go home with one or more of these sought-after crack-of-dawn prizes.

At the Wal-Mart in Valley Stream, New York, some 2,000 people were waiting. Someone from the store told them the store would hope a few minutes ahead and their anticipation grew, but then the unkind spokesperson retreated, saying, no, that was only a joke, and they got really hot-under-their-collars. People at the back of the crowd were already pressing forward, and in an instant the onrush of bodies pushed right through the front doors, breaking them off their frame. Jdimytai Damour, a 250-plus-pound maintenance man, was just inside. Despite his size, he was toppled over. He lay there and people stepped on, over and around him as they headed toward their favorite departments. The mob kept coming. Store employees and even police trying to rush to Damour's aid were jostled as well. Four other people were also pushed down, including a young woman eight months pregnant. She, with her baby, spent the day at a hospital and they'll both be fine. Mr. Damour will not be fine. He was finally picked up and taken to a hospital, where he suffered cardiac arrest and died shortly after 6:00. He was 34 years old.

These accounts of the event come from New York Newsday and the New York Times[1]. One of The Times stories[2] included a picture of a crowd at a Wal-Mart rushing and pushing Friday morning at 5:00, but the people in that picture were in Elk City, Oklahoma. Clearly, New York has no monopoly on aggressive shoppers.

People who were surging out of control to shop for toys, electronics and Christmas items killed a man. What can we say about this?

Early reactions from politicians seem to blame the store. Not enough security, they argue; the store should have been better prepared. The store's managers assert that they did have extra guards and they had erected barricades. By Sunday, local officials were already drafting legislation mandating specific security provisioning. Personal injury lawyers are already filing lawsuits.

Psychologists blame the crowd mentality: individuals lose their individuality in such circumstances and behave in animalistic ways they would never dream of if they had time to think about it. Possibly.

We find that we're at a loss: we really don't know what to say back. We read some David Brooks yesterday. He's the pop-sociologist who wrote Bobos in Paradise; we picked up his following book, On Paradise Drive, about the outgrowth of American cities into suburbs and then on to exurbs. Brooks describes shopping as a way people strive toward some envisioned sense of perfection. They're quite serious in this pursuit, which includes detailed research and planning and analysis of the results with a gravity befitting a scientific experiment, a diplomatic mission or a mountain-climbing expedition. For example, of customers at a discount price club, Brooks says : "They are the savvy marketplace swashbucklers who have achieved such impressive price-tag victories that they will return home in glory to recount tales of the triumphs to tables of rapt dinner guests."[3]

This approach echoes a commentary we actually wrote here now more than two years ago. "Better Living Through Shopping" is the title of that piece, from late August 2006. With the help of a marketing expert, we explored the dual gratification that can come from shopping. There is the obvious pleasure in having the items shopped for: the new waterproof, windproof parka made of AquaCheck laminate with PolarThin insulation and a Sherpa fleece-lined collar, the Bluetooth stereo headset that accommodates both phone service and MP3 music, and so on. But almost as significant is the pleasure in making the acquisition, the actual shopping experience. In these days of tight credit and slim wallets, more of us are going to Wal-Marts, one of the few store chains to see sales growth and continued profitability. We are even more anxious than usual for the bargains we can find there. The early morning Black Friday event would have given a real boost to our spirits. Clearly, though, there's another angle. Peter Goodman of The Times calls this violent episode "a shopping Guernica", in which the crowds came to "engage in early-morning shopping as contact sport". [4]

Our visit with this shopping issue in 2006 was focused on loose credit and free spending that seemed to carry little substance. Today, though, our concern is much deeper. Frivolous buying is minor compared with our distress over what this particular experience became. And as our tone may convey, we don't think it's lack of security planning by the stores that's the problem. We could better understand the panicked surging of the crowd if it had been headed for scarce food and water or to try touching a religious icon on parade at a shrine. But harming people indiscriminately in order to grab a new digital camera? You have to be kidding. I wish I were . . . .
[1] Both from November 29, 2008

[2] Peter Goodman, "A Shopping Guernica Captures the Moment", from The Week in Review section of the Sunday Times, November 30, 2008. Accessed from

[3] David Brooks, On Paradise Drive. New York: Simon & Schuster. 2004. P. 61.

[4] Goodman, loc. cit. I had to look up Guernica, too. It refers to the town in Spain victimized during the Spanish Civil War where soldiers went through recklessly murdering everyone in sight, especially women and children. It occasioned a famous painting by Picasso, which immortalized the name of the town as a symbol for such vulgar deeds. [We are wrong here about rampaging soldiers. See the Comment below by Rosemarie, who corrects our misunderstanding. It's a much more interesting story than we thought.]

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