Seeing the light

I wandered around The Rocks in Sydney today, taking photographs until my battery went dead and the light had gone (happily almost simultaneously, although just after the camera went out of action I saw a big-bearded Methuselah with his gigantic-headed, but benign, dog; the latter was lapping happily at a bowl of water the waitress had brought him and would have made an excellent subject). I sat on a bench opposite the old police station with a takeaway English Breakfast tea and oversized wholemeal scone. Before I could spill hot tea all over myself (and as sure as night follows day, I did) I was musing to myself, first, how nice it was to have nothing pressing to do; and secondly, that I still feel an obscure sense of delight and vindication when handing money over to someone, anyone, to pay for something, anything: such as a cup of tea in a tiny little café. It makes me, I think, feel part of the world; and without wanting to sound maudlin, I also remember what it was like not to have money to pay for things. I also felt disinclined to go shopping and was satisfied with buying some small refreshments, so it works at very small quantities.

Take it to the bank

John Lanchester writes a book review in the New Yorker (of three recent books about the reasons for the current financial crisis, all of which sound well worth reading: Gillian Tett, Fool's Gold; Richard A. Posner, A Failure of Capitalism; and Shiller and Akerlof, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, although you may feel that just reading the excessively long title of the latter is sufficient). The book review itself is a model of clarity for those like me who find the wall of terminology deployed in banking frustrating and incomprehensible (it always seemed to me that obscure coinages and "in-talk" were as much of a self-protection methodology for financiers as they are for lawyers, mutatis mutandis: if no one understands what we're talking about, somehow that will really impress them, and not only that, our language will be a barrier to entry).

Lanchester writes: "At its heart, banking is a simple business. Customers deposit money at a bank, in return for interest; the bank lends that money to other people, at a higher rate of interest. This isn’t glamorous or interesting, but banking is not supposed to resemble skydiving or hip-hop; what recommends it is that it’s a good way of making steady money (and of creating credit in the economy), as long as the bank is careful about whom it lends money to."

But in banking, unlike the law, it's all about the short term (quoting Posner, who incidentally is a judge and legal academic): "The greater the gains are from taking risks that enable very high short-term profits, and the better cushioned the executive is by his severance package against the cost of losing his job, the more risks he rationally will take".

Not a lot of money these days

Thank God the US Treasury, in charge of resolving the financial meltdown, are using appropriate reference to the extent of the problem, cold hard logic and statistical analysis to identify the appropriate extent of the bailout:

In fact, some of the most basic details, including the $700 billion figure
Treasury would use to buy up bad debt, are fuzzy.

'It’s not based on any particular data point,' a Treasury spokeswoman told Forbes.com [on] Tuesday. 'We just wanted to
choose a really large number'.

Dr Evil couldn't have put it any better.

All bets are off

I was in Las Vegas in 2001, at an excruciating sales conference. In my jaundiced view, not helped by the event I was attending nor by the ludicrous hotel we were staying in (“New York New York”), it was a profoundly depressing place, and even from the absurdly privileged vantage point of a high-rolling banker’s free suite at the top of the Bellagio, with a glass of Dom Perignon in my hand, it seemed as hollow as it looks. The worst aspect, and sadly this accounts for the majority of the revenue generated by Las Vegas, was the slot machines: people dressed in extremely casual, almost pyjama-level clothing, each handing over their dollars for a big bucket of dimes which they then proceeded to feed into the slot machines for hours on end, as if participating in a giant metaphor for futility.

Melbourne has a super-casino too, by the river, flanked by strange, huge, sculptural towers spouting gouts of flame every minutes or so; but inside it has exactly the same feel as anywhere in Las Vegas: an ersatz environment, entirely focused on parting fools with their money. Adam Smith could have been thinking of super-casinos, had they existed in the 18th century, when he said: "A lottery is a tax on all the fools in creation".

Macau's casinos, 40 minutes by ferry from Hong Kong, have now overtaken Las Vegas in terms of revenue. In Macau, the interesting thing is that the revenue streams are reversed: 80% of Macau's revenue comes from the tables. This is, not surprisingly, attributed to the fact that the Chinese like people to know how much they are spending; it's a face issue (see below under Maybach, Napoleon wrasse, and Louis Vuitton). No miserable solitude at the slots for them.

Now Macau has become a replica of Las Vegas (which is itself a poor, hotel theme park replica of all the interesting places in the world) it's even less likely I will ever go there again, even if you can get the best Portuguese egg tarts in the kingdom at Lord Stow's Bakery in Coloane.

Draw a veil

In space-strapped Hong Kong, in Repulse Bay, on prime land overlooking the water, there's a huge car showroom taking up about as much room as a spacious residence with garden, or, let's say, a library, a school, or a public swimming pool. It only houses one car: the Maybach. It's a boring, big-bonneted, dim-looking car with strangely whimsical curtains in the back (for the esteemed passenger's privacy, I think) which remind me of those funny little elasticated curtains you get in caravans; and it costs about US$500,000. Not as ugly as the Chrysler Crematorium: but clearly not an attractive car in any way. (It's a must-have buy, of course, for your average Hong Kong tycoon; I think Stanley Ho has one.)

Not such a clever buy after all, though, Stanley: this is a car that, in the first three years of its life (and as soon as you've taken off the shrink wrap) depreciates by US$1,200 a week.

Dressed to kill

I admit, I am looking at dresses at the moment with the idea in my head that the perfect one is out there for me - think Lauren Bacall, think the 1940s, Hollywood glamour, whatever silly idea might come into my head (why do I put myself through this?). I'm going to be 40 this year and in my shallow fantasy, I am wearing a perfect dress, which makes me look fabulous.

So, I am looking at the dresses on Net-a-porter. And I don't think I can possibly be mis-stating this: none of the dresses there are less than GBP1,000/US$2000/HK$15,000. How can that possibly be just or meaningful in any way?

This is a world where hedge fund managers like John Paulson are making US$3.7bn profit for themselves in a year. So it makes money seem meaningless, right? But it's not meaningless. If you make US$3.7bn on gambling on the sub-prime crisis, that means you're making money on people losing their homes. If you buy a dress that costs more than GBP1000, then you are spitting in the face of people who don't know how they are going to afford to eat because inflation has forced up the price of rice.

Am I wrong about this?