Wednesday, April 7, 2010


Michael Pettis explodes with a brilliant post exploring what the likely consequences are of China’s high percentage of nonperforming loans; a large portion concerns itself with what happened the last time this happened at the turn of the millennium. Spoiler alert—but China’s banks basically did it by reducing the rates it paid to depositors (i.e. fewer expenses, which they then used to cover their bad loans). My question is, given that China’s citizenry got stiffed by getting lower interest rates, doesn’t that imply that consumption should have been higher? And yet, Chinese saving rates were quite high and consumption quite low, as compared to its peers. What’s up there? In other China news, apparently it’s willing to help build and finance the California high speed rail project.

A late friend -- God rest his cynical soul -- once doubted that the literary novels he was loaning to his new love interest were actually being read. So our friend discreetly taped a few pages together in the middle of the next book that had been eagerly requested -- The Folding Star, by Alan Hollinghurst, as I recall -- and loaned it to his lover du jour. A week later, the borrower returned the book -- the taped pages unbroken -- and declared it a masterpiece. Our friend repeated the experiment with two more books, both requested by his fading lover, and both times the tape survived intact. The relationship did not.

Wikileaks, the future of journalism? I think the $50,000 figure it paid to produce the helicopter-killings video story is an interesting figure to contemplate. Compare that to a great piece from a while ago in the New York Times Magazine on a New Orleans hospital during Hurricane Katrina: apparently it cost $400,000 (while the average cost is $40,000 for a NYT Magazine front pager). Anyway, some interesting things to think about there.

Paul Krugman on building a green economy.

Funny loans business in Riga, Latvia. As always, sucks for the citizens, and shame on you financial institution, but—and this bears repeating—there are always short-term-thinking politicians involved in these sketchy loan deals.

The Cul-de-sac backlash.

The problems with an IMF bailout of Greece.

Preview of American health practices in the future? Britain cuts use of CT and full-body scans because of radiation fears.

The founders of Apple and why Wozniak wouldn’t’ve made the iPad.

Pension watch: GM and Chrysler’s pension plans are underfunded by $17 billion; there are tons of unstated liabilities in state pension plans (oh, about $3 trillion or so). Between pension plan problems and the low savings rates of the boomers, and it’s clear retirement will not be a long, pleasant dotage of playing shuffleboard and having early-bird specials. Will boomers just work longer? If they do, what does that mean for the generations below them who might, you know, like to work?

The best explanation of Fitzgerald’s “There are no second acts in American lives” that I’ve seen:
The truth, though, is that Fitzgerald was right and practically everyone who quotes him is completely missing the point. How plausible is it, really, that one of the great minds of Western literature couldn't comprehend of a singer who acts or a politician overcoming a corruption scandal? Moreover, this particular author wrote The Great Gatsby, the definitive novel of American self-invention, in which the title character utterly remakes his identity to fit the "Platonic conception of himself." The idea that Fitzgerald, of all people, didn't believe Americans could reinvent themselves is a like thinking Tolstoy didn't believe in snow.

The misconception comes from a lack of context—or maybe deficient math skills. People who quote the line seem under the impression that most theatrical plays have two acts. If that were so, "no second acts" would indeed mean what's it so often mistaken to mean. Something like, "American lives are one-act plays." Or, more broadly, "Americans live hard and die young," a sentiment in keeping with Fitzgerald's own reputation for fast-living and his love for characters that are young, rich, and doomed. Even then, you could make a case that he's right—using examples of iconic "one-act" American lives from to James Dean and Marilyn Monroe, to Jimi Hendrix and Kurt Cobain.

The problem, though, is that most stage plays don't have two acts. Traditionally, they have at least three—a fact of which Fitzgerald, who wrote for the theater at Princeton and later Broadway, was well aware. With "no second acts," he was almost certainly referring to a traditional, three-act drama, in which Act I is establishes the major conflict, Act II introduces complications, and Act III is for the climax and resolution. "No second acts," therefore, means Americans skip from Act I to Act III. That is, we are frustrated by stories that go too slowly, especially due to obstacles that are alien to our national character.

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