Random Walks in the Low Countries

Keeping perspective

November 3, 2008 by Dave Hampton

This morning, I caught up on recent blog posts authored by a US-based friend of mine. Although they are a long way from the sights and thoughts found along a later stroll through Amsterdam’s center, they do remind me of the force that Tuesday’s election has back home.

She writes passionately about the upcoming election, feeling their significance and worrying about the potential consequences of an upset. I followed her links to typical Letters to the Editor and agree that it is getting ugly out there (as it is in my home state: the Seattle Times, the Tri-City Herald). It’s easy to get upset at the distortions written and misunderstandings expressed as people try to sway one another’s votes.

At the same time, it’s not something that I can take personally. These voices are out there, and the papers try to reflect that diversity to reflect the national dialog. But in the end, we all get one vote, the country will move on with a popularly elected leader, and we will undertake the serious work of undoing the social, economic, global, and constitutional damage done by the last one.

Truth be told, I’ve actually been encouraged that the press has not focused on the whispered innuendo and biased slogans from either side, and that they have fact-checked statements and contrasted positions to a much greater degree than in the prior decade.

And, in the end, I do trust that centrist people will make a wise choice.

It’s also not so consequential in the long term: the future will turn on larger themes and bigger events than those we are debating today.

Touring the 16th century canal houses and 18th century villas that dot Amsterdam, I’m always struck by how quaint the technologies, fashions, and perspectives of that time are when viewed from our own. Yet they were the height of progress and sophistication in their time, deadly serious for their people.

The message from the US is real enough, and my friend’s reactions are justified. I have similar feelings of sadness and frustration as I follow the McCain / Palin message and messengers.

But I think that in the heat of this moment we can all see events larger than they really are, and credit dissident voices with more influence than they have. I know that sometimes I do.

And I recognize that we all need to keep the longer perspective.

And so, I’ll share a passage from science fiction writer Olaf Stapledon which I used as a preface to my doctoral thesis and which has always been effective at reminding me of that:

Men of your day, when they look back into the history of their planet, remark not only the length of time but also the bewildering acceleration of life’s progress. Almost stationary in the earliest period of the earth’s career, in your moment it seems headlong. Mind in you, it is said, not merely stands higher than ever before in respect of percipience, knowledge, insight, delicacy of admiration, and sanity of will, but also it moves upward century by century ever more swiftly. What next? Surely, you think, there will come a time when there will be no further heights to conquer.

This view is mistaken. You underestimate even the foothills that stand in front of you, and never suspect that far above them, hidden by cloud, rise precipices and snow-fields. The mental and spiritual advances which, in your day, mind in the solar system has still to attempt, are overwhelmingly more complex, more precarious and dangerous, than those which have already been achieved. And though in certain humble respects you have attained full development, the loftier potencies of the spirit in you have not yet even begun to put forth buds.

Last And First Men, Olaf Stapledon, 1930

Museum Night in Amsterdam

November 2, 2008 by Dave Hampton

A fellow blogger’s recent post alerted me to the N8 Museumnacht Amsterdam held across the city last night. It looked great: roughly 40 museums open from 7 pm until 2 am, accompanied by special showings, performances, lectures, and activities. For 17 euro, patrons get access to every venue, as well as free rides on all city transportation and another day of free admission to a museum before the end of the year.

To take full advantage, it made sense to drive over from Arnhem early, buying tickets mid-afternoon in freezing rain and piercing wind, then securing a hotel booking. The detailed (entirely in Dutch) programme offered at least a dozen worthwhile new places to see over the 7-hour open period. Fortunately, most clustered into three geographic groups, making it easy to skip from one to the other.

So, at 7 pm things started at the Artis Park housing the planetarium, zoo, and aquarium. Venues are easy to reach, transportation is frequent (but crowded), and each entrance is marked with a big flashing colored light cube. The planetarium was a bit slow getting their sky-show kicked off, so the zoo-queue looked like a better alternative. They give you a group number and usher you into a waiting area to wait to be called; there was a brisk trade in gluhwijn and broodjes that probably floats the zoo’s budget for a month. The tour was good fun: the animals were puzzled or sleepy at having repeated intrusion of guests and flashlights after dark, and the guides kept up running Dutch commentary on the natural and social history of the park. We ended at the entrance to the aquarium, a good opportunity to wander the marble halls and debate which was the prettiest (or most repulsive) exhibit.

It was a few blocks walk onward to the Oosterdok, where the ARCAM architecture center, the NEMO Science Center, and the Scheepvaartmuseum are located. More refreshment prior to entering NEMO, then plunged forth into the various interactive exhibits. It seems geared towards children and teens with lots of interactive games, but if you’re willing to get hands wet, it’s a fun time. There was a competition to generate the most power from a water wheel by diverting water (the secret is to create a waterfall, not a rapids), and a popular discussion of puberty titled “Ben Ik Mijn Hormonen?” The party areas were slow to kick off, so the ship seemed like a good alternative. However, it was a bit cold and wet to wander around the decks, so onward to the city center.

The Hinlopen and Van Loon houses were open, exhibiting classical Dutch arts and architecture, circa 1680. The Hinlopen Huis ushers you out into a darkened garden, where people crept along by the glow of cell phones making their way to the main house. The rooms were opulant and there was a harpsichord soloist to set the mood. But I thought that the Van Loon house, filled with actors and everyday items from the period, captured the Golden Age lifestyle better. Lines were long to get into the FOAM gallery, so the Rijksmuseum would be the last stop.

It was nearly 1 am when we joined the line outside the museum. The Dutch were incredibly engaged with the events all evening: the lines never flagged and their interest never seemed to wane. I can’t think of another culture that would wait 40 minutes to tour the Masterworks collection past midnight. Damien Hirst’s artifact, a diamond-encrusted skull titled “For the Love of God”, might also have been the big draw. I thought it was anticlimatic though: after seeing so many examples of really great art, this work just seems shallow and manipulative. (Maybe I was just getting cranky at 2 am).

There were post-parties until dawn, Oliebollen at the corners, and I was tempted to have a last drink at Leidseplein, but in the end tired feet and a weary mind led only back to the hotel. Still, it’s a fun event and well worth coming into the city for the evening. I’m already scanning the guide for next year’s opportunities.

Further thoughts on the economic slowdown

October 31, 2008 by Dave Hampton

I’m running off to Amsterdam today, but wanted to make a few quick comments on the ongoing economic problems

* Many commentators are focused on the mortgages as the source of the crisis: too many house loans were made to too many sub—prime borrowers with little or no vetting. Remedies have thus focused on propping up lenders, asset prices, mortgage payments, or homebuyers. But, in fact, the problem is broader: bad loans were made on everything from credit card debts to student loans, shaky business schemes to questionable public works projects. All of these were securitized, diced up into principal and interest, tranched by risk, and converted to bond-like cash flows. Many of these sources can still go bad, and many of the cash flows are still highly risky. I think that there will be wave after wave of support as various loan types continue to default, long after we have stabilized the mortgage market.

* There has also been a lot of talk about this being a ‘black swan’ event, one which has a vanishingly low probability of ever occurring. I think that it may have been historically true that the underlying asset price movements were uncorrelated and the likelihood of them moving together, by chance, was extremely low. But, as strategies evolved for taking advantage of these asset combinations and the adoption became widespread, I believe that links were formed between previously uncorrelated factors. These lead to causal cascades that ripple through the markets when previously isolated assets suffer a downturn. Far from being random events, I think that instability was built into the system as the underlying assumptions failed. The current downturn is a failure of understanding of how the financial system changed, not a black swan birthed within the context of the old system.

* When is an industry too important to be allowed to fail? And does the financial industry meet those criteria. As government support for using bailout funds to increase liquidity spreads from the financial to the insurance to the auto industry, it begs the question of where this began and where it should end. Many basic industries, from raw materials to health care to food production to transportation, arguably have a greater impact of producing and moving the goods that individuals and businesses rely on. Yet the financial system has uniquely been identified as worthy of government-sponsored rescue and reorganization. The rest have to muddle through. This still feels wrong to me.

* How much of the financial community is a community and how much is it a club? I think that it is very much of a club, excluding participation except for those admitted to membership in the circle, self-protective and self -interested. While government officials and regulators are promising strict laws and accountability, we are already seeing hand-in-glove partnerships between various government and financial institutions. For example, the forced takeovers of marginal banks by stronger banks is consolidating the industry rapidly. There will, in the end, be a few government-sanctioned winners, with much stronger financial positions and influence than they had previously. There will be similar evolution in ratings agencies, insurance, and financial services. In the end, the barons of capitalism will be stronger, not weaker. And I still fear that the taxpayers will foot the bill for a new system that will ultimately work to our disadvantage.