The Frossieland Diary
Paris, Sunday 10 October 2008

While Paris burns, I hunt for fiddlers in Montemartre .

A balmy, clear Autumn Saturday in Paris is the perfect sedative for nerves, frayed by news that a meteor, roughly the size of Earth was hurtling my way. Even in The City of Light, hardened newspaper journalists called for much needed illumination. Stockbrokers, arguably the most un-evolved of our species (in close competition these days with CEOs of certain financial institutions), were reportedly flooding into churches, in attempts to avoid damnation.

It was initially hard to fathom the composition of such a weapon of mass destruction, hurtling through cyber space towards me. Frantic reports had alluded to a rare alchemy, which included elements such as `CDS`(Credit Default Swaps), `Sub-Primes`, `Golden Parachutes`, `Hedge Funds`, `lack of liquidity`(dehydration?), `over consumption` , `Factor 8 GWB `(otherwise known as the `8 years of George W. Bush` multiplier effect) . Innocuous agents by themselves, made diabolical by the work of those timeless catalysts, known universally, as greed and investment bankers.

Oh yes, somewhere in the mix was another compound named CO2, the over production of which had made our geo system vulnerable, causing unstable weather patterns, increasing food/energy prices, poverty and infertile land equating to the combined mass of China and India. Not a bad plot for a disaster movie, if only Hollywood could be that creative. In my production, Woody Allen would be cast as the local town mayor, who routinely prevents disclosure of an impending threat to the spending public. In a role that would be largely based on that of Lehman Bros CEO, Richard Fuld (prophetically and fatally pronounced `fold`-as in `the company is bankrupt``-I kid thee not!). I can imagine him in that well worn scene, where the mayor finally gets nailed for his relentless greed: ``yes I took home US$500m while the company burned...is anyone hungry? I know a great Chinese place in The Village. The dumplings are low fat``!

Just as farcical was the US Senate Committee (Banking, Housing and Urban Affairs) hearing, featuring the testimony of US Secretary of Treasury and former (let me emphasise this) Chairman and CEO of Goldman Sachs (the world`s biggest investment bank) Henry Paulson. Live on CNN, `Hank` Paulson stated that when he got the job at Treasury in July 2006, he was `shocked` to discover that the US$50 Trillion Credit Default Market was totally unregulated. Un petit instant Henri, you mean that as CEO of Goldman Sachs, you were unaware that an investment market, valued over three times the size of the entire US economy was totally unregulated? Gee how about that! The embarrassment of such implications and the complicity of so many were clearly on show at that hearing. Henry Paulson was in no mood to take the rap for the entire mess; however it is clear that as CEO and Chairman of Goldman Sachs he had contributed to ensuring the conditions that led to the current crisis.

A little further investigation on Wikipedia revealed that in 2004, Paulson and his cohorts at the major investment banks had successfully lobbied the U.S. Securities and Exchange Commission to release these institutions from the `net capital rule`; a requirement that limited their credit leverage and risk exposure. EU regulators had also given in to US pressure and agreed not to review the reserves of foreign firms, if the US SEC took that responsibility. A risk management office that was set up as a consequence, to monitor the situation was reputedly dismantled by the current SEC Chairman, appropriately named Cox, after talks with Paulson. If what Wikipedia reports is correct, pigs can in fact fly, foxes are now guarding henhouses and we have governors with unacceptable conflicts of interests.

The same article quotes an AAP news story (`All business: transparency key to bailout success` by Rachel Beck 23rd Sept ) that ``Section 8 of Paulson’s original plan stated that: `Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.`

To his credit, Presidential hopefully John McCain, in breaking Republican party-lines, had initially raised the issue of accountability, calling for the dismissal of Cox. However, he soon settled for less controversial topics, like the rights of Mid Western plumbers named Joe, whilst trying not to make arm gestures like Robbie the Robot.

Elsewhere in the doomed jungle, a few dinosaurs of the neo liberal, free market age were in frenzy, the pheromones of distressed blue chip corporations, proving too tantalising for their rapacious appetites. With Jurassic like shrieks of `no government intervention, let it all burn down`, they kept feeding as cataclysm approached. Others however, like the legendary currency speculator George Soros, who a decade earlier had been accused by Malaysian President Dr. Mahathir, of being an architect of the Asian Market crash, were attempting evolution and speaking about regulatory frameworks and sustainability. Interviewed on Bloomberg TV, Mr. Soros suggested that `Americans were consuming seven times more than what they were producing`; prophesying that people (those beings other than currency speculators) would have to learn to save more and live realistically.

As the week rolled on, the mantra of the free marketers- that the market fixes all ills- had unravelled, as the US moved closer to nationalising its banking system, putting up US$700B to buy up bad bank debts, for an equity stake. Behind all the pinstripes, glossy jargon, complex probability formulas and trend charts, there was no mistaking the glimpse we had of this beast and the naked jungle it lives in.
There can also be little doubt that this is an important moment in the story of our modern western civilisation; one where the compatibility of neo liberal (capitalist) democracy and ecological, socio-economic sustainability came into great question. It is clear that simplistic, linear economic arguments are no longer plausible within this complex, interdependent financial, ecological and socio-economic system.

The ability of the US to distance itself from accountability has also been remarkable, a point that European leaders could have made stronger had their own banks not been following the US investment model. Suddenly, the complicity was global and power changed hands between companies and geo-political realms like lightening. China has now emerged as the majority financier of US debt and the student could now be the master?

In France, a country noted for its strict regulatory frameworks and lower private debt (there are no credit cards in France, something I still find thrilling), President Sarkosy had suggested that the situation called for a greater push with his reform agenda, one based largely on the US model of liberalisation and privatisation. Nice try Nick! The French however, to their credit as the great `resisters`, have been unimpressed with their President and he will now not have the financial or political will to do anything other than introduce robust financial regulations.

As the weekend approached I sought to escape the fatalistic trajectory of thoughts these findings had fixed in my head. The Fetes des Vendages de Montemartre, a local annual festival in the 18th arrondissement, provided the ideal distraction. Featuring wine grazing in the only remaining vineyard in Montemartre, the event included over eighty exhibitors of regional wines, food and local entertainment. It was an ideal opportunity to meet friends at the highest point of Paris, where thoughts could hopefully rise to less complicated and definitely more pleasurable aspirations concerning life, community and civilisation.

We gathered by the sunbathed and reassuring foot of the Sacre Coeur, a Byzantine inspired Basilica, which stands at the highest point of Paris in Montemartre. Below us, the rooftops and streets of Paris seemed empty, devoid of life. Above the city, a smoke-filled haze produced an eerie, almost post apocalyptic panorama. Around us, thousands munched on regional delicacies and swilled from a selection of hundreds of wines.

Prices seemed reasonable, despite the lure of the gullible tourist, as if the sombre events of the week had instilled a sense of fear or sympathy amongst the traders. This had all the appearances of what a market should contain; happy buyers appreciative of the experience and consequently, ecstatic sellers. It felt satisfying to purchase these products from the local people that had produced them, with much toil I am sure.

I tried hard to find a secondary market anywhere. I checked the alleys and sewers, listening intently for the all familiar touting: ``Psst, hoy there! Buy the stock from tent number 23. Let me give you a tip..buy up big, but don`t drink the stuff, sit on it for a year and you will make a killing. They won`t `Fuld` (fold)...`ere, i`ll even lend you the money, without deposit or security...you can`t lose``! It is hard to imagine that in this local market there might have been still others, betting on whether these buyers would default on their loans, however that seems to be precisely what that other, global and electronic market had been doing. Until of course, one pinstriped ape realised that the banana train would not be coming back and then their whole troupe went berserk.

One of many things I find satisfying about the local markets here is the animation and cheer exchanged between sellers and buyers. This is real interaction, not just transaction! There is an exchange of appreciation for the work of the producers, by our presence and patronage and in countries like France this tradition continues, despite the threats of shopping malls and supermarket chains. It is entertainment, socialisation, commerce and it helps us form a much needed sense of community- who we uniquely respond to and identify with- a greater understanding of our interdependencies. We do not get the same level of deep satisfaction, when dealing with faceless enterprise, where the lines of interdependence are blurred within lines of express checkouts and frequent buyer points programs.

After several glasses of wine the truth began to appear, in the form of a fundamental argument, which I pose rhetorically. When is garden a jungle? The answer to me is that when there is no one to look after it for the good of all, a gardener or keeper, we see chaos. Can any of us reasonably expect that a garden can be sustained without constant care, without stewardship? Without regulations that ensure its survival for the enjoyment of all? Can we really believe that something so complex, so interconnected and so potentially savage as the global financial market can be sustained without the care of good stewards and regulations? Yet this is what the free marketers would have us believe.

And what is the long term vision of their ideology, apart from the mayhem of an unkempt zoo? Will a jungle ultimately be the legacy of the Western Civilisation, like the many that have gone before it? Or, will two thousand years of knowledge and wisdom be cultivated to something that is sustainable? That seems to be the dilemma and question we face.

It also is a matter of ideological perception; whether you believe a keeper to be an interventionist or a steward?

Each morning I walk down to my local park, one of over three hundred uniquely landscaped and well maintained in Paris. Many, like the one in nearby Batignolles have ancient merry-go-rounds and I am constantly reassured by the sight of exuberant, young children on the same rides their grandparents would have taken. All parks have a board with a set of regulations governing behaviour and activities however within those restrictions you are free to enjoy the experience with all those around. There is much to do and enjoy and I cannot think of anything missing. Surely not the ice creams, the cafes, petanque and other games, enjoyed by people of all ages. I am now consequently more appreciative of the keeper I see each day, as he silently goes about his duties.

Most of all to be found in Parisian parks is a sense of cultivation, of civilisation. There appears to be a time tested method behind such artistry and it is very reassuring.

For me, the question remains ultimately one of choice, striving for peace and sustainability or taking your chances in the naked jungle. It is no longer sufficient to frame the debate under outdated ideological platforms of socialism or capitalism, or East versus West. The issue is about sustainability of life/planet, livelihood and specifically about how we can achieve sustainable growth, since growth is an inevitability. It is something we are all interconnected with and bound to address, within our individual and collective capacities.

The French, a nation who have stamped their mark on two thousand years of civilisation, may yet provide us with some ideas.