The 1200 Year Old Slow Motion Train Wreck

Memorial Day weekend 2011 finds us recovering from a sojourn in that cradle of Western Civilization that is Europe; a small city in North Rhine-Westphalia, to be exact. The main purpose of the trip was to spend some time with an expanding brood of progeny, but we were also able to experience springtime a in northern clime, something much missed given the on-going extreme drought here in Texas). And of course, it was also a reacquaintance with that sense of antiquity that simply doesn’t exist, outside of a few Aztec ruins, in the Western hemisphere. Fittingly enough, we returned to a Market caught up in yet another bout of Euro-jitters. Wasn’t it just the other day that the troubles in Greece got put to rest?

It was a good thing, then, to have stepped away from the tyranny of the urgent, and that temporal shortsightedness that blurs into incoherence everything beyond even just our parents’ time. My takeaway: there is nothing really newsworthy about civilization atrophying into decay, of nations lurching towards insolvency and entire people groups seemingly stumbling from ennui to despair and beyond. The world is a very old place, much older than the ways we reckon time have conditioned us to think about it. What we call civilization seems to have spent most of its time either dying of exhaustion or finding its way back from yet another near death experience. Whatever travails result from the feckless financial dealings that hatched these sovereign debt chickens now coming home to roost, they are tame when compared with the normative experience of Europe over the past 2000 or so years. Until something a bit more lethal and a lot more charismatic makes its appearance, life, however much the scare mongers would have us think otherwise, will go on pretty much as it has always gone on.

My reconnection with the sprawling vastness of human experience was actually two-fold. It was helpful that I chose as my travel reading (and respite from being in a home with three children under four) to reacquaint myself with G.K. Chesterton’s The Everlasting Man. This 1925 rebuttal of H.G. Wells’ Outline of History is a great way to step outside of the tiny slice of time we happen to occupy, to compare and contrast our selves with that legion of forbears who if they lived before our great grandparents lie nameless and faceless beyond our ken. This sumptuous intellectual repast was accompanied by a sampling of well preserved antiquity. For example, visiting Paderborn, the main attraction of which was a cathedral that dates back to when Charlemagne established a residence there in 795. The antiquity runs even deeper considering that what gave the place staying power as a destination (as the years went by the Emperor showed up less often and otherwise lost clout) was the transfer of the bones of one St. Liborius, a fourth Century bishop who thus became its patron. Apparently, the display of reliquary was very big business for several centuries. The antiquity perhaps run deeper still considering the likelihood that the over 200 springs at that locale were more likely than not sought for the healthful properties of their water even before the Church got in on the act. We wondered as we got into the car on the edge of town how many other pilgrims, and for how many years, had passed that way, or paused at the shrine that stood nearby bearing who knows what burdens.

So what do I take away from this bit of romantic indulgence? That there really is nothing new under the sun. That humanity and most of the edifices under which it attempts to identify and comport itself are really quite old, and as such, by definition in a state of decay. Absent some renewing force, that is what is normal, but it has always been that way, even before there were joint stock operating companies, a buttonwood tree to meet to trade under or a DJIA to serve as a purportedly all-knowing Market. The least surprising thing in the world should be that Greece, Portugal and Ireland are showing signs of senescence, or that the whole Euro project looks like a slow motion train wreck. The vigor of the U.S. for most of the 19th and 20th Centuries, or Japan for a half century or so after 1945, or those other, mostly Asian, places that took the Reagan-Thatcher inoculation just the other day, those so are outliers. The good news is that in the sense that the Market “knows” anything at all, it knows this, and always has. The discontinuities lying in wait out there in the inscrutable future are not “in the price”, but the entropy, the propensity to the inevitable missteps of badly fatigued civilizations, they most certainly are.

The most substantive impression that I would take away from my visit is that Germany is doing relatively well, at least for the time being. It is a very comfortable place. There is nothing not to like about all the investment that has gone into making it so, the roads (and abundant signage), the plethora of bike trails, the public transport, unless you consider how it all gets paid for. Fortunately, this is a good time for the German economy, so paying for all that comfort and security is relatively easy. The economy is humming along not so much because of infrastructure spend or the apparent rapid multiplication of wind turbines, but because so much of the world wants and needs what the German economy happens to be very good at producing. As long as so much of the “developing” world is indeed developing, that proverbial German engineer, and a lot of others who subsist in his wake, is going to be a busy fellow indeed. Be it infrastructure such as power plants, industrial capacity expansions or highly engineered transportation equipment, the world has beaten a path to Germany’s doorstep. Not just the BRIC nations, or the Petro-Rich. Eastern Europe is clamoring, however fitfully and unevenly, to jump start virtuous cycles of prosperity for itself. A beneficent side effect of this has been an infusion of the most impatient, most industrious of Eastern Europeans into economies like Germany’s. So while I would be concerned about how Germany is going to keep its nice comfortable social democracy going in the years well ahead, as long as “global growth” is a theme that needs to be empowered by what Germany does so well, we should expect it to continue to prosper.

About the whole Euro project, though, it is difficult be so sanguine. As I ponder Memorial Day and all it stands for, our commemoration of sacrifice made on dark and bloody grounds, and consider how much darker and bloodier the ground got in Europe, it is hard not to sympathize with the ideal of a transcendent European identity. An ideal is what it will remain. Ethnos runs too deep for bureaucratic fiat to erase. No amount of digitally delivered pop culture is going to make the Welsh more like the Poles, or even the English (whatever that means anymore, ethnically speaking) for that matter. We will not see, our immediate descendants will not see, Greeks becoming more like Germans, and vice versa, any more than we’ll see Canadians becoming more like Brazilians. Deep cultural differences will continue to manifest in very divergent orientations to economic activity. So as long as the global freight train needs the strong engine that is the like of Germany (as well as some of those distinctive competencies that France brings to the table), the largesse is in place for the strong to grin and bear it, dig deep and keep their dysfunctional family intact. But we should not be surprised, once this era of global expansion has started to wind down, to see the strains of forced familiarity overwhelm the good intentions of whoever conceived the notion of a European Community.

OBL, R.I.H.

With earnings release season winding down to the last few stragglers, the Market seems to be slipping into a state of being decidedly undecided. Whatever catalysis to be had from those little reminders of just how resilient, how lean & mean so many companies got coming out of 2009, has been spent. M&A activity, those typically Monday morning reminders of just how much market “efficiency” and “control premia” tend to disregard each other, can only stoke bullish enthusiasm so much. Volumes of shares change hands (in that second derivative, metaphorical sense that the computers that drive most trading don’t have hands) at a rate that would have been unthinkable a generation ago, but it is all sound and fury, signifying nothing but a few more gobbets of fat clinging to the fingernails of the proprietors. We can now expect the Market to lurch along, not so much meandering as in a series of low grade fits of “risk-on” or “risk-off’, with commodity prices seeming to set the tempo. (Is it just me, or does the Commodities Game seem to running on empty? If so, we could be in for a few weeks or even months of a lot more "risk off" days.)

The one purportedly catalytic bit of news that got this week started really wasn’t that substantive a development. Count me among those who are delighted that Osama bin Laden now sleeps with the fishes (though, in one particular sense of that expression, not so much.) Good will come of it, but only incrementally, as not that much has changed. This is not a defining moment in the “long war” that this clever fellow did so much to fan back to life. He was no evil genius masterminding mayhem from his underground lair, at least not to any discernible effect for the past few years. I had come to think of him as forced into retirement. A villa on the outskirts of Islamabad, with no Internet connection, however lavishly appointed, might as well be Devil’s Island, or Elba, c. 1815, not much different than “life without a shot at parole”. I was never quite convinced that the tapes he supposedly released every so often were genuine, and find it more probable than not that the Pakistanis made him a deal along the line of “lie low and be quiet and we won’t rat you out.” He was, in my estimation, no longer in the game, and as such, his departure to unthinkable hotter precincts does not really change the game.

Well, maybe a little. It does matter, in minds of our enemies and those tempted to give them aid, comfort and support, that a resolution so forcefully asserted by one U.S. president was carried out by his seemingly opposite successor. Whatever partisan theatrics divide us, this was a promised act of retribution that we just showed to world we would not be deterred from. Do harm like that and boast about it, you can run but we will find you, no matter how long it takes. It will also matter tactically insofar as whenever Mr. Big gets taken out, the network can be folded up some. This was an operation where in order to find the kingpin, a lot of operatives needed to be identified and then allowed to carry on, with the expectation that their activities will lead to other operatives higher up the hierarchy. Anyone identified as high ranking enough within AQI to potentially have contact with OBL has quite likely been left to go about his business on the chance that he might lead us to the big guy, Now that he has been eliminated, Special Ops forces, no doubt assisted by a ton of incremental intel gleaned from all those captured hard drives, can be a lot more aggressive in terminating what remains of the AQI network.

I have to admit that my first reaction on reading the news of this event was one of high skepticism. It was the “buried at sea” headline that got me. Here was the digital equivalent of “EXTRA! READ ALL ABOUT!” that Public Enemy Number One was dead, and there was a footnote indicating that before the sun came up over Texas the next day, the corpus had been express shipped a thousand or so miles to become food for crabs. I avoid conspiracy-think like it was it warm, flat beer, but this struck me as nuts. (Actually, it brought to mind George Orwell’s 1984, with Winston Smith trying to ascertain whether Oceania was allied with or at war with Eurasia.) Or, eventually, something that only government functionaries would think to do. The rationale, sensitivity to some Islamic sensibility about burying a body within 24 hours, is patently weak. Did we do that for his colleague (and sons) in Iraq? It is inconceivable that his minions would ever accord such respect to their untold countless victims, infidel and Islamic alike. Cultural sensitivity be damned. Considering all that this creep did to burnish the image of Islam, it is arguably an insult to the religion to accord him such respect.

The biggest reason that this weeks big event is, substantively and operationally speaking, a non-event, is that OBL & Associates trashed their franchise a long time ago. Jihad and all that (especially the mocking, tweaking and occasionally killing the unbelieving Other that is us) had a certain cachet when it was new and in the main intangible. But as the entire Islamic world has learned, when AQI comes to town and sets up shop, it just gets creepier and creepier as the weeks roll by. It sounded good in the abstract, but after a few visits by the morality police, a plurality of these folks seem to have decided to take their chances with decadent western influence.

It matters that vengeance has been wreaked, that something our adversaries will recognize as honor has, at great cost and after exceedingly great effort, has been satisfied. But I think that the more substantive development occurred a day or so before. That would be the Colonel who owns Libya witnessing up close and personal that the Western powers he thought he could play have him in their sights and will kill him if they get another chance. He knows that he is almost out of time to cut a deal or die trying. This was a week when we reminded the most hateful of our enemies that we really can be serious if we have to. It gives me hope, a basis for optimism in a world that continually tempts me to just check out and let the crazies have it.