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Banbury Cross

a pillow for lost thoughts...

Archives for: July 2013

Change I Could Believe In

Every once in a blue moon, that ginormously greasy pork factory that we fondly call Washington, DC produces a hearty meal that even your grandma would approve of. All it takes is for one of our beloved sausage makers to skillfully canoe across the alphabet soup of special interests and come up with an idea whose power and simplicity will shine through the rain of bacon like a beacon.

Senator Elizabeth Warren has recently suggested that Federal student loans be tied to the same rate which big banks receive from the Federal Reserve. Amid multi-thousand page legislative monsters, this is a truly inspired idea. The intuitive social justice inherent in her simple proposal as well as its many practical implications form the kind of cocktail that isn't served very often in this town. Why should our monetary policy favor only one segment of our society - bankers? There is more to the organically grown economy than its bankrolling logistics. Students are its future skeleton, flesh and blood - all in one body. Yes, supporting them will be a form of subsidy, but one that is well placed and well thought out. Plus it's not like we are throwing the money away. They will still have to pay it back. We'll just give them more favorable conditions.

Even as an investment it makes perfect sense. A nation's youth is its most precious asset. Why would we coddle the sinful financial sector with artificially low rates while the aspiring doctors, scientists and engineers are stuck with nearly usurious rates? Why would we punish the next generation for wanting to become intelligent and productive? Educated nation should be our long term goal anyway. One could argue that a degree in French history won't add up as much to the GDP as a degree in electrical engineering and to some extent it is true. But even a person with a degree in humanities brings many values to the table, not the least of which is overall elevation of the political culture. Simply put: educations enlightens and softens the rough edges, regardless of the major.

One might also argue that the easy loans would exacerbate the already inflated college costs. True as well. But we already have bubbles in virtually all markets and nobody seems to care. Not to mention that those costs can easily be reduced. And last but not least, Warren's proposal does not say the college loan rates should be artificially low. She just says that they should be on par with the loans we are giving to banks. It's only fair. If I had a say in this business, I would much rather support teachers and professors, because their work represents a definite social contribution. Speculating in the commodity markets less so.

Quality schooling is an important factor in launching a successful professional career. Consequently, easier access to education for all will strengthen the middle class and ameliorate the increasingly lopsided wealth distribution. By extension, one can even hope that such reform and the associated boost in common societal wealth will decrease racial and religious tensions; that the proverbial tide will truly lift all the boats. That would be the change I could believe in.

Now if only we had politicians visionary enough to implement it.

Quantum Music

Quantum mechanics was born out of a sheer mystery. If electrons are revolving around the nuclei, they must be continuously radiating their energy out (like all charged particles), slowing down in the process and eventually fall into the atomic kernel. But they don't. It was only after Max Planck postulated that particles can lose their energy only in discrete quantities (called quanta), an intriguing possibility for stable orbits appeared. After some heavy duty math lifting was applied, it turned out that if electrons move at a very specific energy levels, they do not have to lose their momentum at all. They just keep circling around the nucleus, never losing a single photon, never falling into the central abyss.

I think that music is subject to a similar phenomenon. Most musical pieces become duller and grayer with every new spin on the turntable (or an iPod). They may seem like a feast for your disbelieving ears when you hear them the first time - a sure hit in the making - but as time goes on they slowly lose their luster and eventually fall into the well deserved oblivion. Regardless of a genre, author or an interpret. But every now and then you come across a rare composition which breaks all the classical rules and enters the mysterious quantum state in which it can - at least in principle - live forever. You can play it day in and day out and its wings never tire. Like resonances, these tunes of distinction strike the right ratio of your internal wavelengths and out comes the musical equivalent of the Elixir of Youth.

Which compositions enter this fabled state is, of course, highly subjective. One man's evergreen is another man's flash for the trash. The elusive quantum orbits are hard wired differently in each mind. Sometimes I am actually surprised what makes the cut in my own. The other day I was driving back from a soccer game down in DC and my car stereo starting crooning an old Abba song titled "Me and I". Despite the world's infatuation with Dancing Queen and the likes, this little known late opus was always my Abba favorite. As the song cantered its lighthearted gallop to my eardrums, I realized that over the 20 years since I have known it, it hasn't lost a single bit of its spunk. It was as fresh as the first green maple leaves I see outside of my window every Spring. And I am pretty sure it will stay that way.


Quo Vadis, America?

Fourth of July.

It's that time of the year when the sky blooms with sea anemonies of colorful sparks and the smell of hot dogs overpowers any resolution to wiggle back into last year's pants. This is a hallowed night which presents a great opportunity to pause and ponder the direction in which this young country is going.

Naturally, opinions on that vary greatly.

Many on the right are worried that the country is lurching to the left. The commentators are calling Obama a socialist, the economists are wringing their hands at every bit of expenditure, pointing to the imminent death of the dollar and the shock jocks are dusting off the specter of U.S.S.R and promptly rebranding the country's abbreviation into a sinister sounding U.S.S.A. But they are all way off the mark. I grew up in the Soviet bloc and I can tell you that we are not a socialist country any more than North Korea is a thriving democracy. By historical standards Obama maneuvers in the center-right space, so if we are to fret about any extremist labels at all, it should probably be "fascism". After all, if we had socialism, the wealth gap would be narrowing, not widening. However, despite the lack of signs that we are tacking to the left, there are certain parallels with the former Soviet Union that warrant our attention. Over the past 20 years that I have lived here, these parallels have grown more visible and should be closely monitored by the politicians, by the punditry and above all by the public.

Here they are:

a. militarization of economy: it is not a secret that overextended military and increased economic emphasis on arms and weaponry production is what did the Soviet Union in. We keep shedding whatever consumer oriented production we still have and larger and larger share of our GDP goes to the (unproductive) military complex. The fact that we alone account for 40% of the world's military budget tells you most of the story. The warning of President Eisenhower is half forgotten and military industrial complex is stronger than ever.

b. erosion of civil liberties: the process that started with the Patriot Act in the atmosphere of post-9/11 shock has taken life of its own and as the time goes on, its intrusive scope is waxing, not waning. As the recent NSA revelations show, one by one our liberties are being undermined and the freedom to pursue happiness as we see fit is becoming lost in the labyrinth of laws, regulations and privacy intrusions. The tightly bound police state that the Soviet Union was infamous for is hardly an example to emulate and certainly not a recipe for developing a dynamic and thriving society. Intolerance breeds suspicions which in turn limit the overall mobility of individual citizens as different segments of the society feel shortchanged and crawl into their defensive shells.

c. financial centralization: a system as complex as the national economy needs to be controlled by a robust and decentralized network of thousands of local decision makers, all armed with boots on the ground, equipped with streams of real life data and controlled by self-adjusting feedback loops. A handful of wise men has little chance to appreciate all the details and interconnections of the whole system, much less make decisions beneficial to it. And it matters little whether the building in which they ply their wisdom is owned by a central bank or by a politburo of the communist party. The aftermath of the global financial crisis diverted enormous power into the corridors of the former. The central bankers may think they got all the answers, but at the end they cannot plan the future any better than the old Soviet style apparatchiks could. The hamfisted money printing is distorting interest rates, inflating prices of commodities, stifling markets' ability to correctly choose capital allocations and, in general, turning our economy into a centrally planned morass.

Each of these trends poses a clear and present danger. For now, we are slowly drifting in the wrong direction and fortunately there is no reason to panic yet. We are reasonably far away from the rocks and we have one big advantage: a strong tradition in democracy. While Russians were used to living under tzars for centuries - and that is a lot to saddle the national psyche with - America was built on the spirit of defiance and individual rights. The threshold for totalitarian pain is much thinner in this country. And that gives me hope that the only existential question the fireworks in the future will bring about is whether we should go for that extra hot dog.

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