Demigod Bill Gross Never Was

Bill GrossIf you follow the financial news, you are well aware that Bill Gross has left Pimco. In general, I do not follow the financial news, because it makes my brain hurt. But I’m well aware of Bill Gross. He’s a big bond trader with a huge reputation. I’ve never really understood it. People like him are never wizards. They are smart people, but usually depended upon a huge amount of luck. Let’s consider that for a moment, shall we?

The way bonds work is kind of weird because they work the opposite of the way that stocks do. Let’s suppose you have a stock and you think the stock price is going to go up. Then you hold onto it so that when it is worth more, you can sell for the higher price. But a bond just pays you a set amount of money. So if you think bond rates will go up, you want to sell. Let’s suppose you have a bond that pays you 2%. If you think the rate of new bonds will go up to 4%, you should sell your 2% bond now so that you can buy the new higher paying bonds when the rate goes up. That’s the kindergarten overview, which is about as much as I know. But it is enough to understand the politics.

Back in February 2011, Bill Gross decided that all of our government debt and the end of quantitative easing was going to cause US Treasury bond rates to go way up. If you follow economics at all, this must sound very familiar. Ever since Obama moved into the White House, conservatives have been screaming that the government is going to have to pay oh so much more to borrow money because… Well, to be honest, no one really has any good reasons for why this would be the case. For most people, it is just an excuse to do what they always want to do: cut Social Security. Bill Gross may be a smart guy, but I’m sure that he heard all of this. Or maybe he listens to Rush Limbaugh every day. I don’t know.

Regardless, at that time, Pimco’s Total Return fund had as much as 22% of its money invested in US Treasuries. Gross got rid of it all. The 10-year rate was then 3.7%. So Gross was betting big time that the rate was going to go up. It didn’t. Within eight months, the rate was down to 1.8%. (These are straight rates, not inflation adjusted.) It was around this time that Bill Gross wrote his angry column, The Ugly Side of Ultra-Cheap Money. You see, the problem wasn’t with his lack of understand of economics, it was those meanies at the Federal Reserve were keeping money too cheap.

This makes no sense. People either buy bonds or they don’t. And the quantitative easing that the Fed was doing was having at best a marginal effect on the economy anyway. But no matter. What’s really interesting is that Gross seems to think it is more important that people like him continue to make ridiculous sums of money rather than people like you and me have actual jobs. That is after all the trade-off. Most people would rather have jobs. But the super rich would rather get a great return on their bonds. Tighten that money supply so that people who already own things can make even more money off them!

But I was really struck by a couple of things in a column by Michael Hiltzik today, How Bill Gross and Pimco Got Too Big for Each Other. The first is just that what Gross did with Pimco is not that surprising, if you look at what happened to US Treasuries, “Since its launch in May 1987, the yield on the 10-year US Treasury bond has fallen from 8.61% to 2.52% and bond prices have risen commensurately.” Again, I don’t doubt that he’s smart and very good at his job. But as with most things, aren’t there at least a million people on the planet who would have done as well or better given his opportunities? That isn’t something I say because he works in finance. I’d say the same thing of just about every job.

More interesting is just what a weird person Gross has turned into:

At Pimco, the peculiarities of the 70-year-old Gross’ personal management style were beginning to overshadow his storied success as an investment manager. This was exposed by his widely remarked squabbling with Mohamed El-Erian, the economist who served as co-chief executive and co-chief investment officer with Gross and was once regarded as the latter’s heir-presumptive. El-Erian left Pimco earlier this year.

In the wake of El-Erian’s departure, stories leaked out about Gross’ imperious behavior — traders were forbidden to speak to him or even make eye contact on the trading floor, the Wall Street Journal reported. He brooked no discussion or debate about his trading strategies and became hostile to rising talents on the floor.

He didn’t want the little people making eye contact with him? That’s disgusting, but entirely typical of the super-rich. Gross was apparently paid $200 million per year. He has a net worth of over $2 billion. Here in the United States, we don’t have an aristocracy. He have “job creators.” Except they don’t create any jobs. And those like Bill Gross do everything they can to destroy jobs.

Don’t Forget Cervantes

Jáuregui's CervantesEven though we’ve already had our birthday post, the day cannot go by without mentioning that Miguel de Cervantes was born on or around this day in 1547. I often find myself reminding people that I’m a bit of a Cervantes fan, even though all they have to do is look at the header of this website. The site has had three headers since it was started almost five years ago. The first was the René Magritte header, which was super cool but took up too much of the page. Then we had the phrenology header, which was interesting but I never felt comfortable with it. That’s when we came up with the current “Lego” Don Quixote header. Or rather I should say that Andrea did. She’s done all the art and all the thinking.

But the header does give one incorrect impression. Although I think the two Don Quixote novels are amazingly awesome works, it isn’t just that. Cervantes himself was a really interesting guy. He’s a lot more than those two books. He did quite a lot of great work in his later years. I think it is because he really started showing who he was on the page. It’s clear that he was a very funny guy. He had a wry outlook on life. And especially at this point in my life, I need that.

Life and Times

Cervantes is also my kind of guy. He always wanted to be a poet, but he wasn’t from a rich family and he wasn’t a very good poet. So he joined the army and went off to war. This was at a time when soldiers had to be hunter-gatherers to get fed. They often waited years to get paid. Spain was at war with the Ottoman Empire, and Cervantes fought bravely — even heroically. In the process, he lost one of his hands. It has never been clear to me whether it was amputated or simply useless. Regardless, on his way back to Spain, he was captured by Algerian pirates. Because of some mix-ups in communication, his captors became convinced that he was well connected and thus would bring a high ransom. He wasn’t and didn’t. He spent five years in captivity, during which time he tried escaping four times — a couple of them quite involved schemes. Eventually, his family was able to provide a small ransom and get him released.

On his return, he tried to get a military commission, but the government wasn’t interested. He continued to write plays, but no one was really interested in them either. This is about the time that he and Lope de Vega became literary enemies. Cervantes was a traditionalist, as far as theater was concerned. And de Vega was revolutionizing the theater. It’s an interesting irony that when Cervantes finally found success by revolutionizing the novel, de Vega was disparaging.

Regardless, without any other way to make ends meet, Cervantes became a tax collector. This does not mean what you probably think. He would go into townships and negotiate with the entire town to pay what it owed. These negotiations could go on for months and Cervantes didn’t have a great deal of leverage. What was worse was that like being in the military, the government only paid him afterwards — often long afterwards. And they provided no stipend for him to get by on while working in the field.

Because of this work, he was twice thrown in prison because of irregularities in his accounting. One time it was simply a matter that he deposited government money in a bank that went bankrupt. So you can see, life for people like Cervantes was not easy and it was extremely unfair. He had constant financial problems throughout his life, although things did seem to get a bit better at the end.

The way publishing was done at that time was a writer sold a work to a publisher. That was all the money the writer got. The publisher owned it. (It is technically different now, but as any writer will tell you, don’t expect to make much more than your advance.) So when Don Quixote Part 1 was a huge hit, it didn’t make Cervantes rich. But it did make it much easier for him to publish things — and for more money. And this is when he wrote his greatest works such as Exemplary Stories, Eight Comedies and Eight New Interludes, Never Before Acted, and his masterpiece, Don Quixote Part 2.

Appearance

A couple of years ago, I wrote an article, This is Not Cervantes. It is about that image at top of this article. Everyone uses it because it is the only thing we have that might be considered an image of him. In his preface to Exemplary Stories, Cervantes talks about how a young artist could have painted a portrait of him to go into the book. As Cervantes’ scholar Melveena McKendrick noted:

This innocent remark, which could be taken to mean either that Cervantes had been painted by Jáuregui or that the painter could, if asked, produce such a portrait, predictably sent posterity haring off on a wild goosechase in an effort to discover the authentic likeness of the great man. But alas, there is none, and the portrait most often reproduced as being that of Cervantes, dated 1600, bearing the name Jáuregui and entitled Don Miguel de Cervantes, is not genuine… The painting is almost certainly a nineteenth-century fraud.

We have the same problem with Shakespeare. There is no painting or etching of him from when he was alive. The closest we come is a sculpture on his tomb, where he looks rather bloated, that was doubtless done from his corpse. Better than nothing, but forget all those images you’ve seen. Regardless, it doesn’t really matter what either man looked like. At least Cervantes was good enough to provide us with a self mocking description of his appearance in Exemplary Stories:

This person whom you see here, with an oval visage, chestnut hair, smooth open forehead, lively eyes, a hooked but well-proportioned nose, & silvery beard that twenty years ago was golden, large moustache, a small mouth, teeth not much to speak of, for he has but six, in bad condition and worse placed, no two of them corresponding to each other, a figure midway between the two extremes, neither tall nor short, a vivid complexion, rather fair than dark, somewhat stooped in the shoulders, and not very lightfooted…

Plays

Cervantes wrote at least eight full length plays. They are generally not well regarded. But I wouldn’t know. I’ve never read them. Just recently, his two best regarded plays The Bagnios of Algiers and The Great Sultana have been translated by Barbara Fuchs and Aaron Ilika in, Two Plays of Captivity. More important to me, no one has ever translated Eight Comedies and Eight New Interludes, Never Before Acted. There are individual plays translated here or there. Some day I may do it myself.

A couple of years ago, I wrote about Cervantes’ short comedy, The Cave of Salamanca. It is very funny. Here is the beginning of it from a translation by Edwin Honig:

[Enter Pancracio, Leonarda and Cristina]

pancracio: Mistress, dry those tears and stop your sighing. Remember, I’ll be away four days, not centuries. On the fifth day, at the latest, I’ll be back, God preserve me. But if it upsets you so, just say the word and I’ll break my promise and give up the trip altogether. Surely my sister can get married there without me.

leonarda: Pancracio, dear lord and master, I don’t want you to be discourteous because of me. Go now, God speed you, and meet your obligation, since the matter is so pressing. My grief I’ll keep to myself and spend the lonely hours as best I can. Only, I beg you to come back and not stay any longer than you promised. Oh, help me, Cristina, I’ve a pain in my heart!

[Leonarda faints]

cristina: Ah, weddings and holidays—such dreadful things! Indeed, sir, if I were you, I’d never go there.

pancracio: Run inside, girl, and get me a glass of water to throw in her face. No, wait, I know a few magic words I’ll whisper in her ear: they can revive people who faint.

[He speaks the words and Leonarda recovers, saying]

leonarda: Enough. It can’t be helped. I must be patient. My dear, the more you linger, the longer you delay my happiness. You friend Leoniso should be waiting for you in the carriage. God be with you and bring you back as quickly and safely as I could wish.

pancracio: If you want me to stay, my angel, I’ll be like a statue and not budge an inch.

leonarda: No, no, sweet comfort. Your wish is my desire, which means you must leave and not stay here, for your honor and mine are one and the same.

cristina: Oh, mirror of matrimony! If all wives cherished their husbands as my mistress loves hers, they’d sing a different tune.

leonarda: Go get my shawl, Cristiana. I must see your master safely off in his carriage.

pancracio: No, I beg you. Kiss me, but stay here, please. Cristina, be sure and cheer up your mistress, and I’ll get you a pair of shoes when I return.

cristina: On your way, sir, and don’t you worry about my mistress. I’ll see to it we both enjoy ourselves so she won’t miss your absence.

leonarda: Enjoy myself? Me? What a fantastic idea! Without my love beside me, I can know no bliss or joy, only grief and sorrow.

pancracio: I cannot bear this any longer. Ah, light of my eyes, farewell; I’ll see nothing to delight me will I gave upon you once again.

[Exit Pancracio]

leonarda: Good-bye, and good riddance to you! Go, and don’t come back! Vanish, go up like smoke in thin air! Good God, this time all your bluster and squeamishness don’t move me a bit!

cristina: And I was afraid your sweet nothings would keep him here and spoil our fun.

leonarda: Do you think our guest will really come tonight?

cristina: And why not? I’ve been in touch with them, and they’re just dying to come.

Cervantes was a little devil. Eventually the husband’s carriage breaks down and he comes back and it all turns into something like a Marx Brothers movie.

Translations

When it comes to Don Quixote I still get asked a lot what translation is the best — or at least which one they should read. The standard answer to that is, “Anything but Peter Motteux.” But in general, I wouldn’t even go that far. I would say you should read any copy you can get your hands on. The standard translation is John Ormsby’s, which is absolutely free and available in a number of formats from the Gutenberg Project. Walter Starkie’s 1957 translation seems to always be available in abundance at book sales for a quarter. Or you could get The Portable Cervantes, that provides Samuel Putnam’s lightly abridged Don Quixote, two stories from Exemplary Stories, and a tiny bit of The Troubles of Persiles and Sigismunda.

I don’t think it is necessary to pay more for one of the recent translations like the one by Edith Grossman. But if you do, I would recommend taking a walk on the wild side and trying one by Burton Raffel or John Rutherford. But like I said, it doesn’t too much matter. Since Cervantes is above all a character-oriented writer, his voice comes through regardless.

The main thing to remember is that both the books are a romp. They are comedies. Cervantes had a keen eye for the absurdity of life and people and it finds its greatest expression in Don Quixote. And given that, it is perfectly all right to skip the poetry, which is, with very few exceptions, mediocre. And that’s when it is well translated. Grossman, for example, doesn’t even pretend to care.

Cervantes is still alive. If you read him.

Dean Baker on the Vicissitude of the Marketplace

Dean BakerOf course the problem of the last three decades is not the “vicissitudes of the marketplace,” but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy.

For example an explicit goal of our trade policy is to put our manufacturing workers in direct competition with low paid workers in the developing world. This has the predicted actual result of driving down the wages of manufacturing workers and less-educated workers more generally. At the same time we deliberately depress their wages we largely protect the most highly paid professionals (eg doctors, lawyers, and dentists) from the same sort of international competition.

The government has strengthened and lengthened patent and copyright monopolies. This allows for absurdities like a treatment with the hepatitis C drug Sovaldi costing $84,000 when the drug would sell on the free market for less than $1,000. There would be no hand-wringing moral dilemmas about treating people with hepatitis C at less than $1,000 per person. If we just had a free market the government would not be putting people behind bars for 16 months for allowing people to download recorded material.

The vicissitudes of the market would also not have bailed out the Wall Street banks, ensuring that many of the top 0.1 percent or 0.01 percent did not lose their fortunes due to their own greed and ineptitude. It also wouldn’t exempt the financial sector from the same sort of taxes imposed on all other industries. And the vicissitudes of the market would not have a Federal Reserve Board that is prepared to raise interest rates in order to keep people from getting jobs and keep workers from having enough bargaining power to get wage increases.

—Dean Baker
The Vicissitudes of the Market Would Be a Big Improvement

Tribal Atheism

Seth AndrewsOver the weekend, I heard a talk by Seth Andrews. He’s a prominent atheist who runs The Thinking Atheist podcast. He is very good, which is not surprising. He had worked in Christian broadcasting before becoming an atheist. And he has a gorgeous radio voice and he’s pretty smart and knowledgeable. But I made the mistake of listening to more of his work. None of it is bad. It is just that he presents an extremely common and troubling outlook on life.

Again and again, he talks about atheism in terms of science and what we can prove. Most annoyingly, he claims to base his life on rational thought. It is such an arrogant view. And untrue! We humans are very strange and how we make decisions is only very slowly coming into any kind of focus. But what we do know is that we aren’t nearly as rational as we think we are.

Belief in God, at least today, is more silly than irrational. Most people believe in God for the same reason they vote Republican or root for the Raiders — it’s a cultural thing and they really don’t think much about it. The houses built by fundamentalist Christians are generally as sound as those built by atheists. So theists may be misguided in their belief in specific myths, but they aren’t irrational in a general sense.

I never believed in God. From a fairly young age — from about the time I understood what death was — I wanted to believe in God. But it always seemed too stupid to believe in. Even at the age of ten, I could not see any more reason to believe in Jesus than to believe in the Greek myths I read about in school or the Norse gods I saw in comic books. So perhaps I have a different approach to atheism. I didn’t start off in one culture and move to another. So it isn’t necessary for me to make religious belief or non-belief into a tribal issue. And I believe this is what Andrews has done.

Hemant MehtaThat doesn’t mean that Andrews is bad. He’s actually charmingly inclusive. One thing I really like is that when I listen to him, I feel like I am an atheist. Too many in the atheist community make me feel like I’m a heretic. But a big part of why Andrews includes the great range of non-believers is just that he is so focused on his former Christianity. And I’m glad he clawed his way out of that tribal association. But let’s not go too far in claiming the intellectual high ground.

Much better than Andrews is Hemant Mehta of The Friendly Atheist. Of course I would think that: he is a former math teacher. But as much as I like him, he exhibits some of the same issues. For example, I came upon the following video, “Atheists, where did the universe come from?” I was very exited to see that title, because too few atheists will even engage with the question. But I was really unhappy with his answer:

I don’t have a problem with the answer, “We just don’t know!” That’s a perfectly fine, if incredibly boring, answer. But he makes a critical mistake in framing the question as he does. He says, “Scientists can come up with theories of what may have been there [before the big bang], but the truth is, right now — and maybe forever — we won’t be able to answer that question definitively.” This makes the same mistake that theists make when they claim that God created the universe: it just pushes the question back a step. What if scientists proved that our universe is just part of a multiverse? That would be no more final an answer than the Big Bang is.

When it comes to this ultimate ontological question, I find science and theology equally useless. But theologians understand that the existence of “God” is a real problem — that it must exist in a form that we cannot comprehend because of our being locked into this universe. Scientists largely don’t see the real problem. They are like mechanical engineers thinking that they might figure out the structure of the periodic table by building better bridges. They won’t, because they aren’t even approaching the question.

I understand that we ask the kind of questions that we have tools to answer, and we really don’t have the tools to answer this question. But what a great opportunity this provides! There ought to be common ground here among scientists and theists. The scientists ought to look out at the universe as the theists look out at “God.” Because it is the same thing: the great unknown. I understand that theists are, in general, annoying in their dogma and fear of anything that might counter it. But they aren’t any more irrational than anyone else. What’s irrational is the universe.

I think that people who claim to be science-based and rational are generally people who don’t understand science all that well. Science is a fantastic tool for learning things about the universe. But it is, thus far, limited to the universe. And math has shown us that logic itself is not necessarily consistent if you push it far enough. Thus I see no contradiction between science, atheism, mysticism, and macro-scale rationality. Who wants to join my tribe?

Brutal and Brilliant Life of Caravaggio

Detail of Supper at Emmaus of Caravaggio - CaravaggioOn this day in 1572 (maybe), the great Baroque painter Caravaggio was born. Or maybe it is more accurate to say that he was the inventor of Baroque painting. There is no doubt that he was hugely influential in its earliest development. Baroque painting was a response to Mannerism. Where as Mannerism was highly intellectual and artificial, Baroque painting was dramatic. Artists played a lot with light and shadow and they showed scenes in medias res — things were already happening.

Take for example, everyone’s favor Old Testament story: Judith’s Beheading of Holofernes. It tells the story of the Jewish widow Judith who is none too happy about what pussies the Israelite men are being about the Assyrians. So she goes and visits the Assyrian commander, Holofernes. She gets cozy with him, promising him intelligence about the Israelites, and probably more, if you know what I mean. So she enters his tent one night when he is passed out drunk. And she cuts off his head and brings it back to the Israelites to inspire them. It’s amazing that people not only let their children read this stuff, they tell them it is the most moral Book in the world.

Anyway, a great example of a Mannerist approach to this painting was done by Cristofano Allori, where we just see it after the fact, with Judith holding Holofernes’ head while her maid looks on. (It’s still a great painting!) Caravaggio, provided a Baroque approach, which I think you will agree is very dramatic:

Judith Beheading Holofernes - Caravaggio

Not all of Caravaggio’s work is so cold blooded. Much of it is really quite sweet. But it is always quite dramatic with very rich colors and lots of light and shadow.

As for his character, well, it seems to not have been so great. He was a hard drinking man, much inclined to bar brawls. In 1606, he killed a young man in a brawl, and had to flee Rome. He continued to work and to get into trouble. And along the way, unsuccessful attempts were made on his life. He made a lot of enemies. He died in 1610 at the age of only 36. It is unclear exactly why. Murder is a good possibility. Despite his brief life, there are over 80 known paintings of his. And given the great detail of them, that is a lot. He was probably the greatest painter of his time — and extremely fast.

Happy birthday Caravaggio!