Taking Stock

A horrific week on Wall Street prompted me to seek out diversions, especially in the hours before (or worse, instead of) sleep that otherwise were spent calculating losses. Bourbon was a tempting option but ultimately a counterproductive one, so I uncorked a few books instead. They were less cheering, but the mornings after were less painful – at least until trading started. If the reader of this post is similarly minded, here are five recent reads I can recommend for next week: one for each day of trading. Whatever happens next on the NYSE floor, all are worth a look.

**** ****

This Time is Different: Eight Centuries of Financial Folly by Princeton economists Carmen Reinhart and Kenneth Rogoff

Published in 2009 (and read by me back then), this remains the definitive examination of the 2006-2008 crisis. I reopened the book last Tuesday. While that might seem to have been an exercise in masochism, there actually is some good news hidden in it. Crashes are unavoidable "equal opportunity crises" that will happen regardless of the political or economic system. "A financial system can collapse under the pressure of greed, politics, and profits no matter how well regulated it seems to be," Reinhart and Rogoff tell us, and they give an abundance of international and historical examples to prove it. What is the good news in that? It is that financial collapses, not market drops, are what do deep and lasting harm (as after 1929, 1987, and 2008) to economies. Not every stock market crash precedes a financial crisis. Many don’t. Even the particularly bad 2000 crash, for instance, while it hurt the tech sector, left banks largely unscathed so the effects were otherwise mild. Today the financial institutions are in better shape than in 2000. So, the economic threat is not structural, but literally viral. We’ve seen and gotten past viral scares before (e.g. SARS), though of course there are no guarantees things will play out the same way this time.

The 1987 and 2008 market drops were both preceded by a free fall in real estate prices, which exposed over-extended banks to bad mortgages. That is not a problem this year. Even were real estate to drop (so far it’s not happening) the banks are capitalized well enough this time to handle it. Real estate is a frequent source of past crises, by the way. As far back as 33 CE a Roman financial crisis began with a decline in real estate values. Lenders and investors (many of them senators) discovered their mortgages were larger than the underlying property values. Tacitus tells us “many were utterly ruined. The destruction of private wealth precipitated the fall of rank and reputation, until at last the emperor interposed his aid by distributing throughout the banks a hundred million sesterces.” The emperor Tiberius was a tyrannical old pervert but he was also a budget hawk who had filled up the Roman treasury, so he was able to bail out the financiers. The recovery was slow nonetheless. It is not even clear the bailout helped in a broader sense though it did ease panic. A similar crisis when Julius Caesar marched on Rome (Julius had no money to spare to bail out anyone) resolved itself in about the same time frame without intervention.

**** ****

Icarus by Leon Meyer

This is truly excellent South African crime fiction. Multiple storylines with multiple perspectives intertwine. The plot centers on the murder of a charming but amoral young entrepreneur Ernst Richter who had his fingers in everything from an internet alibi site for cheaters to counterfeit wines to blackmail. Richter’s alibi site provided false records (airline tickets, hotel bills, restaurant receipts, and so on) to clients in order to cover up their indiscretions in other locations. Recovering alcoholic detective Benny Griessel, a recurring character in Meyer’s novels, assists Vaughn Cupido in the murder investigation by Cape Town’s Priority Crimes unit. It is well that Griessel is not heading up this one, because he has fallen off the wagon after a close colleague committed a murder/suicide. He nonetheless does his part.

Many countries have ethnic divisions – sometimes deadly ones – but few are as fraught with complicated history as those in South Africa. Not even the USA comes close to matching the complexity of South Africa, which is saying a lot. Meyer navigates this cultural mix in very nuanced and human terms. “Human” is not always a compliment, but in this case it is.

**** ****

The Blood Countess by Andre Codrescu

Aside from Vlad Dracul, the 16th century Hungarian aristocrat Elizabeth Bathory is commonly cited as an inspiration for the modern version of the vampire myth. She was tried for murdering peasant girls: possibly several hundred, purportedly to bathe in their blood. The record of her trial still exists but at the time it was kept hush hush because the Bathory family had a claim to the throne and this scandal would have been hard to spin. Elizabeth was confined to a castle room as punishment.

Codrescu originally planned a straight-up history, but instead switched over to a horror novel, which was published in 1995. The story is narrated by a Bathory family descendant as a statement to a judge in 1990s New York. He claims his crime of murder is connected to Elizabeth and therefore he recounts her history.

The prose flows smoothly, the historical elements are well-researched, and the ambience of 1990s Hungary nicely evoked. This is not a vampire novel, though there are more than a few hints of the paranormal. It is mostly a historical drama depicting Elizabeth as an intelligent sadistic psychopath rather than a creature of the night. She is all the scarier for that.

**** ****

Forbidden Hollywood by Mark A. Vieira

One of the most interesting periods in film history is the pre-code era from 1930 to the middle of 1934. The Hays Production Code was a self-censorship code formulated by the film industry to head off government regulation. Though it existed in 1930, the studios didn’t start to enforce it strictly until 1934 when the threat of government intervention became more real. Every era generates its share of garbage, and this one is no exception, but when the pre-codes were good they were very good. The characters have complexity, moral ambiguity, and erotic lives that are very human (in a way often lacking in films today) in films such as Baby Face, Skyscraper Souls, Night Nurse, Red Dust (The New York Times reviewer said that the title was off by one letter), Waterloo Bridge (the harsh 1931 version, not the sentimental 1940 one), Scarface, and many many others. TCM has an excellent DVD collection of these films called Forbidden Hollywood and this is the companion book. It is a brief but serviceable history of the era and contains backstories on numerous films.

**** ****

Joker by Brian Azzarello

The first decade of the 21^st century was a fine time for comics and graphic novels. Many of them were aimed solidly at adults. Marvel had the most successful decade, but DC had its moments. Brian Azzarello’s Joker came out the same year as Christopher Nolan’s The Dark Knight movie with the iconic portrayal of the Joker by Heath Ledger. Azzarello’s Joker is very different but equally fascinating. Heath Ledger’s Joker is not actually crazy. He has thought about life, concluded that he is a nihilist, and embraced nihilism: witness his “agent of chaos” speech. Azzarello’s Joker, while intelligent in his own way, is not thoughtful. He is ruled by emotion: witness his “what I hate” speech. He is an impulsive solipsistic psychopath who terrifies everyone (including Penguin, Riddler, Dent, and Croc) except Harley Quinn. Harley, who apparently enjoys the danger of his company for reasons of her own, is not a major character in this comic but she is there. Fair warning: the comic is more graphically violent than one expects from DC.

Joker (which has nothing to do with the storyline of the 2019 movie of the same title) is narrated by the character Johnny Frost, a small time hoodlum. Frost decides to get ahead in the world of crime by tying his star to Joker's on the day Joker is released from Arkham Asylum. Accepted as Joker’s sidekick, Frost quickly realizes he is over his head, but he is unable to extricate himself as the mayhem mounts. Frost knows Joker does not tolerate betrayal. The comic implies that there is a way in which the various Jokers of page and screen connect: there may be multiple sequential Jokers, for Johnny (in a kind of Stockholm syndrome) seems ready to fill the character’s shoes before the story is done. Batman, who doesn’t appear until near the end of the comic, therefore will never defeat Joker. Another will take his place. It’s never possible entirely to defeat the dark impulses embodied by Joker. Batman (and we) can only continue the fight in hopes of limiting his influence.

Sammy Davis, Jr. – The Joker