[PHOTO] Financial District, New York City

I owe thanks to Alexander for showing me around the Financial District of New York City, in lower Manhattan, on my final full day in that metropolis. He took me down a route that included, as centerpiece, a walk down lower Broadway past Trinity Church and down Wall Street to the New York Stock Exchange and thereabouts.

It was fun to walk about the beating heart of American capitalism, but fun also to walk about the longest-settled areas of New York City. Much of the Financial District is coterminous with New Amsterdam, the iconic neighbourhood's narrow streets and monumental buildings and occasional patch of cobblestones evoking a dense past.

The streets are packed.



The buildings of New York tower like mountains.



( Eight more photos. )

[BLOG] Some Tuesday links

• Over at Bad Astronomy, Phil Plait reproduces a map showing how temperatures across most of North America are substantially higher than normal, and notes that so far the climate changes resemble the early predicted effects of climate change.


• BagNewsNotes' Michael Shaw notes that of the three pictures of Anderson Cooper used to illustrated his coming-out blog post, two of them feature him in war zones. What does this choice of photographs say?


• Will Baird at The Dragon's Tales let me know that apparently dinosaurs were feathered, or at least that feathers were much more common than previously assumed.


• Geocurrents observes that plans in Ethiopia to build dams on the Nile to support Ethiopian economic development are making Egypt, dependent on the waters of the Nile, worried.


• Guistino at Itching for Eestimaa considers genetic diversity--and, of necessity, past and present ethnic diversity--in modern Estonia.


• I only hope that the anecdote that The Power and the Money's Noel Maurer shares about two New Yorkers' ignoring an assault victim was a joke.


• Registan's Casey Michel writes about how ongoing disputes over maritime boundaries on the Caspian Sea between the five littoral states--Russia, Iran, Azerbaijan, Turkmenistan, and Kazakhstan--are starting to produce serious problems.

[BRIEF NOTE] On the Basque exception in the economy of Spain

Amanda Cooper's Reuters article "Basque economy has lessons for Spain", does highlight an interesting exception to the picture of general economic despair in Spain: Euskadi, the Basque Autonomous Community in northern Spain, has done much better in the aftermath of the global recession and the Eurozone crisis than the rest of Spain, a consequence of the combined effects of the region's long-standing and successful industrialization and a climate that--Bilbao Guggenheim aside--makes mass tourism of the sort that precipitated real estate booms elsewhere in Spain unlikely.

It goes almost without saying that Euskadi's lessons aren't generalizable to the rest of Spain. The Basque Country stands out in Spain for its long-standing industrialization and relative prosperity, alongside a Catalonia that--unfortunately--despite its general non-real estate prosperity had a real estate boom that took Catalonia down with the rest of Spain. (The article suggests that 9.5% interest applies for Euskadi government two-year debt, versus 14% for equivalent Catalonian government debt.)

One interesting question will be whether the relative economic divergence between Euskadi and the rest of Spain might lead to renewed Basque separatism. The idea of making Euskadi financially autonomous has already gotten mainstream support. In the context of general Spanish gloom, could public opinion in Euskadi shift decisively in favour of independence?

Spain's dash into tourism in the 1970s and its property boom last decade largely passed by the Basque region, a cool, damp corner of the north with a reputation for separatist violence. Instead the Basques stuck with industry, by force of circumstance.

Euskadi, the Basque name for the hilly province of 2 million bordering France, now outshines the rest of Spain with a better credit rating than central government, the lowest regional unemployment and borrowing costs half those of other areas.

[. . .]

The Basque region's secret has been in sticking to manufacturing over the property and tourism industries that ended in economic misery elsewhere in Spain when a real estate bubble fuelled by easy credit burst in 2009.

Tourism was always going to be a difficult sell for the Basques because of the separatist violence that only ended in October 2011 when ETA, Europe's last armed guerrilla group, called an end to its 50-year struggle.

[. . .]

The Basque Country is Spain's fifth largest regional economy, with a gross domestic product of 66.1 billion euros, meaning it accounts for around 7 percent of national GDP. The region's exports are more or less evenly balanced between the rest of Spain and markets beyond Spanish borders.

Its deficit-to-GDP ratio is just 0.25 percent, compared with nearly 90 percent for the central state. It has the lowest unemployment rate in Spain at 13.55 percent, compared with 24.4 percent nationally.

[. . .]

"There was a clear bet on industry here, a bet on those traditional sectors, such as iron, steel, energy and small and medium-sized companies that make all those components for the energy and car sectors, that make things that you can hold in your hand," Jose Luis Curbelo, director general of the Basque Institute for Competitiveness, said.

"That is the secret of the Basque economy," he said. "Basque industry immediately internationalised, whether that was by producing components and gadgets for overseas companies, or by setting up shop and manufacturing abroad."

"That process was much faster and much more committed than in the rest of Spain, so the collapse in the domestic market hasn't affected Basque companies as much. A lot of their sales are global and they can withstand the crisis in better shape."

[ISL] On Jersey independence being a non-starter

My attention was caught by the news that one, Philip Bailhache, a serving parliamentarian and minister of the Channel Island of Jersey, called for considering the full independence of his self-governing island off the French coast from the British Crown.

Senator Sir Philip Bailhache's comments came after the UK government said it was cracking down on tax avoidance.

He said: "Independence is quite a long way down the road, but I do feel and I have been saying for quite a long time, that we should not close our eyes to this possibility."

[. . .]

Sir Philip said Jersey had not been marketing itself as a tax haven nor a place where people could ignore their fiscal dues.

He said Jersey had signed a range of tax information exchange agreements with countries in the European Union and elsewhere to demonstrate it was a transparent jurisdiction.

[. . .]

Sir Philip said: "If Jersey was faced with a stance by the UK or the European Union which meant the finance industry was going to up sticks and leave the island, then that clearly would be an instance where we would have to consider very carefully where our best interests lay.

"We should be ready for independence if it was obvious that it was the right thing for the island to do."

The Channel Islands' unique constitutional structure is one of the few remnants in western Europe of medieval polities; the Channel Islands are the only territories of the Duchy of Normandy that remained under the Crown of England, later the United Kingdom, after the Hundred Years War drove the armies of the monarch regnant in London from the French mainland. In most respects, these islands have been fully internally self-governing, granting the bare minimum of power to the British government, in foreign and military affairs. Lately, these islands have taken advantage of their ambiguous sovereignty--critically, in the European Union's customs area but otherwise outside, with stable governments and convenient locations--to attract financial industries, including tax shelters.

The idea's a non-starter, of course. The people of Jersey seem, by and large, happy with their constitutional status, of near-independence under the rule of the British monarch. The people of Jersey seem concerned with their island's economic future, but it's just not easily reducible to the financial industries alone. Writing in the Daily Mail, for instance, Michael Hanlon argues that independences would impose extra costs on Jersey--how would it manage its economic policies? what would they even be?--while cutting off the ordinary people of Jersey from accessing the mainland. The well-off might do well, granted.

[W]ould an ‘independent’ Jersey set its own currency, be responsible for defence and have to renegotiate new trading and rules with the EU and jettison Her Majesty the Duke? If it set its own currency how would this be backed? Does the Euro appeal? Thought not. So who sets interest rates? An ‘independent’ Jersey would lose its beneficial relationship with Britain, including the automatic right of abode in the UK (and the rest of the EU in fact) for Jersey passport holders. Independent Jersey citizens would therefore not be able to travel to the UK or France to claim benefits or healthcare, for instance (indeed there are already curtailments on the latter in place).

This it would seem that the immediate beneficiaries of ‘independence’ would be limited to the hyper-rich and the corporations who have made Jersey their (usually nominal) home. The ordinary people, the 90,000 or so islanders, would either be worse off or notice no difference. But that would only be the case if things stayed hunky dory with the financial sector.

Nicholas Shaxson in The Guardian argues that the overall uncertainty of things in an independent Jersey would even put off the financial industry that would supposedly benefit from independence.

The world's financial actors come to Jersey because of the rock-like stability and predictability that stems from its umbilical relationship with the UK. While Britain's crown dependencies (such as Jersey) and overseas territories (such as the Cayman Islands) do have their own quasi-independent politics, their governors and some other officials are appointed by the Queen, Britain is responsible for their (supposedly) good governance and defence, and no laws can be passed in Jersey without final assent from the privy council in London. Has the Duke of Normandy – that is, our dear Queen – even been asked if Jersey may become independent?

If this reassuring bedrock were removed Jersey could still be a tax haven, but a more marginal one. When the Bahamas won full independence from Britain in 1973, its (then mostly criminal) financial sector decamped almost wholesale to the Cayman Islands, which remained a British overseas territory. If Jersey went it alone, its financial industry would be similarly devastated.

[. . .]

Statements like Bailhache's are not driven by Jersey's people, but by its financial sector – a sector with which Bailhache's family law firm has had a very profitable relationship over the years. If Jersey lost all the protections provided to it by the British establishment, it is likely that the seething and widespread corruption on the island – which I am not seeking to link to Bailhache – will be vulnerable to greater exposure.

[LINK] "The Prince vs. the 'Paupers'"

Foreign Policy's Michael Wise has an article examining the surprising resilience of something that looks awfully like absolute monarchy in early 21st century central Europe.

The principality of Liechtenstein, wedged between Switzerland and Austria in the Alps, is unique in the world as the last German-speaking monarchy extant.* Like many other microstates in the post-Second World War world, Liechtenstein has become prosperous thanks to its marketing of its sovereignty as an asset, becoming--among other things, and yes, like the Channel Islands off of Europe's Atlantic coast--a tax shelter. The princely family has done by all accounts a decent job of shepherding Liechtenstein's transformation into one of the wealthiest polities in the world. The only problem is that the princely family also insists on retaining a tight control over domestic politics. Calls for full democratization--specifically, lifting the prince's veto over popular referenda--have been met by promises from the princely family that, if a constitutional referendum scheduled for the 1st of July succeeding in overturning the veto, they would abandon the country to an uncertain quasi-republicanism.

(The referendum failed, 76% voting against.)

With a net worth estimated at $7 billion, the silver-haired monarch ranks among the world's richest heads of state, and he owns one of the most important art collections in private hands. His conservative principality, nestled between Austria and Switzerland, has the planet's second-highest GDP per capita, and it is an island of economic stability in troubled Europe. But discontented rumblings are afoot after Prince Hans-Adam's heir, 44-year-old Prince Alois, threatened to veto the result of a referendum last fall aimed at overturning Liechtenstein's ban on abortion.

Although Prince Hans-Adam supports a formal division of church and state, he and his family do not hide their Catholic devotion. Eighty percent of their principality's population of 36,000 is also Catholic. A massive carving of Jesus on the cross looms over the fireplace in Prince Hans-Adam's vaulted office, and when he showed me around the 130-room castle this past winter, we stopped in a chapel adorned with a Gothic altar where he and his offspring pray regularly.

But unlike in the United States, where the battle over abortion rights is part of a larger cultural war, the tempest in Liechtenstein is not primarily related to religious belief: Rather, it centers on the extraordinary degree of political power retained by a dynastic leader in the heart of 21st-century democratic Europe.

"Dominions … are either accustomed to live under a prince or to live in freedom," wrote Machiavelli. Liechtenstein is accustomed to having some of both, but Prince Hans-Adam clearly tipped the balance when he used a 2003 constitutional referendum approved by 64 percent of the electorate to increase his leverage over parliament and the courts, obtaining power to irreversibly veto any law, dissolve the legislature, and appoint judges. But since November's unsuccessful bid to allow abortion -- it failed in the wake of a princely threat to veto it if it gained voter approval -- a new citizens' initiative is pushing for limits on the royal veto prerogative.

Even so, neither power nor money fully satisfies Prince Hans-Adam, who talks in terms of generations rather than the short-term goals of most elected leaders. To ensure a smooth succession, in 2004 he appointed his son Prince Alois as his representative in running day-to-day government matters, but he remains head of state and still exerts considerable influence. Prince Hans-Adam, free from the daily rigors of governance, has recently sought international recognition by writing a book -- called The State in the Third Millennium and published in 10 languages so far -- presenting Liechtenstein's odd constitutional monarchy as a model for other countries.

[. . .]

The prince, whose aristocratic roots stretch back nearly a millennium, describes himself as "a convinced democrat committed to a form of democracy that far exceeds what is normal today," even if it's hardly the norm nowadays for monarchs to be more than symbolic leaders much less have anywhere close to his degree of power. But he sees no contradiction in tenaciously clinging to inherited dynastic privilege. Prince Alois, who attended the British Royal Military Academy Sandhurst, is only slightly more circumspect, warning parliament in March that the princely house would not serve as a "fig leaf" for policies it did not support and "would completely withdraw from political life in Liechtenstein" if it lost the "necessary political instruments."

Adherents of the prince in the tiny country, once part of the Holy Roman Empire and only actually inhabited by the Liechtenstein royal family since 1938 (they lived primarily in Austria and what is now the Czech Republic until the rise of Nazism) hail what's called a "dualistic" political system, whereby policy is shaped jointly by the princely house and a 25-member parliament. A large portrait of Prince Hans-Adam hangs in the chamber as if to keep an eye on the proceedings. The legislators, who serve on a part-time basis, rose in the prince's defense on May 23, voting 18 to 7 against the citizens' initiative as part of the procedure to put the referendum on the veto power before the public. Although open threats of a royal veto are rare, David Beattie, a former British ambassador to Liechtenstein, notes that the prince and his son regularly meet behind closed doors with officials, so "it's impossible to know how many times government policy may have been influenced by the possibility of a veto."

(I exclude Luxembourg from consideration, owing to the Grand Duchy's allegiances to the Low Countries, as well as the implantation of French as a language of wider communication alongside the slow elevation of Luxembourgish to the status of national language. nwhyte?)

[BRIEF NOTE] On the end of the Minitel

This image, featured in the Les Échos article "France Télécom a débranché son Minitel" ("France Telecom Has Unplugged Its Minitel") by Solveig Godeluck, shows the growth in usage of the pioneering French Minitel network from 1984 through to its formal shutdown at the end of the 31st of June, 2012.

It's certain that the small vintage console, with its brown buttons and giant pixels, left a big impact on society. Minitel, with its entire ecosystem (applications, payments platform, built-in network) inspired the U.S. Vice President Al Gore when he delivered his famous speech on the "Information Superhighway" in the 1990s. The French experience did not escape NTT Docomo, the Japanese mobile operator who invented the iMode, and even Apple with iTunes. Steve Jobs had in fact his own Minitel, given to him by the Frenchman Jean-Louis Gassée.

Jean-Paul Maury, "Mr. Minitel" of the Directorate General of Telecommunications (ancestor of France Télécom), said that France was "well ahead" in computer systems in the 1980s: "The display of colors in JPEG format was invented in France for the Minitel. Similarly, our power supply inspired the USB of today." Jean-Paul Maury fights against the idea that the Minitel delayed the changeover to the Internet in France: "Instead, it gave us an advance of twenty years. At one point we were the only ones with an electronic directory, banking, information in real time when France Info didn't exist! " The father of Minitel concedes that the country lost its lead, first, because the United States capitalized on their vast domestic market to conquer the world with their PCs. These worked everywhere, while each European country built its own standard of Minitel.

Then, in France the liberalization of telecoms terminated the plans for public investment. "From the outset, we planned to distribute 30 million Minitel terminals," said Jean-Paul Maury. At the time, France Telecom was connecting 2 million homes per year to phone lines, for 5000 to 6000 francs each. He was not underestimating the cost of adding Minitel connections: "The terminal costing 1000 francs was included in the CHF 100 billion plan to catch up the phone! "

In thirty years, the centralized system which counted up to 25 million users brought in billions of euros. France Telecom says modestly that "tens of millions of euros" were earned in 2011 for the hundreds of businesses still using the platform, and "several million" for the telecom operator itself.

The Twitter hashtag #ripminitel carries links to various people's reactions to the end of the platform.