Alex from the Black Forest's Open Salon Blog

The Euro drama: Germany “victim” of easy money ?

Sat, 12 May 2012 06:05:30 -0400

Loads of things are written on why Angela Merkel advocates a rigourous debt cut policy, attracting overt criticism from Keynesians like Paul Krugman and overt hostility from electorates in Greece and elsewhere. (As usual, she will probably soften her way at some point but is still waiting for what will seem the right moment, but for the time being, there are too many significant elections coming up in German regions and neighboring states.)

I found an interesting explanation in the French magazine “Alternatives Economiques” (May issue, p. 46) under the thought-provoking title “Germany victim of the European Central Bank?”

In the first part of the past decade, the ECB (as did the Fed) employed low interest rates to cope with the economic consequences of the dot-com disaster, which in turn favored the buildup of huge real estate pricing bubbles in countries like Spain or Ireland. Yet, monetary policy was too restrictive for then-low-growth Germany (until the takeoff in 2005/2006).
At present, we are again in a low interest rate, easy money phase to save the financial system for already the second time in a decade. However, the German economy performs quite well now; this money flood has started feeding inflation and especially real estate prices. Actually, the ECB current monetary policy is too expansionist for Germany.
Now, monetary policy is the same for all Euro member states. No member can run its own monetary policy anymore, meaning that the Bundesbank cannot specifically cut down money supply in Germany to contain inflation (which the British central bank is currently doing for the pound by shutting down its debt purchasing program).
So, what is the alternative for Frau Merkel and Herr Schäuble to compensate for the monetary policy of an expansionist money supply? That would be advocating a restrictive budgetary policy among all Euro member states. To summarize, they discourage other Euro members from debt-making in order to contain inflation in Germany.

Of course, there is this Berlin phenomenon. Whereas you used to quickly get cheap flats in the German capital not long ago, prices are suddenly soaring and apartments have become a rare good almost overnight for both rent and sale. Already, one in three apartments or houses sold in Berlin are purchased by foreigners seeking a financial investment rather than by people with a real housing need. Yet the Berlin-specific hype (e.g. the city is a Brad Pitt favorite) can only be part of the explanation. Real estate prices being up by more than 3% on national average do seem contradictory with a declining population. Already, wages are going up (after having stagnated for a long time) and thus productivity is somewhat declining - which would seem to go towards more purchasine power in Germany and more economic balance among Euro members but does not serve the interests of German corporations.

This is probably the main Euro drama: the vastly differing interests among members, which seem insurmountably conflicting:

On one side, quite a number of countries crave for growth to foil recession and deflation and to attain any hope of paying back debts (and dream of times past when competitive devaluation was an available remedy). France is now tipping over on that side.
On the other side, Germany and some other contain inflation by non-monetary means.

Even the strongest Euro believers start do doubt that their favorite currency still has a bright future.

Aikido and Life

Wed, 14 Sep 2011 10:09:51 -0400

Aikido is a martial art that is merely defensive and different from all others. Its creator, Morihei UESHIBA, often respectfully called "O Sensei", underwent a deep spiritual transformation. After a lifelong quest that made him kill people as a soldier and then led him through a variety of traditional martial arts and combat skills, he eventually searched for what he thought to be at the core of all martial arts and the deeper meaning of the Way of the Warrior (Bu Do): harmony. Not the kind of "harmony" of nice neighbourhoods with lovely gardens and birds singing, but a deeper, universal principle of harmonious energy (Ai Ki Do = the way of harmonious energy). Aikido aims not at destroying an adversary but at restoring a balance. The essence of the "energy" is to flow and move in waves and spirals. Conflicts block this flow. They put edges and ripples into this flow. Anger is like a dam that stop the water from flowing.

Now, in life, you may chose to be a rock or you may chose to be the water. The rock might be strong and stand as firm as it wants in the river and seem to impose its will upon the world. However, in the end, with time, the water always wins, wears off the angles from the rock and consequently improves its own cyclic flow through sky and soil while telling the rock about the world it has seen out there, from above, from below, from within. The rock is the ego, the water is the ego-less state.

Due to our Christian education that holds high the mind and somewhat despises the body from the neck downwards, we might not be familiar with the Oriental idea that through movement and action, the body might actually be the vehicle of choice for evolving mentally and perhaps spiritually.

Ueshiba's Aikido is demanding and time-consuming to acquire, but at high level the body expresses movements and principles that are congruent with the unhindered and smooth flow water and Ki (energy) naturally follow, and therefore tends to harmony (in the musical sense of tones melting into one strength-giving sound) with a set of spiritual principles:

no resistance
no use of strength
smooth melting with the incoming movement, prolonging it into the initial direction at first and then seamlessly taking over

Aikido mostly consists in smoothly flowing into the movement of the adversary and turning his own movement against him, making him trip over himself, disappearing in front of him, reappearing at his side or back, fooling his brain by half a second and leading the movement into unexpected directions where he cannot catch himself fast enough and therefore eventually goes to the ground. The essence of movement is that it always goes into one single direction and the brain optimizes resources for that direction and needs time to adapt and correct the movement's inertia if that direction suddenly changes. This allows for a variety of "tricks" to fool the adversary's brain, and Aikido has plenty of them. High level Aikido can do this without inflicting damage to the attacker, but it can also break bones - without using strength!

It is the single martial art where men are at a disadvantage and perhaps the only physical sport where people become better and better with age. How that? Plain Aikido is technique only. The more physical strength you have, the more you are tempted to compensate poor technique with strength (and the longer it takes to learn techniques because you first have to unlearn the reflex of applying physical strength). Women often learn Aikido faster: they have less strength to "cheat" with, and therefore are forced to use good technique instead from the start. They have less to unlearn before they start learning.

I know a Bavarian lady, perhaps 5' high and way beyond 70 years, who looks like just another frail grandmother when you meet her in plain clothes. She started practising Aikido around the age of 50 and can now bring and keep down a six-four, 180 lbs guy thanks to perfect technique. And that feat is possible only because she will never leave an edge in the smooth spirals of her movement, never directly oppose the movement or speed of the adversary, and therefore never meet his physical strength and thus grant him an opportunity to leverage it. The adversary's movement always runs into emptiness.

AIKIDO & LIFE

With the years of practice, notice them or not, some small details start to change in your life, your way of moving your body through space with optimized effort, your awareness into all directions, your modes of resolving or even dissolving conflicts by letting them run into nowhere, by not opposing attacks directly, by not giving way to your first response, to your reflex to fight back, by then rather reconnecting with the attacker from an unexpected side.

A conflict starts with the loss of balance inside somebody. It is his or her own story, intimately within. But to regain his balance, he will project the conflict onto his surroundings - and look for a fight. Aggressiveness is an inner imbalance seeking to get out into the world. Since his imbalance resonates with my imbalance and numerous blind spots and own zones of unresolvedness, my first reflex will be to respond to whatever form of violence with whatever form of violence. But by doing this, I surrender to being only an instrument, a part in a foreign conflict that controls me, to being locked into just another absorbing fight of two egos. Whatever the outcome, I lose. We both lose. The ego is desperate to keep us small and control us through reflexes and automated, stereotype behaviours. Conflicts are a good way for the ego to do just that and remain in charge.

There is an alternative: I can refuse the conflict - not by opposing it, but by letting it run into nowhere. This leaves the adversary in charge of his conflict. He fails to project it outside. To do this, the Aikidoka needs to be aware that the true adversary is not the attacker, but the ego within both him and me, and that a physical fight is just another way to enter automatic mode and loose ground to that inner tyrant.

This is Aikido. We give the attempted conflict back to the adversary. In the best case, he reflects on solving his inner conflict (while the Aikidoka keeps him in a lock to give him time to cool down) and stops sending ripples through the fabric of the universe, which, according to Morihei Ueshiba, is made of harmony. Ueshiba thought that by practising Aikido, you naturally fit into the shapes and movements of the universe, wear off your stubborn ego, layer by layer, develop humility and find your place in the larger picture of harmony, leaving less room for inner imbalances. You do not even have to think about it: If your teacher has understood the principles, practising Aikido will transform you, and you might well start singing in tune with the tune of the universe, which might be a definition of harmony.

OK, that sounds very naive in a world that still idealizes violence as a legitimate alternative conflict solving language. Ueshiba probably lived in a world of his own. And many Aikido students choose to only learn techniques to take an opponent down and that's it. Even in Japan, the deeper meaning probably eludes most practitioners. But then, some people also consider Ueshiba to be not only one of the greatest masters ever in martial arts, but also a significant, albeit unusual spiritual guide who further developed the Budo, the Way of the Warrior, reminding that the ultimate goal of the Knight is not to destroy the enemy but to restore peace. As the Chinese Lao Tse put it, the best way to win a fight is to do it without fighting. And Aikido as a research into harmoniously melding with the incoming movements instead of opposing them could appear to be the kinetic expression of fundamental principles recognizable from oriental philosophy, yet able to help us in everyday life.

Eisleben - Where Protestantism Was Born

Wed, 30 Jun 2010 16:06:45 -0400

I have this small gift to American readers or to whomever is of Protestant confession or has any interest.

A few days ago, I was in Eastern Germany, in Eisleben, now Lutherstadt-Eisleben (See on map). Eisleben is located in a rather declining region where the population grows older because the youth has left for better places. Eisleben itself counts about 15,000 inhabitants, so I was told.

However, Eisleben is special in two ways: Martin Luther was born there, and he died there, only a few hundred meters away from his birthplace. And both houses still stand. So here are a few pictures I brought from there.

He was born here:

He died in the house on the right:

Some more pictures from Lutherstadt-Eisleben:

Next time you are in Berlin, you might want to visit Eisleben from there. It is located about a 2 hours car ride to the south.

The Wealth of Nations

Wed, 23 Jun 2010 10:06:37 -0400

May we be using the wrong figures to evaluate wealth, progress and innovation?

GDP

The gross domestic product of a country, i.e. roughly the value-added generated by its economy, is often used as an indicator of wealth and progress. The growth or decline of the GDP is a figure many efforts of our governments focus on. A difference of "economic growth" (i.e. positive GDP variations once the effect of inflation has been calculated away) between two countries is often used to evaluate the success or failure of policies or more generally the state of a country.

Could we be wrong ? In issue 850 of the Italian magazine "Internazionale", I found a translation of a paper first published in the New York Times Magazine questioning whether the GDP (gross domestic product) gave any real indication about the wealth of nations, and whether it was not misleading at all on the state of a country.

I would like to add some considerations:

The changes in GDP has a meaning only when related to population changes. For example, part of the GDP growth in the United States is a mechanical effect of a growing population. In Germany, population declines but GDP still grows, albeit less.

Consider a village with 100 inhabitants, each of them owning an average of 100.000 dollars of personal wealth, adding to 10 milions. Now one of them wins 10 million dollars at a lottery. So now the inhabitants have an average wealth of 200.000 dollars each. But 99 ou of 100 see nothing change. More generally, neither the total GDP nor the average GDP per capita tell anything on how this income is distributed. According to Paul Krugman, for example, the median (not average!) income of a US household today is about the same it was in 1980, because the added income has mostly gone to the top of the scale.

When an international comparison is made based on felt quality of life, then the ranking among the countries shifts a lot compared to the GDP ranking. Canada or Scandinavian countries often rank at the top.

Several psychological surveys show that money raises happiness only to the point where a given set of basic needs is fulfilled. At that point, the correlation between monetary wealth and happiness stops operating and other factors take over.

That raises the question of what "wealth" actually is. Money is a convenient because it is easy to measure and to calculate with. But what about fresh air? What about safe streets? About friendly, violence-free social interactions? Pleasures of life? Personal freedom of expression and choice? Lots of friends? Children? Grand-children? Good education? Protection by law? Equal rights? Absence of corruption? Knowledge? Good institutional support during hardship or retirement? Communities to belong to? Beautiful landscapes? A vivid culture? A confident attitude to the future? Lots of sunshine? Creativity? Healthy ways of living? No regrets? And all the rest? The list is long, you certainly have many topics to add by yourself. Shouldn't at least part of these be included into the wealth of a nation, if only because they are as much the result of a process as material wealth is?

The sense of wealth changes with time. Have you noticed how many older people who had spent their whole life chasing after more money and are now asked about their regrets, do answer things like "I should have spent more time with my family"?

This decade that will end by Dec. 31th 2010 has brought two huge financial crises. The current crisis has the surprising effect of making some people of all generations stop in their tracks, give it some thought, return to simpler and less expensive satisfactions and refocus on what is really essential to them and their happiness once they overcome the urge to consume (consume to fill the void they feel once they lost track of what is essential to them).

INNOVATION

There is another point I found in an interesting blog entry on the website of French daily paper "Le Monde".

Policy makers and media often evaluate the rate of innovation of their economy based on the percentage of the GDP spent on research and development (R&D). However, the author, Delphine Manceau, states that focusing on R&D to measure innovation actually might prevent benefitting from innovation! Her points:

Innovation does not necessarily come from new technology. It often bears no technological component at all. Many innovations actually derive from new uses of existing technology, or from new organizational or business models (like low-cost air traffic or specialized store chains or new service brought to your doorstep). In Japan, non-technological innovations represent 60% of total innovation. In France, it is only 23%.

Patents are often used as a measure of innovation, but they rather measure research performance without revealing much on the economic benefits from that research. Many patents (about 36% in the European Union) never result in any product and only take dust on some shelf. The drugs industry produces lots of patents for drugs that are no real innovations but only slight modifications of existing products, only to keep the royalties streaming in when older patents expire.

Invention and innovation are two different things. Many innovations are not linked to inventions or patents. Many inventions may be pieces of brillant engineering but impossible to use by us average human beings and therefore have no economic effect because nobody wants them. Other innovations reach the market with a bad timing and fail (remember the Apple Newton?). (Technology visionary Ray Kurzweil once said that timing is an essential component of innovation success.)

Focussing policy on the R&D/GDP ratio and productivity narrows down attention and funding too much on only one single aspect and dries out other sources of innovation with more economic potential, like supporting smaller companies bring their innovations to market to generate... well... GDP. This focus might actually blind us to the many areas where innovation awaits.

CONCLUSION

These are two examples on how misleading focussing on some big, convenient figures can be when it comes to measuring the wealth and creativity of a region or nation, and on how much we should always question the focussing and mind-narrowing nature of such figures, look beyond them and remember that there is a bigger picture with plenty of hidden potential.

Robert Kennedy made a most eloquent speech on national wealth on March 18, 1968 at the University of Kansas, which you might want to read.

Relationships : A Small User's Guide

Mon, 8 Feb 2010 07:02:33 -0500

Relationships: How we spend more time destroying than nourishing them, and how we can change this.

Part IV of "Uniform Thinking - and how to go beyond"

Many people have the impression that life owes them something. This impression might be a transfer, a generalization after the impression that their parents owe them something. They feel they did not receive enough love or care or attention or money or fairness or consideration or encouragement or just communication. Once they have reached the age of an adult, they could very well give all this to themselves, but that would require that they be aware of this feeling. It is, however, a diffuse feeling. So, they live with it. It is there, unnoticed, sometimes manifesting in some kind of unwellness or frustration. Sometimes it also expresses itself through an urge to get as much as possible as fast as possible yet all this never being enough to fill the void.

The problem is that we carry many diffuse feelings with ourselves which remain subliminal until they find a surface to project themselves onto. One of the most convenient projection surfaces for all the things unsolved we carry within ourselves is our relationships. We enter our relationships with a huge set of unsatisfied demands and expectations and will perhaps not even notice it. But we will still expect the other person to satisfy them. We particularly expect them to fill the voids we carry within ourselves and into the relationship.

This is important: One of the best, if not the best way of killing our relationships and making them fail over and over again, is having expectations, or even demands.

There is this person in front of us. Once the initial magic of being in love has faded, we are busier and busier with our inner accountancy of all our expections and demands this person will not meet or fulfill. Do we really see the other person ? Don't we rather see the little remainder to which the other person has been boiled down once our perception of him or her has went through the filters of our expectations and demands - and fears, and cravings. It is a long checklist.

Is that really fair ? Isn't it incredible, once we consider it with full awareness ? Think of it: If the person we love does not meet our expectations, then we do consider that that person is wrong, not our expectations ! We would rather change that person than our inner checklist.

We can change nobody. Never. Forget that. We will never change anybody. We might bully or manipulate people into changing certain habits, but by doing that, we diminish them and do not make them grow, we imprison them rather than providing the possibilities that other person might grow into. But we will never really change anybody, or at least we should not expect to be able to do so.

But we could change our expectations. That would be easy. Our expectations come from our past, but they are not written in stone, they are no absolute truth, they are just thoughts that we have because we never thought of getting rid of them.

They are our long gone past trying to control our future.

I do not want to play the amateur psychologist, yet it seems quite obvious that many of these expectations are unsatisfied demands from our childhood. We feel the craving and needing but forgot how it started. We are adults and demand from our adult partners that they fulfill expectations that our parents did not satisfy when we were children. Perhaps we even punish them with all the anger and frustration still vivid within ourselves from that long-gone past. We let our long-gone past sabotage our present and future by making the people we love pay for something they did not do.

Even worse: If they actually repeated those behaviours that we had suffered from in that long-gone past, then we might perhaps consider that we actually chose them exactly for that - to materialize once again some long-gone drama. Our subconscious has a tendency to reproduce the same patterns over and over again until we recognize them as patterns and seize the opportunity of that realization to go beyond the patterns and automatic behaviours they generate and reach more freedom and awareness.

Many people have caring partners but won't see that fact because the anger and frustration that still lives within them after all these years is constantly seeking for any opportunity to feed upon.

Many relationships are tainted and eventually die from these negative feelings we import into them without understanding that these feelings were alive long before the beginning of our current relationship. We only see those traits of our partner that confirm our imported feelings and shut off all the rest. And we throw truckloads of expectations at our partners that they will probably not be able to satisfy, which will give us more confirmation on how inadequate that partner is.

And why should they satisfy these expectations ? They want to give freely and with love, and instead get the impression of being there to fulfill requirements and expectations and be cast away otherwise. And then we wonder why our partners seem to have as much pleasure at being with us as they have filling out their income tax declaration. We signal to them that it will never be enough anyway.

The reason is simple: They CANNOT fill the void we demand that they fill. Because we can only fill it ourselves. And that is also the solution.

We cannot expect to be happy in a relationship we import negative feelings into that we accumulated in other relationships. If we want to be happy in a relationship, then we will have to import that happiness into it.

There are so many people who enter a relationship like putting an order: "You ! Make me happy!" Nobody can make you happy. Sometimes people or the feelings we have for them can be a useful distraction from our own inner unhappiness. But it will not last that long. The initial hormonal illusion of falling in love fades inevitably. And once our own inner unhappiness unfolds again and gains momentum and takes over again, then we will of course accuse our partners that they are responsible for that unhappiness - and are therefore reversing the causality of unhappiness: We are not unhappy because of failed relationships, our relationships fail because instead of nurturing them with happiness from within, we feed them with our obsolete dissatisfactions and cravings instead of taking responsibility.

Relationships succeed or fail due to the combined action of both partners. The responsibility is always shared. We will not grow and reach higher awareness by always accusing the other one of having destroyed the relationship, because that will only doom us to re-enact the same patterns in the next relationship, with the same outcome, and in all those after that.

So, taking our own 50% of responsibility for the sucess or failure of our relationships makes us grow. Next time a relationship ends, do not check your partner for his wrongs, because beyond the anger and disappointment, the most important question for your own future is: What could YOU do better next time ? What unconscious need might still be interferering with your happiness ? Craving and desiring always expresses a state of separation, so what do you feel separated from ? These thougts will make your relationships getting better each time by seeing them as a learning process.

We can considerably improve the chances that our relationships will succeed more and more often. The key is acceptation.

If we renounce expectations and really let our partners be what they are, if we open up that space between us and step back a little, then we might well see our partners grow into showing the better part of themselves, because now they have the space to do so. And if we give them positive feedback on the things we admire about them instead of cutting and shouting them into fitting the mold of our expectations, then they will thrive and surprise us.

In a relationship loaded with mutual expectations, there is no space left for growing, because these relationships are controlled by our past and therefore bear no inner life force to feed durably upon. But if we create the common space and quiesce our own expectations and let the relationship grow by and from itself instead of trying to control it, then our relationships cease to be another repetition of the same scheme and instead each become and enrichening and unique and maybe a durable and fulfilling experience.

I know: It is very hard to give up control. We WANT to be happy and we have a certain set of beliefs on how our happiness has to look like.

But trust me: Life knows much better than you do what will make you happy, really happy, put you on your way and bring you closer to what is your purpose on this planet. So give up control and trust life instead. You set the general goal and loosely keep it in mind, but you should let life choose the means to bring you there. Let life surprise you. Let your relationships surprise you with new forms of fulfillment and happiness that you never would have expected - so give up expecting. And start trusting. Love may not be forever, but there is more love beyond. That is what matters. What matters is that all your relationships make you grow and discover and mature, and that you let your partners grow from them and discover, too.

And take pride in being such a person who allows the people around you to mature and grow into in the space and freedom your acceptation creates for them, because that makes you a rare and precious gift.