longreads

Dubai on Empty

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Dubai is the parable of what money makes when it has no purpose but its own multiplication and grandeur. When the culture that holds it is too frail to contain it. Dubai is a place that doesn’t just know the price of everything and the value of nothing but makes everything worthless. The answer to everything in Dubai is money. In the darkness of the hot night, the motorways roar with Ferraris and Porsches and Lamborghinis; the fat boys are befuddled and stupefied by sports cars they race around on nowhere roads, going nowhere. Taxi drivers of their ambitionless, all-consuming entitlement. Shortchanged by being given everything. Cursed with money.

What is it about Dubai that warrants extensive pieces in magazines? In 2009, I read Johann Hari’s fantastic piece “The Dark Side of Dubai.” In 2010, I read no less than three articles on Dubai. And today, I finished reading A.A. Gill’s piece “Dubai on Empty” in Vanity Fair. I can’t say I’ve learned a lot new information from the piece, but I enjoyed it for the writing. The quote above best summarizes the piece. A few other passages of note below.

Love the descriptions and strong metaphors here:

A derelict skyscraper looks exactly the same as one that’s teeming with commerce. They huddle around the current tallest building in the world—a monument to small-nation penis envy. This pylon erected with the Viagra of credit is now a big, naked exclamation of Dubai’s fiscal embarrassment. It was going to be called Burj Dubai, but as Dubai was unable to make their payments, they were forced to go to their Gulf neighbor, head towel in hand, to get a loan. So now it’s called Burj Khalifa, after Abu Dhabi’s ruler, who coughed up $10 billion to its over-extended neighbor.

Making a strong case that Dubai isn’t a real city (there are no squares, no plazas, no center), and that it’s unwalkable:

My driver gets lost more than once. He’s lived here all his life. He says he always gets lost. The roads keep changing. It’s a confusion of orange traffic cones and interlocking barriers; access roads peter out into long drops to rubble and dust. Nothing actually goes anywhere. The wide lanes loop around endlessly, and then there’s no place to go. No plaza or square, no center. Nowhere to hang out, nowhere to walk. Why would you walk? In this heat?

On the rapid transformation of the city:

No one dreamed of this. Twenty years ago, none of this was here. No Narnia. No seven-star hotels [Editor’s note: The Burj-Al-Arab is the only seven-star hotel in the world]. No tallest prick buildings. Just a home of pastoralist tented families herding goats, racing camels, shooting one another. And a handful of greasy, armed empire mechanics in khaki shorts, drilling for oil. In just one life span, Dubai has gone from sitting on a rug to swiveling on a fake Eames chair 100 stories up. And not a single local has had to lift a finger to make it happen. That’s not quite fair—of course they’ve lifted a finger; to call the waiter, berate the busboy. The money seeped out of the ground and they spent it. Pretty much all of it. You look at this place and you realize not a single thing is indigenous, not one of this culture’s goods and chattels originated here.

A reminder of how the workers in the city are mistreated (I reiterate that reading “The Dark Side of Dubai” will give you a better perspective on this topic):

Yet, the workers, who make up roughly 71 percent of the population, have precious few rights here. They can’t become citizens, though some are the third generation of their family to be born here. They can be deported at any time. They have no redress. Many of the Asian laborers are owed back pay they aren’t likely to get.

Another passage with vivid, bold descriptions. The words jump out of the page:

The track sits in a wasteland surrounded by the exhausted squirm of motorways. I walk around it and look not at the galloping horses and their bright jockeys but back up at the stands. Here in one long panorama is the Dantean vision of modern Dubai—the Arabs huddled in a glass dome, looking like creatures from a Star Trek episode in their sepulchral winding-sheet dishdashas. Next to them are the stands for Westerners, mostly British, loud and drunk, dressed in their tarty party gear. The girls, raucous and provocative, have fat thighs that wobble in tiny frocks. Cantilevered bosoms lurch. The boys, spiky and gelled, glassy-eyed and leering…

My consensus? Read the entire piece for the writing, which I like to highlight from time to time on this blog.

Michael Lewis Goes to Ireland

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I’m a huge fan of Michael Lewis’s writing, having read Liar’s Poker, Moneyball, and most recently, The Big Short (all of which I recommend). In his latest piece for Vanity Fair, “When Irish Eyes are Crying,” Michael Lewis travels to Ireland to ascertain why the country is undergoing a financial crisis. It’s a lengthy and spectacular account of Ireland’s woes: population decline, real estate bubbles, and so much more. I pull the most notable quotes below.

On the spectacular population decrease of Ireland, and even more remarkably, the country’s likelihood to default (as judged by one firm):

In recognition of the spectacular losses, the entire Irish economy has almost dutifully collapsed. When you fly into Dublin you are traveling, for the first time in 15 years, against the traffic. The Irish are once again leaving Ireland, along with hordes of migrant workers. In late 2006, the unemployment rate stood at a bit more than 4 percent; now it’s 14 percent and climbing toward rates not experienced since the mid-1980s. Just a few years ago, Ireland was able to borrow money more cheaply than Germany; now, if it can borrow at all, it will be charged interest rates nearly 6 percent higher than Germany, another echo of a distant past. The Irish budget deficit—which three years ago was a surplus—is now 32 percent of its G.D.P., the highest by far in the history of the Eurozone. One credit-analysis firm has judged Ireland the third-most-likely country to default. Not quite as risky for the global investor as Venezuela, but riskier than Iraq. Distinctly Third World, in any case.

Michael Lewis met with Morgan Kelly, a professor of economics at University College Dublin, who:

learned that since 1994 the average price for a Dublin home had risen more than 500 percent. In parts of the city, rents had fallen to less than 1 percent of the purchase price—that is, you could rent a million-dollar home for less than $833 a month. The investment returns on Irish land were ridiculously low: it made no sense for capital to flow into Ireland to develop more of it. Irish home prices implied an economic growth rate that would leave Ireland, in 25 years, three times as rich as the United States.

Kelly wrote two newspaper articles, forecasting the imminent financial collapse in Ireland. His second article explained:

In 1997 the Irish banks were funded entirely by Irish deposits. By 2005 they were getting most of their money from abroad. The small German savers who ultimately supplied the Irish banks with deposits to re-lend in Ireland could take their money back with the click of a computer mouse. Since 2000, lending to construction and real estate had risen from 8 percent of Irish bank lending (the European norm) to 28 percent. One hundred billion euros—or basically the sum total of all Irish public bank deposits—had been handed over to Irish property developers and speculators. By 2007, Irish banks were lending 40 percent more to property developers than they had to the entire Irish population seven years earlier.

But it took a year for Kelly’s name to become widely known:

It wasn’t until almost exactly one year later, on September 29, 2008, that Morgan Kelly became the startled object of popular interest. The stocks of the three main Irish banks, Anglo Irish, A.I.B., and Bank of Ireland, had fallen by between a fifth and a half in a single trading session, and a run on Irish bank deposits had started. The Irish government was about to guarantee all the obligations of the six biggest Irish banks. The most plausible explanation for all of this was Morgan Kelly’s narrative: the Irish economy had become a giant Ponzi scheme and the country was effectively bankrupt.

I love this narrative from Lewis:

A banking system is an act of faith: it survives only for as long as people believe it will. Two weeks earlier the collapse of Lehman Brothers had cast doubt on banks everywhere. Ireland’s banks had not been managed to withstand doubt; they had been managed to exploit blind faith. Now the Irish people finally caught a glimpse of the guy meant to be safeguarding them: the crazy uncle had been sprung from the family cellar. Here he was, on their televisions, insisting that the Irish banks were “resilient” and “more than adequately capitalized” … when everyone in Ireland could see, in the vacant skyscrapers and empty housing developments around them, evidence of bank loans that were not merely bad but insane.

It seems like the lending practices in Ireland were even more lax than at the height of the housing boom in the United States:

An upstart bank, Anglo Irish, had entered their market and professed to have found a new and better way to be a banker. Anglo Irish made incredibly quick decisions: an Irish property developer who was an existing client could walk into its office in the late afternoon with a new idea and walk out with a commitment of hundreds of millions of euros that night. Anglo Irish was able to shovel money out its door so quickly because it had turned banking into a family affair: if they liked the man, they didn’t bother to evaluate his project.

How was the real-estate bubble different in the United States compared to Ireland?

The Irish real-estate bubble was different from the American version in many ways: it wasn’t disguised, for a start; it didn’t require a lot of complicated financial engineering beyond the understanding of mere mortals; it also wasn’t as cynical. There aren’t a lot of Irish financiers or real-estate people who have emerged with a future. In America the banks went down, but the big shots in them still got rich; in Ireland the big shots went down with the banks.

A telling passage about the history of the Irish people and their pride:

The Irish nouveau riche may have created a Ponzi scheme, but it was a Ponzi scheme in which they themselves believed. So too for that matter did some large number of ordinary Irish citizens, who bought houses for fantastic sums. Ireland’s 87 percent rate of home-ownership is among the highest in the world. There’s no such thing as a non-recourse home mortgage in Ireland. The guy who pays too much for his house is not allowed to simply hand the keys to the bank and walk away. He’s on the hook, personally, for whatever he borrowed. Across Ireland, people are unable to extract themselves from their houses or their bank loans. Irish people will tell you that, because of their sad history of dispossession, owning a home is not just a way to avoid paying rent but a mark of freedom. In their rush to freedom, the Irish built their own prisons. And their leaders helped them to do it.

A summary from Michael Lewis:

The blunt truth is that, since September 2008, Ireland has been, every day, more at the mercy of her creditors. To remain afloat, Ireland’s biggest banks, which are now owned by the Irish government, have taken short-term loans from the European Central Bank amounting to 86 billion euros. Two weeks later Lenihan [Ireland’s Finance Minister] will be compelled by the European Union to invite the I.M.F. into Ireland, relinquish control of Irish finances, and accept a bailout package. The Irish public doesn’t yet know it, but, even as we sit together at his conference table, the European Central Bank has lost interest in lending to Irish banks. And soon Brian Lenihan will stand up in the Irish Parliament and offer a fourth explanation for why private investors in Ireland’s banks cannot be allowed to take losses.

I like this note from Lewis (first time I’m hearing of it):

There is an ancient rule of financial life—that if you owe the bank five million bucks the bank owns you, but if you owe the bank five billion bucks you own the bank—that newly applies to Ireland. The debts of its big property developers—now generally defined as anyone who owed the bank more than 20 million euros—are being worked out behind closed doors.

And a whimsical aside: how do the Irish view America, and Americans view Ireland?

Two things strike every Irish person when he comes to America, Irish friends tell me: the vastness of the country, and the seemingly endless desire of its people to talk about their personal problems. Two things strike an American when he comes to Ireland: how small it is and how tight-lipped.

The entire piece is worth reading for the wonderful narrative and Michael Lewis’s conversations with Morgan Kelly, Joan Burton (Labour Party’s financial spokesperson), as well as bankers and commercial real estate developers.

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Thanks for Jodi for pointing me to this piece, who has an excellent reading list of her own here and here.

Readings: USB Plug, Nabokov’s Lepidoptery, Art Forger

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A few interesting readings from today:

1) “USB Plug Goes Both Ways” [Yanko Design Blog] – wonderful concept for a double sided USB plug. Would alleviate a ton of hassles of trying to correctly connect the USB thumb drives and other devices to our computers.

2) “Nabokov Theory on Butterfly Evolution is Vindicated” [New York Times] – when he wasn’t writing novels, Nabokov had a deep passion, lepidoptery:

Nabokov inherited his passion for butterflies from his parents. When his father was imprisoned by the Russian authorities for his political activities, the 8-year-old Vladimir brought a butterfly to his cell as a gift. As a teenager, Nabokov went on butterfly-hunting expeditions and carefully described the specimens he caught, imitating the scientific journals he read in his spare time. Had it not been for the Russian Revolution, which forced his family into exile in 1919, Nabokov said that he might have become a full-time lepidopterist.

This piece explains how one of Nabokov’s most interesting (and controversial!) theories about a group of butterflies he studied (the Polyommatus blues) has been vindicated:

Few professional lepidopterists took these ideas seriously during Nabokov’s lifetime. But in the years since his death in 1977, his scientific reputation has grown. And over the past 10 years, a team of scientists has been applying gene-sequencing technology to his hypothesis about how Polyommatus blues evolved. On Tuesday in the Proceedings of the Royal Society of London, they reported that Nabokov was absolutely right.

I love the inclusion of Nabokov’s poem near the end:

I found it and I named it, being versed

in taxonomic Latin; thus became

godfather to an insect and its first

describer — and I want no other fame.

3) “The Forger’s Story” [Financial Times] – a fascinating piece about Mark Augustus Landis, who may be described as a reverse-forger. That is to say, he forged paintings not for the purpose of selling them, but to see if they would be accepted into museums:

For nearly three decades, Landis has visited ­museums across the US in various guises and tried to donate paintings he has forged. As well as Father Scott, he has posed as “Steven Gardiner” among other aliases. He never asks for money, although museums have often hosted meals for him and made small gifts. His only stipulation is that he is donating in his parents’ names – often his actual father, ­Lieutenant Commander Arthur Landis Jr, a former US Navy officer.

Landis has been prolific and consistent in his endeavor:

Matthew Leininger, chief registrar of the ­Cincinnati Museum of Art, has spent more than two years tracking Landis’s progress. He estimates that Landis has tried to fool at least 40 museums – and probably many more – in 19 states in cities from Boston and Chicago to Savannah and ­Oklahoma City. Some forgeries have been spotted, yet he has persuaded museums not only to add works to ­collections, but even to hang them in galleries.

What’s fascinating is that what Landis does isn’t against the law:

The difficulty is that, however annoying and disruptive Landis’s activities may be for museums, he does not seem to have broken the law. “The criminal statute [of fraud] says there must be a loss and that’s the problem. There hasn’t been a loss to any victim,” says Robert Wittman, an investigator who used to run the FBI’s Art Crime Team.

As always, I recommend reading the entire piece.

Apple and the Legacy of Steve Jobs

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You might have heard that the CEO of Apple, Steve Jobs, has taken an indefinite medical leave. This is the third time in the last ten years that Steve Jobs has stepped aside from the biggest technology company in the United States.

If you don’t know much about the company or Steve Jobs’s nature, then there is one article that is an absolute must-read. It is this Esquire piece, written by Tom Junod in 2008. It may appear dated, but it’s as every bit as relevant today as when it was first published. I highlight a few quotes which grabbed my attention

On Steve Jobs’s health and perseverance:

Steve Jobs has been saying that Steve Jobs is dying for years. From the beginning, death has been the hellhound on his trail; from the beginning, he has based his claim on immortality on the knowledge that he isn’t going to make it. In the commencement speech he gave to the graduates of Stanford University a year after his cancer surgery, he diagnosed himself as “fine now,” and hopeful to live “a few more decades.” At the same time, he spoke of death as though it were a new Apple product — that is, as “very likely the single best invention of life.” He said that since he was seventeen, “I’ve looked in the mirror every morning and asked myself, If today were the last day of my life, would I want to do what I’m about to do today?”

I love this passage on the bravado and Jobs’s stubborn demeanor. Must he always win?

Nobody wants to be the guy who points out that Jobs is “an obnoxious asshole” or “just a horrifying human being” — because then Jobs has already won, simply on the basis of scale. Better to be the ex-Apple-employee who says, “The question is not whether he’s an asshole. That’s beside the point. The question is whether he [Steve Jobs] can be an asshole and a good Buddhist.” Now, that’s a good one, because it concedes the obvious and moves on to the question of whether Jobs’s epic simplifications hide, well, inconsistencies. How can the Buddhist — the strict vegetarian — squash so many people like bugs? How can the Apollonian artist of our technological moment also be the Machiavellian corporate executive? How can the guy who implicitly put himself in league with Gandhi, John Lennon, Bob Dylan, and Martin Luther King while urging us to “think different” think, in fact, only of winning? “For most people, he’ll go down in history as the guy who made technology user-friendly,” says one executive. “But to people in business, he’ll be remembered as the guy who only did deals where he had all the leverage — and used every bit of it. It’s not enough that he wins. You have to lose. He’s completely unreasonable.”

That part about you having to lose, that’s gladiatorial. I was immediately reminded of Derek Sivers’s post “The Day Steve Jobs Dissed Me in a Keynote.” I highly recommend reading it.

An excellent paragraph about Jobs’s ruthlessness (if you weren’t getting the picture just yet). But also: why are Apple products something the consumers desire so much?

Now they start with what makes an existing experience crappy. And that’s where Jobs is a genius. That’s where his ruthlessness comes in. He’s ruthless with himself, ruthless with other people — he’s also ruthless with technology. He knows exactly what makes it work, and what makes it suck. There were MP3 players before the iPod, but they sucked. So he’s like, Okay, what do we have to do so that they don’t suck? Same with the iPhone. A lot of phones had Web browsers before the iPhone, but nobody used them. Why? Because they sucked. Now even people without iPhones are using the Web browsers on their cell phones. But that’s because of the iPhone. And that’s what he does. He makes the experience of technology better.”

Lastly, I love this wisdom from Steve Jobs: shortly after he showed off the iPad last year, Steve Jobs was asked what consumer and market research guided its creation. Steve Jobs’s response was illuminating:

None.  It isn’t the consumer’s job to know what they want.

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There’s a lot more in the Esquire piece which I didn’t highlight here. If you have a half hour, I highly recommend reading the entire piece. It paints a portrait of Steve Jobs better than any I’ve ever read.