Failures of the 1991 Russian Revolution

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I posted a review of “Why Did the Soviet Union Collapse,” as a companion to this posting. Members of the Soviet Union government who opposed Mikhail Gorbachev’s reforms to decentralize much of the government’s power to the republics organized a coup attempt in August 1991.The coup collapsed in only two days in the face of a powerful outpouring of support for a new democracy and Gorbachev returned to power. The failed coup is considered to have led to the demise of the Communist Party of the Soviet Union (CPSU) and dissolution of the Soviet Union. Boris Yeltsin won admiration for defying the coup attempt by climbing on top of a tank and calling on people to defend the freedom he had promised. Yeltsin promised to transform the socialist command economy into a free market economy and endorsed privatization programs. However, much of the national wealth fell into the control of a small group of oligarchs. People lost their jobs and savings in economic upheaval in 1992 and 1993 and blamed the reformers instead of blaming the legacy of the Soviet system. The result was constitutional crises in October 1993 and a political standoff and the killing and wounding of hundreds during shelling of the Russian White House. Yeltsin put a new constitution in place approved by referendum that gave strong presidential powers. He became widely unpopular and left office after appointing Vladimir Putin as his successor in the last hours of 1999. People were relieved to have a young and strong leader and overlooked Putin’s background in the KGB.

The title of a recent article from the Washington Post by Kathy Lally “1991 revolution’s goal is a thing of the past,” summarizes where things stand today. One observer is quoted as saying, “We saw the old train (Communism) was taking us in the wrong direction, but we thought all we had to do was change the conductor and we would have comfortable seats and good food. Democracy would take us where we wanted to go, not on our own effort. Sometimes you need to get off and push.”

Russia today does not have fair elections, courts are not independent, and political opposition is not tolerated. Corruption is rampant, and the gap between the rich and poor has widened. There are occasional demonstrations in favor of democracy, but they are mostly ignored except by the police. Opposition to the government is not allowed on the news, which relentlessly carries the message that life is better and Russia is stronger under Putin.  The only thing that keeps the country running is the bribes that are necessary to get anything out of the government. The hope that was created by the defeat of the coup in 1991 has been replaced by disappointment, frustration, and nostalgia. The saddest part of the story is that only a tiny percentage of the population, which is declining because of low birth rates, expresses an interest in changing things. The next presidential election is in March, and Putin is expected to make the decision about who will run.

No Worries

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Most people who hear or use this expression understand it to be the Australian way of saying “don’t worry about that.” It is said to be an Australian’s way to “represent a feeling of friendliness, good humor, optimism, and ‘mate ship’.” It has been called the national motto of Australia. However, I found one dark reference asking that the term not be used. Nazi death squads said “Keine Sorge” or Keine Angst” (no worries) to Ukrainians just before executing them. That’s just one more thing to justify  residual anger toward the Nazis, and I’m certain I will enjoy hearing “no worries” in the future.

Great Turning Points in History

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This book by Louis L. Snyder has short descriptions of twenty-five events that changed the world. The author observes “…a new direction in history can be brought about by a happening, a stage, or set of conditions, and occasionally by the action of a single individual. I was most interested in four of the events described because they give insight into the conflict between the Christian and Muslim religions. I recently completed a multi-part review of “The Looming Tower, Al-Qaeda and the Road to 9/11,” that includes discussion of the development of militant and terrorist Muslims under the leadership of people such as Osama bin Laden.

Crucifixion of Jesus — This is more about the growth of Christianity in during the years of decline of the Roman Empire than about the singular event of the crucifixion. The author observes, “The selection of the execution itself as a turning point is an arbitrary one—either the birth or resurrection of Jesus could be substituted as the focus of change.” What is important is that Jesus preached of a loving God, feasted with and forgave sinners, healed the sick, and denounced private wealth. His teachings, death, and resurrection resulted in a rapid spread of Christianity “…through the hollow shell of the once magnificent Roman state…” Christianity is a proselytizing religion that declares all other religions inadequate, and it swept through Western Europe, Persia, Armenia, Arabia, and to the Far East. Paganism is said to have been virtually eliminated in major cities by 400 A.D. Christian political organization in the form of bishops, deacons, and of course the hierarchy of the Catholic Church made Christianity the institution considered to control salvation and was also the ultimate political authority.

Flight of Muhammad from Mecca to Medina — Six hundred years after Jesus the Muslim religion arrived to challenge Christianity for dominance. Muhammad had revelations of voices speaking to him and heard himself being called “Messenger of Allah” by the Angel Gabriel. He began calling on people to worship one God, but had few converts for several years. He mostly only succeeded at infuriating Meccan merchants who wanted to eliminate him. He and Abu Bakr hid in a cave for three days until they could obtain camels and flee to Medina in what was later called the flight (the Hegira or Hija). He attracted an arm of believers in Medina and within eight years had taken Mecca. The Koran (Arabic Qur’an) or recitation, appeared shortly after Muhammad’s death and was compiled by Abu Bakr from communication by the Archangel Gabriel to Muhammad. The Islam religion spread to millions of converts. It rejected the Christian doctrine of the Trinity; Muslims believe Allah is the only God.

Battle of Tours — This battle in 732 A.D. was the first major defeat of the Muslims as they were attempting to march out of Spain and into Gaul. Muhammad had counseled his followers that “…to fight for religion is better than the world and everything in it.” The promise of martyrdom to Muslims if they died in jihad against unbelievers made them ferocious fighters, and they were accustomed to winning. Abu Bakr as caliph (successor) succeeded at bringing Syria, Egypt, Babylonia, Persia, and Spain under the rule of Islam. Vanquished peoples were either allowed to convert, pay tribute, or put to the sword. Many found it advantageous to embrace the faith, and the liberal treatment by the Muslims led many cities to welcome them. The Franks under Charles had a private army and a poorly trained militia. At least 80,000 Muslims, most of them mounted, were arrayed against Charles under Abderraham, but they had the disadvantage that they were burdened with enormous amounts of plunder from their previous victories. The Muslims mounted several cavalry charges against the phalanx formed by Charles, and they failed. Abderraham was killed in the fighting. A rumor spread that Charles had sent forces to steal from their camp, and they broke off the battle to defend their plunder. The Muslim invasion of Western Europe ended, and they retired to Spain to consolidate their already huge empire.

Crusades: The Speech of Urban II — The crusades were a serious of religious campaigns by the Christians of Western Europe from 1096 to 1291. They began after Pope Urban II gave a speech advocating that the Holy Land be recovered from the Muslims. Thousands would strike out with fanatical enthusiasm with little thought of how they would get to the Holy Land or what they would do to combat a powerful enemy once they got there. The most ghastly tragedy was the Children’s Crusade, which involved 50,000 children marching off to be either killed or taken into slavery. On 1291 the last Christian post in the Holy Land was stormed by Sultan Kelaun, and the defenders who weren’t massacred were sold into slavery, thus ending the Crusades. Oddly it is advocated that the Crusades resulted in a positive economic effect. Crusaders who survived to return home brought Oriental goods, and there would be fortunes made in meeting European demand for more goods. Also, feudal lords often freed their serfs before they marched off to often die in the Holy Land. The ones who survived brought back amazing stories of the magnificent cities and progress in art, science, and philosophy in the Muslim lands. Considerable knowledge was transferred to the West. However, the negatives should not be overlooked. Osama bin Laden called the allied soldiers who were in the two invasions of Iraq and the invasion of Afghanistan Crusaders as he taught young Arabs they had a duty of jihad against America.

American Tourists in the Bahamas

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We recently visited the Atlantis Resort on Paradise Island in the Bahamas with our kids and grandkids, and completely enjoyed the luxury of the accommodations, the extensive Aquaventure Water Park, interacting with dolphins and sea lions, the vast aquariums, amazing meals, and impeccable service (at a high but what I judged to be a fair price). The driver who took us back to the airport in Nassau after our vacation made me reflect on our trip when he told us we had missed out by not taking a trip into the town. He pointed out numerous historical sites of interest, including a statue of Christopher Columbus. I realized I had very little knowledge of the history of the Bahamas or its people. I did a bit of Internet searching, and found what I consider to be some fascinating facts I wish I had known when we were planning the trip.  The Wikipedia article I will extensively quote observes the information should be reviewed by an expert, but I didn’t find discrepancies on the official Bahamas history site.

The first inhabitants of the Bahamas were the Lucayans or the Taino people, who arrived between 500 and 800 A.D. from other Caribbean islands. Recorded history begins with the arrival of Columbus in 1492. Columbus intended to sail to India for spice trade, and when he landed on an island in the Bahamas he called it “Indies.” He then named the Lucayans “Indians,” and the error resulting from him not knowing where he was would be repeated when explorers encountered indigenous peoples throughout the Americas.

The peaceful nature of the Lucayans was exploited by the Spanish, who enslaved them and transported them to Hispaniola (now the Dominican Republic and Haiti). There were 40,000 people enslaved in twenty years. The Spaniards decided to transport the remaining Lucayans to Hispaniola in 1520, and found only eleven people. The islands remained uninhabited for 130 years. An English Puritan group from Bermuda founded a colony in 1649 and struggled with food shortages. The colony was supported with supplies provided by the Massachusetts Bay Colony.

English privateers established themselves in the late 1600s, and Nassau eventually became the “pirate’s republic” with Blackbeard, Calico Jack., Anne Bonny and Mary Read using the islands as their base. A British governor, Woodes Rogers, arrived in 1718 and pardoned pirates willing to surrender and fought those who didn’t. The Bahamas fell to Spanish forces in 1782, but a British-American Loyalist expedition retook the islands without a fight. Most of the current inhabitants are descended from the African slaves brought to work on the Loyalist plantations established from land grants issued by the British. The slaves were freed after the British abolished the slave trade in 1807. The islands were deforested as plantations were built.

The Bahamas prospered during the American Civil War as a base for Confederate blockade runners. Rum running thrived during the American prohibition, and the enormous inflow of revenue ended with the repeal of prohibition.  Drugs eventually replaced rum, and at one time it was estimated that as much as 90 percent of the cocaine destined for the United States passed through the Bahamas.

The Hotel and Steam Ship Service act of 1898 inspired the beginnings of thriving tourism  by providing government support to the construction of hotels and subsidizes to steamship service. The closure of Cuba to Americans gave an additional boost to tourism. The Bahamas achieved self-government in 1964 and full independence on July 10, 1973, and is a member of the Commonwealth of Nations.

Learning something about the history of the islands increased my appreciation of the friendly service by every single person we encountered at the Atlantis resort. We and the other thousands of other guests were obviously the source of great jobs for large numbers of Bahamians, and our experience was universally positive. However, I can’t quite escape an uneasy feeling about the divide between the wealth of the visitors and the economics of those providing all that wonderful service. That uneasy feeling was reinforced when my wife asked me to go the movie The Help. We joined about thirty women and watched the story of how black maids raised white children and did all the work in Mississippi households in an atmosphere of ruthless discrimination. I hope those who served us in Atlantis were comfortable that we were polite and appreciative of our interaction with them.

Hand Over Fist

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Wikianswers explains that coins were made during the Iron age with a peg that had a stencil of the coin on one end. The peg was gripped in one fist and it was struck by a mallet in the opposite hand to form the face of the coin, thus leading to the expression “hand over fist.” There is an opposing theory that the expression refers to seamen pulling rope hand-over-fist. However, I’m going with the first explanation, because the expression is often expanded to “making money hand over fist.”

Commercial Mortgage Loan Turmoil

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I mentioned in a June 29, 2011 posting titled Financial Crisis–Part III that one component of the Dodd-Frank law was to create a new regulatory structure for credit rating agencies.  Erroneous credit ratings that were given to mortgage-backed securities resulted in billions of dollars of losses, and were one cause of the financial crisis.  The SEC has not fully staffed the new office mandated by the Dodd-Frank law that is supposed to address this issue, and the provision that would hold credit rating agencies legally liable for their ratings was reported to have been tabled. Of course the government is now angry at Standard & Poors (S & P) for downgrading U.S. debt from AAA. There was a recent event involving S & P that was given very little media attention, but shocked the commercial mortgage-backed security (CMBS) world into disarray. Goldman Sachs and Citigroup pulled a $1.48 billion dollar CMBS offering hours away from settling the issue after S&P announced they would not be able to deliver final ratings on the security. A Wall Street Journal article by Al Yoon quoted a man who has worked in real estate finance since 1995 as saying “I’ve never seen this happen, to the extent where a deal was so far along, ever.”

The process of issuing a CMBS involves issuers working with the rating agencies to determine final pricing based on a preliminary rating, which has been developed after months of diligence. As was the custom, Goldman Sachs and Citigroup priced the recent issue based on the preliminary rating. No rating agency has previously failed to issue the rating when the deal is about to close, but that string has now been broken. S&P muddied the issue even more by saying “…it won’t assign new ratings to transactions based on its current criteria” (whatever that might mean). Other deals had to be recently “sweetened” to reassure investors.

What does this mean, and why should we care? The drama of watching the President and Congress thrash around with how to come up with a way of keeping the government funded followed by a stock market swoon has consumed nearly all of the news reporting. The possibility that the commercial real estate mortgage market is in limbo has been hidden behind the screen of bureaucratic ineptness of our elected officials trying to figure out how to fund overspending by the government. I fear this mostly unnoticed event instigated by what must be a nervous S&P could further cripple an already fragile economy. For those who haven’t been watching, the real estate market hasn’t been doing very well, and killing the commercial market by causing funding to dry up will be harmful. I write that believing that I have mastered the art of understatement. One analyst was quoted as saying, “This is a debacle of epic proportions.”