Archive for the ‘The New Republic’ Category

Call of the Wolf

Tuesday, September 8th, 2009

Long before Martin Wolf became the chief economics columnist for the Financial Times, he wrote the newspaper letters–lots and lots of letters. It was the early 1980s, the height of the Thatcher era, and Wolf was running research at a think tank in London that was sympathetic to the government’s pro-trade agenda. The FT’s letters section became the ideal place to take to task all those who would stand in the way of the first waves of globalization.

With a British gentleman’s cutting subtlety, Wolf parried with other letter writers over everything from tariffs to agricultural subsidies to the German textile industry. He assailed the arguments of a Mr. Mitchell as “ ’codswollop’ raised to a high power.” Taking apart the logic of one Mr. Calvert, Wolf quoted nineteenth-century French economist Frédéric Bastiat: “Absurdity is the limit of inconsistency.” Arguing with a Mr. Smith about the oil shock of 1983, Wolf’s didactic style was on full display:

How does Mr Smith reach his conclusion? The unstated argument appears to go as follows: in order to prove the economic optimality of competitive general equilibrium, one needs to assume a full range of contingent and future markets. A full range of such markets does not exist. Consequently, the actual equilibrium is not optimal. Centralised co-ordinating agencies might, therefore, improve on the market. The actions of the Japanese and other governments are generally held to improve on the workings of the market. Accordingly, co-ordinating action by the British Government would improve on the market.

When stated in the above way, the argument looks a little silly.

Today, Martin Wolf has moved on to bigger targets than Mr. Smith. Hired as an editorial writer by the FT in 1987, he is arguably the most widely trusted pundit of the current economic crisis. Consider the people who count themselves fans of his column. Larry Summers: “He is probably the most deeply thoughtful and professionally informed economic journalist in the world at this point.” Harvard economist Kenneth Rogoff: “He really is the premier financial and economics writer in the world.” Mohamed El Erian, CEO of PIMCO, the world’s largest bond investor: “He is, by far, the most influential economic columnist out there. His columns are eagerly anticipated.”

Knowing that Wolf is widely read and highly esteemed, major players in the economic world court his approval. The day after Treasury Secretary Timothy Geithner announced details of the Public-Private Investment Program, he called his old friend Wolf, who he knew was working on his Wednesday column. Geithner wanted to explain–and defend–the initiative. Wolf listened politely and, the following day, slammed the program as the “vulture fund relief scheme.”

“You cannot measure influence, but you can feel influence,” says University of Chicago economist Raghuram Rajan. “And I think he has it.” What makes this influence so fascinating is that, more than two decades after he became a full-time journalist, Wolf’s columns resemble nothing so much as his frantic, dense, cutting letters to the editor. They are learned, baroque, and quite frequently terrifying.

Wolf was born in 1946 in London. His father Edmund had been a playwright in Austria but managed to slip out of the country before the Holocaust wiped away most of his family. In London, he met Martin’s mother, a Jewish refugee from Holland whose family had also been killed. Growing up in the shadow of World War II and the Holocaust, Wolf was wary of anything outside the reasonable center. “It made me extremely suspicious of political extremism, on both the left and the right, a strong believer in democratic freedoms, which was very much my father’s position,” he told me.

A vivid memory of doom may have also driven Wolf into economics, which he sees as the underpinning of everything that can possibly go wrong. He was, he says, “very, very much formed by the sense that the catastrophe that befell my parents’ generation was in large part because of the Great Depression, which itself was the result of huge economic policy blunders.” References to the 1930s pervade his writing.

After studying economics at Oxford (where he identified as a social democrat), Wolf got a job in 1971 at the World Bank, which was then under the stewardship of Robert McNamara, the disgraced former U.S. defense secretary. McNamara, in Wolf ’s telling, was a forceful leader. “He was utterly and completely in control of the institution, of the facts, of the objectives that he wanted to achieve,” Wolf recalls. “And that made him quite impressive—I mean staggeringly impressive.”

According to Wolf, McNamara had a very firm idea of how to fix poverty in the developing world: Poor countries were poor because they didn’t have enough capital. Ergo, raising investment levels was the key to creating prosperity. To achieve this goal, McNamara pushed for loaning more and more money to developing countries, leading them, eventually, into massive debt crises in the 1980s.

Wolf was disgusted enough by these policies that he began to move to the right, and he eventually left the Bank in 1981. He says the experience taught him that “it’s really, really, really hard for large institutions to make intelligent decisions.” Wolf swore he’d never work in such a bureaucracy again.

In 1987, after working for six years at a pro-free-trade think tank in London, Wolf was courted by Sir Geoffrey Owen, then editor of the Financial Times. Wolf had written a few stories—and more than a few letters—for the paper, and Owen wanted to take him on as his chief economics editorial writer. Wolf, who shared the FT’s basic free-trade stance (although he was to the right of the paper), accepted. For nine years, he wrote with no byline, occasionally advocating stances he did not espouse, which rankled after his experience at the World Bank. Finally, in 1996, Wolf was given his own column on international economics.

It has been 28 years since Wolf left the World Bank, but he still sees his journalistic work as an antidote to the top-down style of decision-making he witnessed there. Now, he sees the same destructive behavior in the private sector. “If you go from Chuck Prince”—the former CEO of Citigroup—“to the people who were actually designing these securitized assets or, even more, the people who are making the subprime loans, you’ve probably got ten or eleven layers . . . that the people have at the bottom to get all the way to the top—filtered through all the people in between, whose job it is to give the impression to the people at the top that everything’s going smoothly. Because that, of course, is what they’re being rewarded on,” he says. “So, if there are minions at the bottom . . . saying, ‘Well, actually, this isn’t making any sense,’ if there were people like that, this information simply wouldn’t get up through the machine.” His job, he says, is to give voice to those minions who are unable to send their criticisms up the chain of command.

Moreover, the current crisis has re-awakened Wolf’s dread of the 1920s and ’30s. “I never expected, I have to say, to be as close to those experiences again in my lifetime,” he explains somberly. As a result, he has swung back toward Keynes—closer to his ideological roots— and he frequently criticizes the Obama administration from the left.

To understand Wolf’s influence, one must first understand his audience. They are dedicated Financial Times readers, and Financial Times readers are some of the top earners, spenders, and decision-makers in the world. “I’m writing for the people who are doing these things, who are running these things, both governmental and politicians and financiers,” he told me while vacationing in Liguria, Italy, where he has spent summers since childhood. (His family has a house there, and, every August, Wolf returns. “It’s an important break,” he says. “Unlike Americans, I believe in long breaks for reading and thinking. I don’t understand the American culture of one-and-a-half or two weeks of holiday a year at the maximum.”)

Befitting someone who writes for insiders, his style is brazenly dense. His FT columns come with footnotes and charts. Moisés Naím, the editor of Foreign Policy, recalls working with Wolf on a cover story on the coming market crash in 2000. “He makes no concessions to the reader,” Naím says. “There was a bit of back and forth about what he felt was ‘self-evident.’ ” His prose, even to the educated layman, can be hard to crack. “He’s writing for very well-informed readers,” says New York Times columnist Paul Krugman. “Obviously, I have a similar space, and I don’t write things that look like what Martin writes because I think I’ll lose too many of my readers.”

Wolf is staggeringly well-connected within the elite circles he is writing for. El Erian was a Wolf protégé, as was current British education minister Ed Balls. Wolf’s circle of friends and acquaintances includes the likes of Indian Prime Minister Manmohan Singh and Mervyn King, governor of the Bank of England. “I don’t know if there’s any significant central banker I don’t know,” he told me with a flat matter-of-factness. But part of his appeal is that he doesn’t hesitate to criticize friends. He is close with Geithner and Summers yet has repeatedly attacked their policies for not going far enough.

His fans cite his logical rigor, a faculty he loves to engage face to face. In FT editorial meetings, he’s known for packaging an extreme position in provocative language in order to make others clarify their own stance. “He starts by summarizing your argument, and, two minutes in, he’s trashed your argument,” says FT business columnist John Gapper, who used to be Wolf’s editor. “And that’s when you realize he’s only just getting going.” FT editor Lionel Barber says he stands up to Wolf, whom he calls “Two Brains,” “once every five years.”

It is these qualities—the deep erudition, the sense of proximity to the temples of power—that have made his columns about the financial crisis so impossible to ignore. When the bolts of rhetorical thunder emerge from his dense cloud of prose, you take notice. A typical column warns that we risk nothing short of “the mother of all meltdowns” or the end of “liberal trade.” Passages offer ominous predictions:

Yet the idea that a quick recession would purge the world of past excesses is ludicrous. The danger is, instead, of a slump, as a mountain of private debt. . . topples over into mass bankruptcy. The downward spiral would begin with further decay of financial systems and proceed via pervasive mistrust, the vanishing of credit, closure of vast numbers of businesses, soaring unemployment, tumbling commodity prices, cascading declines in asset prices and soaring repossession. . . . This would be a recipe not for a revival of 19th century laissez faire, but for xenophobia, nationalism and revolution.

By the time you put down a Wolf piece during the worst of the crisis, you could have been forgiven for thinking that we were hurtling toward a disaster of even more cataclysmic proportions. Although he may have written his columns with an audience of technocrats in mind, his jeremiads—clearly informed by Wolf ’s fear of repeating the Great Depression— broke through to a much wider audience. (They constantly rank among the most read on the FT’s website, and even Matt Drudge, the least academic man in the world, links to them.) What’s more, it is their very denseness that commands attention. To the broader public, suffering from grave confusion and outright panic, his pieces may be frightening, but their learnedness also provides a sense of odd comfort: Here is a solid view of the path ahead.

When columnists are too close to power that’s usually cause for concern. The classic example was Joseph Alsop, who used his op-eds to fight bureaucratic battles on behalf of his high-ranking friends. But Wolf’s readers feel a sense of gratitude for his closeness to the world’s central bankers and finance ministers and other denizens of the Davos set. Because when he zings them, or pushes the panic button, at the very least, we know they are listening.

Call of the Wolf [TNR]

Making War Just Got a Whole Lot Easier

Wednesday, August 12th, 2009

Russian legislators summering in Sochi got a special visit from President Dmitry Medvedev yesterday when he came into town to introduce a bill that would radically expand his powers to declare war and move troops outside Russia’s borders.

The law, as it stands now, is fairly narrow. Russia can mobilize to protect itself from invasion and to fend off aggression. That’s it. Medvedev’s proposed additions, however, would allow Russian troops “to protect the interests of the Russian Federation and its citizens, world peace, and Russian troops” anywhere in the world. Russian forces would also be allowed to fight piracy, preempt aggression, and intervene in any conflict … anywhere in the world. This is, to say the least, quite broad and gives Medvedev more flexibility to use force in the future, and he made no effort to mask the more immediate impetus for the change, either. “This is connected to the well-known events of last year,” he said, referring to the August war between Russia and Georgia. “These matters must be clearly regulated.”

But the real kicker is the procedural difference: Now, the Russian president can declare war, but the Federation Council (the upper house of parliament) has to approve it within 24 hours. Last year, when Russia invaded South Ossetia, the Council was on vacation and decided they didn’t feel like coming back to approve what they said was a mere peacekeeping operation in a region full of Russian citizens. A few weeks later and when the war was already over, the conflict devolved into a legal mess: Had it been a legal use of Russian armed forces, or not? Didn’t they need approval to go past Ossetia and into Georgia? As Russia found itself backtracking and defending its invasion internationally, the Council jumped to the rescue and approved the war. But Medevdev’s proposed amendment offers an even better way to clean up the confusion. It gives the president a wide window to get the Council’s approval to mobilize troops–in fact, there is no defined time window anymore–which means that the Council’s belated blessing in 2008 falls squarely within the time limit now, which means the Council wasn’t late at all, which means Russia’s invasion of a sovereign nation last summer was, actually, perfectly legal. Neat, huh?

Making War Just Got a Whole Lot Easier [TNR]

So This Is What Passes for Opposition These Days

Monday, July 6th, 2009

Tomorrow, after his breakfast with Vladimir Putin, Obama meets with Russian opposition leaders at the Ritz Carlton in Moscow. What we call the “opposition,” however, is so thoroughly fragmented and disorganized as to be effectively useless. Attending tomorrow’s meeting, for example, is Sergei Mitrokhin, leader of the nineties-era, pro-Western liberal Yabloko party. Once a decent political force, the party won no seats in the most recent parliamentary elections. Also in attendance will be Western media darlings Boris Nemtsov and Garry Kasparov, representing their new liberal party Solidarity, which is not represented in the Parliament either. On the guest list as well: Leonid Gozman, a one-time Kasparov associate (he had an arm broken in an anti-Kremlin protest) who now heads the Right Cause party, a Kremlin-assembled “opposition party” meant to function as a safety valve; Ilya Ponomarev of Just Russia, another Kremlin-made shell party; and Communist Party leader Gennady Zyuganov. The competing agendas for the meeting–ranging from bilateralism to the evils of “Putinism”–show just how imprecise it is to use one word to describe the group.

Meeting with the opposition, or something close to it, is oftentimes part of the choreography when American presidents travel to Russia. In May 1988, for instance, Ronald Reagan went to Moscow to meet with Mikhail Gorbachev, who, perhaps like Medvedev, was seen as a liberalizing, friendlier figure. Reagan sat with an assortment of 96 dissidents grouped just as tenuously as Obama’s attendees–Jews, Orthodox priests, political prisoners. Gathered for tea at the American embassy, they told him of their plight–Jewish families blocked from emigrating, political dissenters drugged in psychiatric wards–and Reagan expressed his admiration for their courage, urged them to fight on, and then, after an official speech at Moscow University evangelizing freedom, downplayed the dissidents’ plight as a mere bureaucratic inconvenience. (He caught a lot of flak for this from conservatives at home, especially William F. Buckley.)

This time, however, the meeting with the opposition is being handled with more delicacy by all sides. Unlike Reagan, who, at the end of his second term, felt free to side unequivocally with those opposed to his hosts, Obama is just setting out and has much damage to undo. (Bush, for all his championing of democracy, never met with the Russian opposition.) And, whereas Reagan invited people who were expressly forbidden by Soviet authorities from traveling to the meeting, Obama did not invite the more fringe elements of the opposition, like Eduard Limonov’s Nationalist Bolsheviks, known more for their performance art than their political philosophy. Moreover, the Kremlin is not protesting, and the invited opposition, for their part, have decided not to complain to Obama of internal politics, and instead promise to talk about issues like the global economic crisis, as if, in a hyper-centralized state, they are in any position to help resolve it. “It isn’t proper to complain to the leader of a foreign government about your own problems–it’s a sign of weakness,” said Mitrokhin, who plans to discuss missile defense with Obama.

But Mitrokhin and the other attendees will be made to feel like America is listening to voices other than the Kremlin’s, the Kremlin knows it isn’t really being threatened, and Obama recovers some of the brownie points he lost in certain circles back home for seeming not to support the Iranian opposition. So, off they go, gingerly balancing egos and symbols that smooth the way for the substance of the thing.

So This Is What Passes for Opposition These Days [TNR]

What To Make Of The Russian Media’s Reaction To Iran?

Wednesday, June 17th, 2009

As we continue to pick apart the dubious Iranian election returns, it’s worth considering their very different treatment in Russia, which has long sought to play the lion tamer in the nuclear tug-of-war with Tehran. For starters, the mainstream Russian press has taken the official election results largely at face value, referring to Ahmadinejad as the “winner” without the slew of qualifiers that pad the term here. Only Tuesday, when the ayatollahs announced a partial recount, did some Russian papers label the election results “shaky.” Today, the fourth day of protests, what coverage there is (many papers have dropped the story) is a bit more urgent, focusing on a growing threat of real upheaval (Kommersant, the main national daily, leads with “Iran Finally Remembers the Revolution”). The tone, though, is still one of strict objectivity: Here’s who won, here’s who people hoped had won, and here’s the official data.

Why has the Russian press largely sidestepped a skeptical analysis of the election returns? One answer is that the Kremlin always feels as if it has to be at center stage and, for that, it needs Ahmadinejad and his antics. This explains why the hard-line Pravda depicted Mousavi’s supporters as sore losers and quoted a Russian Iran expert as saying that “the protests will not yield anything. …We can firmly and definitively call Ahmadinejad the elected president of the country.” But what’s surprising is that even fiercely liberal outlets like Novaya Gazeta (Anna Politkovskaya’s paper) gladly accepted the results. On Monday (it is published Mondays, Wednesdays, and Fridays), it described the elections as lively and “wondrous.”

Though it’s impossible to generalize, there’s one fairly obvious explanation for such uniformly accepting coverage: This just doesn’t look like a rigged election to Russians, because Russians don’t rig their elections; they engineer them. Last year’s choreographed election, remember, was carried out with no room for error: no debates, with one candidate’s message drumming ceaselessly on state-owned media for months, and, when the vote finally came, returns spiked conveniently at all the round numbers. It’s a low standard, but, given the fact that local governors aren’t even elected in sham elections anymore, anything with more than one pre-ordained candidate and a modicum of friction seems like a free and fair election to Russians.

And so, though the press is reporting extensively on the protests and dashed hopes of a thaw, it is also questioning whether the Mousavi-ites are as representative as the Western press implies. The centrist Moskovskiy Komsomolets, for instance, compared the green protests to the recent unrest in Moldova: “Without much of a base and without much chance of success–but with a lot of noise.” Even Yuliya Latynina, an opposition columnist for the liberal, pro-Western Ezhednevniy Zhurnal, was not surprised that, in a country full of the pious and “simple poor,” Ahmadinejad swept to a resounding victory. “The elections in Iran demonstrate one simple thing, evident even to Aristotle and Plato, but often forgotten by devotees of democracy,” she wrote. “Democracy is one of the most imperfect forms of government if the poor get to vote.”

But there may be a quick about-face in the coverage, as even the Kremlin seems to have taken a cooler stance toward Ahmadinejad and his landslide. Some of the press’s coverage has surely been influenced–though not overtly–by the fact that Ahmadinejad has been a Russian ally because he has been a constant irritant to American ambitions in a region Russia historically views as part of its sphere of influence, and because that irritant lets Moscow play the needed and important salve. Now, though, the winds are changing. Obama has taken a less militant tone with Tehran and with Moscow. Medvedev, lately showing more sleight of hand than his predecessor, seems to have finally picked up on the world’s extreme skepticism about the election results and the growing seriousness of the unrest in Iran.

Here’s what happened: Slated to arrive in Yekaterinburg on Monday for the summit of the Shanghai Cooperation Organization summit (Iran is an observer in the group, which is a sort of answer to NATO in Asia), Ahmadinejad postponed his trip because of the situation at home. When he finally arrived yesterday, Ahmadinejad found that his two-hour tete-a-tete with President Dmitri Medvedev had been canceled due to the president’s “overly-saturated schedule.” Instead, he shook hands in front of the cameras with Medvedev, whose spokesperson insisted that this fleeting encounter was nothing more than a flicker “on the sidelines.” As Gazeta noted in its main headline on Iran of the day, “Ahmadinejad Can Wait.”

What to Make of the Russian Media’s Reaction to Iran? [The New Republic]

Prophet Motive

Friday, May 15th, 2009

This year, Nouriel Roubini, the economist known to the general public as Dr. Doom, Prophet of the Financial Apocalypse, spent the early hours of Mardi Gras on the floor of the Frankfurt Stock Exchange. It was only 11 a.m., but the party was rollicking. Traders careened around the floor, hooting and honking, dressed as dragons and devils and convicts. Rock music roared overhead, and no one seemed to care that, by the bye, the market had tanked. Tickled, Roubini registered the flicker of amusement on his Twitter thread: “Nouriel is at the Frankfurt Stock Exchange,” he wrote, “where everyone is dressed in Mardi Gras costumes even if the market is down 2.5%.”

Roubini has always been a bon vivant–a trait that has mesmerized the tabloids ever since Facebook photos surfaced of him, the professional pessimist, partying … with women. But, today, there was no time to celebrate. First, he had to go see Axel Weber, head of the nearby German Central Bank, to discuss “how the German taxpayer is going to have to bail out the lazy Italians and the lazy Greeks,” who were up to their eyebrows in debt. Then there was a panel discussion with finance gurus Robert Merton and Stephen Ross; there were clients to counsel, a keynote address to deliver, and e-mails, hundreds of e-mails, slowly piling up in the BlackBerry on his belt. By the time he responded to the ones worth responding to and updated his blog, it was nearing 4 a.m., and he only had time to sneak in a few hours of sleep before another day of flights, meetings, conferences, and TV appearances.

When I caught up with Roubini three days later, he was draped over a booth in an Upper East Side diner, his hair rumpled, collar undone. The speckled blue tie he had worn on Maria Bartiromo’s show that afternoon was gone. His speech was still a rapid spit-out of facts and favored metaphors (the government “cannot be half-pregnant” with the banks), with modifiers in just the wrong places (“I was all day long giving talks”), but it was disembodied: Roubini was wiped and having a hard time propping himself up.

Now that his early prophesies of a “bloodbath” have come to pass, Roubini’s star is at its apex, and everyone wants a little ray of its gloomy light. This includes his editors at Forbes, The Wall Street Journal, and a growing number of other publications; his students at NYU, where he is a popular tenured professor; and his consultancy’s swelling portfolio of clients–the World Bank, IMF, 50 central banks, and 30-odd finance ministries among them. He also appears on CNBC almost every day. He is a curious presence on the network–the antipode to its yawping, fratty ethos–and he is trotted out to play the foil, delivering bad news with a dark and steady gaze, punctuated by the occasional impish smile. It’s good for business, Roubini admits, but he makes no secret of his contempt for the network’s roster of “perma-bulls who declare that this is the dramatic and cathartic event that signals the bottom of the crisis, and recovery is three months ahead.”

“What a delusion,” Roubini sniffs.

Though he hasn’t attacked the Obama administration’s policies with Paul Krugman’s fury, and though he is no longer the most bearish of the bears, his short-term outlook is still quite bleak: a 36-month downturn, double-digit unemployment, and sluggish, recessionary growth well into 2010. At best.

Roubini is widely seen as an incorrigible pessimist, and, in the years leading up to the crisis, this nose for doom pitted him against his more cautious colleagues in the academy and the regulatory agencies, as well as the ebullient in-house economists at banks and hedge funds. Even those who predicted a downturn didn’t recognize the extent of the problem. They homed in only on certain pet indicators–trade imbalances, say–and saw a temporary, contained recession in the works. Roubini, on the other hand, saw something else entirely. Like a good mechanic or internist, he understood the wiring. He knew, for instance, that current-account deficits were integral to the housing bubble, and that those two factors linked up to countless other factors at home and abroad. So he took what, back in 2004, was just a hunch–there is a foreign-financed bubble in the United States–and eventually pushed it, step by logical step, into a Socratic cul de sac: We are headed for an unmitigated financial disaster that will completely change the way the world does business and leave no one untouched. The theory seemed far-fetched, even hysterical–until it came true.

By calling the recession, Roubini has traveled from the Jeremiah wilderness to become one of the world’s central economic authorities. So, does he have a unique ability to penetrate data, or was he simply a relentless pessimist the business cycle was eventually bound to vindicate? Is he our great economic seer, or did he just get lucky?

Roubini can be a pleasantly phlegmatic man, but, whatever the topic, he almost always positions himself as a clear-eyed outsider battling against the half-wits. “Silly” is one of his favorite adjectives, as is “ridiculous.” When we met in New York, he wasted little time in dismantling the myth of his newfound stardom. “People sometimes write these articles saying, ‘He was an obscure academic professor and now he’s become a rock star,'” he said, one arm absently bumping an increasingly irritated man enjoying a club sandwich behind him.

Then there is the problem of Roubini’s pop-culture image: Dr. Doom, the partying pessimist. He hates both parts of the packaging. “In many ways the Dr. Doom moniker is inappropriate,” he punched into his BlackBerry, unprompted, one very early morning in New Delhi. “I turned out to be much more of a realist than a pessimist, grounded in reality rather than living in a bubble of delusions about how bad things would get.” And he flares at any mention of his reputation as a playboy, accusing Nick Denton, the publisher of Gawker Media and the main peddler of these allegations, of anti-Semitism (Denton’s mom is Jewish).

If Roubini slides easily into the role of victim, it’s a stance that his ancestral history may have predisposed him to. The Roubinis are from Mashad, a city on the eastern fringe of Iran and the resting place of the Imam Reza, the eighth of the twelve Shia imams. This made Mashad a major religious hub and, thus, a difficult place for its Jewish community, the Roubinis included, to live. The city’s Muslims and Jews, however, managed to maintain a tense equilibrium for centuries until, in 1839, a Jewish woman got a strange prescription for an abscess on her hand: cut open a puppy, stick your hand in its innards, hold for an hour. She carefully followed the Muslim doctor’s advice, but got the timing wrong, killing the dog on a major Muslim feast day. This was interpreted as a mockery of the holiday, and the town exploded in violence. When it was over, 36 Mashadi Jews were dead and the rest were forced to convert to Islam, an event that came to be called the Allahdad. For the next century, until the Iranian state slowly loosened its grip in the 1940s, the Jews had to secretly keep their faith while maintaining an elaborately Islamic facade.

The trauma of the Allahdad forged a strong insularity among the Mashadi Jews, one they maintain even in the exile of Long Island and Israel–and it gave them the sense that the unimaginably bad is nearly always possible. “It’s like a big tribe,” Roubini says. “They mate among each other; they don’t even mix with other Jews.”

Roubini himself was born in 1958, not in Mashad, but in Istanbul, where his parents had a short layover before moving on to Tehran, Tel Aviv, and, finally, Milan, where the family set up its Oriental rug business and lives to this day. Because they arrived in Italy when they were young, Nouriel and his two brothers, born one after the other in the span of 21 months, were able to duck right into Italian society (though they spoke Farsi at home) and, in the typical way of first-generation immigrant children, disappear. The Roubini boys came to immerse themselves in politics during the 1970s, when Italy was rocked by social unrest and domestic terrorism; according to his youngest brother David, Nouriel began leading student assemblies on the events of the day. “I was like everybody else, the son of a good upper-middle-class family, and like many of my generation, I was socially conscious,” Roubini says. “I wanted to make the world a better world. And, probably, my interest in economics came from my interest in politics.”

The interest was largely incomprehensible to Roubini’s parents. In the Mashadi community, a boy was expected to go into his father’s line of work; many didn’t finish high school. “Unlike Ashkenazi Jews, Middle Eastern Jews put less emphasis on education,” Nouriel explains. “They were more about business. There was no particular impetus to learn. So I’m a little bit like an outsider because I broke out of it.”

He has remained an outsider ever after, never fully inhabiting any role or place since his grad-school days at Harvard, when he was able to pursue a blend of academic economics with tangible questions of policy. After seven years of teaching at Yale, he was drawn south, to New York, to fill the cultural void that New Haven had opened in his life. (He missed the opera in particular. At one Yale party, an advisee’s wife walked in on Roubini and four other economists ripping through the Catalogue Aria from Don Giovanni, a list of the paramour’s conquests: “In Italy, six hundred and forty;/In Germany, two hundred and thirty-one;/A hundred in France; in Turkey, ninety-one;/But in Spain already one thousand and three.”)

But, at NYU in the mid-’90s, he wasn’t fully comfortable, either, and was drawn south again–this time to the policy battles of Washington, where he served briefly at the World Bank and the IMF, before deciding to abandon academia for a while and adopt the life of a bureaucrat at the White House and Treasury (where he was Timothy Geithner’s adviser). That, too, did not satisfy him for long. Two years later, he was back in New York, trying again to fuse economic policy with theory, and, in 2005, he added another element to the mix: RGE Monitor, a multimillion-dollar international consultancy.

The crisis has blessed Roubini with fame, wealth (mid-recession, RGE is still growing), and odes from his peers. Nassim Taleb, who also predicted a catastrophe in his book The Black Swan, calls Roubini “the best living economist”; heavyweights like Brad Setser, Simon Johnson, and Kenneth Rogoff were nearly as flattering in their appraisals. And yet, Roubini still sees himself as outnumbered and put-upon, the man no one will listen to until it is too late.

He also bristles at anything that smells remotely of constriction. When two people from the notoriously on-message Obama campaign approached Roubini and asked him to come onboard last year, he declined. Though Roubini had been happy doing policy in the late ’90s, he had chafed at working longer days for half the money, and his recommendations were being shorn of their Roubini-esque fullness. “When I was in government, every word I said in public, I had to clear it with general counsel,” Roubini says. “I prefer to be a free thinker and be able to write daily without having to worry about that.”

Before they left for Washington late last year, he told his old colleagues Geithner and Larry Summers that, though they were free to contact him, he was happy directing policy indirectly, on television or on his blog. “I cannot do everything,” he says. “You have to choose.”

Some economists–strict academics mostly–have long considered Roubini a quack. They sneer at his approach, which is wide, deep, and deeply unconventional. When he travels, for instance, he says his research includes talking to “everyone from the airport cab driver all the way to the finance minister.” One prominent economist who studies recession indicators recently slammed Roubini for his “subjective,” “wild man” predictions because they don’t always rely on econometric modeling. And Roubini certainly didn’t help his case at an IMF conference in September 2006, when he guesstimated the chances of a world recession at 70 percent before offering, by way of explanation, that he had pulled the number “just out of my nose.”

Anirvan Banerji, an economist with the Economic Cycle Research Institute, has been particularly dismissive of Roubini’s forecasting abilities: “The average time between recessions is about five years in the postwar period,” he says. “So, if you forecast a recession one year and it doesn’t happen, and you repeat your forecast year after year … at some point the recession will arrive.”

And Roubini has undeniably overshot. In 2004, he predicted that the oncoming recession would precipitate the crash of the dollar. The crisis has mainly buoyed it. On September 1, 2005, three days after Hurricane Katrina made landfall, Roubini told Reuters that economic disaster was imminent. What followed instead was a bump in financial activity that forestalled the recession for more than two years.

All the while, though, Roubini understood better than anyone just how weak the fundamentals of our economy were. The day after the now-famous 2006 IMF talk, he went on “Kudlow & Company,” on CNBC. Roubini was, as always, the foil to Kudlow’s chipperness. “All my friends are in a great mood, Nouriel. They’re in a terrific mood. They love America,” Kudlow sang. Roubini countered starkly: “Well, they’re all rich,” he said. “The average American actually is in debt”–a sign to Roubini that housing would only be the catalyst of something larger.

What sets Roubini apart from his fellow economists (and what occasionally gets him in trouble) is his willingness to intuit broad patterns and connect the dots, something that became apparent early in his career. While others spent years refining one econometric model or drilling down on one microsubject, Roubini gorged on a range of diverse topics that, to him, were all related: Japanese public debt, tax evasion, liquidity and exchange rates, monetary policy in the newly formed European Union, the effect of political cycles on industrial economies. As a graduate student, he attracted the attention of older, more established academics both for his ambitiously sweeping econometric analyses and his ability to synthesize vast swaths of seemingly unrelated information.

But the first real test of Roubini’s eclectic methodology didn’t come until 1997. That summer, the government of Thailand–highly in debt and over-leveraged after a long and poorly regulated real-estate boom–cut its currency from its peg to the dollar. Investors panicked, and Thailand’s surging economy froze, triggering massive layoffs in real estate, finance, and construction. The crisis, which quickly spread to the rest of the region, took most economists by surprise.

Roubini, by then a young professor at NYU, was trying to stay on top of the rapidly shifting situation in Asia for a class he was teaching. He found it nearly impossible until he hit on a relatively new technology: a website. He hired some students versed in HTML and set up the Asia Crisis Homepage. The bright yellow portal pooled news reports, academic work, and policy debates on the subject, filtering, organizing, and contextualizing the information in real time under no fewer than 32 headings.

Wading through the data on Thailand, Roubini found that corruption and bad policy created a vacuum that sucked in a flood of foreign capital. This skewed the country’s financial reality and accelerated an unsustainable boom. (Roubini later spotted this distinctive pattern in the United States when the Chinese, Russians, and Gulf states were hungrily snapping up U.S. debt and inundating the market with foreign cash.) But, at the height of the Asian financial crisis, Roubini was, again, in the minority. Many economists saw it as a simple comedy of errors: Misinformed investors panicked, they said, and pulled the rug out from under the Thais. Roubini, on the other hand, saw the crisis as a systemic failure rooted in Thailand’s policies. And he was right.

More than a decade later, Roubini-ism–sprawling, non-linear, and hypercaffeinated–looks pretty much the same. His prescient February 2008 blog post that predicted the Rube Goldbergian collapse of the world financial system, for example, was called “The Twelve Steps to Financial Disaster,” but, if you include all the sub-steps and sub-sub-steps, the real number is likely twice that. On television, his talking points are similarly pluralized, rushing out quickly, like a magician’s scarves, to a grand and logical finale. (At the diner, I clocked him: 295 words on the intricacies of the European monetary crisis in under 90 seconds.) This, of course, means that brevity goes out the window. Roubini’s weekly Web column for Forbes comes in at close to 3,000 words and runs at half that length. A recent Roubini academic paper tracks no less than 47 emerging countries over the course of 32 years using more than 50 variables. Giancarlo Corsetti, who was Roubini’s advisee at Yale and is now a frequent collaborator, presents with Roubini at conferences, and sometimes finds this expansive approach frustrating. “I go up, I present one or two points,” Corsetti says. “Nouriel goes up and gives you twenty-six points, three or four of which are contradictory.”

Robert Shiller, who also worked with him at Yale and was one of the first people to warn of a housing bust, isn’t surprised that Roubini, of all the great minds staring down our financial future, emerged as the one to piece it together. “A financial crisis needs general thinking, and a team of specialists will have difficulty understanding the whole thing,” he says. “Nouriel’s approach has always been worldwide, which is not rewarded in academia. There’s an element of luck in everything, but it’s not random who he is.”

This is what the life of a prophet looks like: Two days after we met at the diner, Roubini is back at the airport. He’s off on another long jag–four continents, seven countries, eight cities, ten days.

He’s been thinking a lot not just about the way down but the way out. With the help of the Obama administration’s policies (not great, he says, but better than nothing), he sees “a light at the end of the tunnel.” To actually get to the end of it, though, the United States will have to get used to consuming less, which means China, Germany, and Japan will have to get used to producing less, which means that all the intermediaries–Chile, Australia, Brazil–will have to scale back and turn inward like everyone else. The world may curve and warp a bit, and it will be difficult, but Roubini sees good in this. Given the right changes, perhaps the United States can develop with the productive long view in mind, and maybe its human talent can be spread more equitably. “When you have more financial engineers than computer engineers, you know that the brightest minds have gone into something where, probably, the margin was excessive,” he had told me earlier. “Maybe some of these bright people are going to do something entrepreneurial, more creative, or go into government. I think that’s actually a good change. The transition is painful, but the result may be good.”

On the other end of the line, I can hear him fumbling with his luggage as he talks, and there’s a sense of noble resignation in his tone. He hasn’t had any rest since we met, but, he insists, “I cannot get sick. I can’t stop.” His is hard, life-shortening work, but someone has to tell the world that only its wholesale rewiring will get us out of this.

Prophet Motive [The New Republic]

The Method Behind Russia’s Cuba Madness

Thursday, February 12th, 2009

Last week, Cuban President Raúl Castro wrapped up a whirligig tour through Moscow, the first visit by a Cuban leader in a quarter century. For eight days, he was shuttled around the Russian capital in a flurry of museum visiting, wreath laying, and agreement signing. The time for bickering over Soviet-era debt and who abandoned whom, it seemed, was over; the time for a new friendship between old friends had dawned. And so, Castro and Russian president Dmitry Medvedev “expressed their satisfaction with the growing collaboration between the two countries,” wrote Granma, Cuba’s official state paper, at the height of the visit. “It is a testimonial to the historic friendship and mutual respect that exists between the Russian and Cuban peoples.”

All told, the two leaders expressed their historical amity in the form of over 30 agreements, and, though they kept mum on many of the details, Castro reportedly returned to Havana “very happy.” How could he not have? Those deals were worth over $350 million in fresh loans and hurricane aid, and impoverished Cuba needs everything it can get.

But Russia has been careful not to make this visit seem like a Soviet-era Russo-Cuban love-fest. Back then, there would have been a parade for a visiting Castro; this time, the Red Square was procession-free. Another key difference: 30 years ago, the other Castro–who was doubly important as an ideological ally and a persistent nuisance to America–would have left Moscow with grants, not loans, in his pocket. (“The era of gift-giving is over,” a Russian official in Havana said.) There was also a change in tone: As a western official in Havana told me, while the Cubans were busy playing up the renewal of ties, the Russians were keeping them at arm’s length. They wanted to send a clear signal that things are going to be different this time.

Things, however, are pretty much the same. It’s just that, like many other things in contemporary Russia, they just have different names. So instead of “subsidies,” Cuba gets “loans.” And no longer will there be a lopsided pro forma barter system. The new agreement that essentially swaps planes for rum (which Russians don’t even drink)? In 2009 that’s called “trade.”

So why is Russia–the emerging economy hardest hit by the economic crisis–lending a few hundred million dollars it probably won’t get back to a country that can barely pay for its goods and with which it no longer shares an ideology?

The reason, like the tactics, is old: sticking it to Uncle Sam. While the U.S. is distracted by its own melting economy, Russia gets to curry some influence right under America’s nose, perhaps as retribution for the U.S.’s support of Georgia last summer. Indeed, the coffee table in the lobby of the Russian embassy in Havana has a stack of Spanish-language pamphlets called “South Ossetia: Chronicle of a Genocide”–Cuba was one of the few countries to support Russia in August–and the Russian official there spoke to me more about the “anachronisms” of the American system than about Russo-Cuban relations, which was the purpose of my visit. Renewing a historical friendship, it seemed, was more of a ploy to make an old enemy pay attention.

This time, however, Russia is too clever to think that it’s well served by angering a new president who might meet them halfway on, say, the European missile defense shield. In using Cuba for spite, Russia could have reopened Lourdes, a Cold War listening post outside Havana that Putin closed in 2001. It didn’t. Instead, in throwing some pocket change to a country that’s not even in play, says Alexander Kliment of the Eurasia Group, “Russia is simply stacking its bargaining chips ahead of its first meeting with Obama.” How? “By asking, ‘Where are those asymmetrical pressure points?'” Kliment says. “That’s what Russia always looks for.”

One such pressure point was discovered last week when Russia handed the Kyrgyz $2 billion to kick the U.S. off a crucial air base. Another pressure point? Spending $7.5 billion to fund an alliance of former Soviet republics in the Baltics and Central Asia to consolidate its influence in the region. When it meets with Obama in the spring, Russia can then easily back off these none-too-crucial arrangements in return for some concessions from the U.S.

Which nicely explains the logic of returning to the old tactic of a none-too-profitable trade with Cuba: Lopsided trade agreements? $354 million. Pressing a steel thumb into one those pressure points? Priceless.

Oklahoma Is Doing Pretty OK, Actually

Monday, January 19th, 2009

As a wonderfully menacing Christmas card sent out by the Oklahoma GOP last month reminded us, Oklahoma was the only state in the Union to go completely and utterly red: Not one county–and only one of the state’s 2249 precincts–voted for the Obama/Biden ticket in November. (“It was god, guns, and gays with a little bit of race thrown in there,” a local Democrat quipped bitterly.) And yet, two months later, a crowd of 800 Oklahomans merrily rang in the Obama presidency on Sunday night at the Museum of the American Indian. A sense of marvelous good luck (for some) and of smirking at the gods (for others) permeated a crowd that had as many Native Americans as ten-gallon hats and bright blonde coiffures. Tribal chiefs and Air Force ROTC high schoolers mingled with state representatives, local business people, and young couples around piles of jalapeño corn bread and chicken pot pie. One Oklahoma architect, bopping his head towards the merry crowd, snipped, “These are all the people that voted for Obama in Oklahoma. That’s it. They’re all here.”

One of those voters was a reluctant one: Oklahoma’s lone Democratic congressman Dan Boren, a vocal board member of the NRA and scourge of environmentalists. In July, he made news for refusing to endorse Obama because of his “liberal Illinois voting record,” before finally coming around. “I had reservations about him,” he told me as a soft jazz band inexplicably sent strains of “Georgia on My Mind” up to the rotunda’s ceiling. “But the President-elect’s early moves have signaled that he isn’t going to govern from the left, that he won’t govern as an ideologue, that he’s going to give tax cuts to small businesses, and that he won’t try to stifle growth. So we’re very hopeful.”

The state’s other professional Democrats were, for the most part, Obama-backers from Edwards’s departure and got behind him to the best of their hobbled abilities. Dr. Ivan Holmes, the state’s Democratic Party Chair, recalled how Obama called him to say that he would not be coming to the state and that Holmes was not to spend a dime on his campaign after initial polling suggested that Obama could only scrape together 35 percent of the vote. (He ended up with 34.) But the state party did as much as it could: State Representative Anastasia Pittman beamed with pride as she recalled how many voters her team had registered: 2,000. Holmes, in spite of the party nominee’s diktat, disbursed $50,000 to buy 50,000 lawn signs.

This was like shaking a fist at a rain cloud, however, and the November returns were devastating. “I completely understand why Obama didn’t spend any resources here,” Democratic governor Brad Henry told me. “It’s a waste of time.” But when their candidate pulled through because of the other 28 states in the win column, Oklahoma Democrats’ relief was tinged with more than a little embarrassment. Many whispered of an undercurrent of racism in the rural areas. Linda Edmondson, the wife of the state attorney general who plans to run for governor in two years, said some of her friends held firm to the belief that Utah was actually the reddest state. “It’s pretty depressing,” she said. Holmes, the otherwise feet-on-the-ground state party chair, repeated a similarly soothing, if inaccurate, factoid: “I think there were three states that were actually redder, percentage-wise,” he insisted over a plate of chocolate-covered strawberries. “I can’t recall which ones, but I’m pretty sure there were three that were worse.”

But the mood was so infectiously happy–the rotunda was still packed when the security guards threatened to lock the doors on a crowd that wouldn’t go home until it had shouted through the entirety of “Oklahoma,” a capella–that even the few Republicans in the crowd seemed to be warming to the changing of the guard. Everyone was simply trying to make the best of a situation that hadn’t gone anyone’s way: Oklahoma Democrats hadn’t delivered the state for their candidate, and the others hadn’t gotten their candidate at all. And though the most stalwart Republican members of Oklahoma’s Congressional delegation were in absentia (most had timed their returns to D.C. for the last minute before the inauguration; others, like Senator James Inhofe, promised to come, but, held up by mysterious delays, never showed), the ones that were there wouldn’t badmouth the incoming president. “It was a fair election and nobody’s sulking,” Representative Tom Cole told me later, echoing the mood of his constituents back home. “It’s clearly an exceptional moment for the Democrats, and it’s preeminently their celebration. We’re just pleased to be invited.”

WTF Else R We Gna Do?

Friday, January 16th, 2009

Earlier this week, David Frum and his wife, Danielle Crittenden, invited some of their (conservative) friends to fete the inauguration of a man they didn’t vote for. “We’re going to watch and have a few drinks–well, maybe more than a few–and discuss how we’re going to deal with this,” Frum, a fellow at the conservative think tank American Enterprise Institute, told me. He sounded chipper, almost wondrous at how the conservatives had gotten to this point. At the bottom of the invitation, he and Danielle wrote “celebrate/commiserate cuz wtf else r we gna do?” “That’s short for ‘What else are you going to do?’” says Frum, laughing.

“Seriously, though,” he continues, “never, ever, ever go to an inaugural ball. They’re terrible. First you get in a taxi and instantly hit terrible traffic. Then the taxi drops you off at some cavernous space, like the Air and Space Museum. Then you get in a long line to drop off your coat. Then, once you’ve dropped off your coat, you get into another long line to get a drink and the whole time you’re surrounded by people you don’t know, and people who don’t know each other.”

Frum’s event was supposed to be an antidote to such anonymous elbow-rubbing, a low-key gathering at his Glover Park home–but it seemed to tap into a hidden demand and was soon overrun. “We just hung out the shingle a couple days ago and over 100 people responded,” he said. “Most conservatives live in Virginia and feel cut off by the bridge closings.” Though Frum is keeping the guest list close to his chest, the party, co-sponsored by Laura Ingraham and Marty and Byron York, will be attended by Frum’s AEI colleagues, Giuliani campaign veterans, mysterious-sounding Canadian and Norwegian parliamentarians, as well as many other alienated DC right-wingers looking for a stiff drink before heading out into the Democratic blizzard.

Incidentally, the event is doing double duty as a launch party for, which will go live at 12:01am on Inauguration Day. The site, Frum says, will serve as a platform for reform and renewal of the GOP and will feature what he called “a cross-section of conservatives.”

An axis of opposition, perhaps?

“No,” Frum says, souring. “That gag has had its run. This is just a group that’s not so hopeful about the change.”

Legend of The Fall

Monday, January 12th, 2009

Last month, far from his old D.C. stomping grounds, a very old W. Mark Felt, Sr., died quietly in Santa Rosa, California. The press, who had known him as the dashing, silver-haired spook dubbed Deep Throat, portrayed this as a major event, the passing of one of the late 20th century’s most influential figures. The New York Times remembered him as the man who “helped bring down President Richard M. Nixon by resisting the Watergate cover-up and becoming Deep Throat, the most famous anonymous source in American history.” Across the Pond, the Guardian’s obituary only heightened the legend. “Long after memories of Linda Lovelace’s pornographic film have vanished,” it wrote, “Felt will live on in American political history as Deep Throat, the mysterious insider whose leaks to journalists Bob Woodward and Carl Bernstein brought well-deserved ruin to the Nixon presidency.”

In no small part because of Hal Holbrook’s goggle-eyed, cotton-mouthed portrayal of him in All the President’s Men, we’ve come to think of Deep Throat in these romantic terms: as the mystery man feeding rounds into Woodward and Bernstein’s gumshoe guns. That was in 1976. Nixon had resigned, the bad guys had gone to jail or had been publicly shamed, the movie won four Oscars, and still no one knew who Deep Throat was. So a large and devoted gaggle of politicians, journalists, and scholars began to guess at Deep Throat’s identity. Then they began to obsess over it, doubling back on every possible hypothesis, and Deep Throat’s legend ballooned. “A lot of awfully intelligent people made awful fools of themselves,” says Slate’s Timothy Noah, who, until Deep Throat’s outing, was an active participant in the guessing game. A bemused Woodward told me that, over the years, he’s received scores of PhD and masters dissertations trying to uncloak Deep Throat once and for all. It took three decades for Felt to come out and put an end to (most of) the speculation.

But this most anonymous of sources was not nearly as important to Woodward and Bernstein’s reporting–or to Nixon’s demise–as we have come to believe. He was useful, yes, but the Washington Post staffers who midwifed the Watergate story readily admit that he was just one of many, many sources, some of whom are still anonymous. In fact, the entire editorial team did not know about Deep Throat’s identity until after Nixon resigned. To them, Deep Throat was not the man who helped two reporters fell a crooked president, but just one piece of a huge and dynamic puzzle.

“Don’t think for a second that if Deep Throat was so important, Ben Bradlee wouldn’t have asked who he was,” Barry Sussman, Woodward and Bernstein’s direct editor on the Watergate articles, told me recently. (Today, Bradlee, the Post’s former executive editor, says he didn’t ask because Deep Throat was usually right. “Being right is what you care about in a source,” he explained. “If he was caught way off base telling a lie, then I would’ve asked. I would’ve throttled Woodward.”)

The Post had a two-source rule for the investigation–that is, every bit of information had to be corroborated–but Deep Throat was never one of them. He was rarely the one to approach Woodward; he didn’t offer documents or leads or even many details; he spoke in code and disappeared for long stretches of time. For the most part, he was a check on information Woodward and Bernstein had already cobbled together. “He was important, but the story could’ve been done without him,” says former metro editor (and Sussman’s boss) Harry Rosenfeld. “It wasn’t like any story stood or fell by what he told us.”

“I think his nickname elevated him into history more than his actual contribution,” Bradlee says. Thirty-odd years later, he is still baffled and delighted by the naughtiness of the moniker. “It’s extraordinary that it caught on. I mean, the average person had not seen the movie, I guess, and did not know that we were talking about oral intercourse here!”

On the two Woodward and Bernstein stories that made the biggest difference in the Watergate investigation, Deep Throat was of little help. The first was an August 1, 1972, piece about how Nixon reelection funds had been deposited to the account of one of the Watergate burglars. This was Woodward and Bernstein’s big break on Watergate, the first to link the burglary to the White House, and it launched an investigation by the GAO (which was largely ignored). The tip, however, had come not from Deep Throat, but a story in The New York Times. After reading the story, Bernstein flew down to Miami and plied the local investigator into showing him the burglar’s phone and bank records. The FBI had looked into this weeks earlier, but Deep Throat had kept mum.

The second was an October 10 article on Donald Segretti, a foot soldier in Nixon’s army of dirty tricksters. Before the story ran, Woodward met with Deep Throat to see if the story’s allegations were true. Deep Throat confirmed that the Post was right about Segretti, but hinted that there were more like him and that the rot reached wide and high, up to the very top of the administration. A pretty vague and useless hint for the reporters on deadline, but such were Deep Throat’s ways.

Even Felt, back when he was still denying that he was Deep Throat, told the Hartford Courant that, had he actually been Deep Throat, he would’ve “done it better. I would have been more effective. Deep Throat didn’t exactly bring the White House crashing down, did he?”

A good question. If Deep Throat didn’t bring the president down, what did he do?

Deep Throat, it turns out, was more of a vague guide than a fount of contraband information. “He didn’t just say, ‘Go into the office, open the third door on the left, and under the desk you’ll find something,'” says Bradlee. “But he pointed them in the right direction and gave guidance. He saved them all sorts of time and energy.” Deep Throat’s biggest impact was in the beginning of the beginning of the Watergate saga, before the machinery of an FBI investigation and Congressional inquiry took over the job of putting pressure on the White House. When news of the break-in first surfaced in June 1972, it was thought to have been a rogue operation and most news outlets quickly dropped the story. Woodward cajoled a very reluctant Mark Felt into hinting that the break-in was not an isolated incident, so Woodward and Bernstein, two relatively inexperienced city reporters, figured they should keep going. And so, as Nixon was actively trying to stuff the matter under the rug, the Post was able to keep the public spotlight trained on the administration long enough for Senator Sam Ervin to take notice and set up a Congressional inquiry. (The FBI had been investigating the break-in since the beginning, but the extent was largely unknown to the public.) “The information they got from Deep Throat gave Woodward and Bernstein the confidence and credibility to keep going and to create a climate that would allow for a Senate Watergate investigation and special prosecutor,” says Timothy Naftali, the director of the Nixon Presidential Library.

But Woodward and Bernstein’s reporting was not what ultimately brought down Nixon; it was the famous “smoking gun” tape in which the president voiced his intent to snuff out the FBI’s investigation of the Watergate break-in–and that didn’t come out until August 1974, after months of bruising hearings and a Supreme Court decision. On August 9 of that year, two years since the initial burglary, Nixon finally resigned–the result of all the little hatchets of the government’s investigative and judicial agencies slowly chipping away at the hydra’s many necks. And Deep Throat had little to do with that.

“I think that the press minimized the role of the government and the power of subpoenas and the threat of prison and all the things the Justice Department can do to people to say, ‘Unless you testify, you’re going to wind up in prison,'” says Edward Jay Epstein, a writer who was one of the first to investigate the role of the press in exposing Watergate.

Woodward, too, admits that Deep Throat’s role in taking down Nixon has been exaggerated, but he doesn’t think it was negligible. “The accurate answer is, we played a role in a certain period, very early on, in finding out what happened,” Woodward says in his soft, serious voice. On the line from his Post office where he is most days of the week, he is frustrated that his source, protected by the sacrosanct code of confidentiality, became the subject of a glib parlor game. “Deep Throat was invaluable, but, you know, he wasn’t Daniel Ellsberg coming in with a grocery cart full of documents and Pentagon Papers.”

Hold Tight, Hillary: Russia Just Got Scarier

Friday, November 21st, 2008

If any proof were needed that the Russian political system operates in its own time-space continuum, it came this morning, when the parliament decided to deal with the country’s economic meltdown by amending its constitution. The Duma fixed the 1993 text by decoupling presidential and parliamentary elections and approving term extensions for the president, from four to six years. The amendment, which President Dmitry Medvedev announced on November 5, was discussed for a scant two weeks and passed overwhelmingly: 392 to 57. (Amazingly, those 57 votes came from the Communists.)

In the West, the amendment was met with a hearty round of “how could they’s.” It was perceived as a cynical play by Putin for another stab at the presidency, and, more fundamentally, as yet another giant crack in the foundation of an anemic democracy.

The debate among Russia’s chattering classes, however, sounds very different–more like specific, sinister prophesies of doom. The amendment, they say, is all Putin’s doing, and now Medvedev will step down within the year, ushering in a new round of elections, the end of the thaw, and, of course, twelve years of President Putin (whose approval ratings, incidentally, are still some 20 percent higher than Medvedev’s, the actual sitting president). Yulia Latynina, a prominent political columnist, sees something even more complex on the horizon: “First, the ruble will collapse in early 2009–or at the latest when the country’s gold and foreign currency reserves run out. … Medvedev’s first reaction will be to blame the West for everything. Then he will explain that he lacks the moral strength to lead the country during a serious crisis.” Then, a new round of elections, twelve years of Putin, yadda yadda yadda.

These fears are not unfounded, of course, but for the regular folks, it’s far more simple. Fully 56 percent of Russians support the amendment because, heck, they like the president. Both of them! Of the people less favorably inclined–this third of the population mostly happens to live, by the way, in Russia’s two big (elitist?) cities–some disapprove because they don’t buy the government’s argument that they need more than four years to get everything done. In a country of red tape, city voters feel, perhaps ironically, that four years is plenty of time to achieve policy goals. More than half of the dissenters, however, defend democracy so fiercely as to render it moribund: Twelve percent of Russians say that a constitution is not for amending. Ever.

What does the Kremlin say in its defense? It invokes the economic crisis and the time needed to deal with it; it points to Russian exceptionalism and the country’s dire need for a strong leader. “To be honest, I do not think that Russia should be a parliamentary republic,” Medvedev said at a press conference on Tuesday. “I think this would be fatal for the country.” And in the saltiest Russian manner, he invoked the “you hypocrite Americans do it all the time” excuse, saying, “Some countries do it less often, like the United States, for example, though they too have passed a fair few amendments over the years.”

Most baffling of all, however, was Medvedev’s harking back to the days of the tsarist ancien regime when the French were to be emulated in all things. When Madeleine Albright asked him at the G20 summit why the Russians were so keen to extend presidential term limits, Medvedev replied like a borscht-belt comedian: “That’s normal for an incumbent administration–trying to enhance your capabilities.” He then added, “But I was guided by other considerations. … Recall the Constitution that France had at the time of De Gaulle. It gave the President a seven-year term in office. I think it played a good part in helping France to develop as a strong nation.”

So there you have it, folks: Russia is moving towards a de Gaullian form of government.

On The Trail And Off Their Rockers

Wednesday, October 29th, 2008

CNN political correspondent Candy Crowley has taken to running through a checklist before bed. Every night she travels with the Obama campaign, she orders a wake-up call, sets one regular alarm and one back-up on her cell phone, which she places strategically out of slapping distance across the room. Then she writes down her vitals: What city is she in? What time zone? What time does she have to be out of the hotel room the next morning? What day is it? With that, she can drift off before the next day’s campaign coverage. Most of the time, though, Crowley is so scared to oversleep that she’s awake and waiting, long before the alarm–any one of them–ever rings.

“After the previous campaign, it took me a good month to stop waking up in the middle of the night in a panic that I’ve missed something,” Crowley says.

On most days, adrenaline is enough to get her through the “The Situation Room” and “Anderson Cooper 360,” but it’s all she can do not to zonk out in the car between events. At campaign rallies, Crowley, a self-described loner, is mobbed by “CNN junkies,” all of them clamoring for a picture or an autograph. (“That’s why I love my iPod,” she says.) Crowley was with Barack Obama when he declared his candidacy in February 2007, and has been going nearly non-stop ever since. She has heard all the speeches, covered all the campaign ads. She can’t remember her last furlough and her “strategic nice reserve” ran out two months ago. Now in the final lap, Crowley just wants to go home.

“After a while, you just miss your house, you know?” she said from Chicago on Monday. “I miss my back yard. I miss going to the grocery store.”

She’s not the only one pining for a more mundane life. “I haven’t seen a movie in about a year,” said New York Times reporter Jeff Zeleny, also in Chicago with the Obama campaign. “I’m looking forward to getting reacquainted with civilians.”

Matt Bai, his colleague at the Times and himself a seasoned political reporter (who, with two young children at home, has mostly recused himself from intensive travel this year), speaks as if he’s watched his countrymen go off to battle. “There are guys who went out to the primaries in November, December, and thought they’d be done in February or March, and they just never came home,” he says with grave admiration. “They never came home.”

After the longest, most sustained campaign on record, political reporters are running on little more than the scant sustenance of yet another slice of pizza. Some are running out of energy; others are running out of ideas. “The one conversation I keep having with reporters is, ‘What the hell do we write about? What are the interesting stories left to cover in this election?'” says The New Yorker’s Ryan Lizza (who used to be a senior editor for TNR). “There are a lot of people scratching their heads trying to find a new angle at the end.”

Others, like soldiers who have served one tour too many, are slowly losing touch with the world outside the candidate’s orbit. Bai, who is married to a Fox producer, has seen the strains of life on the road. “You lose contact with the outside world,” says Bai. “You call your spouse at home and talk about the trail and the person at home just doesn’t get it or care, because it’s the same story over and over again. It’s murder on relationships.” Every four years, Bai says, there’s at least one divorce or break-up. “It’s just not a normal human experience.”

And even if your relationship survives, your personality might not. Last week, Lizza, who was banned from the Obama plane in July, found his way back on and thought he had stumbled on a lost colony. “It felt like the Lord of the Flies in there,” he says. “The people who have been there for a long time have all of their little decorations and knickknacks all over the back of the plane. Everyone’s a little grumpy and territorial, and there’s this sense of people thrown together who have been with each other way too long. I got the sense that I was dropping in on a hostage-captor situation.”

“There is definitely a captives’ mentality on the plane,” Zeleny agrees. “These people eat together, drink together, work together, sleep together–in the same place, that is–every day for 18 months. Now that the campaign is winding down, they’re all taking pictures of one another, and you get the sense of summer camp coming to an end.”

Veterans point out that despite the length of this race, the reporters’ relationships to the candidates and to each other aren’t nearly as toxic as they had been in previous years. There’s been little of the high school cliquishness that plagued the Kerry press corps, and reporters don’t seem to loathe McCain or Obama the way they loathed Gore–who refused to hold a press conference for upwards of 60 days–in 2000.

Call it summer camp or Stockholm Syndrome, but some don’t want the madness to end.

“It’s so built into my system, that it’s going to be hard to stop,” says Politico’s Ben Smith. Smith, who started blogging about New York politics in 2005, is now seriously addicted to the pace and metabolism–a word many invoked to describe the election’s rhythms–of the blogger’s life. He finds himself especially energized by the intensity of his readers who, by 4 a.m. have posted dozens of comments to a 3 a.m. post and who are now some of Smith’s best sources, sending him scoops and stories and snapshots of a far-roaming campaign. His family, however, is eagerly looking forward to November 5th. Smith’s wife repeatedly threatens to flush his Blackberry down the toilet; his kids, jealous of his “running conversation” with his readers, regularly squirrel away the device in the off chance they find it unattended. But Smith can’t bring himself to stop. Recently, he returned at 2 a.m. from a fishing trip and “couldn’t not plug in after being off the grid for an entire day.” He stayed up blogging and answering emails until 6 a.m.

“It’s really pathological,” he conceded.

Like the lost souls in All Quiet on the Western Front who, home on leave, jump at the sound of a backfiring exhaust, campaign reporters eye the post-election lull with trepidation. “There is an inevitable come-down just in terms of the energy of the thing,” says Adam Nagourney, of The New York Times. “I mean, you’re going along at 100 mph and then all of a sudden it just stops. The transition to the White House is a whole different story than covering a campaign. It’s slower, more institutionalized. It’s going to be a big adjustment.”

Hendrik Hertzberg, who covered the Dukakis vs. Bush campaign for TNR and has spent 2008 anxiously cheering for Obama in The New Yorker, isn’t too excited about the transition either. He has, after all, only started enjoying the game a couple of weeks ago, when Obama pulled ahead decisively in the polls. “I don’t want it to end, but I always want it to be about to end,” he says. “If the election were always a week away and I was feeling fairly good about it, that would be nice–sort of like Groundhog Day. Because after the election, things will start to get really serious. Then it won’t be the game anymore. Governance is serious business.”

Younger journalists who came of age in this election are anxious for more personal reasons. Andrew Romano came to Newsweek to do long feature pieces but was conscripted as a blogger. “I’m not one of these crazy political junkies,” he told me after another long blogging shift, in which he struggled not to say, “Obama is winning today, too.” “It’s not my life. It’s just a story I was interested in. For a long time I was feeling like I’m looking forward to this being over and going back to writing long-form journalism as opposed to writing multiple stories every day.” But then a funny thing happened. His blog, long buried on Newsweek’s website, started drawing nearly four million hits a month, making Romano the site’s most-read author. “It’s kind of like, this is who I am now, so the idea of the campaign being over and not doing a politics blog is a little bit like, who am I after this election?”

Candy Crowley, on the other hand, can’t think of a single thing she’ll miss about the campaign. She’s long ago sent in her Maryland absentee ballot, and November beckons with lush vistas of sleep and TiVO.

“Look, I’m a political reporter. I love politics,” she said. “But after the election, there’s going to be a lull where everyone’s talking about governance and who’s going to be the Secretary of State, and can the President do all the things he promised to do now that he doesn’t have any money. It’s all governance. But honestly, how long do you think it’ll be before politics kick in in Washington? A day and a half?”

The Nose Cutting

Thursday, September 18th, 2008

There’s a saying oft heard in Russian schoolyards: “Go ahead and spit at me. Fill your mouth with shit and spit at me.” It may be an indelicate way of suggesting that one should cut off one’s nose to spite one’s face, but it provides some insight into why Russia’s economy, which grew by eight percent last year, has suddenly melted. The failures on Wall Street linked arms with falling oil prices to wallop a Russian market that, due to a combination of internal factors, had been sliding all summer. On Tuesday afternoon, trading on Russia’s two exchanges, the RTS and MICEX, was shut down after they plummeted 12 and 18 percent, respectively. Wednesday morning, weary Russian brokers gingerly tried their luck again, but after six and three percent downturns, the exchanges will remain shuttered till Friday.

A double digit loss is a devastating shock for any market, but Russia’s stock market has lost over half its value since the start of the year. In the first part of the year, investors were already jittery about the Kremlin’s meddling in the business world. And then things got really bad in August. Remember August? That was when Russia could not resist using Georgia’s attack on South Ossetia to retaliate with such force that the West could only marvel at Russia’s lack of discretion. When Putin responded to Western criticism, he was so defiant that Leonid Radzihovski, a columnist for the liberal online political journal Ezhednevny Zhurnal, characterized his government’s diplomatic position as: “If America wants it so much, let it come and make up with us.”

Putin gambled that it was worth taking the economic hit at home to reestablish Russia’s geopolitical stature. With oil prices in the triple digits, he surely figured, the blow would be well-cushioned; foreign investors would eventually calm down and realize they couldn’t live without Russia. And he had reason to believe it. Even though much of the growth was fueled by petrodollars, the Russian economy was slowly diversifying and strengthening. Russian wages and consumer spending were growing at over ten percent a year, construction and manufacturing boomed–everything was expanding so fast that even with an added risk premium (around three percent), foreign corporations’ Russian outposts were extremely profitable. “They can’t afford not to be here,” a Russian analyst told me two weeks ago.

The problem, however, is that Western investors got scared off by the extremity of the Kremlin’s response to Georgia, the harshness of American criticism, and the way domestic companies were being strong-armed even more than they had been for the last six years (metallurgical company Mechel lost a third of its value in one day this July when Putin trained his critical gaze on it). Investors decided that they could very much afford not to be there. “Doing business in Russia has never been for the faint of heart,” Alexander Kliment, an analyst with the Eurasia Group, told me this week. “But now investors are really starting to see the unpredictability of the Kremlin’s decision making.”

And here’s where things get really Russian: Though the Kremlin acted as if it wanted the West to shove off, what they really meant was, love us. We may despise you, but you still gotta love us. It’s a common Russian attitude towards the West, one of both contempt and envy that the analyst described as “the double-faced Janus.” As Radzihovski sarcastically put it, “We’re quite sure that the more we shit on their countries, governments, and the West in general, the greater will be their masochistic pleasure in crawling back on their bellies with their money. Having read Dostoyevsky, Western bankers will behave accordingly in the land of Dostoyevsky!”

Apparently, Western bankers didn’t get the joke, because in August alone, over $20 billion of foreign investment made for the hills, $7 billion of it in the first two days of the war alone. Scared to do business with such a reckless, unpredictable partner, investors had been closing ranks all summer, and Georgia only locked up their formation. The risk premium has spiked to nine percent, foreign banks stopped lending money to Russian companies–suddenly in dire need of it because all that foreign capital had fled–and foreign issuance dropped by over 85 percent since June. And then oil prices tanked, American brokerages folded (taking their foreign investments with them), and Russian companies, already cash-strapped, started looking around for money, putting in margin calls, borrowing at home, and forcing the Russian Central Bank to free up some $45 billion to pump into the market to keep it liquid. If the government doesn’t clean up its mess quickly and efficiently, it might be risking its own life. “The system is based on economic growth and rising living standards,” Kliment said. “If they drop, the wheels come off politically.”

Russia would have been hit by this crisis no matter what, but, had it not hobbled itself all summer, it would have met the downturn with a greater reserve of strength. Now, although the whole world is hurting, no other stock market is doing as badly as Russia’s. Take Brazil, another resource-rich emerging economy riddled with corruption. Its stock market is also in crisis–after an eight percent drop yesterday. But Brazil isn’t telling its neighbors to go do unprintable things; it’s strengthening trade deals with them and diversifying its energy sector. It isn’t going out of its way to beat its chest and attempt to instill fear it mistakes for respect. And, as a result, it didn’t take as big of a hit this week. But then again, Brazilian children probably don’t go around advocating shit-spit revenge either.putin1