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Saturday, December 31, 2011

Friendship & Surprise

Surprise and friendship are two words that do not come together that often; but they did for me earlier this month here in London. It seems appropriate to write about on this last day of 2011.

My beautiful wife Judith turned sixty-five on 26 December. In July I started to plan a surprise birthday party for her in spite of her specifically mentioning that she didn’t want one. Of course I didn’t listen. A great time was had sneaking around: arranging a date among a far flung group of friends, picking venues, planning menus and wines, party favors, developing a little slide show of Judith’s past, and lots of other small details.
Judith is a very perceptive and curious person; she notices things, so it was hard to keep this secret. A few times I was a whisker from being found out, a mouse click from being caught.

For the night of the party I had dreamed up a ruse supported by a few co-conspirators to get Judith to the party; to be held in the Mall Room at the Royal Automobile Club on Saturday, December 3.
About a week before, friend Phillip helped by inviting Judith and me to a fictitious art showing at the Club. With another friend’s support, I arranged to be called out on the day of the party to a last minute business meeting. This gave me a chance to finish setting up and to greet guests that had been instructed to arrive at six o’clock.
My wife is a fastidiously punctual person; and Philip had asked us to arrive at six thirty for the hoax art show. Carole, a longtime friend, was staying with us; we had coordinated her trip, unbeknownst to Judith, to coincide with the celebration. So as the final step, Carole was charged with the herculean task of slowing Judith down, which she did courageously and much to Judith’s mounting frustration. In spite of Carole’s valiant efforts, they still arrived to the club five minutes early; I met them at the door. After a few more vaudevillian near-encounters with a guest or two near the cloakroom; I escorted Judith and Carole upstairs to the Mall Room.  

Judith was completely taken aback upon entering the room to a thunderous yell of “SURPRISE!” She relates that time switched to slow motion, trying to figure out why Paul, from the States, was standing next to Philip; and other incongruities: Eileen was just in London, less than a month ago, what was she doing here, François and Regine should be in Mexico; Lilla, Portugal. Her right hand came up to her chest, she only could say “oh my God.”
Eventually things sunk in, and Judith was greeted by about twenty wonderful friends from around the globe. This was a priceless moment for me.

The room was conducive to conversation; friends met other of our friends for the first time; all fell into an easy exchange. Connections continued among the canapés, toasts and champagne, impromptu speeches, graceful service, nice food and good wine. Looking around it was a varied group: ages from mid-thirties to mid-seventies; different nationalities and native tongues, varied economic circumstances and political stripes. Sadly a few friends couldn’t make it because of last minute colds or other emergencies; and sadder still, our dear and departed friend Himanshu could only watch from the heavens.

Although spilled out from some cosmic puzzle box, people fit together perfectly.

The power of friendships has already been constrained in literature by too many metaphors, written by many so much more polished; I won’t try to add anything here. But I know all came together to honor Judith, and I remain awed by the richness of that blissful evening. It ranks among the top days of my life.

There was a second luncheon party the following day. It was more relaxed, conversations picked up from where they had left off the evening before. There was more champagne, wine and food (and as François jokingly pointed out, a bit too much crème brûlée).

As the year ends I have a lot to be thankful for, not least of which is friendship; and perhaps, surprise yet to come.

Saturday, November 5, 2011

How Bad Is It?

How bad is it? The simple answer: "pretty bad!"

Since the early eighties and extending almost 20 years our economy and equity markets experienced a golden period; then things started to go a little sour. We had the dotcom bust in 2001 and the financial meltdown of 2008. Equity values have not really risen at all this past decade. My explanation for our current problems is that this seemingly outsized growth beginning in 1980 was a bit of a mirage; and can be pretty much explained by us citizens and our government just borrowing our way to today. Consider the following.

Our Federal Debt and the sovereign debt of other countries (think “PIGS”) has gotten the most attention, but it doesn’t illuminate the full state of affairs; it’s better to focus on all four debt components: that of governments, households, banks and corporations; in aggregate, the Total Debt.
For the longest time, America’s Total Debt was about 150% (1.5 times) the nation’s GDP. An exception was the Great Depression, when it increased to 300% (3.0 times), however this rapidly returned to normal. Around 1980 this long term trend of 150%, stable since the 1940s, began to climb. In 2011, we are now over Depression Era levels; estimates are as high as 360% (3.6 times GDP). The government, financial and non-financial companies, and households have a Total Debt of about $57 trillion (it looks worse when you actually include the zeros: $57,000,000,000,000). If we had maintained the 150% norm during this period, we would have a Total Debt of only $24 trillion. So an extra $33 trillion in consumption and investment (GDP) over the last thirty years was “put on the card” so to speak. This isn’t a trivial amount; it’s about 10% of total GDP for the period.
Some might say this is because a greater percentage of households now own their home, rather than renting. The fact is home ownership has hardly moved; in 1980 it was 65%, now it is 67%. Home equity historically had been above 50% in the United States, as of 2011 it is 38%. Housing is a big part of the problem, far from the fulfillment of the American Dream.

We most likely will not grow out of our debt problem as easily or as quickly as we did in the Thirties.
In the ten years from 1933 to 1942 our nominal GDP bounced by 187% ($56.4B to $161.9B). Unfortunately consensus estimates of our future growth are much more anemic, 2.5% annually on the high end (the economy thus taking almost 30 years to double).
Another negative staring at us is our demographics. As the Baby Boomers started reaching working age in the early Sixties there were relatively fewer children because of lower fertility and also fewer elderly as extended longevity hadn’t kicked in with full force. Academics call this phenomenon a “demographic dividend.”The number of Americans too young or old to work, compared to the number of working age adults (the “dependency ratio”) started to erode in 2010, going from 50% (5 dependents for every 10 working adults), to a forecasted 65% in 2050 (6.5 dependents for every 10 working adults). The tsunami of retiring Boomers is just beginning and it will be another unfunded and growing tug on productivity for the country.

The linked power of high economic growth and the demographic dividend are not present for us in this latest crisis. We are going to have to pay down a big chunk of this debt along with greater interest payments, analysts antiseptically call this an extended period of “deleveraging.”
And this rather gloomy scenario assumes we start accepting the truth about our current situation and get public policy and individual responsibility mostly right; which at this moment seems a bit farfetched. American politicians are bickering with themselves to distraction; the Euro Zone is balancing on the brink of collapse. China faces wrenching shifts away from its very successful export led growth and is also burdened with the worst dependency ratio trend in the world (rising from 38% today to 64% by 2050). It’s hard to see much to smile about. 

Michael Lewis’ new book, “Boomerang: The Meltdown Tour” has a wonderful quote that captures the moment: “leverage buys you a glimpse of prosperity you haven’t really earned.” We are in some big trouble. Interest payments and debt reduction will be a real and yet necessary drag on all our lives for perhaps decades. I think it would be foolish to plan for something else; better to dampen expectations and modify behavior now, perhaps to be pleasantly surprised later.

After all, there’s always an “upside case” that might be realized.

Saturday, October 1, 2011

Portugal: Wedding Bells

Judith and I just returned from a week in Portugal, September 21 through 28, the visit prompted by the wedding of a friend. 

On our trip from the Lisbon airport, I made a quick detour north to the Cabo da Roca, the westernmost rocky outcrop of continental Europe; a rather odd geographical place on Earth, but somehow meaningful to me nonetheless – I wanted to see it. We then continued on to the hotel, which was about a 40 minute drive west of Lisbon. The Fortaleza do Guincho is a converted 17th Century fortress; solid, low slung with muted yellow walls, perched upon the Atlantic coast in the town of Guincho. Its setting is lovely yet desolate; a windswept sandy bay directly on the ocean.
Our friends Regine and François were also attending the nuptials and arrived to the hotel, although a bit later than us; we had a nice dinner together at the hotel’s one-star Michelin restaurant. All eventually fell to sleep to the ceaseless pounding of the Atlantic’s thunderous waves.

The following day, Thursday, the four of us drove north; up the coast to Sintra, a pleasant town nestled in the wooded hilltops of the Serra. We toured the 14th Century Palácio Nacional de Sintra; and the Palácio da Pena, a schizophrenic collection of architecture, built in the 19th Century for the young husband of Queen Maria II. Most of this area was first developed as a summer getaway and hunting ground for the monarchs of the day. It was and remains good to be a king.
We had a nice luncheon interlude at the outdoor Café Paris in the main square. But we needed to cut sightseeing short; there was a pre-wedding party in Cascais, at the home of the soon to be married Lilla and Stan. The couple was very gracious to have their out-of-town guests for an evening of fun. It was a lovely time, our first time meeting Stan; the food was excellent and the conversation lively. The finale was the launching of seven candle-fueled paper lanterns, the glowing shapes slowing rising and disappearing into the night sky; their symbolism meant to bestow luck onto the couple for all time, each day of every week.

On Friday, after a lazy morning; we drove to Sintra for lunch at the beautiful Tivoli Palácio de Seteais. This hotel was breathtaking; however, the food just barely passable. We arrived back to the Fortaleza just in time to clean up for the five o’clock wedding at Quinta do da Serra in Colares. The wonderful weather complimented the understated ceremony and delightful reception. Lilla is Hungarian, Stan from Luxembourg; and its current ambassador to Portugal. The approximately one hundred guests comprised a mini United Nations; seventeen different nationalities represented. Stan and Lilla made each of us feel at home, perfect hosts. We left for our hotel around eleven; Regine and François had an early flight back to Paris on Saturday, the 24th; Judith and me off to Lisbon.

An easy drive had us to the Ritz Four Seasons – Lisbon, close to the Parque Eduardo VII; we were upgraded to a nice suite on the ninth floor. Unpacking with our usual military precession, we were out to explore.
Lisbon is a city of hills, anchored to the northern bank of the Tagus River. With what was left of the day, we walked from the nearby Praça Marqués de Pombal and down the wide boulevard of Liberdade to the Elevador de Santa Justa, built in the early 20th Century by a student of Eiffel. It was a small, unimpressive cousin of the Paris landmark, but afforded some wonderful views. It was then down to the river and the large Praça do Comércio. Retracing our route, we arrived back to the hotel tired after a three hour trek.

Sunday was a beautiful day. We took the modern metro from Pombal to Baxia-Chiado station, and walked to the tram station at Praça do Comércio. The #15 was jammed with tourists, all heading west along the Tagus to Belém, to visit the Torre de Belém and Manuel I’s 16th Century Mosteiro dos Jerónimos. The famous Portuguese explorer, Vasco da Gamma, is entombed here in the adjoining Church of Santa Maria. Lunch was at a nondescript place, but late afternoon drinks were wonderful at the very modern boutique Altis Belém Hotel’s terrace overlooking the river – highly recommended.

Monday, sunny and warm again, had us off by car to nearby Palácio de Queluz, originally a 17th Century hunting lodge, then transformed into a Rococo summer palace; the rooms and gardens were a delight to the eye. We were back to the hotel by 12:30, and took the metro to the Bario Alto and Chiado and had a quick lunch; then traversed east to the old Moorish district of Alfama, to visit the Cathedral and the expansive Castelo de São Jorge. Exhausted, we took the rickety #28 tram, it’s ancient gearing groaning against the steep grades, winding down the circuit of narrow cobbled streets. The metro took us to the Praça Marqués de Pombal, but we still had to climb the tortourous hill to the Ritz Four Seasons; our calfs at this point were threatening munity.

Our last full day was perhaps the nicest in Lisbon. We took a short walk past the Parque Eduardo VII to the Museu Calouste Gulbenkian. This was a purpose built structure constructed in 1969 to house the collection of its namesake, Mr. Gulbenkian, a wealthy Turkish businessman who had made his home in Portugal during WW II. The works are eclectic and exquisite; a personal artistic statement spanning decades of acquisition from around the world. It reminded me in many ways of Henry Clay Frick’s wonderful collection in New York City. It is similarly an intimate and personal statement of one man’s ideal of art, housed in Frick’s former home, which was designed from its start to eventually house his collection.
We returned to the Chiado district for a wonderful lunch at Tavares, on Rua da Misericórdia; faithfully serving its clientele since 1784. Afterward, it was to the 16th Century Church of São Roque; a Baroque masterpiece. We stumbled back to the metro and dragged ourselves up the hill once again.

On Wednesday, the 28th, we left in the early afternoon to London; arriving at Heathrow, Masood whisked us back to our flat through light traffic.

My feelings are mixed about Portugal. Its history spans a millennium; in the 16th Century this country and Spain were the world’s superpowers, dividing the New World between them with the blessing of the pope. Although some were brilliant, its monarchs were mostly self consumed. In ways the massive wealth that poured in from trade with the New World seems somehow analogous to what sociologists now refer to as the “oil curse” when talking about Venezuela and the Near East. Oft times the fortune of natural resources, or in Portugal’s case, naval supremacy, can hollow out the rest of an economy, its leaders and its people. After all, Salazar’s dictatorship continued here until 1968, and only then did the Carnation Revolution bring true democracy. Nature also played its villainous part, the massive earthquake that flattened most of Lisbon in 1755, and the 1988 inferno that engulfed much of Chiado.
 In spite of its rich history, Portugal is in actuality a young democracy, with young institutions. Few realize this.

The guide books point to Portugal’s ten million people as gregarious folk, I sensed a much more stoic presence. Mine was a portrait contained in their language, “saudade,” a type of ethereal melancholy; this mood is even part of the national music, the Fado. I suppose this could be more than just this country’s rhythm, perhaps the world’s serial financial crises have flattened all our spirits of late. I suppose “gregarious” doesn’t come to mind looking at faces while I walk the streets of London.

Still, Lilla and Stan’s wedding was a metaphor for hope. They are smart and caring individuals committed to a brighter future, for themselves, their family and friends, for all in fact. My wish is that the seven lanterns looking down upon them will bestow many years of good fortune.

This trip was a wonderful experience, adding to my life and understanding of the world. The natural beauty and deep history of Portugal are extraordinary. I fondly remember being fascinated about “The Age of Discovery” in my grammar school classes; and Vasco da Gamma remains a hero, an explorer extraordinaire. I can imagine his curiosity and trepidation as he rounded the Cape of Good Hope in 1498, off to discover India for the West.

Saturday, September 17, 2011

La Reserve de Beaulieu: “Seizième Année”

This was our 16th September at La Reserve de Beaulieu; it was bittersweet – our annual “hajj au soleil.” I realize I have 16 years less of life to live, but in some important ways I’m healthier now than my working years.

When we first came here in 1996, we met two couples from Belgium (the women were sisters); fun loving but perhaps in their late seventies. I saw them checking out one morning and wished them well; saying “hope to see you next year.” With a telling smirk, one wife replied “so do I.”
One couple had actually first arrived in Beaulieu-sur-Mer out of serendipity; on honeymoon in 1947 after the war, their car ran out of petrol here and they stayed. They said they had been back every year since, with the exception of one. Sadly my morning goodbye was the last time I saw them; they didn’t show in 1997.

La Reserve hasn’t changed; the spirit of reserved and personal customer service still drips from everywhere and everyone. The clientele; however, has altered over time. When we first arrived in the mid-nineties, there were Americans here; as well as Brits, Germans and Swiss. For a time there were some Japanese; quietly taking pictures of their food; and some Arabs. Lately it has been the Russians in ascendancy; older men, the current masters of the universe, with young beauties obviously attracted to values other than their partners’ looks. The "new kids" on the block are scoping out the turf; driving the staff crazy (as well as some of the other guests).
I observe that the nationality of the clients here at La Reserve is a mirror to the world of economic “ups” and “downs” over the years. Russian oligarchs are currently “kings of the world,” happy to have themselves and their money outside the kleptocratic reach of their country.

When we first came here Europe was a bargain. The French Franc slipped to seven-something against the dollar in the late nineties; the Euro shortly after introduction had its nadir early this decade, one US Dollar buying 1.20 – ah, those were the days! Of course, now things have turned; the ratio has flipped: my US Dollar now gets me only 0.73. In ten years the US Dollar has dropped 40%; thus, not too many Americans around the pool.

Still we love our time here. We had the pleasure of making some lifetime friends. Sadly, we also experienced the unfolding horror of 9/11 in this quaint French seaside town; now it’s tenth anniversary.

In spite of everything, this is as close to paradise as one could hope.

Saturday, August 20, 2011

Out of the Bretton Woods?

I’m not a gold bug, and do not own gold or gold shares of any kind (maybe I should). August 15 marked the fortieth anniversary of Richard Nixon’s closing of the gold window in 1971; and I was reminded of this by an article in the August 13 issue of “The Economist.” The last sentence was a shocker. It read: “In terms of the old gold measure, the dollar has devalued by 98% since the end of the Bretton Woods era.” Wow!

I thought this couldn’t be true; however, it is. Checking values, gold in 1971 was a few cents less than $41 per ounce, 40 years later this August 15, $1,766. Today’s one US dollar will only buy 2.3% of the gold it could buy in 1971; so roughly 98% less.
With the collapse of the convertibility of money to gold, world reserve currencies became Fiat Currencies. This doesn’t mean they became based upon the solvency of an Italian second-tier automobile manufacturer; rather currency is now backed by the full faith of the country issuing it.

I’m not arguing here that gold was the investment of a lifetime (its return against the dollar was just under ten percent per year); in fact the S&P 500 for the same period returned almost 12%.
Looking at the long term; however, the depressing fact is the erosive power of inflation. Trying to manage wealth for future generations is a demanding project; the “real return” for the S&P 500 for this period was only 7.2%, rises in real prices consumed 4.6%. If things held constant, and you placed $1,000,000 today in a safe deposit box and left it there for the next forty years, you would withdraw only $165,000 in purchasing power in 2050. It turns out the biggest investment “expense” is actually inflation, and the math is depressing. If one spends say 3% of retirement assets per year, one would need an 8% or 9% gross annual return on the portfolio to cover spending, taxes and the effects of inflation in order to keep wealth from declining in real terms. This is a very tough goal to achieve with, say, a lower risk, balanced portfolio.

“Fiat” is actually a Latin word, roughly translated as “to be done” or “let it be done.” I guess the question becomes “let it be done” to whom?

George Bernard Shaw has a wonderful quote with which I will end: “If the governments devalue the currency in order to betray all creditors, you politely call this procedure “inflation.””

Friday, August 12, 2011

Which Deficit, What Debt, Social In-Security

You would have to have had just crawled out from under a rock to not be aware of our Federal Debt, Deficit, Debt Ceiling and credit downgrade by Standard & Poor’s. Most of us know things don’t look too good.

It doesn’t help that our federal budget is fiendishly complicated. The Founding Fathers weren’t very good accountants, more “big idea” guys. The Constitution was pretty sloppy about financial reporting; Article 1, Section 9, Clause 7 just mentions informing citizens about revenues and expenses “from time to time.” Politicians of all stripes have taken this vagueness to heart and exploited it often. I reference Henry Kissinger’s poignant quote: “90% of politicians give the other 10% a bad reputation.”

Not until 1921 did legislation finally mandate an annual budget to be submitted to Congress by the President; and the Office of Management and Budget and the Government Accounting Office were created. Congress stayed pretty much in the dark financially until 1974; the “Congressional Impoundment and Control Act” brought into being the Congressional Budget Office (“CBO”).

Social Security from its formation in 1935 until 1968 was treated as a separate budget (wonks today call this “off-line”). Starting in 1969, the Nixon administration adopted the recommendations of the “President’s Commission on Budget Concepts” and changed this policy to a single “Unified Budget” bringing the Social Security surplus “on-line.” This is actually where a lot of mischief started. The old accounting system would have showed the budget in a deficit of $500 million; the Unified method, absorbing the Social Security surplus, showed a $3.2 billion aggregate surplus.
Not to bore you with too much history, but Social Security went back “off-line” in 1983 as recommended by the Greenspan Commission. In 1985 it became a confusing hybrid as a result of the “Balanced Budget and Emergency Deficit Control Act” (Gramm-Rudman-Hollings “GRH”), staying “off-line” in the Budget but schizophrenically allowed in the calculations of the Debt, thus reducing it on paper. In 1990 the “Omnibus Budget Reconciliation Act” repealed the ability to use the Social Security surplus in calculations of the Debt and Social Security went “off-line.” And legislatively this is where we sit today. Confused?

Unfortunately presidents since 1990 have presented the Federal Budget in a Unified format to press and public. The off-line revenues (payroll taxes) and expenses (benefit payments) of social security (and its surplus) are shown grouped with other on-line items with the effect of underestimating the Deficit. In the ten years to FY2010’s budget, this has understated our annual deficits for this same ten year period (2000 – 2010) by almost $1.8 trillion (the Unified deficit for the period was $4.4 trillion, the “on-line” deficit without the social Security surplus was $6.2 trillion).
In a further sleight of hand, administrations began to talk up the concept of “Debt Held by the Public” (politicians say that’s the “real” Debt) as the more meaningful statement of our Debt, rather than our Total Debt. Total Debt includes “Debt Held by the Public” and “Intergovernmental Debt,” amounts owed to one department of the federal government to that of another. Here the logic starts to break down. Our government reports a lower Deficit by absorbing the Social Security and other trust fund surpluses; but then does not count these “IOUs” in reporting our Debt.

Here is an analogy to bring home my point. Suppose I had a 401K with $100,000 in assets, but was continually getting myself into financial trouble. Out of desperation, my plan sponsor lets me borrow the $100,000 from my account to pay for my current spending, which I could not pay for with my current income. But when a friend asks me at dinner about retirement, I confidently reply that my 401K has $100,000 invested, not mentioning the loan. This is the present state of the Social Security Trust Fund; nominally $2.6 trillion, its net value actually zero, since it has been loaned to and already spend by us to cover current expenditures.

We shouldn’t get reports in this fashion; the press should “call out” our elected officials and demand more honest numbers. Our Total Debt as of July 2011 is $14.3 trillion; $9.8 trillion owed to the public, $4.5 trillion owed to various federal trusts (the largest of which is Social Security, $2.6 trillion).

By as early as 2015, annual revenues versus outlays for Social Security will become negative as more Baby Boomers retire. It is my prediction that politicians will then start to argue that Social Security should go “off-line” once again.

Wednesday, July 27, 2011

Moderates Revolt!

I wanted in this post to propose a revolt: a “Revolt of the Moderates.”

Watching the Debt Ceiling food fight among the Democrats and Republicans, the White House and Congress, and Fox News and others has caused total frustration. Before I continue, I want to briefly shed some light on the history of political parties and some interesting new research from Pew.

First, look at political parties. Our constitution doesn’t mention them, Madison and Hamilton each in their own way voiced concerns about them. George Washington was never officially committed to one, and remained stubbornly non-partisan through elections and his tenure as our first president. The Republican and Democratic Parties of today seem strong and timeless; integral to the process. A look at history sees them in a more transitory way. Political scientists see five or more distinct party phases that have come and gone in America; with names such as Whigs, Federalists; even the now oxymoronic “Democratic-Republican” Party of the early 1800’s. Our current configuration roughly began in the Thirties with the introduction of the New Deal. So parties aren’t at the core of our politics, although their most partisan voices now control almost all of the debate.

Second, I mention The Pew Research Center’s “2011 Political Topography” report. Its fifth since 1994, the research goes deeper than the traditional “Red-Blue” two-dimensional concept, and provides a more granular and politically useful view of the populous. The study creates a spectrum of nine cohorts positioned into four groups: GROUP 1 – MOSTLY REPUBLICAN: “Staunch Conservatives” (percent of public, 9%; of registered voters, 11%), “Main Street Republicans” (11%, 14%); GROUP 2 – MOSTLY INDEPENDENT: “Libertarians” (9%, 10%), “Disaffecteds” (11%, 11%), “Post Moderns” (13%, 14%); GROUP 4 – MOSTLY DEMOCRATIC: “New Coalition Democrats” (10%, 9%), “Hard-Pressed Democrats” (13%, 15%), “Solid Liberals” (14%, 16%); and finally GROUP FOUR – BYSTANDERS: “Bystanders” (10%, 0%). This framework allows one to break out of the current winner-take-all contest between Conservatives and Liberals. It is an excellent read, and goes into the demographics of each. (See ).
If you examine the wonderful insights of Pew Research, the extreme positions, left and right, represent at most 23% ( less than 12% at each extreme) of the populous, 27% (less than 14% at each extreme) of the registered voters.  Unfortunately, Republican and Democrat candidates alike only survive the primary gauntlet by making promises to these zealots, and this should stop.

I had been pondering a solution to all this when I read Thomas Friedman’s Op-Ed piece in the NY Times on July 23rd titled “Make Way for the Radical Center.” Friedman mentions a new group, “Americans Elect” (See ).
As he writes in his column:

“The goal of Americans Elect is to take a presidential nominating process now monopolized by the Republican and Democratic parties, which are beholden to their special interests, and blow it wide open — guaranteeing that a credible third choice, nominated independently, will not only be on the ballot in every state but be able to take part in every presidential debate and challenge both parties from the middle with the best ideas on how deal with the debt, education and jobs.”

Check it out. This might finally be a way for a virtual mainstream party to break through the tortured maze of the states’ arcane rules for getting on the ballot. I think “Americans Elect” could be a positive force.

Friday, July 15, 2011

Not One Dollar More!

I’m somewhat confused in our current debt ceiling drama. Republicans ask how Obama and the Democrats could be so out of touch with America and its economic frailty to propose tax increases. They are dug in around the rallying cry: “not one new dollar more in tax revenue!”

Yet in the same speeches Republicans also say what is necessary is to cut public spending vigorously to reenergize the economy. Don’t they know that if you are worried about a fragile economy, then any move that reduces private consumption places more pressure on a recovery? Raising tax or reducing spending provides the same result. If one is bad, so is the other; their policy effect is near identical.

Why don’t Democrats point this out? And while they are at it, Democrats should also dispel this notion that we’ve been overtaxed of late. In 2010, federal tax receipts were 14.9% of GDP, 3.1 points below the forty year average (1971 – 2010) of 18%; while federal spending was 23.8%, 2.8 points above 21%, for the same forty year period. Tax collections as a percent of GDP were 17% below the forty-year benchmark; spending 13% above; so about the same deviation.

So the problem isn’t one sided; we spent too much but we also collected too little.

With these facts in hand, a sane citizen would conclude the proper fix is to balance both spending cuts and increased tax collections together; and to do it quickly, since the August 2 deadline is fast approaching.

This is not the Republican conclusion. Since they aren’t stupid, I therefore conclude they are dangerously using the debt ceiling as a disingenuous and partisan pry bar in their pursuit to unseat Obama in 2012; shameful.

Thursday, July 14, 2011

Tax Expenditures?

As I wade through all the budget rhetoric of late, a term keeps popping up: “tax expenditures.” Unfortunately, a citizen would be wrong if he or she assumed these were expenses paid with our taxes. Tax expenditure is actually wonky jargon for the opposite.

It is actually tax revenue that is not collected through the provisions of our tax laws that allow deductions, exclusions, or exemptions from a taxpayers' taxable expenditure, income, or investment, deferral of a tax liability, or preferential tax rates. Don’t get a headache; think loophole, but not corporate perks or private jets variety. Here are some commonplace examples: the largest is employer contributions for health insurance and care ($184 Billion), in second place, the deduction of home mortgage interest ($96 Billion), and in fourth, 401K Plans ($68 Billion). For FY2012 the CBO has identified 137 “tax expenditures” and they add up to a whopping $1.2 Trillion in federal revenues forgone. To put this in perspective, the total forecast collections of the federal government for the same period are $2.6 Trillion. Thus, the deductions, credits etc. are not small potatoes; they represent almost 50% of what the net collections are.

It’s easy to see how we got here. If you are a politician with a position that you would like to promote, it’s much easier to sell us on the idea of a deduction or a credit than to tell us that we are going to have to actually pay for your priority.

Let’s look at something close to home: the mortgage deduction. This tax expenditure is regressive and expensive, what is sometimes referred to as an “upside down subsidy” because it helps the relatively well off to reduce their taxes. Much academic research suggests that it does not promote home ownership, instead encourages households to acquire bigger mortgages and larger homes. At some point it might have been a good idea, but how do you withdraw the benefit? Multiply this dilemma 137 times and you start to understand the mess we are in.

A more perverse aspect to this is “tax rate inflation.” Because so much income has a tax preference, what’s left must be taxed at a higher rate in order to raise the required revenues. As rates increase, tax avoidance behavior becomes more rational, adding yet another drag on productivity.

We need more debate about “tax expenditure,” and how we can wean ourselves off this dangerous drug. We need to jettison the confusion in favor of low rates over a much broader income base.  

Sunday, July 10, 2011

The Budget: First Things First

The budget debate just seems to get sillier and sillier; unfortunately, it is anything but a game. We citizens are numbed by the rancor, the daunting size of the numbers (how many zeros in a trillion?), and jargon that is meant to confuse.

The opposing factions have at once called Wisconsin’s Representative Paul Ryan’s budget too specific and President Obama’s too general. Both miss the point. America needs someone to talk about first principals. For me, the first question to answer is this:

What is the proportion of our GDP that should be spent, in turn, by government and by its citizens? We need to have general societal consensus on this before anything else happens.

What we currently give to government to spend on our behalf is not an easy question to answer because we have federal, state, municipal and local governments all spending money. But the Organization of Economic Cooperation and Development (“OECD”) estimates that the average five year US tax burden (2004 – 2008) has been about 27% of GDP; the federal portion by far the largest at about 20%. Is this too high, too low or just right?  The OECD average for its 34 members for the same period is 35%. America is the 5th lowest, ahead of Mexico, Chile, Turkey and Korea. The highest was Denmark, at 49%. With these facts in hand, I think most Americans who were sitting around a table would think we need not lower the government’s allocation, some might say we could increase it some amount moving us closer to the OECD average.

Honing in on historical federal budget data, the CBO estimates that our forty year average federal spending (1971 – 2010) was about 21% of GDP. For argument sake, let’s assume there is general agreement around 21%. Our GDP forecast for 2012 is approximately $15.8 Trillion, so we citizens would agree with the federal government spending approximately $3.3 Trillion.

Our government then needs to collect this money from us through tax receipts. These collections would be most efficient if they were simple, transparent and very broadly based, and most fair if they were progressive. We don’t in fact have this kind of system, but more on this later.

This doesn’t answer the question as to what to spend this money on, but at least we might agree on the big number. It’s a good start.

Friday, June 10, 2011

Weapons of Mass Distribution

We arrived in Budapest yesterday for a ten day stay.

We were having a late afternoon drink in the lobby of our hotel, the Four Seasons Gresham Palace when a group of motorcyclists arrived to check in. The group later met in the lobby bar, about a dozen. Overhearing language and accent, they were from the Middle East.

All were decked out “head to toe” in the latest Harley Davidson gear; leathers, tee shirts, headbands, knapsacks, boots and hats; in fact any bit of clothing a logo could be plastered upon. I imagine tens of thousands of dollars worth. Their “biker girls” were donning their hijabs, these without logo, but clearly Hermes. All were drinking Coke Light with lemon and discussing the ride. These were wealthy folk; I overheard one man on his mobile ordering up the washing of the hogs (actually, maybe not this exact term). Later in the evening we saw them loading onto a small luxury coach, off to dinner somewhere.

Our concierge friend told us they were in fact wealthy Saudis, completing a European road trip – they had arrived from Vienna; Budapest was their last stop. They were returning to Jeddah in the morning by private jet; bikes and gear by cargo plane.

Why I write and what struck me was the universality of some American brands like Harley Davidson and Coke; and France’s Hermes. Seemingly out of context, but not. In spite any hatred brewing in the Near East about the West; the world still aspires to the attributes these Western products exude: freedom, refreshment, luxury, possibilities. We may not live up to this in our foreign policies; the products do. They are more potent than our military will ever be in reshaping the world; truly weapons of mass distribution.

Thursday, May 26, 2011

The Ebb and Flow of Tolerance

Our recent trip to Spain’s Andalucía region, with its rich history, prompted thoughts on the ebb and flow of tolerance, and its fleeting presence.

My first insight is that “tolerance” is a much used word; therefore, some of its meaning has blurred over time. For instance, most of us do not understand that you cannot exhibit tolerance without having power over those to whom you extend it. Tolerance is voluntary action by someone who could control things otherwise. By way of example, if the table next to me in a restaurant where I’m not known nor have any influence is loud and annoying, I put up with it; I don’t tolerate it. On the other hand, if it were my restaurant and I had plenty of customers, yet I allowed it to continue, I would be tolerant of the behavior. Tolerance has a conscious forbearance of behavior (read custom or belief) even though one looks upon it with disapproval; and might see it as inferior, harmful or distasteful. You endure it even though you have the power to disallow it.

My second insight is that this virtue is not innate to a culture. For almost 800 years, Islamist Moors controlled most of Spain, from 711 to 1492 and the fall of Granada. This was a period of tolerance; Jews and Christians were allowed to practice their faiths without being tortured or expelled. I’m not trying to make this an idyllic setting, there was ingrained prejudice, and ghettos were numerous. Society wasn’t a serene meritocracy; but those in power had forbearance to those without. And this society flourished intellectually and commercially.

When the Catholic monarchs finally defeated the Moors, the Spanish Inquisition happily started. Moslems and Jews were forced to convert; or be killed or expelled. Even among those that converted, many were tried as heretics. Recent texts downplay the number of sinners burnt at the stake, and the brutal torture techniques; still large populations of non-Catholics fled the area: Jews, Muslims and Protestants alike. This intolerance wasn’t a short term event; it wasn’t officially abolished until 1834 under Isabella II. The region suffered; the Enlightenment was slow to take hold here.

Today we constantly see the West lecturing the Moslem world to become more secular and tolerant. What a difference 500 or so years make. When the magnificent mosque in Córdoba was being constructed, most people in Western Europe were huddled in caves; enough time turns everything on its head.

Absolute values are easy to explain and indoctrinate; just black and white to defend – simple belief. Relative values have a much tougher road; all that gray tone – lacking the fire and brimstone. America has lots of power in the world, so we must have forbearance; tolerance. I fear we are losing some of this. Others without power just have to “put up with it;” but not happily and not without a growing bitterness.

We need to pay more attention to history.

Friday, May 20, 2011

Southern Spain | May 2011 - Part 3

May 13, 2011 (Granada)It was a bit cloudy when we woke for our last day in Granada. Today we explored the Albaicín, the old city on the hillside opposite the Alhambra. The narrow Carrera Del Darro snakes along its namesake’s river. Our first stop was at El Buñuelo, an 11th Century Moorish bathhouse. Its star-shaped openings in its vaults were unique. On Cuesta del Chapiz we caught the bus to Mirador de San Nicholas for sweeping views of the Alhambra; afterward, a meandering, cobblestoned stroll back to Plaza Nueva.
Lunch was again at Restaurante Centro on Place Bib-Rambia near the cathedral; then wobbling back to Palacio de los Patos about three.

In order to be considered for the intrepid travelers’ of the year award, we felt obligated to see one more sight in Granada; choosing Monasterio de la Cartuja, it did not disappoint. Founded in 1516, the church is a Churrigueresgue marvel, topped by it amazing sacristy. We took the #8 bus back to Gran Via, walked home and drank to our good fortune on the patio. It would have been a tragedy to have missed this.

Dinner was again outside at the hotel’s restaurant; we were too tired to go anywhere else.

May 14, 2011 (Granada – Marbella)
We had a wakeup call at seven, packed, had a light breakfast and on were on the road by ten. It was an easy two hour drive to the sea; we arrived to the Marbella Club at noon. It is a large compound, highly recommended by Paul and Jane in London. The weather was wonderful, a sunny 72°F; we walked a bit to get our bearings and had a kier royale at the pool near the beach while our room was being made up. Around 1:00 we were given our key to room #245, a spacious suite; were at the pool by two; a light lunch of grilled tuna, very good.
The complex has two pools, a large salt water by the sea, and a smaller more intimate fresh water further up from the beach; we initially at least, prefer the latter. May’s sun was gentle; and apart from the disruption of a group of ten loud, indiscrete Americans, we had a peaceful afternoon. The staff seems attentive.

We walked back to the beach and the hotel’s pier in the early evening; then had dinner at the Grille.

May 15, 2011 (Marbella)
We had a nice breakfast on the Grille’s terrace; the weather was a bit overcast and windy as we took a morning stroll along the Mediterranean walkway. By eleven we were at the pool, and had a nice lunch, accompanied by a pleasant rosé, a 2010 Rioja from Muga. In late afternoon, the sun returned. In all it was a relaxed day: reading and snoozing. The pool here is not really set up for lap swimming; it’s more for just dipping and a quick cool off.

Dinner was at the Grille again; tonight beef. The highlight was the Ribero Del Duero 2005 Hacienda de la Monasterios Reserva, a combination of tempranillo, malbec and cabernet sauvignon; blackberry, licorice and espresso flavors – fantastic! I have to thank Paul for the recommendation.

May 16, 2011 (Marbella)
The weather is not cooperating; after a ½ hour walk we were to the pool on a cool and cloudy day. We had another nice lunch and did some reading, but the lack of sun certainly took some sparkle out of our time here.
Dinner was in the Grille again tonight; definitely not the “A” team doing the service, slow, inattentive and sloppy describes it. The 2006 Alion from Vega Sicilia was the highlight.

May 17, 2001 (Marbella)
After breakfast we decided to take one more trip. On the road before eleven, we snaked north up the switchbacks of A397 through the rugged Serranía de Ronda; in about and hour and a half we were to Ronda, a picturesque town straddling a precipitous limestone cleft. It was one of the last Moorish bastions, finally falling to the Christians in 1485.
We walked across the Puente Nuevo, an 18th century feat of civil engineering, toured the famous bullring, inaugurated in 1785, and the Santa Maria la Mayor, a church built on the site of a 13th century mosque.

I had read about a restaurant that had gotten rave reviews; we stopped at Restaurante Tragabuches on Calle José Aparicio, near the bullring. The tasting menu turned out to be creative and wonderful; our second course was “cresta de gallo,” which is actually the red fleshy skin of the rooster’s plume, or cockscomb as it’s called. It was served in small stewed pieces in a truffle sauce, with parmesan foam; tasting like plump mushrooms. We actually aren’t as adventurous as it sounds; the maître de told us what we had after we had finished. The only drawback to the whole meal was that we had no wine; I was driving.
Our last trip to Ronda was in the mid-nineties with Chrysler; it was good to return and update our memories. About five we left and retraced our route back to the Costa del Sol and Marbella. It was a nice day; we reminisced about it at the hotel’s bar over a glass of Chardonnay.

Dinner was again at the hotel, the wine from Ribera Del Duero the highlight.

May 18, 2001 (Marbella)
The forecast was for cloud with occasional rain for our last day, and the weatherperson didn’t disappoint. After breakfast we arranged for our rental pickup by Europcar and lazily read our way to lunch; which was at the MC Café. Reading continued accompanied by heavy rain from about three to five o’clock. We resembled the sloth for most of the day.
Dinner was at the Grille again; a good final night ending with nightcaps in the bar.

May 19, 2011 (Marbella – London)
We were up at seven to an overcast day, packed, breakfasted, and we were off to the Malaga Airport. Our British Airways flight was excellent, arriving early; Masood met us and whisked us into London. Everything in the apartment was fine; we were glad to be back.

Friday, May 13, 2011

Southern Spain | May 2011 - Part 2

May 4, 2011 (Seville)
We had a restless sleep, but awoke to a beautiful day and a pleasant breakfast. Our first stop of the day was to Hospital de los Venerables; we had an awful time finding it in the patchwork of lanes, but eventually found it. I’m sure we were yards away several times. It was a home for elder clergy completed around 1700; now a cultural center. The highlight is its church, a Baroque splendor; we spend hours there.
We had lunch at another tapas bar on Gaga, this time the Belmonte; it is known for its beef, decorated in a bullfighting motif.

After lunch, we walked to the river and the Torre Del Oro, part of the 13th century fortifications. Judith then talked me into a “step-on-step-off” bus tour; it was as horrible as expected, baking in the sun on the upper deck while touring what could only be described as the top ten most uninteresting things about Seville. Live and learn; thankfully the audio wasn’t working properly so we didn’t have to listen to the canned presentation, and it only lasted one hour.
Next it was to Hospital de la Caridad, a charity hospital founded in 1674 and still a sanctuary for about 85 elderly gentleman. More Baroque splendor, as well as some well preserved frescos. We briefly visited Seville’s bullring, its season in full swing.

We crawled home exhausted, had some wine poolside and had another dinner at Palacio de Villapanés; sleep came after midnight (again).

May 5, 2011 (Seville)
It was another wonderful sunny morning. Today we were off early to Parque María Lucía, donated by its namesake in 1893 in preparation for the 1929 Ibero-American Exposition. It is well maintained and picturesque; although Disney may have gotten some inspiration here; something a bit unnaturally natural. We left the park via Avenue de Maria Luisa and visited the imposing façade of Palacio de San Telmo, built in 1682 with an exuberant Churrigueresgue portal. We had a quick break and drink at the Hotel Alfonso XIII’s patio.

Lunch was on Calle Rodrigo Caro at Restaurant La Cueva, in the heart of the old Barrio Santa Cruz. The chicken was terrible, but the entertainment uplifting. This is the time for the Spring Fairs, or la feria; where ladies dress in the traditional and flamboyant flamingo costumes. These fairs date back to the gypsies and the 19th century. We bumped into a frolicking party of geriatrics, seventy something’s as limber, energetic and fun loving as a group of twenty year olds. They weren’t beautiful like their younger lithe counterparts flaunting themselves around the city, but their fluid movements were amazing to watch; we all have hope!

It was then on to Casa de Pilates, a palacio inspired by the High Renaissance and the Holy Land; built in the 1500s by the Marquis of Tarifa to resemble Pontius Pilate’s residence in Jerusalem. There were more wonderful examples of mudéjar architecture throughout.

We were back to the Hotel Grand Alfonso XIII for drinks and dinner, very pleasant; the property will be closing in about a month for a ten month renovation. A taxi home had us to bed late again. The custom of late dinners at ten or after is starting to wear on our tired, old bodies.

May 6, 2011 (Seville)
Most of the city’s sights had been seen by us; today was a “clean-up” day; weather remained wonderful. Our first visit was to Iglesia de la Magdalena in el Arenal; its special Madonna and Child. It is an immense Baroque church completed in 1709. Then it was on to Museo de Bellas Artes; a breathtakingly converted convent dating to 1612, the Seville School well represented. Next was Casa Palacio Lebrija, with a wonderful Baroque chapel. Finally, the grand Baroque Iglesia Del Salvatore.

We had a leisurely lunch at Robles Laredo on Plaza de San Francisco. We finished our tour of Seville with Archivo de Indias, a museum dedicated to Spain’s exploration of the New World. Ironically, the temporary exhibit was about piracy; I couldn’t help but draw the strange parallel between the British and French terrorism in the Caribbean during the 17th century with that of the scourge of their Somali counterparts of today in the Persian Gulf. Not much changes.

We had a light and quiet dinner at the Palacio de Villapanés, and then crashed to sleep.

May 7, 2011 (Seville – Córdoba)
We were up early to a cloudy day, had breakfast and packed for our drive to Cordoba, less than two hours to the north and east. We left Seville without fanfare; however, our entrance to Córdoba was tough. The navigation was technically correct in guiding us to the destination in the shortest time, unfortunately trying to take us through several pedestrian zones. To complicate matters, this Saturday was the height of First Communion services at many churches; I tried desperately not to run over pretty little girls in their white dresses. After a few failed attempts, I noticed a taxi driver able to lower a mechanical bollard by speaking into a pedestal near the barrier. I drove up right after him, begged in poor Spanish for entry; miraculously the bollard lowered and we made it through. After a few more turns, we arrived at our hotel, Palacio Del Bailío.
We didn’t unpack much; the hotel will switch us to a suite tomorrow. This done, we headed off to Córdoba’s main sight, the Mezqutia; an 8th century marvel. This structure showcased the power of Islam in southern Europe, built between 785 and 787. With the fall of the Moors at the hands of the Catholic monarchs in the 1400s; a part of the mosque was destroyed to accommodate a cathedral. What a sweep of history is contained within its 850 arches, vestiges of Islam and Christianity coexist. The mihrab prayer niche nestled next to the Christian Churrigueresgue cathedral choir. We wandered around for hours; there is no way to capture this immense structure in a picture; in much the same way as you cannot capture the Vatican’s proportion. Deeply moved and satisfied, we meandered our way back to the hotel.

Dinner was at the hotel’s restaurant. We met Jimmy, an affable transplant from New York working for the hotel, now living in Spain since 1984. But he hasn’t lost his accent or Big Apple flare – six degrees of separation proved once again.

May 8, 2011 (Córdoba)
The weather remained perfect. Our morning took us to Córdoba’s 14th century Sinagoga and the Capilla de San Bartolomé, a small church built in a Gothic-Mudéjar style. It was then on to Alcázar de los Reyes Cristianos; wonderful gardens built in the 14th century, very expansive and exquisite.

In the afternoon we went back to Palacio Del Bailío, had lunch and transferred to our new suite, the Gran Captain, #109 – very special. After the move, we had a leisurely lunch on the patio. We met a nice couple, Conrad and Lorraine, from Los Angeles. Both were Spanish-American, growing up poor; an American success story, both professionals. We discussed life, politics and current events until after nine.

Saying our goodbye to them, Judith and I went to a late dinner at the hotel, and after a frustrating late night with Internet issues, we crashed to bed.

May 9, 2011 (Córdoba)
We awoke to another nice day; most sights were closed on Monday so we had a lazy day. We were at the pool for an hour or so; then had a relaxed lunch at Taberna Los Berengueles.
It was more wine on the terrace, eventually leading to a light tapas dinner and then off to bed at a more reasonable hour, eleven o’clock.

May 10, 2011 (Córdoba – Granada)
Up early, we had breakfast, packed and left for Granada, about two hours south and east of Córdoba. The drive out of the city was easy, and A45 took us south in the direction of Malaga, then A92, east. As we approached Granada, we could see snow on the Sierra Nevada Mountains; this when our car registered an outside temperature of 77°F; such a contrast. The navigation this time smartly guided us to Palacio de los Patos, our hotel. We checked into a room that was odd in an unpleasant way; very modern and quirky, housed in an 18th century palacio masterpiece. Some architect must have thought he or she was just fabulous with the concept; poor him, or her (and us).

By three we were unpacked and out, walking up Calle Recogidas toward the historic district. We stopped at Restaurant Oliver on Plaza de la Pescadería for a quick bite; not too bad. We visited Capilla Real, the royal chapel, built in 1506, now the internment for Fernando and Isabel. The reja, or grille, by Bartolomé de Jaén was magnificent. It was then to the adjacent Granada Cathedral, a massive structure, at first a Gothic conception, it was transformed into its current Spanish Renaissance brilliance by Diego de Siloé in the 16th century. Its circular capilla mayor in place of the usual semi-circular apse was breathtaking. We took another short walk to visit Casa de los Tiros, a 15th century mudéjar palace. We then dragged ourselves back to the hotel, and had a drink on the terrace; a poetry reading was being hosted there, in Spanish unfortunately.

Dinner was at the hotel; adequate, not wonderful. We flopped into bed near midnight.

May 11, 2011 (Granada)
Today was our day to explore the Alhambra, “the red fortress.” Were up to an early breakfast and off to the #32 bus on Gran Via de Colón to take us to this “city within a city.” I took the luxury of hiring a private guide; we met Lourdes Ayllón at the Alhambra Map, as arranged.
This was the scene of the Moor’s last stand in Spain, the Nasrid dynasty moved its court here in 1232; construction of the palace complex took over 100 years. In 1492 the Catholic Monarchs defeated Boabdil, and Granada and the Alhambra were forever reclaimed by Christianity. This outcrop of rock was witness to changes over centuries, from the Romans to the 16th century Palace of Charles V. Our visit lasted hours, and ended at the summer residence of Generalife, or “garden of lofty paradise.” The Arabic script repeats a line many times on the walls throughout the complex, roughly translated as: “In the end the only winner is God.” Perhaps there is some truth to this; look at the suffering this place and the world have witnessed.

After exiting, we walked to the Alhambra Palace Hotel and had lunch on their marvelous terrace looking out to the cathedral and the Sierra Nevada range. There was a threat of rain, but it did not materialize. A #23 bus took us back to Gran Via, and then we walked back to the hotel; stopping for a better pair of walking shoes for Judith.

We were back out for a half hearted attempt at more sightseeing, but the rain eventually came and sent us scurrying back to our room. A late and light dinner was at the hotel.

May 12, 2011 (Granada)
We were up early for a planned day trip to Baeza, about two hours north in Jaén province. This town dates to the Romans. It was won back from the Moors by Fernando III in 1226 and its splendor climaxed in the 16th century. It has been a UNESCO World Heritage Site since 2003. The Antigua University was formed in 1542 and is still bustling with energetic students, still hotly debating current events. The cathedral and cloister were beautifully maintained; I climbed up the narrow winding stairs to the bell tower, Judith was wiser and stayed behind.
We had lunch at a quaint spot, Taberna El Pajaro on the main square Paseo de la Constitución. It was more tapas for us, including interesting avocado frites called alcachofas. On the drive back, the canyon vistas, with the back drop of the snow capped Sierra Nevada, made the journey seem short.

We got back to the hotel around four; had some wine on the terrace and rested and got some work done in the room. Dinner was at the hotel’s patio, relaxed and pleasant.

Friday, May 6, 2011

Southern Spain | May 2011 - Part 1

May 2, 2011 (London – Seville)
We were up to a nice day; Masood picked us up at ten for our drive to Gatwick, about a half hour further from us than Heathrow. It was our first flight from this airport. Check in went smoothly, but the plane was delayed about an hour because of “dirt on the wing tip,” one might say a seemingly shoddy excuse “on its surface.” The time in the air was fine; we landed in Malaga an hour late at about 6:15.

I couldn’t get a car from Hertz, so rented with Europcar; a nice Mercedes, with navigation provided separately by TomTom. The agent set the language to English for me. I had trouble mounting the unit; I stupidly tried to seal it to the dash rather than the windshield. It was flopping around but we left the garage anyway; I set the destination to our hotel in Seville.

We entered the road, immediately hit a bump, the unit flopped in between our seats; I heard a muffled male voice speaking German directing me. The agent set the screen to English, apparently not the audio; I pulled into a gas station swearing profusely. Eventually I was able to set the audio to a sweet and soothing British female, and overcame my stupidity and realized I needed the smooth surface of glass to have the suction mount hold firm; absolute idiot!

We drove north away from the Mediterranean to A92 and headed west; it was about a 2 ½ hour drive in some quite heavy rain and wind. We had some trouble interpreting the final navigation commands and made one or two aborted attempts, but finally arrived to Las Casas Del Rey de Baeza, our hotel in Seville. It is part of the Hospes chain; our first choice was Hotel Alphonse XIII, but it was fully booked. Our little suite was okay, but far from great. The property is a converted palacio in the rustic style.

We hurriedly unpacked, had a quick dinner and crashed to bed about midnight.

May 3, 2011 (Seville)
We were up early to a sunny seventy degrees and a nice breakfast. The hotel is on the northern outer fringe of the old city; it was a half hour walk through a labyrinth of winding streets; in some spots less than ten feet wall to wall. Cars flew by at excess speed; pedestrians the least of their concern.

The old city has two parts: Arenal along the Guadalquivir River; and east of Arenal; Santa Cruz. Our sightseeing started in Santa Cruz with the Real Alcázar, a royal residence established by the African Moorish Almohad and a brilliant example of mudéjar architecture; rebuild in 1364 by Pedro I. Later monarchs added their touches; Isabel I dispatching navigators to explore the New World from her Casa de la Contratación. The massive and ornate complex of buildings and lush gardens were magnificent to take in.

Our next stop was Seville Cathedral and its bell tower, La Giralda. The tower was built as a minaret in 1198 under the Moorish occupation; after several transformations, the current belfry dates to 1568, with its bronze weathervane, or giralda, in Spanish. This gothic cathedral, the largest in Europe, still has a Moorish legacy throughout.

A very late lunch was at nearby Bar Giralda on Mateos Gago; a well known tapas spot. The food and wait staff were a bit worn; burnt out by the tourists I suppose. Still the interior, a converted Moorish bathhouse had a certain charm.

We weaved our way back to the hotel through the maze of small streets; there wasn’t a straight stretch of more than ten yards, the sidewalk sometimes shrank to a mere six inches. Las Casas Del Rey de Baeza has a small and cozy rooftop pool; we took a snooze in the shade, each with a glass of wine precariously balanced in our hand (mine never seems to last too long).

We cleaned up but were too tired to explore for dinner; we just stepped across the street to Palacio de Villapanés. They have a nice patio; we had some tapas, then a lovely dinner in the restaurant. Again, we weren’t to bed until after midnight.