Washington (Not Constantinople)

The title is a parody of Istanbul (Not Constantinople), the fun 1953 song by The Four Lads. The tune, which is very similar to Irving Berlin's 1929 Puttin' on the Ritz, has since been covered by many bands, including They Might Be Giants in 1990.

For a hilarious Daffy Duck/Porky Pig cartoon with their version, click here.

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I have on occasion remarked that the current situation, with the US as the largest debtor in the world while still maintaining a huge military machine with ongoing commitments in at least two "hot" wars, has parallels in the waning years of the Ottoman Empire.

Two similarities stand out:

High Debt and Corrupt Financiers

"The Sick Man of Europe" was massively indebted, had a thin and ineffective domestic tax base and relied on foreign loans arranged by London and Continental bankers, who demanded several pounds of flesh. The stories of quick 12-18% gains (in hard currency, no less) from one or two year Ottoman Treasury bills are legion, particularly during the latter part of the 19th century. Many a "respectable" European house made killings in such operations, always in co-operation with local bankers in Istanbul (Constantinople). Look at this review of Gold for the Sultan, a specialist book I do not dare put on the Amazon sidebar: they want almost $100 for it! For those interested, I am certain it can be had for less elsewhere - or you can try the local library.

The instruments and details are different today, of course, but the machinations of mortgage and structured-finance bankers to create and extract embedded fees are identical. Only collusion, malfeasance and determined obscurantism can transform a basket of 100% CCC loans into 85% AAA bonds and produce huge fees paid to all involved. Just look at the food chain: mortgage brokers and supervisors, their shareholders, loan warehousers, loan servicers, the packagers, rating companies, salespeople and managers at investment banks, their shareholders...they all gorged on the spread between what the hapless (and sometimes illicit) borrowers paid and what the ultimate "investors" received.

How large were the spreads? In a word, huge - particularly when compared to regular corporate AAA bond issuance fees. I have heard of spreads of 10 points and in some cases even more. Before anyone objects, these are not basis points but bond price points, i.e. "investors" (in quotation marks because they were either complete fools or corrupt) bought bonds that were worth 85-90% of what they paid, right out of the box. This is money that will never be recouped, under any circumstances. It has been transformed into, and readily consumed as, bottles of Cristal, Porsches, Hamptons homes and vacations in Mustique. I am not surprised that no one is making a big stink about the role of such fees in the creation and propagation of the MBS crisis: It's called Omerta.

Look at who owns the largest heaps of such stinking waste: funds, funds, funds - whose managers bought them because they were such good investments? No: some did it after considerable research and analysis contained within sealed brown envelopes and others just got plied with the business-as-usual extra-curricular goodies (boobs and booze). Like the befuddled innocent said long ago: But...where are the customers' yachts? (see the last book in the sidebar).

An over-indebted state populated by apathetic citizens and feasted upon by legions of perennially corrupt financiers and corruptible politicians: That was what the once mighty Ottoman Empire had become by the 1850's. I leave it to everyone's common sense to determine if there are any Sultans, Grand Viziers, Pashas and Constantinople Bankers around today.

Political and Cultural Paternalism

The political system of the late Ottoman Empire centered around a succession of Sultans who based their power on primogeniture and ruthless elimination of other candidates (usually by strangulation or "accidental" drowning) . If any of you have been to the Topkapi Palace and taken the tour of the private quarters, you know what I'm talking about (reader contest: why were all harem eunuchs negroes?). The ablest candidates rarely made it to the throne: the palace intrigues were constant and the cliques favored those weakest and easiest to manipulate, in order to maintain their privileges and status quo.

In the past quarter century the political scene in the US can only be described as "same old, same old". There are no candidates with fresh ideas out there - or if they have them, they do no dare voice them in public. Yes, there are are credible and attractive non-mainstream candidates, but the idea is to change the mainstream, not to have to reach out to the fringe. Broad-based political innovation is a sign of social, economic and cultural vibrancy, a dynamism necessary to maintain a top spot in the world. Paternalism, repetition and "playing-safe" is a sure sign of society's dissipation.

This decadence can even be identified in popular culture: a steady stream of "safe" movies (remakes, I/II/III/IV series), music stuck for years in an amorphous rut, TV programs that reach for the basest human emotions of violence and lust, incessant shopping for needless trifles as a passtime. How much precious brainpower is applied daily to the production of blast-em' video and computer games? Why are stores now crowing about being first to open their doors after (or even before) Thanksgiving?

I don't demand of our society to reach for a modern-day Sophocles as popular amusement for the masses, as it once was in ancient Athens. Not even Mozart and Bach as creators of everyday music, as they were two centuries ago. But how about a current version of America's own Irving Berlin or George Gershwin? They were wildly popular in their time. Heck, I'll gladly settle for mainstream music with more than a throbbing beat and lyrics containing words exceeding four letters.

Quality for the average American has been thrown away, replaced by the cheapest possible denominator. Cheap thinking, cheaper goods, cheapest culture; and above them all a dissolute political machine that has become so self-indulgent that in the face of adversity it demands nothing more of us but to borrow and shop. We deserve much better than this madness. Contrary to many I don't think average Americans have become thoughtless slobs: but the average "Sultans" have, because we have allowed them to. We do not demand more of them.

We are guilty of neglect towards our democratic institutions. We have too easily fallen prey to a corrosive rhetoric that debases our individual and collective responsibility to our society, to our polis. True democracy is a fragile and precious construct; neglect brings about naive populism, itself one precarious step away from fascism and dictatorship. We the people need to get involved again. It matters little what party, candidate or principles we espouse, so long as we are willing to debate and challenge them and one another.

Or we might as well all go shopping. But we should not then complain if USA comes to stand for United Sultanate of America.