MORE MONEY THAN GOD - A bet to save capitalism | SEBASTIAN MALLABY

A BHEEK B HATTACHARYA abheek.b@livemint.com

Karl Marx didn't like speculators. “What distinguishes the present period of speculation in Europe is the universality of the rage,“ he lamented in 1856. On cue, every leftist-type worth his jhola today reserves special hatred for the speculators of our era. There is much lament about the present “universality of the rage“: Speculation these days can even drive up food prices, as one commentator ranted recently in The Independent.

That must mean then that the speculators who most embody this “rage“, none other than hedge funds, are the very avatars of freewheeling capitalism. Sebastian Mallaby, proud capital- ist, tries to find out where exactly hedge funds stand in the capital- ist scheme of things in his More Money than God. In constructing their history, he comes to the conclusion that they may well be the future of capitalist finance.

A former writer at The Econo- mist and The Washington Post, Mallaby tells his story with the keen eye of a journalist and the steady narrative of a novelist.
We're treated to both revealing factual material from hundreds of interviews as well as to the ele- gant metaphors that stitch together these different--and sometimes complex--facts.

The first such fact: What is a “hedge fund“? The term today is thrown around casually to suggest (and blame) some greedy finan- cier-type. Though it's actually hard to settle on a definition, this type of fund has tended to mean a particular way of investing. The first “hedged“ fund, started by A.W. Jones in 1949 was so because Jones took the care to bet in favour of some stocks, while betting against others. He thus “hedged his bets“, protecting himself against the ups and downs of the marketplace.

This fundamental tenet has somewhat survived, even as hedge funds have evolved fantas- tically. Mallaby shows us the “block trading“ days in the 1970s (waiting for someone to dump a large block of stocks, buying them as the dumping lowers the price, and then selling them when the price springs back up); the “trend surfing“ days of the 1980s (watch- ing data charts carefully to ride a bull market and getting out as it turned bearish to bet against it); and the “quant“ days starting in the 1990s (computers detecting financial signals humans can't).

And hedge funds evolved over the last 50 years in step with changes in the macroeconomic landscape. Back when exchange rates were fixed and capital couldn't cross borders easily, Jones wouldn't have dreamed of betting against national currencies. But George Soros, the most famous hedge fund titan till date, could bring both the UK pound and the Thai baht to their knees in the 1990s. Mallaby displays an impressive grasp of history here: As ideas and policymaking shifted, the strategies of funds have had to, too.

But some things have remained the same. “Repellent and attrac- tive, objects of envy and yearning“ simultaneously, hedge funds have remained the “wizards of modern capitalism's favorite pastime, the unabashed pursuit of money“.
Many maintain that this unabashed pursuit must be con- trolled, but Mallaby insists other- wise: Society should tolerate these speculators because, in their greed, they have ended up per- forming a social function (most of the time at least). Block trading provided liquidity to those look- ing to offload many shares; attacking the baht forced Thai- land to abandon an inflexible currency framework, arguably for the better; and all the quantita- tive tricks have, on most days, tried to make prices reflect reality instead of sentiment.

Of course, the days when they aren't so noble, hedge funds have been known to create mayhem.
Yet before we pass judgement on those fund managers who almost crippled the financial system in the past, Mallaby's narrative con- verges on to the present day, when some bankers did fully crip- ple the system.

This book (thankfully) isn't part of the 2007-09 crisis literature, but it adds a great twist to it. To wit, if the big banks failed and threat- ened to take down the whole sys- tem, why doesn't finance rely more on hedge funds? This crisis killed 1,500 funds, without imper- iling the system or requiring government bailouts. Many of them eve n prof ited bec ause they weren't as stupid.

Mallaby is convinced that through all the evolutions and shifts, some things have kept hedge funds unique--and kept them performing a social func- tion--unlike other financial firms.

They continue to rely on individ- ual geniuses, not lumbering bureaucracies. They continue to be driven by contrarian instincts: They don't get sucked into the tide. And they continue to be taut and lean: Because the managers' own savings are often at stake, risk is perhaps better managed and incentives better aligned. Still, after this last gut-wrenching crisis, can we really stomach these unregulated hedge funds?

Mallaby is remarkably fair in addressing this concern. Aware of the exhausting debate over finan- cial regulation that preoccupies the world, he doesn't pretend that his recommendations will stand the test of all time, or that they are free of costs. He offers sufficient nuance, which we should give its due. The only sharp opinion he clings to is that he likes his specu- lators. He wants their rage to be even more universal.

CHARLES DICKENS - MICHAEL SLATER - Under the magic lantern

For those anyone who loves literature, the question of how literary work comes into being, of what relationship there is between the creation and the creator, is of an interest almost as urgent as that felt for the books themselves. When a writer gives us the gift of a character we cannot forget, of a scene or story that changes our relationship to our world, of a way of thinking that wakes us from linguistic or moral inertia, we crave a closer contact with that life and mind. These are the pleasures offered by literary biography, and they may be abundantly found in Michael Slater's new biography of a man who we might legitimately consider the 19th century's greatest writer, Charles Dickens.

Slater's book weighs in at over 600 pages, and in all fairness it would have been hard to make his book any shorter than this, for Dickens' life itself was a vast one.
The son of a financially reckless clerk who on more than one occasion was sent to jail for not paying his debts (forcing the young Charles, at the age of 12, to leave school for a few months and work in a factory), Dickens acquired his enormous success, wealth, good- will and standing purely by dint of his energy, ambition and resourcefulness. Beginning his working life as a parliamentary reporter, he swiftly demonstrated the power of what a famous actor friend of his called his “clutching eye“, or eye for detail that seemed to bring a scene alive. His journalistic descriptions of London streets and incidents soon found an audience not just in the periodicals but when collected, into books. This work constituted Dickens' training for a literary career in which Lon- don--a city he called his “magic lantern“--occupied the centre.

To a greater extent than some of Dickens' earlier biographers, Slater emphasizes that the writer is worth understanding not just as a literary figure but indeed as a businessman. In Dickens' time it was not very common for a writer to make a living from his books alone. Indeed, book publication itself was not the thing that we know it to be now. Most novels of the day--and most of Dickens' novels--appeared first in serial form in weekly or monthly periodicals, accompanied by illustrations. Only later were some of them given the dignity and standing of book publication.

Slater shows how, once Dick- ens began to acquire a sense of his audience, he relentlessly plot- ted and schemed to make not just his art thrive but also his finances.
At times, by undertaking to cover all production costs in return for a larger share in profits, he over- turned the traditional publisher- author business relationship by turning his publisher essentially into no more than a printer. He was happy to prepare handsome, expensive editions of his slim “Christmas books“ (the best and most famous of which is A Christmas Carol, one of the greatest short novels in the English language) and cheap omnibus editions of his collected works. Having sold the copyright of some of his books when in need of money, he later bought them back at a much steeper price, just so that he might have control over his entire oeuvre.

Indeed, Dickens' greatest success was to to balance the competing pulls and pressures of literary artistry and commercial success.
His stories are often melodramatic, but they are incandescent with marvelous metaphors, powerful descriptions of people and place, great flights of comic imagination, and also a sympathy for human frailties and an outrage at injustice perpetrated both by individuals and by systems. There is in them a luminous perception not just of particular characters and their predicaments, but also of an entire society. Slater describes the working notes that Dickens used to prepare to set up the structure of a story, and the way Dickens' language, themes and characters develop across his career. Dick- ens' sociability, infectious energy, and appetite for life and for narrative are in evidence everywhere.

In her short biography of Dick- ens, the novelist Jane Smiley remarks that the relationship between a novelist's life and his work is not unidirectional, but rather dialectical. “Just as Dickens's novels were in part commentary on his life,“ she observes, “so his actions, in part, grew out of the way that writing novels gave his feelings and thoughts specific being.“ In other words, just as Dickens wrote novels, so too did his novels in some way write him. The evidence of this claim is most fully worked out in Slater's meticulously researched and readable biography.
Chandrahas Choudhury is the author of Arzee the Dwarf.
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The queerness of E M Forster

From Business Standar July 3rd 2010

A good biography is itself a kind of a novel. Like a classic novel, a biography believes in the notion of a “life” — a life as a triumphal or tragic story with a shape, a story that begins at birth, moves on to a middle part, and ends with the death of the protagonist

—Cynthia Ozick: Art and Ardour ,1983 Read no history: nothing but biography, for that is life without theory

—Benjamin Disraeli (1804-81)

Biographies of writers are interesting only insofar as they illustrate the work, and to do this effectively requires a discursiveness on the part of biographers that makes them take an imaginative leap beyond formal records.

Not to do so would be to gloss over the lies and silences at the heart of everyone’s lives that would hardly tell us of the man within and/or what made him tick. Because most biographies (especially ours) end up as hagiographies, of lives too good to be true, and few last. Not only are most of us distrustful of exemplary lives in the heroic sense, but certain subjects seem, over time, to be more or less interesting because of the frame of interpretation, the cultural baggage changes. Wendy Moffat’s EM Forster: A New Life (Bloomsbury, Special Indian Price Rs 999) would enjoy a longer life for two reasons: first, A Passage to India has established Forster as the most popular literary novelist here; second, because “connections” between “people, nations, heart and head, labour and art” that were Forster’s great themes are of perennial interest here as well as everywhere else in this age of globalisation.

The book is in two parts — “Grown Up Man” and “Happiness Can Come in One’s Natural Growth” — with a Prologue that sets the tone of the whole book: “Start with the fact that he was a homosexual.” But the question that Moffat asks is why after the publication of A Passage to India in 1924, Forster never published another novel although he lived to be ninety. In 1970, or perhaps a little later, he confided that “I should have been a more famous writer if I had written or rather published more, but sex prevented the latter”. This has been taken as an expression of regret but Moffat takes it as a kind of relief probably because Britain was still very intolerant of gays and Cambridge could well have asked him to “pack up”. (After all, William Empson, who was to become one of the great literary critics with his work Seven Types of Ambiguity, was expelled from his Cambridge college and from the town itself in 1929 for possessing a packet of contraceptives in his rooms!) So much for Oxbridge tolerance.

Whether homosexuality is a part of our DNA is still an open question, but the mother’s dominant influence in early childhood has something to do with the way we grow up. Forster’s early life was, to use an American expression, “zipped up”. He was brought up very much under his mother’s thumb that, no doubt, gave him a sense of security and a smattering of bourgeois mannerisms, but nothing else besides. To a large number of Indian students who were always welcomed to his rooms at King’s College, the overwhelming impression that they carried was Forster’s “solicitousness” (“Call me Morgan”) which many mistook for an easy familiarity and an invitation for a return visit.

But what comes through from his diaries that are filled with such observations as “the bodies of men drying off after bathing in the Thames” is that Forster was unsure about the direction of his own life and that he remained till the age of 37 “a closet homosexual”. All that changed in 1917 when he was posted to Alexandria with the Red Cross, free from the constraints that were imposed by Cambridge. After an affair with a soldier, he fell in love with a tram conductor that finally ended in bed. Moffat has pieced together this part of Forster’s life from bits of a letter which reads like a poem: “Dear Morgan/I am sending you the photograph/I am very bad/I got nothing more to say/...My love to you/My love to you/My love to you/Do not forget ever your friend.” “Only connect”, the yearning epigraph to Howards End provides a clue to Forster’s silence despite his extraordinary gift for writing fiction of great humanity, warmth and humor. At the end of A Passage..., we have the melancholy sight of Aziz and Fielding, friends of different races and cultures, riding into the sunset along different paths. Since all novels have a strong autobiographical content, though “with experience totally transformed”, could this parting of ways be taken as a search for a love that dare not speak its name? Sex certainly provided a glue to Forster’s inner life. He embraced London’s gay subculture no holds barred and makes no secret that he was quite happy with unconventional arrangements: first, with a stocky taxi driver and then a very long relationship with the policeman, Bob Buckingham, to whom he gifted a small part of his will.

Biographies always leave some questions unanswered about the silences that we keep only to ourselves. Moffat could have been a little more courageous about the contradictions of Forster’s inner life, friends with some of the leading intellectuals of the time but intimate only with working class men with whom he couldn’t possibly have any life of the mind?