January 2012

The mainstream consensus locates the root cause of the financial crisis in structural imbalances in the world economy, in what Federal Reserve chairman Ben Bernanke called the ‘global glut of savings’. I have also read a number of Marxist oriented interpretations that argue that crisis is endemic to capitalism and crisis is always the consequence of the over-accumulation of capital and the exploitation of labour inherent in the search for surplus value. If we look past the differences in the conceptual framework, these appear to be fundamentally the same analysis.

Here’s how I think this works for income inequality but the same logic applies in the case of trade imbalances, although the solutions are different. Increasing income inequality means that more money is flowing to wealthier households. But wealthier households eventually reach a level of income where they can’t or don’t want to consume more. The surplus over consumption goes into investments in hope of a higher return. A couple of things follow. Firstly, asset price bubbles develop as surplus funds are invested in assets such as property, stocks and precious metals. Secondly, levels of indebtedness rise. This happens because the downward pressure on potential demand for commodities is being accompanied by upward pressure on the potential supply as surplus funds are invested in new capacity. In order for poorer households to consume the output from increased production, wealthier households, via the banks, have to lend them the money. The link between the two is that the debt is often secured against rising asset prices, and you get something like the sub-prime mortgage market.


Luang Prabang is the former capital of Laos. It sits on a promontory where the Nam Khan flows into the Mekong. We stayed at the Apsara Rive Droite (*), which is on the far bank of the Nam Khan. You get to the main town by the hotel’s small motor boat. A local ordinance insists that the presence of the hotel should be disguised, so to look like part of the village the garden is surrounded by banana groves and bamboo fencing. Out of season in June, we had the place entirely to ourselves.

The town itself is a UNESCO World Heritage Site and still largely undeveloped. The national museum was formerly the royal place until the kings were deposed by the Pathet Lao in 1975. The museum collection is made up largely gifts to the king, including, from the United States, the Lao flag carried to the moon on Apollo 11 and a small piece of moon rock. Round the back in the garage is the collection of royal motor cars: a couple of Lincoln Continentals, a Ford Edsel, a beaten up Citroen DS, a Toyota jeep and a speedboat, used to visit the orchards across the river. The museum has information on the lives of the royal family up until 1975 but nothing later. The last king in fact died a few years afterwards in a re-education camp. The museum also houses the Pra Bang, the small statue of the Buddha that gives the town its name. It was made in Sri Lanka in the 1st century and was a present from the Khmer empire in the 14th century.


Today is the first day of the lunar year in the Chinese calendar. The nomenclature of the years is based on a sixty year cycle of five elements and twelve creatures. This will be the year of the water dragon. This is the third festival in a run, following Diwali in October and Christmas in December.

Like the Indian, but unlike the Gregorian calendar which is solar and the Islamic calendar which is lunar, the Chinese calendar is lunisolar. The solar New Year falls at December 21st, the winter solstice. The twelve months of the lunar calendar are anchored to the solar calendar because the winter solstice always falls in the 11th month of the lunar year. The 1st month of the lunar calendar will therefore start sometime between January 21st and February 21st, depending on which date in the 11th month the winter solstice occurs.


At the end of this month we will be making a second trip to Angkor in Cambodia. There are too many sites within the complex to cover in only one visit.

Angkor was the capital of the Khmer kingdom for 600 years or so from around 800 CE. Most of the structures were built in wood, but the religious monuments were built in stone and it is these that have persisted. At its height in 13th century, the Khmer empire covered most of the area of present day Cambodia, Laos and Thailand. In subsequent centuries it lost ground to the empire of Siam based at Ayutthaya and, possibly as a consequence, the capital moved to Phnom Penh in the 15th century and the importance of the site declined. It became known to Europeans when the notes of the naturalist Henri Drouhat were published in 1863.

The finest carvings are found at Banteay Srei, dating from the reign of Rajendravarman (944-968). Angkor Wat itself was constructed during the reign of Suryavarman II (1113-1150). The larger city of Angkor Thom, the name means great city, was built nearby in the reign of Jayavarman VII (1181-1220). Many visits end at sunset on the hill top of Phnom Bakheng (907). Further afield, it is worth travelling to Kbal Spean, upriver of Angkor, where reliefs of Vishnu and Brahma and thousands of Shiva lingam were carved into the river bed during the reign of Udayadityavarman II (1050-1066). Preah Vihear, up on the Thai border, dates from the reign of Suryavarman I (1002-1050), but because of the border dispute, is not easily accessible at the moment.


I enjoyed watching the new film ‘Sherlock Holmes: A Game of Shadows’ at the cinema, but I also had the sense that, somewhere close by, there was a much better film. Not a different film but a better execution of this one.

The most striking sequence in the film is a chase through the woods as Holmes and his party make their escape from the armaments factory. In slow motion, so the people are just moving and we can track the path of the bullets, it could be a scene from a wuxia movie, a greyed out northern forest replacing the bamboo groves of China. The scenes where Holmes and Moriarty anticipate the moves they will make in combat could have come from the same movie.

And it’s not that this is not an authentic Holmes. There is plenty of warrant in the original stories for the disguises, the theatricality, the hyper-activity and instability. Is there a deliberate echo of Heath Ledger’s Joker in Downey’s smudged make-up at the end of the fight on the train?