a humble suggestion for a whole new model of Value at Risk

- Alfred Kubin

Sunday’s article by Joe Nocera about the rise and apparent fall of Values at Risk models, which were used by banks, hedgefunds, ponzi schemes and assorted big and little fish, as well as their captive regulators, to justify mad and bad leverage, has caused a lot of commenting on the financial blogs – Yves Smith, hat treasure, provided, as usual, the hectoring chorus, with that radiant skepticism which always sets apart the Wall Street dissident from the usual greed jughead, seeing in Nocera’s simplifications that cool anaesthesia of conventional wisdom which, at the moment, is the way the financial press has been self-medicating itself. It is a story that will no doubt stretch on for years – the story of how everything will return to what it used to be after a few knobs are pushed, a few wires are connected.

The model talk is, to an extent, disingenuous, dancing around the question of whether we would really want a financial system that sucks up such appreciable amounts of capital for the purpose of making a very few people very rich. The financial system is, at best, built upon rents – in itself, it adds little to the prospects of humankind. And, of course, when it swells into a force similar to that which has poisoned our culture and way of life since the early nineties, no small benefit it adds will balance the barbarization that it produces, the insect like calculation it introduces into every crevice and hole of our lives. Teaching the insects to enjoy the insecticide is, of course, an old rule in elite governance, but there are limits!

However, instead of a model that takes transforms non-linear processes into a pleasingly single number, good to use over the whole portfolio of security instruments, LI would suggest that Wall Street look to literature for a better model. Most notably, Balzac’s story of the Peau de Chagrin. Chagrin is usually translated as Wild ass – The Wild Ass’s skin is George Saintsbury’s translation. It is a story ripped from today’s headlines, so to speak. Raphael, the protagonist, is a young man who has lived so largely that he is now bankrupt. One day, thinking about suicide, he goes into an antiquary’s shop and finds a skin, upon which is printed, in Sanskrit, the following message:

“Possessing me thou shalt possess all things, but they life is mine, for God has so willed it. Wish, and they wishes shall be fulfilled; but measure they desires, according to the life that is in thee. This is thy life, with each wish I must shrink, even as they own days. Wilt thou have me? Take me. God Will hearken unto thee. So be it.”

Which means, basically, that every wish shrinks the talisman, and every diminishment of the talisman diminishes the number of days left to the wisher. The wishes, the shrinkage, and death will all combine in one moment. The antiquary, of course, tries to warn Raphael from his own exotic experience (“Yes, I have seen the whole world. I have learned all the languages, lived after every manner. I have lent a Chinaman money, taking his father’s corpse as a pledge, slept in an Arab’s tent on the security of his bare word, signed contracts in every capital in Europe, and left my gold without hesitation in savage wigwams”), but of course Raphael is not to be moved by the cautiousness of an earlier generation.

Well, the U.S. economy has been one enormous Peau de chagrin. And last autumn we decided to re-write the contract, wish back the wishes. It is as if one of the wishes could be to make the talisman grow back again. But this is the limit of the contract. One can’t contract to enjoy the wishes and then wish that the conditions be changed. They go together. The rule of talismans are impervious to the chiseling of logicmongers and traders. We watch the traders hang on, though, hang on and on to their precious skins. One more wish. Bring back the effortless profits! The bonuses! Seize the money from somewhere! Bring on the dancing, captive economists, let them predict good times!

"Quite so," said the man of science. "I understand. The remains of any
substance primarily organic are naturally subject to a process of
decay. It is quite easy to understand, and its progress depends upon
atmospherical conditions. Even metals contract and expand appreciably,
for engineers have remarked somewhat considerable interstices between
great blocks of stone originally clamped together with iron bars. The
field of science is boundless, but human life is very short, so that
we do not claim to be acquainted with all the phenomena of nature."

"Pardon the question that I am about to ask you, sir," Raphael began,
half embarrassed, "but are you quite sure that this piece of skin is
subject to the ordinary laws of zoology, and that it can be
stretched?"

"Certainly----oh, bother!----" muttered M. Lavrille, trying to stretch
the talisman. "But if you, sir, will go to see Planchette," he added,
"the celebrated professor of mechanics, he will certainly discover
some method of acting upon this skin, of softening and expanding it."

the revolution of ugly men

Events in Mainz in 1792 (continuing the thread broken off before I went to mexico)

In 1792, Georg Forster had ended up in Mainz, a city in Hesse. The region had become a conflict zone between the French revolutionary armies and the various armies of the coalition formed under the terms of the Brunswick manifesto, to rescue the ancien regime, i.e. the house of Bourbon.

Forster was overworked as the head of the archive and library. At the beginning of 1792, he had not taken a public political stance, although in private letters he expressed a clear sympathy for the Jacobins. He was hiding from his wife Therese the exact extent of his indebtedness, which was crushing – Georg Forster was never a prudent man when it came to cash.

Therese seems to have been emotionally and intellectually of the left. Geiger, her biographer, in 1909, found this so scandalous that he tried to mitigate it by claiming that Therese was Forster’s ‘pupil’. It was far more likely she was his comrade. This marriage and its failure has attracted a host of commentators who have puzzled themselves over the fact that Therese left Georg for another man, and yet the two seemed to rely on each other even after the separation. The solution – that their sexual incompatibility did not hinder their affinity with each other on the basic level of friendship – seems too shocking to propose – especially for those who want to tell a story of betrayal. But Therese seems to have cared for Georg, although she didn’t love him.

The man she did love was Ludwig Ferdinand Huber, a Prussian official and intimate of Schiller. Therese met Huber through Forster, in 1788. In 1790, Huber was living with the married couple. Therese was moving in a direction taken by her mother – who lived with her lover in the house of her husband:

We stood in a doubtful relationship one to another for 1 ½ years. In the beginning I pushed him away, everything now came together, he wanted to forget [his relationship to his fiancé, Dorothea Stock], and a miserable doctor pulled him away from the border of the grave. The noble, humane Forster saw a lot in the young man, drew him nearer, I became used to him, he saw me for a year and went through all the gradation of feeling, my unhappiness strengthened my love for him – although I though of none – finally circumstances offered a hand. I don’t know in which moment, before we could guess ourselves, he had exposed to me his relationship with that girl. I pondered the thing and found decisively the result: he must confess to her that he didn’t love her any more, that time had changed his feeling, that he had no more rights upon her heart. … “ As Therese says, it took 2 ½ years for Huber to come to this point.

Some biographers have said that Therese Huber used her status, when Forster was dead, to suppress much of the information about what was happening in Mainz in 1792.

If the scene was not loaded for an explosion yet – a disaffected couple, sickly children, an overworked world famous intellectual, the French revolutionary army in the area, the wife’s lover in the house – into this scene came Caroline Michaelis.
Why Therese would invite her school friend Caroline, lately widowed, to stay with the household in Mainz is a puzzle. Or perhaps it isn’t – perhaps Therese, out of fairness, wanted Georg to have a lover too. Although Georg was not sexually faithful, apparently he had sex in the approved way, with lower class girls.

Caroline was of course as strong willed as Therese. Caroline’s letters from Mainz give another account of the Forster-Huber household. It is a sign of how narrowly the circles intersect that he chief correspondent was Meyer, the writer who had been Therese’s admirer – who “took” her virginity from her, according to Therese in an ambiguous reference. Surely Caroline knew about that. Even before she went to Mainz,she had written to Meyer: “I have never depended on her friendship – among women, there can be none.”

Soon Caroline is writing in a more sympathetic way about Georg. In particular, she writes a letter linking the ugly men of the revolution – Mirabeau, ostensibly – with her own “beauteous” figure. Strikingly, Caroline “reads” herself into her situation – which has forever been the subject of speculation – with Georg by reading Mirabeau’s famous at the time letters to his lover, Sophie, of which she writes to Luise, her correspondent, that she should read them, except that she imagines Luisa won’t have time, and won’t read in bed, being more inclined to sleep, and is too “good” for a “ugly monster” [hassliche Bosewicht] as the extraordinary Mirabeau was, who had virtues and talents enough to supply a thousand normal people, and too much true intelligence to seriously be a monster, as one can conclude out of particular features. He may have been ugly, he says that often enough in the letters – but he loved Sophie, for women certainly don’t love the beauty of men – and yet the ugly man imposes himself through his exterior on the unruly masses…”

We remember, of course, the striking ugliness of Georg Forster. And that, too, of Chamfort. A revolution of ugly men.

from the other shore

My friend R., M.’s husband, is skeptical of my book. Unfortunately, at one point I described my project as “against happiness” – which is true in a complicated sense. Still, R. quotes that back at me – he has a good ear for the ridiculous things I say. And that phrase certainly goes against R.’s New Left politics.

On New Years Eve, we were all in Malinalco. Chepe has a country house there. I’d previously been down there in 2005. It is a compound of three houses – one is Chepe and Tania’s house, one is a guest house, and one is the house that Tania’s mother lives in. It is a perfect place for long, wordy afternoons, as though cut from a Tom Stoppard play. We all drink, smoke and snack, waiting for dinner, which will be the trout M. bought from the market about half a mile away. The kids throw each other into the cold swimming pool behind Tania’s mother’s house – we can hear them shriek. Friends and relatives show up, say hi, disappear.

M., in the hammock, complains to me that the beginning of the Sorrows of Werther, which she is thinking of teaching to her students this semester on my recommendation, is too lachrymose. Why did I suggest it? I make a few suggestions as to what is historically important in Werther. R. interjects that Werther is not new – that the treatment of love ending in suicide is prefigured in the medieval romance literature, as Denis de Rougemont shows. And he says, Werther is a jerk.

M. says she isn’t going to teach her class that her husband thinks Werther is a jerk. Who cares if R. thinks Werther is a jerk?

Tatiana draws up a chair. She enjoys the fuss R., M. and I are making. She doesn’t say much, but smokes and watches. I reply that there is something different happening in Werther than, say, in the Arthurian romances. One has to have a sense for how history enters the system of the passions. That, I say, has to do with the synthesis between a sentiment, a situation, and a sanction – I reference Durkheim and Ogien. It is in the forging of these syntheses, in the interstices, that we can make a history of the passions possible. So, in particular, we should take the household demographic situation of Europe in the 18th century, which is much different than in the eleventh century, and use it as a reference for understanding how certain syntheses produce sentiments. In particular, with the love-choice marriage, the question arises whether love is the kind of thing described by a longer synthesis, or whether shorter, intense syntheses are at its base.

But R. is not convinced by this, and insists that Werther nevertheless represents an old, Christian thematic of coupling love with death. And that, he says, is a reiteration of an old familiar nihilism, which buffers all the old institutions. What he demands, he says, by way of Marx, Nietzsche and Deleuze, is not my syntheses, which all fall under the notion of the negation of the negation, but an affirmation of an affirmation – love affirmed as it is, in life. We have to get past the clutter of guilt and shame that have been built around the life processes.

My problem with this, I say, is that it is the wrong way to start the investigation. Our material should first be seen as it is, as it is performed, materialized in performance. Whether I reject the coupling of life and death or not, as a social phenomena, the thematic exists. I’m more interested in how to account for it so that I can see how it changes.

I don’t disagree with you from the view of the historian, R. says.

At this point, a couple appears in the yard, coming from Tania’s mother’s house. Hola, everybody says. I say, we are talking about love and happiness. Tatiana laughs.

ps - my review of Patrick Tyler's history of U.S. foreign relations with the Middle East since Eisenhower was published today here.

revolts - intestinal and otherwise

I flew in from Mexico on New Year’s Day. And around six o’clock that night, a little bug crept out from my intestinal fauna and launched a popular revolt against my oons and being by forcing me to vomit copiously every forty five minutes. Alas, copiously does not describe how much my stomach can contain – I’ve never been one of nature’s trencherman. Rather, I have the delicate stomach of a 14 year old schoolgirl considering ballet as a career.

So I went to sleep for 24 hours, waking up now and then to swallow sugared water.

Apparently my organism has recovered. My mind hasn’t fully recovered, however – I have a notebook stuffed with comments I was going to post, here, but an almost insurmountable sloth stands in the way of that ever happening.

So, as a form of light entertainment, here are some comments on the unconsciously hilarious NYT article about Egypt that appeared this morning, under Steve Erlanger’s by-line. One of my wilder predictions for this New Year is that Egypt, which resembles Iran under the Shah, without the oil money, will undergo a revolution. This is simply an intuition – as the Israelis slaughter more and more Gaza Palestinians on the principle, apparently, that nobody can stop them, my intuition tells me that Egypt, heavily dependent on handouts from Saudi Arabia and the U.S., will be on the receiving end of the real collateral damage. Erlanger’s clueless analysis, which could easily have been written by a man locked in the bowels of the Heritage Foundation instead of a man supposedly walking the streets of Cairo, has all the earmarks of a report from a protectorate that is going down.

“CAIRO — Egypt is the crucial, if reluctant, intermediary between Israel and Hamas, which is no great friend of this moderate secular state. Still, a sustained Israeli ground operation in neighboring Gaza would sharply increase public pressure on President Hosni Mubarak of Egypt to do more to help the Palestinians there.

Few criticize Mr. Mubarak himself, and there are widespread feelings here that the radical group Hamas provoked the current crisis. Yet there is unhappiness with the government’s relative silence about Israel’s bombing campaign and its Palestinian victims, and with the apparent lack of diplomatic pressure from Cairo on Israel and the United States to stop the fighting.”

This is lovely reporting. The “widespread feeling”, the mushmouthed “unhappiness with the government’s relative silence…” – truly, this is the kind of reporting you get when your introductions all come from the American embassy. “Few criticize Mr. Mubarak himself” – what can one say? Perhaps Mr. Erlanger might have sought an intro to the jails, to find out what happens to those disaffected few who don’t share the ‘widespread’ feeling among Egypt’s cocktail set. This kind of reporting shares the willful blindness of CIA reports coming out of Iran in 1978 – a little bazaari discontent, nothing that a little sulfur and flint can’t take care of.

Since Egypt is an authoritarian society in which there is nothing like a ‘democracy’ – our favorite word, covering a multitude of American sins in the Middle East, the thing and cause we are always ardently supporting but somehow, through an evil voodoo, end up not supporting at all, and in fact crushing in any of its manifestations – the NYT has to reach around to find kindly, soothing words – an alka seltzer rhetoric shake. Thus the talk of a “moderate secular state”., which is another way of saying, apparently, “a dictatorship by an eighty year old man”.

Most enjoyable is the contrast Erlanger draws between the complicatedness of things and, uh, reality:

“Given the continuing Israeli occupation of much of the West Bank and East Jerusalem, deep divisions among Palestinians and a Gaza controlled by Hamas, the Egyptian government “must make difficult choices,” he said.
“Egypt is working for peace while trying to work realistically with the situation in Gaza, where a radical group took over the territories next to Sinai, a sensitive subject for Egypt,” Mr. Said continued. “So Egypt is trying to support Palestinian humanitarian needs, but not allow a radical group to control the situation, dominate the Palestinian issue or affect Egyptian internal politics.”

But such complications are not easy for most Egyptians to grasp, especially when they see the constant repetition of images of Israeli bombs and dead Palestinians on Al Jazeera.”

Erlanger’s article has to bridge so many complications that it finally lapses into incoherence, as ‘widespread support’ for Mubarak is reduced, in the last paragraph, into an impotent unpopularity:

Ms. Malky, the editor at Daily News Egypt, said that the government is making it clear it wants Hamas to fail. “They’re afraid of the internal situation,” she said. “They don’t want a successful Islamic or Muslim Brotherhood experiment on their own border.

But she warned that unpopularity should not be confused with weakness. “The perception of the government in the feelings of the masses is deteriorating,” she said. “But their power and ability to contain whatever dissent may come out has not been shaken in the least.”

Yes, this is a riskier prediction than those I pronounced at the beginning of last year – it was easy to see that the U.S. economy was going down, while what do I know about Egypt? Yet the combination here of a worldwide recession, the indifference of the Egyptian elite to the murder of Palestinians, and the contrast between the external impotence of the state and its internal omnipotence in crushing dissent are precisely the factors that lead to revolution. Countering which is the eternal inertia of things. Usually, it is better to bet on inertia – it almost always comes in first. But Gaza doesn’t seem to be ending…

sex and the city

I lost my reading glasses in the surf of Playa de la Cuesta, and came back to Mexico City to deal with the duality this introduces into my life. My real glasses are good for the middle distance and beyond, but they take a dim view of print, or the handling of small objects. So I can walk down the street with confidence, but put me in a bookstore and, peering through my glasses, I see all the print as black blotches, as though it had melted and run in the rain of my myopia. My simple solution was to find some reading glasses, but this proved harder than I imagined. In the U.S., you go into a drug store or a supermarket and there they are, the ancient mariner´s friends, on a rack. In Mexico City, this seems not to be the case. So I gave up, but today, wandering lonely as a cloud down a street in the Centro, I spotted reading glasses. I tried some on, attracting, inevitably, a salesperson who hovered around me, and to whom I had to explain, in a parody of baby Spanish that seems, on every outing, to get more and more incomprehensible to the people at whom I am aiming it, that I had lost my reading glasses and had no prescription. So he showed me some, and I bought a pair for 40 pesos that have turned out to be less than useful. However, as I was paying, I looked around the shop and realized it was a sex shop. Mexico is always surprising me. Perhaps the owners decided that the old story, that jerking off causes blindness, might be true, and provided the glasses as a service to old and faithful clients.

Organizing Human products: the ants speak of the aphids

The last time LI mentioned Steve Levitt, the Chicago School economist, was his defense of lucky ducky inequality – while it might seem, by any sane account, that the level of wealth inequality in the U.S. has soared in the last thirty years, when you look at the cheap tat from China that the proles can buy and you compare it to, say, the soaring price of yachts, you can see that there´s been this neat consumer equality going on. This argument seemed to LI to be a perfect emblem of the epoch of the Great Fly: a contrarianism based on a ferocious class warfare premise, presenting itself as a cool gotcha idea.
A couple of days ago, Levitt posted this:

John Lippert presents an interesting and extremely well-reported article on the financial crisis’s impact on the thinking of Chicago economists. It does a nice job of capturing the multifaceted nature of the institution, with people on all sides of the issues.
I absolutely love the following excerpt, which better captures what it is like to hang around with Chicago economists than just about any quote I have ever seen:
“We should have a recession,” [John] Cochrane said in November, speaking to students and investors in a conference room that looks out on Lake Michigan. “People who spend their lives pounding nails in Nevada need something else to do.”¨

His love of a comment that is the height of social cruelty shows not only a certain disturbing baseness, but it also shows why the Chicago School is so favored by the wealthy – which needs an outlet to say the unsayable. Of course, in a sensible society, people who spend their lives recommending unregulated markets, and training young people with the potential to do many socially useful things to go into the field of finance, which should be the dullest mechanism for saving and loaning money, would be encouraged to find other fields in which to flourish – perhaps selling cigarettes under the table to children. Too autistic to embrace the life of crime that is their true bent, they become, instead, the theologians of predation.

The Federal Reserve Bank of Dallas – the most consistently reactionary of the branches of the Federal Reserve – issued a report on Mexico the other day that was sidesplitting in its blind application of a predatory ideology to a suffering object. For the researchers in Dallas, Mexico is turning out to be a pleasant surprise. The nation has been, as it were, crucified upon a cross consisting of emerging market securities. The OECD lists Mexico, along with Turkey, Portugal and the U.S., among the bottom five nations in terms of wealth inequality. The vast wealth of the U.S. ameliorates the lot of people who live in LI´s income percentile – here I am, for instance, the guest of a friend who could afford to pay for a ticket for me to go to Mexico, participating (albeit as a temporary scrounger) in the good life. In Mexico, it is much harder for a vender of balloons, say, to participate in the lifestyle of a billionaire. The freefall in worker´s wages since the seventies, the inability of Mexico to leverage its geographic advantage into an economic advantage (due to the interdiction on the massive public spending which should have accompanied the attraction of foreign industry), and the consequent deterioration of trust in every aspect of Mexican life are superbly overlooked by the Dallas researchers, who see – o love at first sight! – budgetary prudence exercised by the Mexican government:

´Once inward-looking and crisis-prone, Mexico has transformed itself into a nation that thrives on foreign investment and trade and displays a steadfast commitment to monetary and fiscal discipline.
Largely as a result of this transformation, Mexico has been crisis-free since 1995. The country has now weathered two potentially turbulent presidential transitions without experiencing significant financial difficulties—a remarkable achievement, given its economic history.¨

Should we laugh or cry about this utterly bizarre notion of what an economy is for? The crises, of course, derived in toto from the abandonment of the ínward-looking model, or in other words, the standard Import substitution development model of the post war period. The result has been to shift the periodic crises once paid for by the richest to the permanent crisis which now constitutes the year by year of the majority of the country´s population. The lesson was already learned during the first era of laissez faire, a terrible time for the British worker in terms of any of the living standards that count. From those conditions arose the power of organized labour – but the second era of laissez faire is built upon the bones of organized labour.

Here, in its Gradgrindian splendour, is the FRB´s entire view of civilization:

Investors have grown increasingly confident in the country’s commitment to macroeconomic discipline, allowing Mexico to greatly improve its public debt management. The government ran into trouble a decade ago in part because most of its debt was in foreign hands, dollar-denominated and short-term.
The external share of total public debt has fallen from a high of 85 percent before the Tequila Crisis to 40 percent today. In 1995, Mexico’s longest bond had a maturity of one year. Today, the nation issues 30-year, peso-denominated bonds.
This deep change in the composition of debt became possible because of disciplined policymaking and has greatly bolstered Mexico’s ability to deal with short-term fluctuations in interest rates or exchange rates.

It is in this way that breeders speak of cows, marvelling about added weight gains that come through mixing bovine bone bits and corn into the feed. The cow is bred to be slaughtered. But a word to the wise – human products, illnourished, ill educated and ill remunerated until they are sublimely poor in the best of all possible worlds, can, unlike cows, learn to aim and shoot a gun. Give Mexico another decade of disciplined policymaking and those FRB dittoheads might learn, to their discomfort, to appreciate this elementary fact of zoology.

journal at the limit of the sea

In the essay, The Writer on Holiday, Barthes uses a picture of Gide reading Bossuet while floating down the Congo as the point of departure for a reflection on the mythology of the ´writer´ as an essence: ¨one is a writer as Louis XIV was a king, even on the toilet.¨ Barthes, of course, always had a shrewd sense for the connotations of the image, and surely Gide, serene amidst a landscape alien but chosen by himself, and yet so wrapped in the third life of reading that he doesn´t see it, is acting out the master. On the other hand, what can Gide tell us about the Congo? Or LI tell us about Mexico? Myself, I think that noticing does have an end, especially as the references unfold into a jungle darkness one has neither the will nor the strength to explore – say the 17 square inches of cortex inside the head of the woman traipsing up and down the beach here at Playa de la Cuesta, selling slices of mango on a stick to lounging tourists.

I´m told the beach here is treacherous. While it bears the plausible appearance of the usual vast extent of water running up eternally against the sandy marge, the swimmer who would plunge into those waves would soon find himself struggling with cold currents that would draw him, beyond his human strength, out so far into the Pacific that he would disappear from human kind. A sort of dream of suicide comes over me at the very idea. The husband in A star is born had the right idea. Ophelia and Virginia Woolf are all very well, but give me no riverine drowning.

Of course, I have an incredibly movie addled view of the Pacific coast from Tijuana down to Porta Vallerta. I´m fifteen minutes by bus – on a good, non-trafficy morning – from Acapulco, where Orson Welles has that wonderful exchange with Grisby, Rita Hayworth´s husband´s partner, who is sounding Welles out about a potential murder. Porta Vallerta is where Ava Gardner runs a hostel for American alcoholics, and where was it exactly that Monty Cliff ended up torn apart by Mexican boys, the way Orpheus was slain by jealous nymphs? Driving through the streets that brought us to the hotel, we passed by several other hotels that bore the aspects of places that some character from a Raymond Chandler novel would chose to hide out in.

For two days, we had the beach practically to ourselves. Or at least we were not competing with other tourists, although vendors relentlessly patrolled the beach by day, offering jewelry, fruit, horse back rides, cloth, and by night, when the hotel gate is locked and the armed guard patrols the seaward aspect, the beach swarms, apparently, with offers of sex, cocaine, and violence. Gunshots are sometimes heard, but more often the boom boom boom of Mexican hip hop. The latter seems to drive the owner of the hotel crazy. In the morning, I run along the beach with M., up to the point where the military outpost faces the sea, and down to the cliffs upon which assemble, every morning, the waiters, maids, and discrete supervisors of hammocks and pools, recruited from the colonias which extend back into the mountains.

Guerrero, the state where Acapulco is located, has long hosted low level conflicts between peasant guerillas and the State. Lately, the narcos have joined the brawl, most spectacularly by hewing off the head of the chief of police of Acapulco and sticking it on the gate before the police station. When I finally take the bus into town – alone, as M.´s family has seen enough of Acapulco – it is disappointingly unglamourous. The zocalo of the old part of town is much smaller than I expected. I came to see the divers, but miss my chance to see them in the afternoon and don´t want to wait to see them again in the evening. Instead, I tour the Fuerte de San Diego. The connoisseur of forts soon recognizes the smallness of the repertory of his object: after all, forts are simply walls with cannons emplaced in them, enclosing a parade ground that is devoid of anything that would interupt the monotony of drills. Living quarters inside the fort are converted into exhibits made up of antique looking furniture, chests, cloths and arms. Signage refers to imperial splendors past. TVs show five minute educational films to fill the visitor in on geography, dates, and prominent names. Still, the grounds around the Fuerte give one an amazing overview of the bay. I gaze at it, jot down some notes, and then set out to feed myself.

The children, Constanza and Julian, fall utterly into the embrace of the beach. They love to wade out and be buffetted shorewards. Bobbing, Constanza, in her French accented English, calls it. ¨Mamma, I want to go bopping in the waves!¨ Eight and six, little thin bodies that look as precarious as any seabird by the side of the ocean. Black haired Julian tans immediately, while fair haired Constanza must have sun screen more lavishly daubed over her. Julian has brilliant comic talents, and comes up with routines that I would suspect he stole from Harpo Marx if he hadn´t shown such boredom the one time I showed him a Marx brothers film. He is an incredibly physical child, who can´t walk twenty feet without bounding up at least once. Constanza, on the other hand, is a daydreamer. Captured by some idea – a sleepover party, bopping in the waves – she will harp on it for days. Myself, I´ve been trained to take my ideas seriously, but talking to Constanza makes me realize how slightly ridiculous that is, how close daydream is to reflection, explanation to myth. What I have learned is not how to unfold my ideas according to the rules of logic, but how to mistreat my daydreams until they look like ideas.