Modern Times

The German Stadtsanierung.

Town Refurbishment, German Style: How To Revive A Failing Economy.

In need of a little tender loving care.
The Napoleon House in Pegau, 2004: in need of a little tender loving care.

I was visiting Pegau with my former partner, Brian. Pegau itself is a little town near Leipzig, not far from delightful – if equally dilapidated Naumburg. Nevertheless, there was something truly remarkable about Pegau, which had been in the DDR and Communist governments were only interested in production not investment. In this way, the communists strangled their own economy – and the result is infrastructure that was in an appalling state of repair. Their towns were little different.

Yet the roofs of this little town were bright and new. What’s more, there was new zinc guttering too. Yet underneath was a house that was all but ruinous. A term that doesn’t do these buildings justice: some were so dilapidated and for so long that the windows had rotted from their casements. Nobody had the money or the will to do anything, nor were they allowed to do it by the communists who had some remarkably daft ideas. Sometime, we’ll visit the East German trams to discover how astonishingly daft these ideas imposed by the Soviets were.

I was puzzled as to what was going on.It was later and whilst still looking for houses with Brian, that the term Stadtsanierung popped up. I looked into this and it transpired that with some of these renovated properties there was a substantial debt to pay on them. This was the more puzzling still!What was going on here?

This is what can happen when free money's given out. Looks a bit better, doesn't it?
This is what can happen when free money’s given out. Looks a bit better, doesn’t it?

Believe me, it took a while to firstly work out what was going on, what had gone wrong and then to reverse-engineer all this to establish the principle.

Because the Germans had been dashed clever. Well, that’s what Germans are good at, isn’t it. But this was truly fiendish! Yet it was the kind of thing no American government could ever dream of, because it involved giving money away. With terms and conditions, but the appearance was free money. Saxons they may be, but Germans do not share the same guilt complexes that the Anglo-Saxons do!

The German government made an agreement with houseowners whereby their building would be restored. You can imagine that this money would then flow back into the economy fairly quickly: renovating buildings means buying stuff in the local shops and builders’ merchants. Not forgetting the builders themselves.

The increase in sales tax alone would have been enough to pay the interest on the money the German government had borrowed.Everybody wins!

The crunch would come when after a certain time, it came to the owner of the building having to pay their fair share. The rule was simple: you paid the government the going rate for your home.All of it!But then, if you owned a neat little house that had a decent roof and was in good condition, there’d be little difficulty in arranging a mortgage for it. You can see that the Germans really did work with their banks. Only if you know anything about banking, selling mortgages is not where the money’s made! Leveraging funds and playing the stockmarket like a casino is where the big money is. The Americans learned this the hard way with the crash of 2007; the Germans just don’t let their banks make that kind of profit – in Germany at least.

In any case, the house prices were going up, so the German homeowner wouldn’t be so upset by all this because their house would soon have doubled in value. What’s more, many houses in their street would be equally pretty.Positive Spirals. You can see that the German government set up an effective tool to both establish a sensible number of decent houses and at the same time, revive an emaciated economy. Not only that, everybody won. The homeowner got a decent place to live in, the government got their money – and the speculators jumped in too! No doubt this was hoped for, but buying a dilapidated property for almost nothing and then paying back the government doesn’t seem that bright an idea, does it.

"ThisUntil you start thinking, that is. When you realize that in waiting a year, the house would have accrued another 15% in value! In the mean time one was able to make a profit by renting the place. When you start to think about this, it doesn’t sound so daft, does it? Germans are good thinkers, it’s why their engineering’s so good.You see: the speculators were actually working to fuel the economy and the German government at the same time! Unlike in the US and UK where they only line their own pockets and inflate the stockmarkets. Because this wasn’t the stock market they were playing about with, where the values are entirely notional.

The Germans had salted their economy with a small amount of money and in the space of ten years had a better economy, better housing and as importantly, made lots of money too. This was bricks and mortar – and with a growing economy, houses to buy and rent were becoming sought after. Solid objects have a value that is tangible and far harder to undermine than the imaginary value of a share on the stockmarket. Americans reading this, please take note.Negative Spirals Courtesy Of The US Government.

Nevertheless, the Americans managed to undermine the notional values of their stockmarket with consummate skill. Their style of economy whilst certainly more dynamic than the communists was its mirror. For the Americans changed their banking regulations to allow the banks to lend to people who neither had the capital, the value in their home nor the money to pay the mortgage. Yet happy salesmen pounded the streets and sold mortgages to any Tom, Dick or Harry.A brilliantly simple idea, and the banks made a stack!Only as with all simplistic ideas, it had a flaw. For simplistic ideas rarely consider the consequences, where clever – but elegantly simple – ideas have.The problem was this: the Americans gave away loans (and this is important: a loan is not free money!) The Americans gave them to anybody and everybody, irrespective of their home or what they might do with it.

The final point was the wooden stake hammered through the heart of the US economy: the loans given out did nothing to improve the state of the houses nor did it improve the local economy.

There came a point where the American banks couldn’t handle the numbers of repossessions on their hands. That is to say, the owners couldn’t pay their monthly interest, and so handed back the keys. The problem was that the house they lived in was worth nothing at all. The banks were left with their own debts and nothing of value to place against them.There was only one thing they could do!

The only thing they could responsibly do was to tell everyone else that the wonderful investments they’d purchased were worth nothing at all. That they were rated AAA by the ratings agencies only proves that the ratings agencies lack the ability to discern when they’re being had. That the US economy is one of the few AAA rated on this planet is more because of the ratings agencies’ shortcomings than any genuine economic muscle.Thus it was that we had the crash of 2007. [Update, 2016: Deutsche Bank is being fined $14bn for doing this – when it could only do this kind of thing because US banking regulations allowed it to].

The Americans’ Fool’s Gold.

The Americans made the mistake of not investing the money they gave out.

Well, that was fool’s gold, wasn’t it?

What the Americans had done in their supremely American way was to do precisely what their hated communist enemies had done three decades and more before them: they had not thought of investment as the key strategy to improving an economy.Communist and capitalist alike, they were only interested in the bottom line. They were only interested in the economic statistics.The German government had looked at the statistics and asked in that more Steinerian of approaches: where do these numbers come from?

Taking The Right Risk.

Because investment always involves a risk, and handling risk is a matter of using one’s intelligence to assess that risk as much as it is to use one’s courage in implementing it.Neither communist nor capitalist will take such risks. The communists are now dead from self-strangulation, the Americans now need an oxygen supply from a tracheotomy that lies below their ever-tightening noose.

That is to say they are inflating the lungs of their economy with printed illusory money rather than pumping up the economy with genuinely valuable houses and the economic activity that created them.This doesn’t mean that the Germans are entirely correct, but the truth is this: it is the nature of the Anglo-Saxon that dovetails with the German so neatly.

The Anglo-Saxon imagination is just what a culture like Germany needs.

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Emotional Intelligence · Our Subconscious

A First Peek At Autism.

The Subconscious, Part 11.

Now it must be understood that my perspective on psychology is entirely my own. That doesn’t mean the conclusions I have reached are incorrect, it only means that they may not accord with those of the mainstream.

Now when it comes to autism, if there is one element that is common to all descriptions of autism, it is the autistic person’s inability to relate to the outside world in some way or other. In this respect this is the ability to form a judgement of the things one sees around one, being able to place a value on something oneself.

Without such discernment, one is left with the purely animal response of our emigdala: fight or flight. The true purpose of this is to get us out of immediate danger, just as it is with our animal brethren. However, it is not intended that we should behave like animals. Fight, after all, is where the animal asserts its authority (self) over the other, usually by brute strength. Flight is where the animal has the authority of the other asserted over it (other). There is no in between realm where conversation can form a bridge between the two. After all, we have consciousness where an animal is but sentient (1); we can be pro-active, that is to say, creative with solutions and their outcome. We do not have to be merely respondent to the impulses that surround us as a ‘dumb’ animal must. We have a choice, an animal does not.

Many people accept orders from on high because they are paid to act on them. What they do not realize is that they are active in allowing their own discriminatory faculties to slip. Put the other way around, they were not active in retaining their conscious abilities to discriminate, to form their own conscious, creative decision. After all, why should one bother when we live in a world filled with entertainment that allows one to slip into semi-consciousness (2).

That most people don’t know any different only adds to the problems for those who do wonder. That this includes most psychologists is where the problem starts to become rather more dangerous. My point in today’s ramble is to look at the effect of not being able to connect with one’s surroundings. In a world where children are taught knowledge and sports is a world that has forgotten to teach them to relate to these things. Knowledge becomes an issue of right or wrong, sports become winning or losing – put into the perspective of thinking, feeling and willing, we have reduced our children’s capacity to feel.

It is certain that one can encourage a child to express themselves in their schoolwork; however it is not a requirement to do so, as it is in the Waldorf schools. That most teachers know nothing of self expression only compounds the problem further and so the entire schooling system becomes one of de-sensitization rather than genuine learning.

It is an interesting aside that I taught a child who used dayglo colours in her schoolbooks. The effect of this after reams of boring blue and black ink was startling. That she was also the brightest kid in the school speaks to the power of developing the power to express the child’s feelings as well as the other two poles. That is to say, thinking (knowledge) and willing (sports). Waldorf children are renown for beating other schools at sports.

Which brings us to look at autism. This is an extreme case of unfeelingness where the feeling realm is entirely below the surface of consciousness. Autistic people speak of relationships “being entirely beyond them”. This is the same experience I had with the end-bit of my hoover, where it was entirely beyond me as to its whereabouts (3). Autistic people like a routine where everything is ordered and contained – that is to say, there is nothing unexpected that can occur that they might have to deal with. That is to say, discern. Everything has to be pre-discerned and ‘known’.

One can see this in many bureaucrats, who are in my own terminology, ‘voluntarily autistic’. In doing exactly as they are told, they have allowed others to take full control of the bureaucrat’s actions – the ‘flight’ scenario in fight or flight.

The difference between the voluntary and the genuine autistic is subtle: the autistic person simply cannot live in any other way. The bureaucrat had a choice, although it is arguable that this choice existed at a time when as a child they weren’t old enough to make it. In colouring my own schoolbooks, this choice was something I worked on myself. In encouraging children to draw and sing in a consistent and ongoing manner, the Waldorf schools hand their pupils the keys to discerning problems for themselves when meeting the unexpected.

Notes:

(1) I explore the nature of sentience in my post “What’s It Like To Be A Cat?”
(2) This is a phenomenon termed ‘crossing the threshold unconsciously’. It
is explained in detail in the series that begins with “The Clock Ticks” (Published on my private blog).
(3) Absent-mindedness is the birthright of any professor’s daughter. This is my tale of Frustration.

The Subconscious: Links To Other Parts In This Series.

Part 1 Why Some Africans Can’t Count Beyond Three.
Part 2 Doctor Jazz, Düsseldorf.
Part 3 Letting The Lizard Drive!
Part 4 The Lizard Brain Meets Its Match: Brian’s Fiat Panda.
Part 5 Snow White And The Railways.
Part 6 Enemies In The Boardroom.
Part 7 The Clock Ticks: The Unconscious Threshold.    (Published on my private blog)
Part 8 Milena Sees Witchcraft Everywhere.
Part 9 Frustration!
Part 10 What’s On Mina’s Mind Today?
Part 11 A First Peek At Autism.
Part 12 A Railway Waggon At The Roots Of Dementia?
Part 13 What’s It Like In There? Life With Dementia… (Published privately)
Part 14 The Evidence For Dementia.
Part 15 The Trouble With Alzheimer’s.
Part 16 The Man On Platform Two.