TLS on Prokofiev

on Good Music

Sergie(sic!) Prokofiev

THE GAMBLER
Royal Opera House

The stages of opera houses are no strangers to madness. Indeed, from Orlando to Wozzeck and Lucia to Tom Rakewell, delusion and insanity of one kind or another have come to be staples of operatic psychology. Few works, though, can claim to be as thoroughly estranged from reason as Prokofiev's early adaptation of The Gambler, a novella by Dostoevsky about the capricious charms of the roulette table and the hollowed-out society that gathers around it. This is not simply a question of individual characters going mad - although that does happen - but of the world in which they operate being depicted as, in itself, radically unhinged. More importantly, the main device in this representation - beyond an adaptation of the story from which Prokofiev has stripped away all humanizing features - is musical. Employing selfconsciously astringent expressionist idioms, Prokofiev's score is structured as a series of violent headlong descents into the dramatic present which leave the listener gasping for breath, groping for some minimal vantage point to use as a neutral position for reference. Only one is offered, coming in the final act. It depicts with shrill woodwind and piano, quite brilliantly, the metallic rattle and skip of the ball on the slowing wheel, and then the tortuous silence that divides the moment it settles from the number being called.
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That the single moment of musical rest offered by Prokofiev is also the opera's dramatic climax is the stroke of genius that holds the work together. The audience's world becomes complicit in the madness on stage, the audience hankering after peace with an immodest urgency, like a gambling addict whose sole access to clarity of vision and emotional equilibrium is the brief moment when events are put completely beyond his control. This is the gambling addict's pathological focus - something that renders the rest of the world colourless, devoid of sympathy - as art.
Prokofiev had completed no fewer than six operas before 1915, when his proposal for The Gambler was finally accepted by Albert Coates as part of his effort to rejuvenate the Maryinsky Theatre. Although the Revolution prevented the production from going ahead (the premiere was in Brussels in 1929), the score was ready in 1917 after an intense period of work during which the composer's mother, hearing the brutal and frenzied sounds emerging from behind her son's closed door, began to worry seriously about his mental and musical health. But Prokofiev knew exactly what he was doing. "I have done everything possible", he explained at the time, "not to burden the singers with unnecessary conventions, in order to afford them freedom in the dramatic realization of their parts. I am aiming only for simplicity."
As promised, the score comes unhampered by arias and set pieces, presenting over two hours of unadulterated recitative. If this makes the music difficult to interpret, the quicksilver pacing and two-dimensional characterizations make it very difficult to stage. Yet the Royal Opera's new staging is one of several successful recent British productions of The Gambler, although the work has not been heard in London since David Pountney's staging for English National Opera in 1983. (The Royal Opera have also used Pountney's translation.)
One reason for this recent surge of interest is obvious: the society pilloried so mercilessly by Prokofiev is, in many respects, no worse than our own. The madness endemic in Dostoevsky's Roulettenberg (based on Wiesbaden in Germany) is institutionalized, just as individuals today are consumed by an economic environment in which the relation between value, worth and work has been stretched beyond breaking point. If such a factor were enough to recommend the project to Antonio Pappano and his director, Richard Jones, it cannot by itself guarantee the work's dramatic success. But Pappano's investment in the score is total - excitingly immediate and yet sufficiently clear-sighted to maximize each of Prokofiev's minute orchestral effects. And just because it is a difficult score to listen to attentively (Prokofiev's early conception of opera was that the music should be transparent in respect of the action and "not stand out as an independent element"), it doesn't mean that The Gambler shouldn't be great fun to play - which it clearly was.
The interwar period sets are equally virtuosic. Nicky Gillibrand's costumes are fashioned in extraordinary detail, combining sophisticated shades of Erté with contemporary grotesques. The result is a riot of sense and reference for the eye quite equal to Prokofiev's music. Antony McDonald's artdeco interiors have foreshortened interiors so that the monumental aspects of the hotel, botanic garden and gaming rooms are offset by deceitful distortions of perspective.
Jones's direction, too, acutely emphasizes the skin-deep psychology of Prokofiev's characters, carried through with some finely judged acting from Susan Bickley as Babulenka and John Tomlinson as the General.
(Tomlinson was also Christian Badea and Pountney's General.) As for the singing: according to Prokofiev, you shouldn't really notice it. But the Italian tenor Roberto Saccà and German soprano Angela Denoke (who is scheduled to appear as Salome later this season) both make the best of the lyrical scraps left for them by the composer.
One touch that deserves mention is Jones's addition of an unscripted (silent) acting role for a sunken-eyed caretaker. Attention rests on him for one passing moment, as Alexey mocks the Germans (yes, he goose-steps) for their absurd notion that modest wealth and comfort should be earned by hard work. The caretaker haunts the stage almost for the entire duration of the opera, working when he can, watching when he can't. Only once does he come into contact with the other world, when the General flings him against a wall as he marches back to the casino; the caretaker crumples to the floor before returning to his sweeping. The actor who plays him is, appropriately, uncredited.

Песня далекого детства

koi no bakansu

tameiki no deru yo na
anatano kuchizuke ni
amai koi wo yume miru
otomegokono yo

kin-iro ni kagayaku
atsui suna no ue de
hadaka de koi wo shiyo yo
ningyo no you ni

hi ni yaketa hoho yosete
sasayaita yakusoku wa
futari dake no himegoto
tameiki ga dechau

aa
koi no yorokobi ni
BARAiro no tsukihi yo wo
hajimete anata wo mita
koi no BAKANSU

hi ni yaketa hoho yosete
sasayaita yakusoku wa
futari dake no himegoto
tameiki ga dechau

aa
koi no yorokobi ni
BARAiro no tsukihi yo wo
hajimete anata wo mita
koi no BAKANSU

TLS on Arts

on Good Music

VAN DOESBURG AND THE INTERNATIONAL AVANT-GARDE Constructing a new world Tate Modern Gladys Fabre and Doris Wintgens Hotte, editors VAN DOESBURG AND THE INTERNATIONAL AVANT-GARDE Constructing a new world 264pp. Tate Publishing. Paperback, £24.99.

978 1 85437 872 9 Within the loose and sometimes argumentative tribe of avantgardists who called themselves, or who have been called by others, "Constructivists" - that is, artists whose work was more or less abstract in content, restricted in means and jagged or geometrical in effect - are several wide splays of opinion. Chiefly at issue was a question which had exercised the philosophical flank of the artistic community through much of the nineteenth century: should art be useful or beautiful? Or rather, could it be both? The artist, designer and critic Theo van Doesburg believed it could.
A decade younger than the better-known Piet Mondrian, he championed his countryman's painting and publicized his ideas through a Stakhanovite lecturing schedule and an influential journal, De Stijl, as well as strongly echoing it in his own art. Van Doesburg steered a judicious middle way between the manically engagé approach of artists such as Tatlin and Moholy-Nagy and the art-for-art's-sake stance assumed by Mondrian and other artists in De Stijl's orbit. It is the doggedness and suppleness with which he maintained this course, as much as the estimable quality and remarkable diversity of van Doesburg's output, which makes him a wise choice of flagship for what is effectively a group show at Tate Modern. Van Doesburg and the International Avant-Garde is both a beautiful and a useful exhibition, though maybe only rarely both at once.
Van Doesburg's first artistic creation was himself. Having survived the First World War, he proclaimed himself reborn, and discarded his given name, Christian Emil Marie Küpper, in favour of his stepfather's rather more patrician one. During his editorship of De Stijl (which lasted a decade or so from 1917), he also wrote under the names Aldo Camini and IK Bonset, to conceal his authorship of writings with, respectively, a futurist and a dadaist bent. But as an artist, typographer and what we might today call an interior designer, he was pretty consistent: once he found his path he stuck to it. Less exclusive than Mondrian in his palette and formal language (the duo disagreed strongly about the permissibility of the diagonal, among other things; Mondrian was banished from the pages of De Stijl in 1924), his work is nonetheless broadly similar to the older man's. Grids are infilled with flat rectangles of colour, elegantly but asymmetrically arranged across the picture surface or café wall in question. It is all very resolved, very clearly conceived and fully realized (though on an architectural scale it must all have been a bit strident).

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The term Mondrian devised for this sort of work, "Nieuwe Beelding", cognate with if not quite the same as "New beholding", implies a looking at the world, a sense of some kind of reference to nature in art, whereas its common English translation, "Neoplasticism", stresses the autonomous being of the work of art, its independence of any subject, its disavowal of any documentary or allegorical role. Van Doesburg, ever the diplomat, hedges his bets somewhat on this question.
There is a nice trio of pictures in the exhibition, arising from van Doesburg's contemplation of a cow (a potent emblem of national identity in the Netherlands, let's not forget, and an important motif in Dutch art). The first two, a stylized but recognizably "handmade" pencil drawing and a more rigid painting, are both cow-like to some degree. The third is a matrix of squares and rectangles on a white ground, with a single larger square where the bulk of the animal's torso might be. The process implies that abstraction is a journey away, or a removal of inessential material, from some sort of visual transaction with a definite subject. Yet elsewhere van Doesburg uses arithmetical series, or patterns inferred from pieces of music (like many of his associates he was very keen on Bach, and we've noted Mondrian's love of jazz above) to generate pictures. In his writings, and notably in Klassiek - Barock - Modern (1918), he speaks of a harmony between the universal and the particular, between essence and phenomenon. In his last years he preferred the term "concrete" to "abstract", and his ultimate attempt to found an artistic grouping went under the name "abstraction-création", which suggests two different paths converging on the same destination.
Around Mondrian and van Doesburg's paintings, and other pieces of "fine" art by Bart van der Leck, Georges Vantongerloo and other De Stijl regulars, the curators have assembled a broad church, or a busy and rowdy square-dance, of European art, design and typography from between the world wars: De Stijl's camp followers in Germany and Eastern Europe, a dash of dada, the more cool-headed and technologically inquisitive work of Moholy-Nagy and other artists affiliated with the Bauhaus, outside the gates of which van Doesburg pitched his teepee for a while in the 1920s.
There are also several designs for buildings and interiors, and some furniture by Gerrit Rietveld, Marcel Breuer and Eileen Gray. It is this which may be the most widely recognizable fruit of the De Stijl philosophy. Rietveld's "Red-Blue" chair, which he devised before coming into contact with the De Stijl circle, but which he simplified and painted in Mondrian's triad of red, blue and yellow under its influence, has been canonized as a design classic. It exemplifies the utilitarian as well as the utopian aspirations of high modernism (it was an early example of flat-pack furniture). Yet it isn't what you'd call a model of functionality, and never will be until the day that humanity finally evolves a right-angled backside. A table designed under the same rules is wobbly and weak - and Gerrit Rietveld's sideboard of 1919, as well as being more or less the most hideous thing you will ever see, must have been responsible for many concussed and black-eyed children, and a good few kneecapped adults, in the progressive dining spaces of Europe between the wars. Never entirely useful, and only sometimes beautiful, in other words.
In general, though, the exhibition does its best to improve and delight. Putting fragile works on paper next to paintings and sculptures demands lowish light levels, so the colours in some of the pieces don't quite sing out as they should, but it does stress broad continuities as it exposes small differences. There might have been a bit more Russian work on display, and certainly the influence of Kandinsky on several of these artists is too palpable not to have been acknowledged a bit more emphatically. The broader question of political affiliation is, perhaps, soft-pedalled a little, in the good postmodern style, which is what we nowadays often mean by art for art's sake. At any rate, van Doesburg, while certainly leftish (in a Fourierist or even Bloomsburyish way) was in no hurry to mount the barricades. Many of the proclamations to which he put one or other of his names shows a weariness or a cynicism about politics, a wariness arising from the Soviets' abandonment of avantgarde principles - and, as a corollary, a sense of disappointment in the reluctance of the working classes to be transformed by his, and his friends', new beholding.

Listening to: Bossa de Novo

BOSSA DE NOVO


Bossa de novo, the chamber jazz group, is the only Slovenian band which plays bossa nova. This type of music is a mixture of afrobrasilian rhythms, cool jazz and American west coast rhythms. Bossa de novo for the first time presens this enigmatic, in all respects asymmetric Slovenian music to audiences in different languages, especially in largely unknown Portugues.

Beside processing the most brilliant pieces of Brazilian composers (Tom Jobim, Caetano Veloso, Joao Gilberto, Dorival Caymmi, ARY Barroso, Carlos Lyra) this group also uses rhythms and harmonies of other musical genres, eg. jazz standards and Slovenian national songs.

In May 2009 they released a new CD entitled NOVA. Music from the new disc premiered at the Festival Druga godba 2009.

Primož Vitez
Aljoša Kosor
Drago Ivanuša
Marko Gregorič
Mitja Vrhovnik Smrekar

Rolling Stone on Bailout

Wall Street's Bailout Hustle

Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash

by MATT TAIBBI

On January 21st, Lloyd Blankfein left a
peculiar voicemail message on the work phones of his employees at
Goldman Sachs. Fast becoming America's pre-eminent Marvel Comics
supervillain, the CEO used the call to deploy his secret weapon: a
pair of giant, nuclear-powered testicles. In his message, Blankfein
addressed his plan to pay out gigantic year-end bonuses amid
widespread controversy over Goldman's role in precipitating the
global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries
and bonuses — meaning that Goldman employees were each set to
take home an average of $498,246, a number roughly commensurate
with what they received during the bubble years. Still, the troops
were worried: There were rumors that Dr. Ballsachs, bowing to
political pressure, might be forced to scale the number back. After
all, the country was broke, 14.8 million Americans were stranded on
the unemployment line, and Barack Obama and the Democrats were
trying to recover the populist high ground after their
bitch-whipping in Massachusetts by calling for a "bailout tax" on
banks. Maybe this wasn't the right time for Goldman to be throwing
its annual Roman bonus orgy.

Not to worry, Blankfein reassured employees. "In a year that
proved to have no shortage of story lines," he said, "I believe
very strongly that performance is the ultimate narrative."

Translation: We made a shitload of money last year because we're
so amazing at our jobs, so fuck all those people who want us to
reduce our bonuses.

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Goldman wasn't alone. The nation's six largest banks — all
committed to this balls-out, I drink your milkshake!
strategy of flagrantly gorging themselves as America goes hungry
— set aside a whopping $140 billion for executive
compensation last year, a sum only slightly less than the $164
billion they paid themselves in the pre-crash year of 2007. In a
gesture of self-sacrifice, Blankfein himself took a humiliatingly
low bonus of $9 million, less than the 2009 pay of elephantine New
York Knicks washout Eddy Curry. But in reality, not much had
changed. "What is the state of our moral being when Lloyd Blankfein
taking a $9 million bonus is viewed as this great act of
contrition, when every penny of it was a direct transfer from the
taxpayer?" asks Eliot Spitzer, who tried to hold Wall Street
accountable during his own ill-fated stint as governor of New
York.

Beyond a few such bleats of outrage, however, the huge payout
was met, by and large, with a collective sigh of resignation.
Because beneath America's populist veneer, on a more subtle strata
of the national psyche, there remains a strong temptation to not
really give a shit. The rich, after all, have always made way too
much money; what's the difference if some fat cat in New York
pockets $20 million instead of $10 million?

The only reason such apathy exists, however, is because there's
still a widespread misunderstanding of how exactly Wall Street
"earns" its money, with emphasis on the quotation marks around
"earns." The question everyone should be asking, as one bailout
recipient after another posts massive profits — Goldman
reported $13.4 billion in profits last year, after paying out that
$16.2 billion in bonuses and compensation — is this: In an
economy as horrible as ours, with every factory town between New
York and Los Angeles looking like those hollowed-out ghost ships we
see on History Channel documentaries like Shipwrecks of the
Great Lakes, where in the hell did Wall Street's eye-popping
profits come from, exactly? Did Goldman go from bailout city to
$13.4 billion in the black because, as Blankfein suggests, its
"performance" was just that awesome? A year and a half after they
were minutes away from bankruptcy, how are these assholes not only
back on their feet again, but hauling in bonuses at the same rate
they were during the bubble?

The answer to that question is basically twofold: They raped the
taxpayer, and they raped their clients.

The bottom line is that banks like Goldman have learned
absolutely nothing from the global economic meltdown. In fact,
they're back conniving and playing speculative long shots in force
— only this time with the full financial support of the U.S.
government. In the process, they're rapidly re-creating the
conditions for another crash, with the same actors once again
playing the same crazy games of financial chicken with the same
toxic assets as before.

That's why this bonus business isn't merely a matter of getting
upset about whether or not Lloyd Blankfein buys himself one
tropical island or two on his next birthday. The reality is that
the post-bailout era in which Goldman thrived has turned out to be
a chaotic frenzy of high-stakes con-artistry, with taxpayers and
clients bilked out of billions using a dizzying array of old-school
hustles that, but for their ponderous complexity, would have fit
well in slick grifter movies like The Sting and
Matchstick Men. There's even a term in con-man lingo for
what some of the banks are doing right now, with all their cosmetic
gestures of scaling back bonuses and giving to charities. In the
grifter world, calming down a mark so he doesn't call the cops is
known as the "Cool Off."

To appreciate how all of these (sometimes brilliant) schemes
work is to understand the difference between earning money and
taking scores, and to realize that the profits these banks are
posting don't so much represent national growth and recovery, but
something closer to the losses one would report after a theft or a
car crash. Many Americans instinctively understand this to be true
— but, much like when your wife does it with your 300-pound
plumber in the kids' playroom, knowing it and actually watching the
whole scene from start to finish are two very different things. In
that spirit, a brief history of the best 18 months of grifting this
country has ever seen:

CON #1
style="font-size:12px; font-weight:bold; font-family:Verdana;text-decoration:none; color:#103080">
THE SWOOP AND SQUAT

By now, most people who have followed the
financial crisis know that the bailout of AIG was actually a
bailout of AIG's "counterparties" — the big banks like
Goldman to whom the insurance giant owed billions when it went
belly up.

What is less understood is that the bailout of AIG
counter-parties like Goldman and Société
Générale, a French bank, actually began
before the collapse of AIG, before the Federal Reserve
paid them so much as a dollar. Nor is it understood that these
counterparties actually accelerated the wreck of AIG in what was,
ironically, something very like the old insurance scam known as
"Swoop and Squat," in which a target car is trapped between two
perpetrator vehicles and wrecked, with the mark in the game being
the target's insurance company — in this case, the
government.

This may sound far-fetched, but the financial crisis of 2008 was
very much caused by a perverse series of legal incentives that
often made failed investments worth more than thriving ones. Our
economy was like a town where everyone has juicy insurance policies
on their neighbors' cars and houses. In such a town, the driving
will be suspiciously bad, and there will be a lot of fires.

AIG was the ultimate example of this dynamic. At the height of
the housing boom, Goldman was selling billions in bundled
mortgage-backed securities — often toxic crap of the
no-money-down, no-identification-needed variety of home loan
— to various institutional suckers like pensions and
insurance companies, who frequently thought they were buying
investment-grade instruments. At the same time, in a glaring
example of the perverse incentives that existed and still exist,
Goldman was also betting against those same sorts of
securities — a practice that one government investigator
compared to "selling a car with faulty brakes and then buying an
insurance policy on the buyer of those cars."

Goldman often "insured" some of this garbage with AIG, using a
virtually unregulated form of pseudo-insurance called
credit-default swaps. Thanks in large part to deregulation pushed
by Bob Rubin, former chairman of Goldman, and Treasury secretary
under Bill Clinton, AIG wasn't required to actually have the
capital to pay off the deals. As a result, banks like Goldman
bought more than $440 billion worth of this bogus insurance from
AIG, a huge blind bet that the taxpayer ended up having to eat.

Thus, when the housing bubble went crazy, Goldman made money
coming and going. They made money selling the crap mortgages, and
they made money by collecting on the bogus insurance from AIG when
the crap mortgages flopped.

Still, the trick for Goldman was: how to collect the
insurance money. As AIG headed into a tailspin that fateful summer
of 2008, it looked like the beleaguered firm wasn't going to have
the money to pay off the bogus insurance. So Goldman and other
banks began demanding that AIG provide them with cash collateral.
In the 15 months leading up to the collapse of AIG, Goldman
received $5.9 billion in collateral. Société
Générale, a bank holding lots of mortgage-backed crap
originally underwritten by Goldman, received $5.5 billion. These
collateral demands squeezing AIG from two sides were the "Swoop and
Squat" that ultimately crashed the firm. "It put the company into a
liquidity crisis," says Eric Dinallo, who was intimately involved
in the AIG bailout as head of the New York State Insurance
Department.

It was a brilliant move. When a company like AIG is about to
die, it isn't supposed to hand over big hunks of assets to a single
creditor like Goldman; it's supposed to equitably distribute
whatever assets it has left among all its creditors. Had AIG gone
bankrupt, Goldman would have likely lost much of the $5.9 billion
that it pocketed as collateral. "Any bankruptcy court that saw
those collateral payments would have declined that transaction as a
fraudulent conveyance," says Barry Ritholtz, the author of
Bailout Nation. Instead, Goldman and the other
counterparties got their money out in advance — putting a
torch to what was left of AIG. Fans of the movie
Goodfellas will recall Henry Hill and Tommy DeVito taking
the same approach to the Bamboo Lounge nightclub they'd been
gouging. Roll the Ray Liotta narration: "Finally, when there's
nothing left, when you can't borrow another buck . . . you bust the
joint out. You light a match."

And why not? After all, according to the terms of the bailout
deal struck when AIG was taken over by the state in September 2008,
Goldman was paid 100 cents on the dollar on an additional $12.9
billion it was owed by AIG — again, money it almost certainly
would not have seen a fraction of had AIG proceeded to a normal
bankruptcy. Along with the collateral it pocketed, that's $19
billion in pure cash that Goldman would not have "earned" without
massive state intervention. How's that $13.4 billion in 2009
profits looking now? And that doesn't even include the
direct bailouts of Goldman Sachs and other big banks,
which began in earnest after the collapse of AIG.

CON #2
style="font-size:12px; font-weight:bold; font-family:Verdana;text-decoration:none; color:#103080">
THE DOLLAR STORE

In the usual "DollarStore" or "Big Store"
scam — popularized in movies like The Sting —
a huge cast of con artists is hired to create a whole fake
environment into which the unsuspecting mark walks and gets robbed
over and over again. A warehouse is converted into a makeshift
casino or off-track betting parlor, the fool walks in with money,
leaves without it.

The two key elements to the Dollar Store scam are the whiz-bang
theatrical redecorating job and the fact that everyone is in on it
except the mark. In this case, a pair of investment banks were
dressed up to look like commercial banks overnight, and it was the
taxpayer who walked in and lost his shirt, confused by the
appearance of what looked like real Federal Reserve officials
minding the store.

Less than a week after the AIG bailout, Goldman and another
investment bank, Morgan Stanley, applied for, and received, federal
permission to become bank holding companies — a move that
would make them eligible for much greater federal support. The
stock prices of both firms were cratering, and there was talk that
either or both might go the way of Lehman Brothers, another
once-mighty investment bank that just a week earlier had
disappeared from the face of the earth under the weight of its
toxic assets. By law, a five-day waiting period was required for
such a conversion — but the two banks got them overnight,
with final approval actually coming only five days after the AIG
bailout.

Why did they need those federal bank charters? This question is
the key to understanding the entire bailout era — because
this Dollar Store scam was the big one. Institutions that were, in
reality, high-risk gambling houses were allowed to masquerade as
conservative commercial banks. As a result of this new designation,
they were given access to a virtually endless tap of "free money"
by unsuspecting taxpayers. The $10 billion that Goldman received
under the better-known TARP bailout was chump change in comparison
to the smorgasbord of direct and indirect aid it qualified for as a
commercial bank.

When Goldman Sachs and Morgan Stanley got their federal bank
charters, they joined Bank of America, Citigroup, J.P. Morgan Chase
and the other banking titans who could go to the Fed and borrow
massive amounts of money at interest rates that, thanks to the
aggressive rate-cutting policies of Fed chief Ben Bernanke during
the crisis, soon sank to zero percent. The ability to go to the Fed
and borrow big at next to no interest was what saved Goldman,
Morgan Stanley and other banks from death in the fall of 2008.
"They had no other way to raise capital at that moment, meaning
they were on the brink of insolvency," says Nomi Prins, a former
managing director at Goldman Sachs. "The Fed was the only
shot."

In fact, the Fed became not just a source of emergency borrowing
that enabled Goldman and Morgan Stanley to stave off disaster
— it became a source of long-term guaranteed income.
Borrowing at zero percent interest, banks like Goldman now had
virtually infinite ways to make money. In one of the most common
maneuvers, they simply took the money they borrowed from the
government at zero percent and lent it back to the government by
buying Treasury bills that paid interest of three or four percent.
It was basically a license to print money — no different than
attaching an ATM to the side of the Federal Reserve.

"You're borrowing at zero, putting it out there at two or three
percent, with hundreds of billions of dollars — man, you can
make a lot of money that way," says the manager of one prominent
hedge fund. "It's free money." Which goes a long way to explaining
Goldman's enormous profits last year. But all that free money was
amplified by another scam:

CON #3
style="font-size:12px; font-weight:bold; font-family:Verdana;text-decoration:none; color:#103080">
THE PIG IN THE POKE

At one point or another, pretty much
everyone who takes drugs has been burned by this one, also known as
the "Rocks in the Box" scam or, in its more elaborate variations,
the "Jamaican Switch." Someone sells you what looks like an
eightball of coke in a baggie, you get home and, you dumbass, it's
baby powder.

The scam's name comes from the Middle Ages, when some fool would
be sold a bound and gagged pig that he would see being put into a
bag; he'd miss the switch, then get home and find a tied-up cat in
there instead. Hence the expression "Don't let the cat out of the
bag."

The "Pig in the Poke" scam is another key to the entire bailout
era. After the crash of the housing bubble — the largest
asset bubble in history — the economy was suddenly flooded
with securities backed by failing or near-failing home loans. In
the cleanup phase after that bubble burst, the whole game was to
get taxpayers, clients and shareholders to buy these worthless
cats, but at pig prices.

One of the first times we saw the scam appear was in September
2008, right around the time that AIG was imploding. That was when
the Fed changed some of its collateral rules, meaning banks that
could once borrow only against sound collateral, like Treasury
bills or AAA-rated corporate bonds, could now borrow against pretty
much anything — including some of the mortgage-backed sewage
that got us into this mess in the first place. In other words,
banks that once had to show a real pig to borrow from the Fed could
now show up with a cat and get pig money. "All of a sudden, banks
were allowed to post absolute shit to the Fed's balance sheet,"
says the manager of the prominent hedge fund.

The Fed spelled it out on September 14th, 2008, when it changed
the collateral rules for one of its first bailout facilities
— the Primary Dealer Credit Facility, or PDCF. The Fed's own
write-up described the changes: "With the Fed's action, all the
kinds of collateral then in use . . . including
non-investment-grade securities and equities . . . became
eligible for pledge in the PDCF."

Translation: We now accept cats.

The Pig in the Poke also came into play in April of last year,
when Congress pushed a little-known agency called the Financial
Accounting Standards Board, or FASB, to change the so-called
"mark-to-market" accounting rules. Until this rule change, banks
had to assign a real-market price to all of their assets. If they
had a balance sheet full of securities they had bought at $3 that
were now only worth $1, they had to figure their year-end
accounting using that $1 value. In other words, if you were the
dope who bought a cat instead of a pig, you couldn't invite your
shareholders to a slate of pork dinners come year-end accounting
time.

But last April, FASB changed all that. From now on, it
announced, banks could avoid reporting losses on some of their
crappy cat investments simply by declaring that they would "more
likely than not" hold on to them until they recovered their pig
value. In short, the banks didn't even have to actually
hold on to the toxic shit they owned — they just had to
sort of promise to hold on to it.

That's why the "profit" numbers of a lot of these banks are
really a joke. In many cases, we have absolutely no idea how many
cats are in their proverbial bag. What they call "profits" might
really be profits, only minus undeclared millions or
billions in losses.

"They're hiding all this stuff from their shareholders," says
Ritholtz, who was disgusted that the banks lobbied for the rule
changes. "Now, suddenly banks that were happy to mark to market on
the way up don't have to mark to market on the way down."

CON #4
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THE RUMANIAN BOX

One of the great innovations of Victor
Lustig, the legendary Depression-era con man who wrote the famous
"Ten Commandments for Con Men," was a thing called the "Rumanian
Box." This was a little machine that a mark would put a blank piece
of paper into, only to see real currency come out the other side.
The brilliant Lustig sold this Rumanian Box over and over again for
vast sums — but he's been outdone by the modern barons of
Wall Street, who managed to get themselves a real Rumanian Box.

How they accomplished this is a story that by itself highlights
the challenge of placing this era in any kind of historical context
of known financial crime. What the banks did was something that was
never — and never could have been — thought of before.
They took so much money from the government, and then did so little
with it, that the state was forced to start printing new cash to
throw at them. Even the great Lustig in his wildest, horniest
dreams could never have dreamed up this one.

The setup: By early 2009, the banks had already replenished
themselves with billions if not trillions in bailout money. It
wasn't just the $700 billion in TARP cash, the free money provided
by the Fed, and the untold losses obscured by accounting tricks.
Another new rule allowed banks to collect interest on the cash they
were required by law to keep in reserve accounts at the Fed —
meaning the state was now compensating the banks simply for
guaranteeing their own solvency. And a new federal operation called
the Temporary Liquidity Guarantee Program let insolvent and
near-insolvent banks dispense with their deservedly ruined credit
profiles and borrow on a clean slate, with FDIC backing. Goldman
borrowed $29 billion on the government's good name, J.P. Morgan
Chase $38 billion, and Bank of America $44 billion. "TLGP," says
Prins, the former Goldman manager, "was a big one."

Collectively, all this largesse was worth trillions. The idea
behind the flood of money, from the government's standpoint, was to
spark a national recovery: We refill the banks' balance sheets, and
they, in turn, start to lend money again, recharging the economy
and producing jobs. "The banks were fast approaching insolvency,"
says Rep. Paul Kanjorski, a vocal critic of Wall Street who
nevertheless defends the initial decision to bail out the banks.
"It was vitally important that we recapitalize these
institutions."

But here's the thing. Despite all these trillions in government
rescues, despite the Fed slashing interest rates down to nothing
and showering the banks with mountains of guarantees, Goldman and
its friends had still not jump-started lending again by the first
quarter of 2009. That's where those nuclear-powered balls of Lloyd
Blankfein came into play, as Goldman and other banks basically
threatened to pick up their bailout billions and go home if the
government didn't fork over more cash — a lot more.
"Even if the Fed could make interest rates negative, that wouldn't
necessarily help," warned Goldman's chief domestic economist, Jan
Hatzius. "We're in a deep recession mainly because the private
sector, for a variety of reasons, has decided to save a lot
more."

Translation: You can lower interest rates all you want, but
we're still not fucking lending the bailout money to anyone in this
economy. Until the government agreed to hand over even more
goodies, the banks opted to join the rest of the "private sector"
and "save" the taxpayer aid they had received — in the form
of bonuses and compensation.

The ploy worked. In March of last year, the Fed sharply expanded
a radical new program called quantitative easing, which effectively
operated as a real-live Rumanian Box. The government put stacks of
paper in one side, and out came $1.2 trillion "real" dollars.

The government used some of that freshly printed money to prop
itself up by purchasing Treasury bonds — a desperation move,
since Washington's demand for cash was so great post-Clusterfuck
'08 that even the Chinese couldn't buy U.S. debt fast enough to
keep America afloat. But the Fed used most of the new cash to buy
mortgage-backed securities in an effort to spur home lending
— instantly creating a massive market for major banks.

And what did the banks do with the proceeds? Among other things,
they bought Treasury bonds, essentially lending the money back to
the government, at interest. The money that came out of the magic
Rumanian Box went from the government back to the government, with
Wall Street stepping into the circle just long enough to get paid.
And once quantitative easing ends, as it is scheduled to do in
March, the flow of money for home loans will once again grind to a
halt. The Mortgage Bankers Association expects the number of new
residential mortgages to plunge by 40 percent this year.

CON #5
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THE BIG MITT

All of that Rumanian box paper was made
even more valuable by running it through the next stage of the
grift. Michael Masters, one of the country's leading experts on
commodities trading, compares this part of the scam to the poker
game in the Bill Murray comedy Stripes. "It's like that
scene where John Candy leans over to the guy who's new at poker and
says, 'Let me see your cards,' then starts giving him advice,"
Masters says. "He looks at the hand, and the guy has bad cards, and
he's like, 'Bluff me, come on! If it were me, I'd bet everything!'
That's what it's like. It's like they're looking at your cards as
they give you advice."

In more ways than one can count, the economy in the bailout era
turned into a "Big Mitt," the con man's name for a rigged poker
game. Everybody was indeed looking at everyone else's cards, in
many cases with state sanction. Only taxpayers and clients were
left out of the loop.

At the same time the Fed and the Treasury were making massive,
earthshaking moves like quantitative easing and TARP, they were
also consulting regularly with private advisory boards that include
every major player on Wall Street. The Treasury Borrowing Advisory
Committee has a J.P. Morgan executive as its chairman and a Goldman
executive as its vice chairman, while the board advising the Fed
includes bankers from Capital One and Bank of New York Mellon. That
means that, in addition to getting great gobs of free money, the
banks were also getting clear signals about when they were
getting that money, making it possible to position themselves to
make the appropriate investments.

One of the best examples of the banks blatantly gambling, and
winning, on government moves was the Public-Private Investment
Program, or PPIP. In this bizarre scheme cooked up by goofball-geek
Treasury Secretary Tim Geithner, the government loaned money to
hedge funds and other private investors to buy up the absolutely
most toxic horseshit on the market — the same kind of
high-risk, high-yield mortgages that were most responsible for
triggering the financial chain reaction in the fall of 2008. These
satanic deals were the basic currency of the bubble: Jobless dope
fiends bought houses with no money down, and the big banks wrapped
those mortgages into securities and then sold them off to pensions
and other suckers as investment-grade deals. The whole point of the
PPIP was to get private investors to relieve the banks of these
dangerous assets before they hurt any more innocent bystanders.

But what did the banks do instead, once they got wind of the
PPIP? They started buying that worthless crap again,
presumably to sell back to the government at inflated prices! In
the third quarter of last year, Goldman, Morgan Stanley, Citigroup
and Bank of America combined to add $3.36 billion of exactly this
horseshit to their balance sheets.

This brazen decision to gouge the taxpayer startled even
hardened market observers. According to Michael Schlachter of the
investment firm Wilshire Associates, it was "absolutely ridiculous"
that the banks that were supposed to be reducing their exposure to
these volatile instruments were instead loading up on them in order
to make a quick buck. "Some of them created this mess," he said,
"and they are making a killing undoing it."

CON #6
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THE WIRE

Here's the thing about our current
economy. When Goldman and Morgan Stanley transformed overnight from
investment banks into commercial banks, we were told this would
mean a new era of "significantly tighter regulations and much
closer supervision by bank examiners," as The New York
Times put it the very next day. In reality, however, the
conversion of Goldman and Morgan Stanley simply completed the
dangerous concentration of power and wealth that began in 1999,
when Congress repealed the Glass-Steagall Act — the
Depression-era law that had prevented the merger of insurance
firms, commercial banks and investment houses. Wall Street and the
government became one giant dope house, where a few major players
share valuable information between conflicted departments the way
junkies share needles.

One of the most common practices is a thing called
front-running, which is really no different from the old "Wire"
con, another scam popularized in The Sting. But instead of
intercepting a telegraph wire in order to bet on racetrack results
ahead of the crowd, what Wall Street does is make bets ahead of
valuable information they obtain in the course of everyday
business.

Say you're working for the commodities desk of a big investment
bank, and a major client — a pension fund, perhaps —
calls you up and asks you to buy a billion dollars of oil futures
for them. Once you place that huge order, the price of those
futures is almost guaranteed to go up. If the guy in charge of
asset management a few desks down from you somehow finds out about
that, he can make a fortune for the bank by betting ahead of that
client of yours. The deal would be instantaneous and undetectable,
and it would offer huge profits. Your own client would lose money,
of course — he'd end up paying a higher price for the oil
futures he ordered, because you would have driven up the price. But
that doesn't keep banks from screwing their own customers in this
very way.

The scam is so blatant that Goldman Sachs actually warns its
clients that something along these lines might happen to them. In
the disclosure section at the back of a research paper the bank
issued on January 15th, Goldman advises clients to buy some dubious
high-yield bonds while admitting that the bank itself may bet
against those same shitty bonds. "Our salespeople, traders
and other professionals may provide oral or written market
commentary or trading strategies to our clients and our proprietary
trading desks that reflect opinions that are contrary to the
opinions expressed in this research," the disclosure reads. "Our
asset-management area, our proprietary-trading desks and investing
businesses may make investment decisions that are inconsistent with
the recommendations or views expressed in this research."

Banks like Goldman admit this stuff openly, despite the fact
that there are securities laws that require banks to engage in
"fair dealing with customers" and prohibit analysts from issuing
opinions that are at odds with what they really think. And yet here
they are, saying flat-out that they may be issuing an opinion at
odds with what they really think.

To help them screw their own clients, the major investment banks
employ high-speed computer programs that can glimpse orders from
investors before the deals are processed and then make trades on
behalf of the banks at speeds of fractions of a second. None of
them will admit it, but everybody knows what this computerized
trading — known as "flash trading" — really is. "Flash
trading is nothing more than computerized front-running," says the
prominent hedge-fund manager. The SEC voted to ban flash trading in
September, but five months later it has yet to issue a regulation
to put a stop to the practice.

Over the summer, Goldman suffered an embarrassment on that score
when one of its employees, a Russian named Sergey Aleynikov,
allegedly stole the bank's computerized trading code. In a court
proceeding after Aleynikov's arrest, Assistant U.S. Attorney Joseph
Facciponti reported that "the bank has raised the possibility that
there is a danger that somebody who knew how to use this program
could use it to manipulate markets in unfair ways."

Six months after a federal prosecutor admitted in open court
that the Goldman trading program could be used to unfairly
manipulate markets, the bank released its annual numbers. Among the
notable details was the fact that a staggering 76 percent of its
revenue came from trading, both for its clients and for its own
account. "That is much, much higher than any other bank," says
Prins, the former Goldman managing director. "If I were a client
and I saw that they were making this much money from trading, I
would question how badly I was getting screwed."

Why big institutional investors like pension funds continually
come to Wall Street to get raped is the million-dollar question
that many experienced observers puzzle over. Goldman's own
explanation for this phenomenon is comedy of the highest order. In
testimony before a government panel in January, Blankfein was
confronted about his firm's practice of betting against the same
sorts of investments it sells to clients. His response: "These are
the professional investors who want this exposure."

In other words, our clients are big boys, so screw 'em if
they're dumb enough to take the sucker bets I'm offering.

CON #7
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THE RELOAD

Not many con men are good enough or
brazen enough to con the same victim twice in a row, but the few
who try have a name for this excellent sport: reloading.
The usual way to reload on a repeat victim (called an "addict" in
grifter parlance) is to rope him into trying to get back the money
he just lost. This is exactly what started to happen late last
year.

It's important to remember that the housing bubble itself was a
classic confidence game — the Ponzi scheme. The Ponzi scheme
is any scam in which old investors must be continually paid off
with money from new investors to keep up what appear to be high
rates of investment return. Residential housing was never as
valuable as it seemed during the bubble; the soaring home values
were instead a reflection of a continual upward rush of new
investors in mortgage-backed securities, a rush that finally
collapsed in 2008.

But by the end of 2009, the unimaginable was happening: The
bubble was re-inflating. A bailout policy that was designed to help
us get out from under the bursting of the largest asset bubble in
history inadvertently produced exactly the opposite result, as all
that government-fueled capital suddenly began flowing into the most
dangerous and destructive investments all over again. Wall Street
was going for the reload.

A lot of this was the government's own fault, of course. By
slashing interest rates to zero and flooding the market with money,
the Fed was replicating the historic mistake that Alan Greenspan
had made not once, but twice, before the tech bubble in the early
1990s and before the housing bubble in the early 2000s. By making
sure that traditionally safe investments like CDs and savings
accounts earned basically nothing, thanks to rock-bottom interest
rates, investors were forced to go elsewhere to search for
moneymaking opportunities.

Now we're in the same situation all over again, only far worse.
Wall Street is flooded with government money, and interest rates
that are not just low but flat are pushing investors to seek out
more "creative" opportunities. (It's "Greenspan times 10," jokes
one hedge-fund trader.) Some of that money could be put to use on
Main Street, of course, backing the efforts of investment-worthy
entrepreneurs. But that's not what our modern Wall Street is built
to do. "They don't seem to want to lend to small and medium-sized
business," says Rep. Brad Sherman, who serves on the House
Financial Services Committee. "What they want to invest in is
marketable securities. And the definition of small and medium-sized
businesses, for the most part, is that they don't have
marketable securities. They have bank loans."

In other words, unless you're dealing with the stock of a major,
publicly traded company, or a giant pile of home mortgages, or the
bonds of a large corporation, or a foreign currency, or oil
futures, or some country's debt, or anything else that can be
rapidly traded back and forth in huge numbers, factory-style, by
big banks, you're not really on Wall Street's radar.

So with small business out of the picture, and the safe stuff
not worth looking at thanks to the Fed's low interest rates, where
did Wall Street go? Right back into the shit that got us here.

One trader, who asked not to be identified, recounts a story of
what happened with his hedge fund this past fall. His firm wanted
to short — that is, bet against — all the crap toxic
bonds that were suddenly in vogue again. The fund's analysts had
examined the fundamentals of these instruments and concluded that
they were absolutely not good investments.

So they took a short position. One month passed, and they lost
money. Another month passed — same thing. Finally, the trader
just shrugged and decided to change course and buy.

"I said, 'Fuck it, let's make some money,'" he recalls. "I
absolutely did not believe in the fundamentals of any of this
stuff. However, I can get on the bandwagon, just so long as I know
when to jump out of the car before it goes off the damn cliff!"

This is the very definition of bubble economics — betting
on crowd behavior instead of on fundamentals. It's old investors
betting on the arrival of new ones, with the value of the
underlying thing itself being irrelevant. And this behavior is
being driven, no surprise, by the biggest firms on Wall Street.

The research report published by Goldman Sachs on January 15th
underlines this sort of thinking. Goldman issued a strong
recommendation to buy exactly the sort of high-yield toxic crap our
hedge-fund guy was, by then, driving rapidly toward the cliff.
"Summarizing our views," the bank wrote, "we expect robust flows .
. . to dominate fundamentals." In other words: This stuff is crap,
but everyone's buying it in an awfully robust way, so you should
too. Just like tech stocks in 1999, and mortgage-backed securities
in 2006.

To sum up, this is what Lloyd Blankfein meant by "performance":
Take massive sums of money from the government, sit on it until the
government starts printing trillions of dollars in a desperate
attempt to restart the economy, buy even more toxic assets to sell
back to the government at inflated prices — and then, when
all else fails, start driving us all toward the cliff again with a
frank and open endorsement of bubble economics. I mean, shit
— who wouldn't deserve billions in bonuses for doing all
that?

Con artists have a word for the inability
of their victims to accept that they've been scammed. They call it
the "True Believer Syndrome." That's sort of where we are, in a
state of nagging disbelief about the real problem on Wall Street.
It isn't so much that we have inadequate rules or incompetent
regulators, although both of these things are certainly true. The
real problem is that it doesn't matter what regulations are in
place if the people running the economy are rip-off artists. The
system assumes a certain minimum level of ethical behavior and
civic instinct over and above what is spelled out by the
regulations. If those ethics are absent — well, this thing
isn't going to work, no matter what we do. Sure, mugging old ladies
is against the law, but it's also easy. To prevent it, we depend,
for the most part, not on cops but on people making the conscious
decision not to do it.

That's why the biggest gift the bankers got in the bailout was
not fiscal but psychological. "The most valuable part of the
bailout," says Rep. Sherman, "was the implicit guarantee that
they're Too Big to Fail." Instead of liquidating and prosecuting
the insolvent institutions that took us all down with them in a
giant Ponzi scheme, we have showered them with money and guarantees
and all sorts of other enabling gestures. And what should really
freak everyone out is the fact that Wall Street immediately started
skimming off its own rescue money. If the bailouts validated anew
the crooked psychology of the bubble, the recent profit and bonus
numbers show that the same psychology is back, thriving, and
looking for new disasters to create. "It's evidence," says Rep.
Kanjorski, "that they still don't get it."

More to the point, the fact that we haven't done much of
anything to change the rules and behavior of Wall Street shows that
we still don't get it. Instituting a bailout policy that
stressed recapitalizing bad banks was like the addict coming back
to the con man to get his lost money back. Ask yourself how well
that ever works out. And then get ready for the reload.

[From Issue 1099 — March 4, 2010]

LRB on Salmon

Simply Putting on Weightby Richard Hamblyn

a review of To Sea and Back: The Heroic Life of the Atlantic Salmon by Richard Shelton. Atlantic, 213 pp, £18.99, October 2009, ISBN 978 1 84354 784 6

Some of the oldest laws in Britain were drafted in defence of the Atlantic salmon; one of the lesser-known clauses of the first Magna Carta in 1215 ordered the removal of all salmon weirs in the Thames and Medway estuaries, a statute that remained in force until the end of the 19th century. In Scotland, there is still no public right to fish for salmon, even in the sea, while recent bylaws passed in England and Wales have reinstated a number of ancient restrictions, including on the use of the ‘Viking’ haaf nets that have been a feature of Cumbrian salmon fishing for more than a thousand years. Native American, Norse and Celtic myth-makers wove the figure of the wise or noble salmon into a number of early myths and legends, such as the sixth-century Welsh quest narrative of Culhwch and Olwen collected in The Mabinogion, in which a sea-scarred, Severn-born salmon is revered as the oldest and wisest creature on earth; or the Ossianic legend of the Salmon of Wisdom, the skin of which was accidentally eaten by Fionn mac Cumhaill, who from it gained oracular access to all the knowledge of the world.

Salmon – the name, it’s thought, derives from the Latin salire, ‘to leap’ – has always been a fish apart, marked by its unusual capacity to migrate between the distinct worlds of salt and fresh water. According to William Camden’s Britannia (1586), the salmon leaps of Pembrokeshire were Britain’s first tourist attractions, at which scores of people would gather to ‘stand and wonder at the strength and sleight by which they see the Salmon get out of the Sea into the said River’. The spectacle remains one of the great sights of autumn, and people still crowd the banks of the Teifi to watch the returning salmon launch themselves at the cascading waters in brute determination to reach their ancestral spawning grounds upstream. Many don’t make it, but for those that do, it marks the end of an extraordinary circular migration that begins and ends in the same shallow gravel-beds to which every sea-run adult will seek to return at least once in its life: an impulse that was confirmed by Francis Bacon in the 1620s, when he tied ‘a Ribband or some known tape or thred’ around the tail of a sea-bound smolt, retrieving it the following year when the fish returned as a splendid silver grilse.

read more

‘Smolt’, ‘grilse’: as Richard Shelton observes, salmon are spoken of in a ‘stained-glass language’ of their own, their life stages marked by an ichthyological lexicon unchanged since Chaucer’s time. Born in a ‘redd’, a shallow, gravel-covered depression dug by the female in the days before spawning, newly hatched salmon begin life as ‘alevins’, tiny, buoyant creatures with their yolk sacs still attached. Once the yolk has been absorbed, the fast-growing fish, now known as ‘fry’, are able to feed for themselves, turning instinctively to face the current in order to graze on drifting insect larvae. Some months later, the juvenile salmon, now known as ‘parr’, move downstream to deeper water, where their markings grow darker and their shapes more distinctively salmonoid. By the following spring, most parr have begun the first of the transformations that will enable them to cross the hydrological boundary from the river to the sea: once their kidneys have been primed to reverse their usual function of taking in salts and excreting dilute river water, their skin colour brightens to reflective silver through a microscopic coating of guanine crystals, and their body shapes fill out in anticipation of the long voyage ahead. It is then that the ‘smolts’, as the fish are now known, are ready to head downriver to the sea.

Once out in the ocean, the salmon are lost to view. By day, they swim too near the surface for a ship’s sonar to distinguish them from the acoustic ‘clutter’ created by waves, and at night, when they descend, their shoaled shadows seem to disappear. It is only in recent years that fisheries scientists such as Shelton have succeeded in tracking the oceanic wanderings of spring smolts – or rather, ‘post-smolts’, now that they have left the river. As soon as they reach the sea, it appears, Atlantic salmon (unlike their shore-hugging relatives, the sea trout) head rapidly away from the coast, crossing a series of sharp salinity and temperature contours in what appears to be a headlong journey north, towards the plankton-rich feeding grounds of the Norwegian Sea.

The phytoplanktonic bloom, which covers much of the North Atlantic in microscopic algae every spring, is the most important event in the global marine system, a vast green banquet that attracts much of the world’s zooplankton, the tiny free-swimming animals on which the rest of the oceanic food web depends. For a few months, as millions of tonnes of nutrients transform the top few metres of the North Atlantic into a kind of concentrated chowder, shoals of long-distance predators make their way to the feast, their migrations assisted by the same north-trending currents that stir up the oceanic broth while preventing its dispersal. Young salmon, from rivers on both sides of the Atlantic, arrive in their tens of thousands to gorge themselves on krill, sand eels and arctic squid, their bodies growing fast compared to those of most other sea fish, from the few ounces they weighed on leaving home, to three pounds or more by the end of the summer, and eight or even ten pounds by the end of the following year. Some of these fattened one-winter salmon, now known as ‘grilse’, will begin to make their way back to the redds of their birth, drawn by the scent of familiar waters that was imprinted on their sensory systems during the outbound stage of the journey. The others will remain at sea for another year or two, sometimes even three, before they too turn home, transported, as though under a spell, back to their ancestral rivers, and up the series of perilous and exhausting leaps that gave Salmo salar its name.

To Sea and Back is a remarkable book, a lyrical zoography of the Atlantic salmon that weaves in and out of a wider historical narrative of ocean exploration, fisheries science and personal memoir. Admirers of Shelton’s previous book, The Longshoreman: A Life at the Water’s Edge (2004), will be familiar with the loose structure (as well as with – it must be said – a fair amount of recycled material), but the controlled meanderings that marked out The Longshoreman as a new kind of nature writing range further afield in this second outing, in which the motifs of exile and homecoming are refracted through a series of autobiographical asides that evidently made a strong impression on whoever wrote the press release, since it gave the title as To Sea and Back: The Heroic Life of the Atlantic Shelton, an insightful slip, given that much of the interest of the book derives from untangling the complex relationship between the author’s knowledge of the sea and the personal circumstances that first drew him to it.

It was, he says, the chalk streams of the Chilterns that made him ‘first a naturalist and then a biologist’, encouraged by the books he discovered in his grandparents’ library, a room overshadowed by the menacing horns of long-dead Highland cattle. Frank Buckland’s multi-volume Curiosities of Natural History (1857-72) held a particular fascination for him – ‘I have the four little books in front of me now and, opening the first of them, it falls open at the chapter on rats that was my favourite holiday reading of over half a century ago.’ Ah, yes, Frank Buckland and his edible rats. As a would-be social reformer and committed zoophagist – an eater of unusual animals – Buckland was convinced of the double benefits of putting rat meat on the national menu: not only would it help relieve the hunger of the poor, it would also ease the infestations that plagued every city in the world. ‘It is not generally known what good eating young rats are,’ he wrote, with a lack of squeamishness inherited from his father, the Very Rev. William Buckland, dean of Westminster, who regularly plied his dinner guests with dog, panther, crocodile and hedgehog, as well as with canapés of toasted field-mice (a favourite of Frank’s). Although the failure of his rat meat campaign was followed by other attempts to amend the eating habits of the poor – ‘in my humble opinion, hippophagy has not the slightest chance of success in this country,’ he wrote after a disastrous dinner in which every dish, from the soup to the jelly, had been prepared from the carcass of a knackered old cab horse – it was in his role of inspector of salmon fisheries, to which he was appointed by the Home Office in 1867, that Frank Buckland finally made his mark on the British diet by introducing stockbreeding methods to the rearing of salmon and trout. His aim was twofold: to increase domestic fish supplies while introducing fast-growing freshwater species to the newest territories of the British Empire, New Zealand and Tasmania. Trays of ice-cooled ova were shipped across the world to be released into the southern hemisphere’s most pristine rivers, but while the European trout species established themselves well, the Atlantic salmon failed utterly, their genetic predisposition to head north to colder waters proving lethally unsuited to the warm, shark-patrolled expanses of the South Pacific.

At home, meanwhile, Buckland was becoming quite the showman, touring a miniature salmon hatchery around the country, while campaigning for the cleaning up of industrially polluted rivers from which ‘the king of fish’ had virtually disappeared. Buckland’s claim to have met the elderly man who caught and ate the last salmon in the Thames seems about as likely as his father’s claim to have eaten the desiccated heart of Louis XIV (‘I have eaten many strange things, but have never eaten the heart of a king before’), but his outrage at the poisoning of British rivers was authentic, and his published findings did much to change the views of politicians and industrialists, though probably not of the factory owner who assured him that ‘sulphuric acid was a tonic for the fish.’ But however gratified Buckland might have been ‘to hear again of salmon in the Kelvin, Clyde, Tyne and Thames’, he left another legacy in the form of modern high density fish farming, the greasy-fleshed results of which, Shelton rightly complains, ‘bear little culinary relation to their wild-caught counterparts. The flavour tends towards the uriniferous with lower notes of stale fish food.’ Even Shelton’s terrier, Dinah, ‘an otherwise enthusiastic little scavenger of generally catholic tastes’, refuses to touch it, though the Bucklands would probably have wolfed it down raw.

Most farmed salmon tastes horrible because caged fish have no opportunity for active swimming. Fed on high-fat pellets full of artificial colour – the pinkness of a wild salmon’s flesh comes from the amphipods and krill it eats during its time at sea – the cooped up salmon simply put on weight without distributing the fat around their bodies. A wild sea-run salmon, by contrast, prepares itself for the journey home by storing fat reserves across its muscles, connective tissues and under the skin, from where it will draw the energy to sustain it during the task ahead. As soon as it smells fresh water again, an adult salmon will stop feeding, devoting itself solely to the rigours of the voyage, its body beginning its final transformation, as its immune system shuts down to conserve energy, its skin starts to lose its silvery sheen, and (in the case of the male) a rush of hormones prompts the lower jaw to change shape, curving into an aggressive-looking underbite known as a ‘kype’, a jutting scimitar used for fending off other males in the spawning grounds upstream.

The journey can take many months, however, and as the starving returnees battle against the freshwater currents, their fuel reserves deplete rapidly, consumed by the effort of the journey as well as by the production of eggs (by the females) and milt (by the males), so now they must rely on bursts of adrenalin to scale the near vertical ascents. The physical cost of homecoming is enormous, and those that do make it home to spawn arrive in a terrible state, weak, exhausted and already dying from disease and starvation, so the effort of mating, described by Shelton with an Attenboroughesque attentiveness – ‘the quivering displays of the sailor home from the sea bring the hen to arching orgasm’ – is often their final act. Shelton coolly describes the lingering death of a spawned-out male, now known as a ‘kelt’ – the last of its names – lying in ‘the shallow tail of a pool’, with its arteries blocked and muscles wasted, its broken skin scarred by bacterial infections, as it slowly drowns in the water that seeps into its wounds. The decay that follows serves to replenish the river with phosphates and nutrients that in a few months’ time will help sustain the hatched young that emerge from the redds, buoyant and vulnerable in the shallow water, until they, too, are ready to head downstream on the first stage of ‘their great adventure’, as Shelton calls this vast oceanic circumnavigation that will end, as do all great journeys, in the place it began.

LRB on Khodorkovsky

In Moscow, the second trial of the former oil and banking tycoons Mikhail Khodorkovsky and Platon Lebedev has now been going on for nearly a year. The trial itself, which is doggedly examining a series of esoteric and possibly imaginary economic crimes while skating over more serious – and also possibly imaginary – suggestions of violent criminality, has not been very interesting. The drama of two very bright men – one of whom, Khodorkovsky, is now a political figure of some significance – facing off against the entire apparatus of an authoritarian state, on the other hand, has been riveting. It was always bound to be.
Mikhail Khodorkovsky graduated from the Mendeleev Institute in Moscow in 1986, with a degree in chemical engineering. At university he’d been deputy head of the Komsomol, in charge of making sure other students came to Party meetings and of excluding them if they had a bad attitude. Kicking someone out of the Komsomol also meant kicking them out of the university; Khodorkovsky had done that too. He was the only child of two Soviet factory workers, one of whom (his father) was Jewish. ‘I realise now that my parents hated the Soviet government,’ he has said, ‘but they shielded me from this, thinking that to do otherwise would be to ruin my life.’ They were right. Their son’s path to success in the Soviet Union was through conformity; they raised him well, and he conformed.
Even if Khodorkovsky had wanted to become a dissident, he would hardly have had time: just as he was getting out of school, Gorbachev was beginning the process that would end up destroying the Soviet Union. Almost immediately, the insane scramble to build Russian capitalism began. Khodorkovsky gathered together some friends, mostly computer programmers and engineers like himself, and began doing what the Russians still call bizness. They imported computers and bad French brandy and took advantage of the various inefficiencies created by the fact that the official dollar-rouble exchange rate differed from the unofficial one by 300 per cent. The late Soviet system had no real banks, and so they started one, called Menatep. They were learning on the job. Some years ago the Moscow Times tracked down a one-time associate of Khodorkovsky’s, a French financier, who described what it was like to work with Menatep in the early days. They were fantastically inventive and fantastically ignorant. The Frenchman recalled a letter they’d composed after a consultation with the accountancy firm Arthur Andersen. ‘Could you tell Mr Arthur Andersen …’ it began. Andersen, the firm’s founder, had died in 1947. ‘They didn’t have a clue,’ the Frenchman said.
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They got a clue pretty quickly, however, and homed in on one of their key comparative advantages: of all the early capitalists, Khodorkovsky had the nicest face. Like the others he was shrewd and intelligent, but he was also quiet and polite, with a knack for winning people’s trust. One of the most remarkable boondoggles of the late Soviet years was the conversion of the contents of illiquid corporate accounts into real-life cash. For years state-owned companies had been transferring huge sums of money to one another, because what’s 100,000 roubles on some ledgers between state corporations? Well, nothing, literally nothing, because those roubles didn’t exist. But if you spent your evenings in the late 1980s getting a law degree, as Khodorkovsky did, you might be able to figure out a way to turn those imaginary roubles into actual roubles. It was alchemy, but you needed a licence to perform the alchemy, and to get a licence you needed help from the top. The Washington Post’s David Hoffman, in the best journalistic account of the heroic age of Russian capitalism, The Oligarchs, found an old professor, the head of a giant research institute, who remembered Khodorkovsky and another young man coming to him to ask for some start-up capital. They were such nice young men, the professor recalled. He wanted to help them. ‘Well, maybe I forget now,’ the professor told Hoffman. ‘But it seems to me I gave them 170,000 roubles’ – that is, 170,000 roubles from the institute’s notional coffers. This was an enormous sum of money at the time, and you can be sure the professor was not forgotten by his protégés.
As the ‘transition’ to capitalism continued in the early 1990s, Khodorkovsky grew increasingly powerful without growing correspondingly obnoxious. In a country where the first thing anyone did with money was buy a tight-fitting pin-striped Armani suit and pointy shoes, Khodorkovsky wore jeans and a roll-neck sweater. More important, he kept his ties to power: for a while he served in the first Yeltsin administration as a deputy minister of fuel and energy. But soon he returned to the business world. There were many opportunities during those years for someone who knew where to look, though the real action for a Russian bank in the early 1990s was to take advantage of the runaway inflation. If you had some deposits on your books – Menatep was fortunate to be husbanding the monies of the Federal Pension Fund – you could take your roubles, turn them into dollars, and then turn them back into (many more) roubles in a few months. The losers – the people on the other side of that trade, as they say in the business – were the Russian population, for whom the price of bread went up while salaries and pensions stagnated.
The first seven or eight years of nickel-and-diming the wealth of the nation into their pockets put Menatep and a few other banks in position for the truly big play. This came in 1995, when Vladimir Potanin, a banker with even better connections than Khodorkovsky’s, came up with a plan. The Yeltsin government was rapidly running out of money. It had slashed social programmes, healthcare and military spending, but even so it was falling behind on salaries, particularly in the vital oil, gas and metal mining sectors. Up to this point the government had largely been financing itself by holding the world’s largest yard sale, selling off its many industrial assets; by 1995 all that remained were the oil, gas and metals giants. Unfortunately, the Communists, who weren’t enjoying the yard sale at all, were still powerful enough in the Duma to get legislation through making it illegal to privatise the country’s richest companies. But – this was the ingenious bit – what if the banks, the only more or less properly capitalised institutions in the country, were to ‘lend’ the government the money, with the government putting up shares in the untouchable oil and metals majors as collateral? Perhaps the government would default on the loans (of course the government would default on the loans!), but there was no telling that in advance. Banks would bid for the right to loan the government money, but in order to keep the Communists from yelling and screaming too much, foreigners would be banned from the bidding. This would also have the useful effect of keeping prices at a level that the Russian banks could afford.
Over the course of several weeks in late 1995, the ‘loans-for-shares’ auctions, as they came to be known, fundamentally altered the ownership structure of Russian society, handing controlling packets of the largest oil and metals companies to a group of well-connected private bankers. Potanin got Norilsk Nickel, the world’s largest nickel producer; Boris Berezovsky and his young partner Roman Abramovich bought half the oil company Sibneft for $100 million (when Abramovich sold his shares ten years later, that stake would be worth more than $9 billion); Khodorkovsky, who was Potanin’s closest ally in the loans-for-shares scramble, got Yukos, one of the country’s biggest oil companies, for $350 million. His stake would be worth 20 times that in just two years.
Loans-for-shares became the historical flashpoint for anger at the way the 1990s privatisation was conducted. But the deeper cause of this anger was the lawlessness that allowed a small group of people to become very wealthy while everyone else came to fear for their lives. There was fear of famine, but famine was averted; instead, as they saw their savings evaporate, Russians witnessed a civil war on the streets of their cities. Before Chechnya, before Turkmenistan, there was the war in Moscow, Petersburg and Yeltsin’s hometown of Ekaterinberg. Well-armed gangs were at one another’s throats, and you never knew when, going out for milk, you would find yourself in their way. A lot has been written about the humiliation Russia experienced when it ceased to be a superpower; a lot has also been written about the rapid immiseration of a vast segment of the post-Soviet population. But these things were affected by the daily experience of fear. It was certainly bad to be ruled by the senile bureaucrats of the Communist Party, but for a lot of people it was worse to be ruled by thick-necked thugs in tracksuits and Mercedes. It’s notable that the one work of cinematic art to come out of Russia in the 1990s was Alexei Balabanov’s Brat (Brother), a revenge fantasy in which a young man comes to Petersburg after serving in Chechnya and, somewhat reluctantly, finds himself killing all the mafiosi in town. It’s a Russian Taxi Driver, a film animated by a profound wish to wipe the scum from the streets, born in the collective unconscious of a social class (the emasculated intelligentsia) incapable of doing any such thing.
The connection of the future oligarchs to the crime rife in the cities is complex. The small-time thugs who started out by shaking down old ladies selling homemade pies on street corners did not, for the most part, end up owning the world’s largest oil companies. Nor, for the most part, were the future oligarchs setting up appointments for shoot-outs the following day at noon. By the mid-1990s, the major players all had private security services headed by former KGB generals or (as in Khodorkovsky’s case) police chiefs. But this didn’t mean that, out in the provinces, at the furthest corners of their empires, there weren’t still problems that were solved violently. When the anti-Yukos campaign gathered real steam in late 2003, people began to come forward saying they’d been followed, shot at, attacked or threatened by the Yukos security forces. Some were clearly lying. But after a while it added up. Yet Khodorkovsky’s gentle demeanour, his simple, down-to-earth manners, his roll-neck sweaters – these were not a façade. He was a nice guy. As one of his former cellmates says in I Served Time with Khodorkovsky, a collection of interviews with fellow prisoners which was published in Russian in 2005, the jailed oligarch always took the top bunk, rather than the bottom one, in spite of the prison code. ‘But Mikhail Borisovich, you’re in prison,’ this cellmate, Slava, would plead. ‘Here respected people sleep on the bottom bunk.’ Khodorkovsky wouldn’t listen. In another country he might have been the founder of a successful software company, or a brilliant financier: he might have been the president of Microsoft or Goldman Sachs.
Perhaps the best account of how a nice, educated person might have found himself caught up in bloodshed is Yuli Dubov’s remarkable, as yet untranslated novel, Bolshaya Paika (‘The Big Slice’, 1999). Dubov was (and, in exile in London, remains) a close associate of the most controversial of the oligarchs, Boris Berezovsky, and the book is a fictionalised account of Berezovsky’s rise to power. It begins with the Berezovsky character, Platon Makovsky, and all his mathematician friends back in Soviet times: young, bright, exuberant, though also jealous, truculent, prone to explosions. With the collapse of the USSR and their research institute, they go into business together, their business takes off, and one by one the old friends die. One of them is killed by a rival in Petersburg; another commits suicide; another takes a bullet to the head that is meant for Platon. Platon isn’t directly responsible for any of these deaths, but indirectly he is, through his carelessness, and through the intensity with which he does business, always raising the stakes and setting people against him. Really, it’s the money’s fault. When so much of it is involved, people get hurt.
After winning nominal control of Yukos, Khodorkovsky and his team began the long process of taking charge of the company and making it profitable. While they were doing this, the Russian economy collapsed, taking Menatep with it. In the aftermath of the collapse, in 1998, Khodorkovsky performed some unlovely manoeuvres to mitigate the damage to his holdings: at one point a truckload of important financial documents happened to fall into the Dubna River; at another Khodorkovsky threatened to dilute the value of Yukos shares down to zero if minority shareholders didn’t sell out to him at his price. But he has also said that the crisis forced him to reconsider some of his practices. It certainly had that effect on the country’s political class as a whole, which realised that, like it or not, the Yeltsin administration was no longer functioning. A year later, Vladimir Putin, a little known former KGB agent, was made prime minister, and six months after that he became president. His first order of business would be to deal with the oligarchs to whom Yeltsin had sold his soul.
In retrospect it’s fairly clear that no one, including Putin himself, knew what he was going to do, or what he could do, or how far he could go. Now we know that you can destroy a media empire simply by arresting its owner for a few days, and sending a few busloads of masked men with automatic rifles to its main offices. The media magnate Vladimir Gusinsky had a thousand men in his security force, a reputation in the West as the tribune of Russia’s independent media, and a reputation in Russia – for his repeated refusals to back down on Chechnya, above all – as a stubborn, pugnacious independent. He seemed unassailable. In the event, after being briefly arrested in June 2000, Gusinsky was soon on a plane to Spain, and has not set foot on his native soil since. His former television station, NTV, now mostly broadcasts poorly produced Russian cop shows. Berezovsky, Gusinsky’s sometime partner and sometime rival, was soon on his way to London, where he too has remained.
Khodorkovsky stayed put. He was feeling good – the price of oil, which in 1998 had fallen to its lowest level since 1973, was on its way back up – and he had a lot to do. In July 2000, he attended the famous meeting of top business leaders with Putin, at which Putin offered a deal: if the oligarchs stayed out of politics – something Gusinsky and Berezovsky had notably failed to do – the government would refrain from revisiting questions over loans-for-shares and the other privatisations of the 1990s. It’s unclear what Khodorkovsky took away from the meeting, because in the next three years he seemed to do exactly what Putin had warned against. On the model of George Soros’s Open Society programme, which was being pushed out of Russia, he took over the mantle of financing arts and education with his Open Russia foundation, and on the model of Gusinsky he started doing what he could to finance independent media. Open Russia arranged seminars outside Moscow on writing, reporting and institution-building, in the hope of creating the beginnings of a civil society.
At the same time, Khodorkovsky remained an aggressive businessman, furthering his interests in the Duma and the Kremlin; he also gave money to various political parties, including the Communists. Above all, though, he turned Yukos into a powerful, modern oil giant. He took the company public on the London Stock Exchange and dramatically improved its accounting practices. He brought in Western experts to work the oilfields, improving production techniques. He also worked, both for his own sake and the company’s, on his public image. Khodorkovsky’s Menatep, even more than other Russian banks, had become a pariah in the West after 1998, and between 2000 and 2003 he spent millions on public relations, and it worked. By 2003, Yukos had surpassed Lukoil as Russia’s biggest oil producer; its market capitalisation stood at more than $20 billion. Forbes estimated Khodorkovsky’s personal fortune at around $4 billion, making him Russia’s richest man – and on top of all that Yukos was paying more taxes into the Russian treasury than just about anyone else.
He seemed to be moving in the direction Russia wanted to be moving: back into the club of advanced nations, rather than the club of basket-case states that lost wars to tiny mountain republics and periodically defaulted on their foreign debts. But somehow Khodorkovsky took it all too far, or too seriously. As Richard Sakwa describes in voluminous detail in his book on the Yukos affair, Khodorkovsky began trying to break the government monopoly on oil pipelines, planning an independent Yukos pipeline to China; and he also began negotiating a huge share swap, in essence a merger, with either ExxonMobil or ChevronTexaco. He began, in short, to believe his own press. ‘Khodorkovsky,’ one very sceptical American financier told me, ‘was the only one of the oligarchs who forgot that he was an oligarch, that is, a crook. He decided that because he’d stopped stealing from the company that he was a great businessman, a builder of value! The other oligarchs, when they saw the fuzz, knew they should run. But Khodorkovsky forgot.’
In mid-June 2003, investigators arrested Alexei Pichugin, a former KGB major who had become the deputy head of the Yukos security department, and charged him with organising the murders of a number of Yukos opponents. A week after Pichugin’s arrest, Yukos’s headquarters in Moscow were searched. And a week after that, Platon Lebedev, now head of Menatep Group (Khodorkovsky had stepped down in order to become CEO of Yukos), was arrested in the hospital where he was being treated for a heart condition.
Pichugin was eventually charged with organising five killings, all of people who were somehow in conflict with Yukos/ Menatep: an outspoken mayor of an oil town, a woman with a little tea shop in Moscow in a building that Menatep wanted, the bodyguard of a business rival whose car was blown up (the business rival wasn’t in it), and a man (and his wife) who supposedly helped Pichugin plan the killings but had become too loose-lipped. The order for the killings allegedly came to Pichugin from Leonid Nevzlin, a senior Yukos executive and one of Khodorkovsky’s longtime partners. On television shows about the affair he came to be referred to as ‘the serial killer Nevzlin’.
Was any of this true? It’s impossible to tell. Pichugin has consistently denied all the charges. Under questioning, he was apparently given a psychotropic drug, and still denied the charges. His two trials did little to clarify things – the one before a jury was closed to the press, and the one open to the press wasn’t before a jury. Pichugin was found guilty at the jury trial, at which point the prosecutors appealed because they thought the verdict wasn’t harsh enough. They wanted a new trial, and got one. Witnesses changed their testimony, recanted, added new details. Some of the key witnesses were professional criminals. In the end, Pichugin was sentenced to life imprisonment. The thing is that the Russian legal system is in such a state that the outcome would have been the same whether he was innocent or guilty. The most I can say is that there are several Russian journalists I respect who think the case was trumped up, and no Russian journalist I respect who doesn’t.
But someone killed all those people, shot up their cars, and threw grenades inside just for good measure. Someone – or many people, acting separately – spilled a lot of blood during the 1990s, and we don’t know who it was. While this was happening, someone also privatised Russia’s immense oil wealth, avoided taxes, thereby bankrupting the government, which, since it had to finance a war in Chechnya, and also the lifestyles of its own officials, cut back on hospitals, so that patients, when they arrived at those hospitals, were much more likely to die. It would certainly be simpler if the murderers and the privatisers were one and the same.
This is the line that Putin has taken. Whenever he’s asked about Khodorkovsky – and he is almost always asked about Khodorkovsky when he meets with a foreign delegation or with a delegation of Russian liberals – he says that Khodorkovsky is in prison because he and his people were found guilty of various crimes, ‘up to and including murder’. (In France recently he compared Khodorkovsky to Al Capone – pointing out that Capone, in the end, had been imprisoned for tax evasion rather than his more heinous crimes.) It’s a point often lost in Western accounts of the case: politically, the Khodorkovsky case was sold as the humbling not just of a man who’d become too rich, perhaps illegally, but of a criminal organisation. The Putin regime has always based its legitimacy on its supposed fight against the chaos and institutional collapse of the 1990s, and it was important to connect Khodorkovsky to the very worst of those years.
But in Russia the arrest of Pichugin, say, or Lebedev, isn’t the end, or even necessarily the beginning of the end. It’s more like the end of the beginning. The prosecutor’s office always has a case at the ready, and at any given time a number of such cases are ‘under investigation’. Sometimes they are opened at the instigation of the Kremlin, sometimes at the instigation of a business rival. All of this is in the nature of a negotiation: if he understands the signals, a businessman in this position needs to start negotiating.
In the months after the arrests, however, Khodorkovsky did the opposite of negotiate. In the autumn of 2003 he went on a barnstorming tour of the country, speaking to student groups, checking on his philanthropic work, sharing his thoughts on the anti-Yukos campaign with local media. He went to Berlin and Washington, gave speeches, held meetings – and then came back. In Moscow, outside the police station after questioning by investigators, he announced that he wouldn’t run away. ‘If their intention is to get me to leave the country or put me in jail, then they should put me in jail,’ he said. ‘I’m not going to be a political exile.’
On 20 July, Khodorkovsky had given an interview to the tough-talking television ‘news’ show Moment of Truth. By then it was already clear he was going to be arrested. The video – available on YouTube – is difficult to watch. Khodorkovsky is very calm and pleasant, as always; he speaks softly, as always; and he puts particular emphasis on the normality of things: yes, he admits, he’s had conflicts with the government over tax policy, but that’s ‘normal’. He’s had conflicts over the pipelines – also ‘normal’. He insists that everything is all right.
Watching the interview, it’s impossible to tell whether he really cares nothing for his freedom or whether he just can’t believe he’ll be arrested. He is the richest man in Russia, one of the richest in the world. A week before he had had a meeting with Dick Cheney. That this kind of access, and prominence, can’t guarantee you immunity is hard to believe. Perhaps he really couldn’t believe it until a group of special forces, in ski masks and armed to the teeth, stormed his plane on the tarmac of a Siberian airport in October and arrested him. For the first week after his arrest, his cellmates would later report, he was in a state of shock. He refused food, lay on his cot, and seemed to be thinking ‘very hard about something’.
The shock must have been severe, for a spirit of optimistic, strategic denial seems to have been at the core of Khodorkovsky’s project from the very start. As he told Hoffman, a lot of people inside the Party who saw perfectly well the opportunities available in the mid-1980s declined to take advantage, not because they were dull-witted or foolish, but because they remembered earlier episodes of reform that had subsequently been cut short, with many of the reformers landing in prison. But, Khodorkovsky told Hoffman, laughing at his good luck, ‘I was too young, and I did not remember this.’ This kind of ignorance was most of the time a blessing; eventually it led to his downfall.
Scores of journalists and human rights workers have been killed in Russia since 1991, but, fittingly for the twilight of the age of Russian capitalism, it was two businessmen who found themselves at the centre of a show trial. Khodorkovsky and Lebedev were not charged with the murders attributed to Pichugin and Nevzlin; like Al Capone, they were presented with a list of economic crimes. As with the Pichugin trial, most serious students of the case believe the charges were bogus. Menatep and Yukos had taken advantage of various legal loopholes, especially with regard to taxation (in particular, the use of ‘transfer pricing’, where a domestic company sells its oil to an offshore affiliate at a loss, and the offshore company then sells it for a profit); when the loopholes were closed, they found new ones. This wasn’t very sporting (or maybe it was too sporting), but it wasn’t illegal. That wasn’t the point, however. As we know from Bernard Madoff and his 150-year sentence, criminal cases for economic crimes are very much the product of a particular political conjuncture. The Putin regime had always been eager to find a scapegoat for the 1990s; it needed to send a message to the other oligarchs – especially at the dawn of a giant commodities boom – on the matter of taxation; and also, as it happened, Khodorkovsky had become a real pest with his Open Russia programmes, pipelines to China and putative mergers. Richard Sakwa has even found someone who claims that during a meeting with Putin, Khodorkovsky took a call on his cellphone ‘and continued to talk as if the president of Russia did not exist’. (Is this what Putin had in mind when – as Lord Browne, the former president of BP, recently revealed in his memoirs – he said: ‘I have eaten more dirt than I need to from that man’?) Best of all, perhaps, once the case got going the authorities were able to start landing Yukos with enormous tax bills, in the tens of billions of dollars, effectively bankrupting the company so that it could be taken over by Rosneft, run not by a group of Jews but by Igor Sechin, a cabinet minister, a friend of Putin, and by all appearances himself a former KGB man. As for Khodorkovsky and Lebedev, they would both be sentenced to nine years (later reduced to eight) in penal colonies. The ‘serial killer’ Nevzlin was also tried, in absentia, but he had long since fled to Israel.
And as the government seemed to be reading from an old script, of tsarist or Bolshevik vintage, so too, to everyone’s surprise, did Khodorkovsky. Despite his background in the Komsomol; despite nearly two decades of non-stop work, first in finance and then in oil; despite his quiet, somewhat aloof personal manner, as soon as he ran into trouble Khodorkovsky began, perfectly naturally it seemed, to follow the traditional course of Russian resistance. He refused to run, he refused to sell out his friends, he refused to back down. He tried to save his fortune just before his arrest, by putting his several billion dollars’ worth of Yukos shares in the keeping of Jacob Rothschild in London. (Despite his efforts to protect his interests, Yukos shares eventually declined to $.02 before trading on them stopped in 2006.) Above all, like just about every Russian ever placed in jail, he began to write.
According to his former cellmates, after Khodorkovsky recovered from the shock of his arrest and began eating food again (mostly yoghurt), he got to thinking. The result was an epistle, a kind of historical cri de coeur about what had gone wrong in the 1990s, and why. Published in the business newspaper Vedomosti in 2004, five months after his arrest, ‘The Crisis of Russian Liberalism’ was not a reply to his persecutors but a full-scale assault on his only supporters: post-Soviet Russian liberals. ‘Today Russian liberalism is in crisis,’ he began. ‘Of this there can be very little doubt.’ In some detail and without pulling any punches – at times spilling over into outright nastiness – the essay examined the catastrophe of the liberals in a way that even six years later most other liberals have refused to do. ‘Those whom fate and history chose to be the vessels for liberal values in our country were not up to the task,’ Khodorkovsky wrote:
We need to admit this now in all honesty. Because the time for kidding ourselves is past – and from Cell block No. 4, where I now sit, I can see this better, perhaps, than those residing in more comfortable chambers … We need to analyse our tragic mistakes and admit our guilt. Our moral and historic guilt.
There was immediate argument about the letter’s authorship, with some people claiming that the Kremlin made him write it, or had it written for him by a shady journalist. (I once asked the journalist in question if he’d written the letter, and he said: ‘If I told you I didn’t, you wouldn’t believe me anyway.’) From a strictly literary perspective, the letter is puzzling: accusing liberal activists of trying to make money out of politics, for example, sounds rather odd coming from Russia’s richest man; and some of the vocabulary – the word ‘discourse’, for example – seems oddly high-flown. Sakwa takes the authorship question seriously and concludes that Khodorkovky did write the letter; and in I Served Time with Khodorkovsky, his cellmates describe Khodorkovsky reading ‘Crisis’ aloud to them and trying especially to make sure that the only one of them without a university education, Slava, understood it. ‘You’re the educated one, you write it,’ Slava would say, to which Khodorkovsky would reply: ‘That’s exactly why I want you to understand it.’ The following may not count as evidence, but I heard Khodorkovsky read some of his declarations to the court this past spring and summer, some merely procedural, others more general and philosophical, which he had composed the night before, and it was clear from the pride with which he delivered them that he believed them to be witty, sharp and utterly devastating. (They weren’t bad, especially in the circumstances.) He had, in short, the vanity of the author. In Russia, a CEO is more than a CEO.
Khodorkovsky’s next epistle was called ‘Prison and the World: Property and Freedom’. It was more personal than the first. He began by addressing the case against him, calling it a banal attempt on the part of one Kremlin faction to seize his oil company. He claimed that he, for his part, did not find it so unbearably difficult to part with his riches: property, the very basis of the post-Soviet experiment in freedom, the very guarantor of freedom, was also, he had found, an impediment to freedom. Before he went to prison, he wrote, ‘there were many things I could never say, because speaking openly could have harmed my property.’ This was the ‘tyranny of property’. ‘Now,’ he went on, ‘I appear in a different capacity. I have become an ordinary person (from an economic point of view, a member of the upper middle class) for whom the main thing is not his possessions, but his being. Who struggles not for property, but for himself, for the right to be himself.’
This was his best letter, and there have been several others since, as well as diary entries about prison and long exchanges with some of Russia’s most famous writers (which are published in such places as the Russian Esquire, GQ and the literary journal Znamya). Not quite yet a Gramsci, Khodorkovsky has nonetheless moved to the left, producing three consecutive epistles calling for a ‘left turn’ in Russian politics. He’s offered his opinion on the root causes of the financial crisis, as well as what Russia ought to do (think ahead). More than anything, though, in his letters he has remained visibly alive and engaged. It’s one thing to hear about what’s happening to Khodorkovsky in prison – at one point he was attacked with a knife by his cellmate, clearly an agent provocateur, who then accused him of homosexual advances – but it’s another to read him. Who among the other oligarchs has faced down such a situation? Who among them could have?
Khodorkovksy and Lebedev’s second trial began on 31 March last year, and has been dragging on slowly since then. This time the two men are charged with stealing all the oil produced by Yukos between 1998 and 2003 – approximately 300 million tons – and then of failing to pay approximately $30 billion in taxes on it. No one doubts that the verdict in this case, when it eventually comes, will be delivered from on high, without much reference to the facts. Not only do the charges overlap with some of the previous charges (an ‘odd’ circumstance, as Obama pointed out before his recent visit to Moscow), but some are so absurd as to be almost metaphysical. This is, of course, partly the point. Since his arrest six years ago the state has been trying to explain to Khodorkovsky that it can do with him what it chooses, under any pretext it chooses. His refusal to understand this simple fact has been, for six years, one of the central dramas of Russian political life.
For the Kremlin, this drama has long outlived its usefulness: Yukos is gone; tax collection across the oil and gas sector has improved; and whatever funny thoughts might have taken up residence in the heads of the other oligarchs over the years have been decisively swept out. ‘He was the richest man in Russia!’ a person close to one of Russia’s current richest men recently said to me, as amazed six years later as if it had happened yesterday. ‘And still they arrested him.’ The Kremlin, in other words, has made its point, but the Khodorkovsky affair, like the Second Chechen War, just keeps going.