December 18, 2005

04:32:24 am Wednesday, December 14, 2005 - Aswan and Cairo, Egypt - Hazy, High 70s. Includes comments on the US, UK, and New Zealand.  

Flew on Egypt Air from Aswan to Cairo. Flight delayed about two hours due to haze in Cairo. In Cairo, we toured the Egyptian Museum, home to the full King Tut exhibit and other Egyptian artifacts spanning thousands of years. Spent one night at Four Seasons Nile Plaza, which opened about a year ago and is fabulous. We were upgraded to a suite, which put us in a ridiculously large set of rooms, the largest we've had since our night at Burj al-Arab. Deanna stayed up to 3AM shopping for Christmas presents over the web. We've gotten numerous emails from people surprised that we (and this year that was 100% Deanna) were able to send out Christmas cards. That's the beauty of the internet. We did not buy a single postage stamp, lick an envelope, or print a single card. Yet we were able to custom design a card with multiple pictures from this trip, and send off dozens of cards to people in numerous countries. Go to shutterfly.com and you can probably still get your cards in people's hands before Christmas.

Now for a look at interest and exchange rates (normal readers may tune out here). The US dollar has had a couple of tough days, with the price of a euro increasing to $1.20 today. The dollar is weakening on the thought that the Fed is nearly done raising rates (4.25% after yesterday's increase) while the European Central Bank is just getting started with their increase to 2.25% a few weeks ago (their first increase in five years). I think the Fed is fairly certain to raise to 4.50% at the end of January, but a further increase to 4.75% at the meeting after that in March is only a 50/50 proposition at this point, in my opinion. If US economic growth slows next substantially next year (it is likely to slow, the question is by how much), then rate cuts at some point are possible, more likely in the second half than the first. Nevertheless, the Fed would be less likely to cut rates if inflation does not decrease, and oil prices will influence that. I can't predict oil prices, but my best guess is that they will remain in a $50-$60 range, but neither $30 nor $100 would stun me. My best guess is that Fed rates will end 2006 around where they are now, at 4.25%. That is, the Fed may follow one or two increases with one or two decreases. I expect the present two percentage point gap between the US and Europe to narrow to one percentage point as Europe ends 2006 around 3.25%, intermittently raising rates throughout the year as (and if) the EMU country's economies gradually improve (it is not certain that economic growth in the EMU will improve, though). I'm neutral on the dollar/euro exchange rate now. The dollar remains undervalued to the euro on a purchasing power basis but interest rate parity says the euro is due for a boost. The euro has greater political risk as the strains revealed in Europe in 2005 are not going away any time soon. On the other hand, the dollar has a greater issue with the US trade deficit possibly leading to a dollar decline. Thus, things could go either way. In any event, I no longer have the conviction of my March 20 call that the dollar was due to rise against the euro, so I will close out this prediction with a 12% gain (the dollar rose from 74.6 euro cents to 83.3 euro cents as the euro fell from $1.34 to 1.20). I am not saying that I now expect the dollar to fall; rather, I just don't feel as strongly that it must rise against the euro. My best guess is that the euro will range from $1.15 - $1.25 next year, but then I wouldn't be surprised to see it down to $1 or up over $1.35. About the only thing we can be sure of is now that I've closed out my prediction, the dollar will likely be very strong over the next week, hitting new highs for the year, and making my timing look foolish!

The yen also has also moved sharply up against the dollar this week after months of sliding. It is now 117, up from 121. Japan's central bank has not yet increased rates from near 0, but it sure looks like they will next year.

I still think the dollar is still in good shape versus the British pound. The pound began the year earning 2.50 percentage points more than a dollar (4.75% versus 2.25%) but now the rates have converged (4.50% versus 4.25%). With the UK economy looking weak heading into 2006, I expect it US rates to exceed the UK at some point in the first half. The UK also remains silly expensive on a purchasing power basis. Fair value in terms of purchasing power is probably for the pound to fall to $1.25, a 29% drop from $1.77 presently. I don't think we will see anywhere near that drop, but I do think the $1.40-$1.50 range that the pound traded in for much of the 1990s would be a reasonable target over the next couple of years based on purchasing power if Britain's economy stays weak, and if the US economy remains somewhat stronger than the UK.

Finally, I note that New Zealand's central bank raised rates to 7.25% last week. I continue to think--as I have since March--that New Zealand's economy is so good right now, that things there are far more likely to get worse than to improve or even stay where they are. Their currency is down some since I first said this, but their stock market is not. So I will keep saying it.

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November 27, 2005

12:14:10 am French Diary VI  

Tuesday, November 15, 2005 - Paris, France - 50, rainy.

Orsay Museum (art 1848-1914; begins where Louvre ends); World War II section of Invalids; Catacombs. Deanna continues to be sick with a sore throat and now no energy. She went back to hotel after Orsay Museum, but then ventured out later to Invalides by herself.

The Paris subway is among the best in the world. You are never much more than 500 meters from a station and the trains are frequent, the maps are plentiful, and the system is well maintained. It is similar to London in layout, but less prone to breakdown. I don't remember if it is physically uncomfortable in summer; London definitely can be, but Paris's warmer temperatures may mean they have addressed the cooling problem out of necessity. Probably Paris and Tokyo have the best systems overall, although each has a deficiency of escalators/elevators that are present in more newly built systems. Their absence is an inconvenience if you have luggage. Singapore is the sleekest system in the world, in my opinion, although it is not yet as comprehensive. Also, its stations verge on being too big, requiring you to walk long distances to get from the train to the street. Seoul's subway is excellent also, nearly as comprehensive as Paris and Tokyo, but occasionally suffering from the huge station syndrome like Singapore.

Saturday's International Herald Tribune had a great op-ed piece by Roger Cohen on the speech that French President Jacques Chirac has not given, but should, in response to the French riots. Before I discuss what Cohen said, I do have to say that Chirac's feeble response has been so invisible and lacking as to make George Bush's initial handling of Hurricane Katrina look like a model of crisis management. Also illuminating to me is that while in general the IHT has criticized Chirac, it has taken a rather mild tone, before dashing back to its comfort zone of haranguing Bush on everything he does, devoting far more column space to far less serious matters than the French riots. This unbalanced contrast, following the horribly biased Katrina coverage in Europe a few months ago, again shows me that Bush--a man who admittedly does provide much to criticize--is unlikely to get a fair evaluation by the European/US east coast media establishment for the remainder of his term. The sore loser phenomenon of 2000 has a long half-life, especially once the Iraq war re-stoked these passions.

Anyway, regarding France, Cohen providing a soaring speech that pinned the trouble assimilating immigrants to failed economic practice and a welfare state that "inhibits us, saps our creative energy, and extends a culture of dependency into suburbs of despair and vandalism." The answer Cohen says is not more government programs, but a break with past practices such as the 35-hour week and lifelong unemployment benefits that oddly have resulted in more than 60% of French citizens opposed to capitalism.

One thing I will have to commend France on is that they reject affirmative action out of hand, and have continued to do so after the riots, despite some calls to adopt this (most surprisingly by Nicolas Sarkozy, the leading conservative candidate for president in 2007). They also collect no census information on ethnic origin or religious practice, not wanting to put people in groups. Everyone is a French citizen of equal standing, with no distinctions made. Unfortunately, as the riots have revealed, in practice there has been discrimination and immigrant assimilation has not worked as well as in other countries, including the US, which falls all over itself to create ethnic and minority distinctions. I think the US success in immigrant assimilation is due to its economic model that gives hard-working people the opportunity for advancement, rather than its census taking procedures or quota systems, and I would hope if France were to adopt any of our practices it would look to the former and not the later. France's colonial past is full of historical mistakes, but this does not approach the magnitude of US slavery. Thus, I think any justification for affirmative action for France falls short. If they were to adopt any form of positive discrimination, I would hope they would base decisions on economic factors and not race or ethnicity. This might be a better method for the US to switch to as well.

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October 29, 2005

03:51:28 pm Italian Diary I  

Thursday, October 27, 2005 - Venice, Italy

Foggy until late afternoon, low 60s. Second of two nights at Hotel All'Angelo. Went to Galleria Dell'Accademia (Renassaince art), Collezione Peggy Guggenheim (first half 20th Century art; most interesting of the museums, collection pre-dates the downhill slide of modern art post-World War II), and Museo Correr (Venetian art and city history). Took gondola ride, something you really must do if you come to Venice, but not cheap--80 euros for 40 minutes. Food so far has only been okay. Italian food in other parts of Europe better than what we had in Venice. Heard a couple people I know say they found Venice a disappointment. I find that hard to understand, as it is unique in the world. There are cities with more canals (e.g. Amsterdam, Suzhou), but those are conventional land-based cities to which canals have been added. They are not surrounded and completely dependent on water like Venice. There are no cars here--you park in a huge garage and take a boat into the city. All food and goods arrives are delivered by boat as well. You can walk around narrow passageways and over bridges, but the water is never far away. Because of the extra transport and handling costs and the high costs to purchase and maintain real estate, it is expensive. And it is touristy. But if this is a disappointment, the rest of Italy must be incredible.

Friday, October 28, 2005 - Venice, Italy; San Marino; Florence, Italy

70 degrees. Drove down the Adriatic coast to San Marino, a separate country of 28,000 people that somehow escaped the unification of Italy in the 1860s. Europe has several of these Princess Bride countries: Andorra, Lichtenstein, Monaco, San Marino, and Vatican City. I'm giving Luxembourg legitimate country status by not including it in this list--it is 10-20 times bigger than these Macomb-size city-states. San Marino sits on top of an imposing mountain, so I can see why it was not consolidated initially, but it is still surprising that it remained independent, as it is completely surrounded by Italy. Of course, in important national matters such as foreign trade and defense, it relies on Italy to call the shots. Still, it is politically independent--it even had a communist government from 1978-1986. After spending about an hour driving around the country and seeing all of it, we ventured inland to Florence, driving through the beautiful Tuscan countryside. It was evening when we arrived, so we walked around for an hour and then went back to our hotel to rest up for a big day tomorrow.

Interesting updates in the International Herald Tribune on stories we have commented on throughout the year: 1) New Zealand's central bank raised its interest rate to 7.0% as its economic growth remains strong and inflation is appearing; 2) the UK moves to ban smoking in all indoor establishments (exception: pubs that do not serve food and private clubs)--if enacted, this would bring Great Britain in line with Northern Ireland (its ban effective 2007) and the Republic of Ireland (and New Zealand, Norway, and Sweden); and 3) UK housing prices down again in October according to one survey--for the 15th consecutive month--now 3.5% below one year ago.

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October 20, 2005

01:07:08 pm Czech Diary II / Austria, Slovakia, Poland, Hungary Diary  

Monday, October 10, 2005 - Prague, Czech Republic

Our last full day in Prague. I did not do much sightseeing, as we saw a lot yesterday and I wanted to update our web site. In the afternoon, I went to the National Museum, which Rick Steves labeled as "dull." He was too kind. A better description would have been something like "If you could calculate a ratio between the beauty of a building and the merit of its contents, the National Museum in Prague would have the highest ratio, thus making it the poorest use of space of any museum in the world. If you enjoy looking at hundreds of display cases of rocks, by all means do go, otherwise you will be more enriched by watching Czech-language television all afternoon in your hotel room."

Deanna went to the Jewish quarter and checked out the garden grounds around the palace. Her trip to the Jewish quarter reminded me of something I meant to mention about the Jewish museum in Berlin, but forgot. This is always happening, right after posting a log, I think of three additional items I neglected to mention. Anyway, one question I have always wondered is what is it about the Jews that made everyone hate and persecute them. Was it lingering resentment over the Crucifixion? The museum provided this answer. In the 13th Century (1215 sticks in my mind, but I'm not sure if this is the correct date), my favorite whipping boy, the Catholic Church issued an edict that Catholics should not live next to Jews. They required Jews to live in segregated areas, wear a yellow patch to identify themselves as Jews, and prohibited Jews from many jobs in society. In the centuries that followed, they were expelled outright from Catholic countries such as France and Spain. Sound familiar? Just another reprehensible episode in the long history of the Catholic Church.

At night, we went to a modern dance performance at the Black Light Image Theater. Half of it was very interesting, but the comic relief interludes between different segments were insipid and could be cut out completely, with the effect of making the whole show better.

Tuesday, October 11, 2005 - Prague, Czech Republic and Vienna, Austria

Drove about four hours from Prague to Vienna. Similar to the trip between Berlin and Prague, about half the route--mainly the Czech part--was on a two-lane road. The government is building four-lane roads, but this takes time. So, the Eastern Europe roads infrastructure is like the US in the late 1950s and 1960s--major routes are sometimes four lanes, but other times only two. In a decade or two, they will be mostly four lanes. The communists built fantastic public transportation--subways, trams, buses--within cities, but travel between cities was not a priority. The train network is okay, although not as good as Western Europe, but--since most people did not have a car--the roads infrastructure between major cities is not what it should be.

One thing I forgot to mention earlier when we crossed the border from Germany was that the Czech roadside was full of billboards, just like the US, something we have not seen recently. While I have never read this, I assume most Western European countries must outlaw roadside advertising. It's interesting to see different society's differing tolerances for advertising. Western European athletic jerseys look like a NASCAR driver's uniform. Instead of the jerseys saying Manchester United or Real Madrid, they say Vodafone, Siemens, or Emirates. I'm sure the European fans recognize which teams have which jerseys, but I can never remember because the team name is dwarfed (or even non-existent) next to the sponsor's emblem. You never see this in US team sports. Remember the controversy when MLB proposed having a small Spiderman emblem on second base in a movie tie-in for one weekend's worth of games. Why you would have thought they were proposing that pitchers henceforth would have to pitch underhanded, such was the outcry about how the game would be ruined. Our attitude on not polluting an athletic jersey is similar to Western European attitudes on roadsides ("how dare you have signs that inform drivers of restaurants, gas stations, and motels ahead!"). Each side considers the other nuts because it's what they are not used to. Czechs take neither side--they put advertising everywhere. For example, the ice surface on a Czech ice rink has so many ads that you can hardly see the puck (they don't limit themselves to just the boards and the neutral zone ice as in North America).

On a related matter, the UK must severely limit the number of gas stations that can operate. How else could we have run out of gas there, not seeing one station during a 40-mile stretch through a crowded metropolitan area? Continental Europe so far has stations everywhere. As for gas prices, the UK is by far the most expensive. This is most likely an issue as to the level of taxes, but the limited supply of stations may also be a factor. UK prices were roughly $7.50 per gallon, doing the double conversion of liters to gallons and currency to dollars. It cost over $100 to fill up our tank. Elsewhere is Europe, the prices have ranged from just over $4 to around $6 per gallon. I remember correctly, Belgium was surprisingly low for Western Europe, at around $4.50 per gallon. In general, Eastern Europe is lower than Western Europe, as taxes and costs are lower here. Prices between $4 and $5 are the norm here, whereas Western Europe is typically over $5.

We're spending three nights at the Austria Trend Hotel Albatros in Vienna. We walked around the old town after arriving mid-afternoon, spending much of the time comparing our two maps--one super detailed but with no tourist landmarks on it and the other showing all of the tourist spots, but with key details such as street names often neglected. In frustration, I went to the tourist information booth and the man there kindly turned over my detailed map to reveal that what I wanted--a detailed map with tourist sites marked--had been on the reverse side the entire time.

We went to the Haus der Musik (Music Museum). It offers highly interactive exhibits on classical and more modern new-ageish type music. You can even create short compositions. Very unique.

Like Prague, Vienna is full of old, well maintained buildings from centuries past. One hundred years ago, Vienna, at the heart of the still important Hapsburg Austria-Hungary Dynasty, was something like the fifth largest city in the world (presumably behind only New York City, London, Paris, and Berlin). It's population was around 2 million, as compared to about 1.5 million today, a figure that would not place it in the top 50 (top 100?) in the world. Vienna is nicer than Prague, which is to be expected, as they did not have to live through nearly 45 years of communism. Austria's per capita GDP is much higher than the Czech Republic's because of this: in absolute dollar terms $26,720 versus $6,740. The two countries are about the same size, are adjacent to each other, have similarities in history and culture, and have similar populations--Czech Republic 10 million, Austria 8 million. Is there any reason why then, with communism thrown off and both part of the EU now, their economic output per person should not be similar in a few decades time? I can't think of any. Maybe being German speaking gives Austria a slight advantage in that they can better serve the large German market. But the Czech Republic also has the advantage of being newer to capitalism and thus able to learn from the mistakes of others in Western Europe (e.g. don't build huge social welfare programs that sap the incentives from the economy and that ultimately you cannot afford to maintain). This should allow them to leapfrog more developed countries in terms of some technologies and processes. So in an investing sense, I would invest in the Czech Republic rather than Austria.

Some of the Czech Republic's catch up may occur quickly through currency effects. On a purchasing power parity basis, they are not as far behind--Austria's PPP per-capita GDP is $30,000 while the Czech Republic's is $15,750. Austria uses the euro. The Czech Republic uses their own koruna, but plans to switch to the euro, perhaps in 2007 if they meet certain economic targets. I expect the koruna will appreciate between now and then, and once on the euro, the Czech Republic will not be as much of a bargain as it is now.

Received an e-mail from Don Furman in response to the question in my October 4 diary entry:

If memory serves, 99 Luftballoons was the #1 song of 1984 as played on a radio station somewhere during your travels in Australia in April or May.

Noprize?

I was amazed at Don's power of recall (other than it was the #1 song for the month of April 1984 not the entire year on the aforementioned Australian radio station, but that's quibbling). I had forgotten all about writing this. When I posed the question, where have I mentioned "99 Luftballoons" previously in this log, I had in mind the Tampa entry at the beginning of the trip, where the anti-war song fittingly came on as I was playing Missile Command, a nuclear annihilation video game, in a Tampa arcade in January. Although I did not promise a no-prize for answering, I think Don deserves a double no-prize for knowing my subject matter better than I. Your award is not in the mail, Don, and you will not receive it before Christmas.

Wednesday, October 12, 2005 - Vienna, Austria

Went to the Sigmund Freud Museum, the Wien (Vienna) Museum and then took a walking tour of the old town area. The Freud Museum was located in his former office and home before he immigrated to England before the start of World War II. It probably is of interest to fans, but it is really more a collection of mementos than a museum that explains his theories or his significance. I left as I entered, suspecting much of his work was well-intentioned genital-obsessed psychobabble. The city museum was okay although it seemed unaware that Vienna and Austria played any role in either world war. The tour was good, but at 90 minutes did not really do justice to the rich history of Vienna's old town. It easily could have been twice as long without seeing everything. At night, we went to a Mozart concert, a touristy thing to do, but quite good.

Thursday, October 13, 2005, Vienna, Austria

Went to the Belvedere museum, housed in one of numerous Hapsburg Dynasty palaces in Vienna. Having overdosed on palaces in Russia, I just have no desire to see any more, nor really does Deanna. They are all beautiful, but their extravagance is so over the top, that you begin to find them a pointless squandering of wealth for a small group of overprivileged people while the masses suffered. I went to the Belvedere because it had an exhibition on 20th Century Austrian history. This filled in all of the pieces that were missing in the city museum yesterday. Afterward, I went to the Museum of Military History, an aging, but reasonably well done tribute to the Hapsburg proclivity to fight wars with its neighbors. Trying to keep track of all of their battles is like trying to stay on top of a fickle schoolgirl's ever-changing boyfriends. One reason I favor modern history is that I just can't keep track of the earlier periods--all of the different wars begin to blur at some point, although I have come to understand them better on this trip. Finally, I went to the Leopold Museum, an art museum, with an impressionist exhibit from the Museum d'Orsay in Paris. It was okay. Deanna did many of the things I did, but we were on different schedules, as I was staying up late watching the Cardinals playoff games and then sleeping until around 11AM. It's like being in college again.

German-speaking Austria was on the wrong side of history twice this century. Allies with Germany, Austria-Hungary was one of the central powers (Germany, Austria-Hungary, Bulgaria, and Turkey) in World War I. From 1938 to 1945, Austria did not exist. It was merged into Germany, a union (the Anschluss) forced by Hitler but generally supported by the population. Each war carried consequences for Austria afterward. World War I ended the Hapsburg Dynasty, dismembering Austria-Hungary from a great empire to a small country. (As an aside, it is worth noting the unexpected consequences of war--World War I ended the age of monarchism just as World War II brought the colonial era to a close. Neither war was fought toward these aims, but these political systems were no longer sustainable following the wars.) The end of World War II saw Austria re-established as a separate nation from Germany, but one occupied by the four victorious powers just like Germany. Fortunately, for Austria, the outcome was different than in Germany. The occupation zones never became a divided border, and in 1955, the four powers left, with Austria becoming a permanently neutral nation.

Just who are these Hapsburgs, a family name not well known in the US, other than by students at liberal arts colleges? Here's a short history, as I understand it:

1273: First Hapsburg ruler, Randolph I
1500 - 1558: Charles V (Charles I in Spain). Through conquest and marriage, the Hapsburgs ruled the Holy Roman Empire (most of central Europe, centered in Germany), Netherlands, Spain, and all of Spain's colonies. At this point, the Hapsburgs were the most powerful rulers in the world. After Charles V, the Holy Roman Empire and Spain were separated.
1618-1648: Hapsburg power in Germany declines during the Thirty Years' War, a continent-wide conflict between Catholics and Protestants.
1804: Austrian Empire proclaimed; two years later, in 1806, the Hapsburgs abolished the Holy Roman Empire. Partly the HRE had outlived its purpose, but also according to my tour guide, they feared that an ascendant Napoleon coveted the title of Holy Roman Emperor. As long as the HRE existed, the Hapsburgs thought they were more vulnerable to Napoleon she said.
1867: Bowing to a Hungarian independence movement that had raged since 1848, the Dual Monarchy of Austria-Hungary is established.
1914: Archduke Franz Ferdinand, the heir to the Austrian throne, is assassinated in Sarajevo by a Serbian nationalist. Austria-Hungary declares war on Serbia. Russia, an ally of Serbia, mobilizes for war. Germany, an ally of Austria-Hungary, attacks France, an ally of Russia, hoping to defeat it and turn its sole attention to Russia. Desiring an element of surprise, Germany's attack route went through Belgium, and this violation of Belgium sovereignty brought the UK into the war. World War I begins.
1918: Austria-Hungary defeated, the nation of Austria created with about one-eighth the territory of the Austrian-Hungarian Empire. The last Hapsburg ruler sent into exile.

Friday, October 14, 2005 - Vienna, Austria; Slovakia; Krakow, Poland

A driving day, going from Vienna to Krakow. I'm not sure of the exact mileage--it was probably in the range of 300-350 miles. This took us eight hours, although we did stop once. Staying two nights at Hotel Francuski, a renovated property in an old building in the old town area.

This was our first time in Slovakia and our route took us threw a string of rather grim looking communist-era industrial towns. There are signs of foreign investment though--the European hypermarkets are here, namely Tesco and Carrefour (respectively, UK and French grocers and general merchandisers somewhat akin to Wal-Mart).

Saturday, October 15, 2005 - Krakow, Poland

We spent the day visiting the Auschwitz I and Auschwitz II-Birkenau concentration camps, over an hour's drive from Krakow, where approximately 1.5 million Jews and other persecuted groups were murdered during World War II. This makes Auschwitz the largest scene of mass murder in human history. Afterward, we visited the Oskar Schindler factory in Krakow. Schindler was not necessarily the nice guy depicted in the movie--he was a war profiteer, utilizing slave labor, and a womanizing alcoholic. Nevertheless, he had an epiphany, and saved over 1,000 Jews who otherwise would have been murdered. Their 7,000 descendents today undoubtedly care less about Schindler's flaws than the positive action he took when it really mattered.

Sunday, October 16, 2005 - Krakow, Poland; Slovakia; Budapest, Hungary

We spent the morning in Krakow, touring the salt mines, and driving around Nowa Huta. Afterward, drove about 300 miles to Budapest, mainly through Slovakia. This took about six hours, less than we expected. The roads in Poland are not that good, mainly two lanes with deep groves in the pavement and a lot of traffic. You creep along at around 30 miles per hour. This will be different in a decade or two. There are more four-lane roads planned than presently exist. For now, though, you tend to get a short stretch of motorway and then it's back to the two-lane creep. Slovakia generally has better roads, although two-lane roads are still plentiful. They just seem a couple years ahead. Actually, I'm glad we are seeing and experiencing Eastern Europe as it is now. It is going to change a lot, and for the better, but I am glad to have a data point of what it's like now, for later comparisons.

The salt mines have to be seen to be believed. No longer active, except for tourism, they are centuries old, and are filled with intricate statues, all carved from salt. It's a bit kitschy, but utterly unique. See image gallery. Nowa Huta is a planned worker's paradise community, built around a steel factory that once employed 40,000 people, and heavily populated Krakow. It was less interesting than I expected--it would probably be better to see on a tour, where its background and key sites could be described. Notably, the central square of this post-World War II Soviet showcase is now named Ronald Reagan Square. The workers' paradise community ironically became a hotbed of political dissent in the 1980s. Western Europe may not give Reagan his due, but the East, experiencing the iron fist of the Evil Empire firsthand, certainly does.

Our drive back in Slovakia took us through the procession of grim industrial towns at first, but further into the country the terrain became more mountainous and the scenery prettier. There were several ski resorts along the way.

In Budapest, listened to NLCS game 4 that began around 2:45 AM. The Cards lost a must-win game 2-1, and now trail in the series 3 games to 1. They had numerous scoring chances, including first and third with no outs in the 9th, but they could not pull it out.

Staying three nights at art'otel, the same hotel we stayed at in Berlin. The rate actually is more here than in Berlin. More on Hungarian prices tomorrow.

Monday, October 17, 2005 - Budapest, Hungary

Went on a four-hour walking tour of the city. All of the seven other people on the tour (five Australians and two Americans) were traveling for an extended period in Europe, the shortest trip being about five weeks. That's the first time everyone we have been with on a tour was traveling long term. We all swapped many notes and observations of different destinations. The weather was cool, mid 50s, but with bright sunshine that made it feel warmer.

Although it is over 1000 years old, Budapest does not have the narrow old town streets of other Eastern Europe capitals. The streets are wide in a manner that mildly reminded me of Moscow. The city has the old architecture you would expect, with the 19th Century most dominant.

Prices here are higher than I expected, closer to Germany than the rest of Eastern Europe. I don't know why this is--I have not heard a good explanation. Wages and per-capita GDP is in line with the Czech Republic, Slovakia, and Poland, but prices are higher. Possible reasons could be that Budapest is a larger city (about 2 million people) so real estate is more expensive (I don't know if it is), or that there is more foreign investment here (again, I don't know if there is), perhaps because Hungary was first to throw off communism. GDP growth rates are decent--between 3% and 4%--but nothing special, and perhaps a bit laggardly, for Eastern Europe. The government's fiscal situation is poor with a budget deficit over 6% of GDP, and the euro won't be adopted here anytime soon. The government's target date of 2010 is being questioned as too aggressive, considering the budget deficit. My conclusion is that the currency is overvalued. I emailed a friend of mine, Roger Neale, about this. Roger is English, but now lives in Chicago with his Monika, from Hungary. He agreed that Hungary's currency, the forint, could be overvalued. He said an additional risk is that Hungarian consumers often take out consumer loans in Swiss francs to get an interest rate below the local forint rate. He did not think this situation--foreign imports financed by foreign loans--was healthy.

After the walking tour, I took a long multi-hour nap to recover from last night's game, which ended about 5:30 AM, and to prepare for Monday night's game, beginning at 2:30 AM. Throughout the trip I've poked fun at various countries or institutions for their ridiculous practices, so let me now criticize an American institution--Major League Baseball--for their provincial Americanism in not understanding the international market. I've been watching the baseball playoffs over the internet, or when my connection is not fast enough, listening to an audio feed from KMOX, the Cardinals station. Last night (game 4) and tonight (game 5) I have had a fast enough connection, but the MLB site blocked me from watching the video, assuming (incorrectly) that I was in the US (where the games are blacked out on the internet, due to the exclusive that Fox has in broadcasting the games within the US). The message that popped up invited me to call customer service if I thought this was an error, and provided a toll-free number for me to call. US companies have a total blind spot on this, not realizing that anyone outside of the US and Canada cannot call a US toll-free number. Thus, a service available to international fans has a customer service number that none of them can access. Brilliant! They do also have an e-mail address, hidden deep within their web site, but responding quickly to e-mail does not seem to be a priority. I'm okay listening to the audio, as the announcers tend to be more descriptive anyway. And I do recall that only a couple of years ago, there was no video option anyway (nor would there have been a wireless internet connection in my Budapest room then either). For that matter, it was only just over five years ago that audio became available. So technology has made all of this available in a short period, and my expectations have risen accordingly. A decade ago, I would have had no way of knowing the outcome of the game in real time. I would have had to find the International Herald Tribune two days after the game to learn the score.

The game of course provided one of the top moments in Cardinals baseball history. Down three games to one in the series, facing elimination, losing the game 4-2 with no one on, two outs and two strikes in the 9th inning against the best closer in baseball, the Cardinals improbably won the game. The real reason for their victory is that Deanna woke up just in time to cheer them on in the 9th inning. The Astros, one strike away from the World Series, now have to go to St. Louis for game 6 and hopefully game 7, wondering if once again they have let opportunity slip through their fingers, in a manner worthy of the Chicago Cubs.

Tuesday, October 18, 2005 - Budapest, Hungary

Got up about 11:30, after listening to game until 6 AM. Went to Museum of Military History and National Museum. Tried to go to city history museum, but it was closed. The two museums I did go to were decent, with enough English to make sense of everything. Hungary threw off communism three times, but it was like a virus that kept coming back. After World War I, a Bolshevik regime took hold, but lasted less than a year. After World War II, the Soviets installed a puppet government. In 1956, the Hungarians believed that, at the end of October, they had overthrown the communists. They declared themselves a neutral state, ended censorship, opened their borders, routed Soviet troops, and withdrew from the Warsaw Pact. It lasted about a week and a half. On November 4, Soviet tanks rolled in to Budapest. The leader of the uprising, Imre Nagy, was executed, and Soviet order was restored. In 1989, Hungary was the first of the eastern block countries to fall. They opened their border to Austria, providing a circuitous escape valve to the west. East Germans, for example, could get to West Germany by crossing four borders: Czechoslovakia, Hungary, Austria, and West Germany. This time, the Soviets did not have the willpower to oppose Hungary, and by late October--about two weeks before the collapse of the Berlin Wall--Hungary declared itself a non-communist state. Imre Nagy was reburied as a state hero, a ceremony attended by 300,000 people.

Hungary picked bad partners with regard to the world wars. Aligned with Austria within the Hapsburg Dynasty, it was dragged into World War I when Austria thought they would teach Serbia a lesson. The end of the war also saw the end of the Hapsburgs, and this breakup led to the creation of numerous new countries, to include Czechoslovakia and Yugoslavia. Hungary lost 70% of its territory and 60% of its population to these two countries and to Romania in the 1920 Treaty of Trianon. Hitler promised Hungary this territory back, and the revenge-minded Hungarians signed on, not really knowing what they were getting themselves into. They participated in Hitler's invasion of the Soviet Union, and when the tide turned, they became a Soviet satellite for nearly 45 years. While I'm no fan of the Soviet Union, I can begin to understand their desire to have a buffer zone of satellite states after the war. They were after all, attacked by troops from Germany, Finland, the Baltics, Austria, Czechoslovakia, Hungary, Romania, and probably others. Now the USSR attacked Finland and the Baltics first, so no sympathy there, but the other states--under Germany's sway--contributed to the German invasion of the USSR. The Soviets probably did not fear these states directly, as much as it was fearful of Germany's ability to influence them. So the USSR desired that these states, that became German satellites in the late 1930s, become Soviet satellites in the late 1940s. And that is what they did. Hungary did briefly get all of its pre-World War I territory back as Germany promised, but after World War II, its territory reverted to the 1920 Trianon treaty borders.

I read where Northern Ireland (the UK part of the island) has banned smoking indoors, including pubs and restaurants, effective 2007. Then the entire island of Ireland will be smoke free. The Republic of Ireland's (the non-UK part of the island) ban has proved popular with smokers and non-smokers alike, with 90% in one poll supporting the ban. Pubs in Ireland are not just drinking places, but typically the main restaurants in the smaller towns and people appreciate being able to eat smoke free.

Weather: high in mid-50s, low in mid-30s. Oh, and MLB finally responded to my e-mail, providing me with a non-toll-free customer service phone number.

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September 29, 2005

01:36:46 am Benelux Diary I  

Thursday, September 22, 2005 - London, England, UK; Calais, France; Brussels, Belgium

A three-country day, taking the train under the English Channel from London to Calais; picking up our leased car there and having lunch; and then driving on to Brussels. Belgium is a small country, slightly larger than Maryland, but our first impression of it is one of openness and spaciousness in contrast to the UK. The narrow roads and stone fences and hedges of the English countryside give way here to wide-open fields reminiscent of the American Midwest. That Belgium is actually more densely populated than the UK seems hard to believe (the UK has six times Belgium's population of 10 million, but eight times the land. England is probably more densely populated than the UK as a whole (I do not have separate figures for it), but still it would not be that different from Belgium. How different two countries only a couple dozen miles apart can look is amazing. In addition, the weather is much better--bright sunshine and 75 degrees--it was cloudy and at least 10 degrees cooler in London. Stayed for the first of three nights at the NH Atlanta Hotel in the center of the city.

Friday, September 23, 2005 - Waterloo, Belgium and Brussels, Belgium

Brussels does not get high marks as a tourist destination, but we went there anyway as we have found many places interesting--e.g., Brasilia, Canberra--that are not on the normal tourist route. Not coincidentally, these are all government centers, which explains why they don't have a touristy reputation--no nightlife--and why we find them interesting: loads of government spending on interesting buildings and museums. Surely, Brussels as the main location of the EU and NATO must be the same. Surely, though, it is not. This is why we switched to plan B on our first full day in the city--Brussels as a central location to see other places.

I always assumed that Waterloo, where Napoleon met his final downfall in 1815 (his first downfall being the decision to invade Russia in 1812), was in France. It is actually in Belgium, just south of Brussels. I took a local bus there in the afternoon, about a one-hour ride. There's a Wellington Museum in the town of Waterloo, dedicated to the British commander, and about two miles away at the battlefield site there is a visitor center and giant commemorative hill and statue known as Lion Mound. It is all of medium interest at best, making it superior to much in Brussels, but skipable unless you are a real history buff.

Brussels does have a central square--Grand Place--that is fantastic, one of the best squares in all of Europe. They also have numerous museums, which if you speak French, may be worth going to. As an English speaker, you are out of luck. The very helpful English-speaking person who takes your money at the front will tell you that there are translations in English and technically, they are correct. A portion of each museum--in percentage terms a portion less than 10%--is available in English. Available may mean a pamphlet with English words on it that in theory correspond to a particular exhibit, but you would have to be more adept than us to figure out which words go with which exhibit.

Let me tell you how bad the language provincialism is in Brussels' museums. Belgium is a bilingual country--the northern part of the country, about 60% in of the people in total, is Flemish and thus Dutch speaking. The southern part is Walloon. They comprise 30% of the population and speak French. In addition, a very small portion of the eastern part of the country speaks German. There is a significant immigrant population from Arab countries. This makes up maybe 10% of the population, and they appear to have learned French. Finally, because of the EU and NATO, significant portions of all workers are from outside of Belgium. One figure I saw suggested one-quarter of all workers were foreign--this may include the Arab immigrants, I'm not sure. Everyone we encountered can speak English well. So you might think that the cultural institutions in a tolerant, multi-cultural modern city that serves as a quasi-capital of Europe and the actual capital of the country of Belgium would provide their information in Dutch, French, English, possibly German, and maybe even Arabic. But you would be wrong. Some overachieving museums managed to put their information in Dutch, the language spoken by the majority of the people in the country. But others assumed French-only was good enough. This appalled us. This is the capital of the country and not every museum has information in the dominant language of the country!

This French-language bias did not extend to the people. They all willingly spoke English, and were very friendly and helpful to me, probably more so than I would get in the US. For example, I spoke with four different bus drivers on my journey to Waterloo and they patiently explained bus times, departure and pickup points, when to get off the bus, and one even provided a timetable schedule without me asking, so that I would know when the return bus would arrive.

Another perfect weather day, low 70s and sunny.

Saturday, September 24, 2005 - Luxembourg City, Luxembourg and Brussels, Belgium

Drove two hours to Luxembourg, saw the sites there, and drove back to our hotel in Brussels. Luxembourg City is a medieval town, founded in the 10th Century. We visited the Bock Casements, a series of underground tunnels built into the rock on a hill that form a fortress to defend the city. You could get lost for hours in this maze of often poorly lit caverns; in fact, we met a family of four from Germany who had been in there for the past 10 days. As we led them to safety, we explained to them that their recent national election had resulted in both Merkel and Schroder claiming that the other side had lost, and that both of them were correct.

Next, we went to the National Museum of History and Art and the Museum of the History of the City. Now each is an impressive building, with nice displays, but each seem to be put together with the same provincial attitude that we experienced in Belgium. Excuse me for thinking that a country with fewer than a half million people and a size less than Rhode Island, with the highest per capita GDP in the world and half of its GDP from international banking, and a sizable contingent of guest workers from all over Europe, might want to provide information in its relative brand-spanking new museums in the global language. Over 80% of the English entries in the comment book at the city museum suggested the same. Scandinavia, the formerly communist Baltics, currently communist China, and many other countries throughout the world understand that in today's interconnected world you need to provide information in the one language common throughout the world, but to parts of rich, prosperous Western Europe, this is news. That the majority of visitors they come in to contact with speak English, seems to have no bearing on how they put together their museums.

Overall, though, I liked Luxembourg. The casements were unique, and the city was a quaint place. I'd recommend it over Brussels, but I would only spend one day there.

The weather continues to be excellent, in the low 70s. Perfect college football Saturday, although no games seem to be on the local schedule.

Sunday, September 25, 2005 - Brussels, Belgium and Amsterdam, Netherlands

We stopped at the Army Museum on the way out of town. On Friday, the eager, helpful, friendly person at the tourist information booth in Grand Place said they had audio guides in English, which of course they did not. Beware--half of all information provided by eager, helpful, friendly people in tourist information booths around the world is wrong. Again, my heart warmed as I read entry after entry in the comment book criticizing the museum for its lack of English. One entry really made my point better than I could have. It was written in English, but signed by the writer in his native language, Chinese. An increasing number of museums around the world now have information in Chinese, but most still do not, so English is the only lifeline for a Chinese person (or a Japanese person or a Korean person or dozens of other nationalities) to understand anything in foreign museums. This is why English is necessary--not so much for the native English speakers, but for citizens of all countries who may only know one foreign language.

Now, ironically, just as I'm writing this, I receive a rather appropriate e-mail from Peter Magee, my Tuck classmate who lives in London, following up on a similar conversation we had our last night in London:
Today is a big day in the history of the English language. On this day, in 1066, William the Conqueror of Normandy arrived on British soil. Having defeated the British in the Battle of Hastings and on Christmas day he was crowned the King in Westminster Abby.
At the time the British were speaking a combination of Saxon and Old Norse. The Normans, of course, spoke French, and over time the languages blended. To the Saxon word "house" came the Norman word "mansion." To the Saxon word "cow" came the Norman word "beef" and so on.
So the English language now contains more than a million words, one of the most diverse languages on earth. Cyril Connelly wrote, "The English language is like a broad river ... being polluted by a string of refuse-barges tipping out their muck." But Walt Whitman said, "The English language is the accretion and growth of every dialect, race, and range of time, and is both the free and compacted composition of all."
I must confess that today actually refers to September 28 as I am writing this three days after the fact.

Final impressions of Brussels--an unimpressive capital for a developed country/continent; somewhat dirty (trash and graffiti); not much to see beyond Grand Place. I should note that disappointingly, we did not get to see any of the EU buildings, as the last tour of the week they offer is 10AM Friday and we learned of this around 11AM Friday. Other countries make their government buildings available for tourists on weekends, because that's when most tourists (and citizens) are able to see them, but here the European desire for not working hard seems to have won out. It brought to mind Bill Bryson's joke about "How many people work at the EU?" The answer: "About one-third of them!"

The weather is a bit cooler, down in the 60s, and cloudy as the day wore on. Stayed for the first of four nights in the Museum Square Hotel, next to the major art museums in Amsterdam, a bit away from the city center, but still within walking distance.

Monday, September 26, 2005 - Amsterdam, Netherlands

Went to Van Gogh Museum; Verzetsmuseum (Dutch World War II Resistance Museum); and Anne Frank House. My criticism of the Belgium museums' provincial attitude on language was reinforced when I noticed no less than nine languages available via audio guide at the Van Gogh museum, and the exhibit information at the Anne Frank House translated into eight languages. The less well-visited resistance museum only offered two languages, but importantly one was the global language of English. Here is a country that gets it. Probably not a coincidence that their native language (Dutch) is not French. They do seem aware that the French lost a half-dozen wars to the English in the 18th and early 19th century, largely fought over colonial supremacy, and thus the global language today has become English.

The Van Gogh Museum has the largest single collection of Van Gogh paintings in the world (about 200 of the 900 known to exist). Van Gogh is my favorite artist, so I was looking forward to this museum, but I must admit a bit of disappointment. Throughout Europe, we have seen Van Gogh's, with a good art museum typically having a half dozen of his paintings, including one or two that I had not previously seen that jumped out at me as incredibly well done. Here there were dozens I had not seen, and many I liked, but none that really moved me. There is a version of one of my favorite paintings, "The Bedroom," here, but since it is nearly identical to the painting in the Art Institute in Chicago, it was not something new to us. Overall, though, this is an excellent art museum, making it a must visit for anyone with the slightest interest in art. The most significant thing I did learn was that nearly all of the art he is known for was produced in a four-year period! He was only an artist for the last 11 years of his 41-year life, and spent the first part of that period training himself on how to paint. When he moved to Paris and was able to work with the impressionist and post-impressionists of the late 1880s, his talent and painting really flourished.

We have been in German resistance museums in Denmark, Norway, Belgium, and now the Netherlands. The first two countries were invaded by Germany in April 1940, the last two, along with Luxembourg and France, were invaded in May 1940. Overmatched, each country capitulated quickly, ranging from a few hours to about two months. The Netherlands lasted less than one week, Belgium about two weeks. Thus, for each, most of their involvement in World War II was in the form of a resistance movement, and these museums chronicle the experience of the general population: strikes, sabotage, persecution, people in hiding, Jewish deportations, and even collaboration. The museum here in Amsterdam is the best so far, followed by Denmark, Norway, and Belgium (the only one not in English).

The Anne Frank House is moving, another must see. The area they hid within is bigger than I expected, although they did have eight people in it. What would get you though, is the boredom. Spending four days trapped in a two-bedroom apartment with eight people in Manila in 1989 during the coup, the overwhelming feeling I had was one of immense boredom. I can't imagine having to spend over two years in this condition, not to mention the knowledge that, if found, you would likely die.

High today only around 60, cloudy.

Tuesday, September 27, 2005 - Amsterdam, Netherlands

Cold, rainy, 55-60, warmer in the late afternoon once the rain stopped. Went to Rijksmuseum, the main art museum, covering Dutch Masters. Under renovation, it had only its best paintings on display, which probably made the visit more enjoyable. The museum was good, but 17th Century art is not my favorite. Afterward, went to Amsterdam Historical Museum, a better-than-average city museum. Spent the afternoon and evening reading about Germany, figuring out where to go, and beginning to book travel.

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