A Clean Slate

Russia's a very strange place. It can alienate you, make life difficult for you, make you regret you ever heard about it. But once you're gone, Russia has an even more strange way of staying on your mind. For the past year since my return, I've been casting off the little things about Russia and Moscow that had crept into my life. It's been a slow motion ceremony of closure. This weekend I took one of the last, and perhaps most obvious, measures; I shaved off the beard I had grown while on the road in Siberia.

The beard was born from a lack of hot water and otherwise inconvenient accommodations while I was travelling in April and May last year. It certainly wasn't my style - I have never gone more than a day or two without shaving - but it somehow ended up fitting my image of myself. It was a semi-romantic notion I had about a russophile trekking across the great unknown spaces of Eurasia, on his own with his wit to survive. Of course, reality was a little bit different. I sipped tea on comfortable trains, went to ballets and operas, and never really lacked for anything. As far as travel goes, it was on the low end of adventure and not on the hardship scale at all.

Reality began to set in slowly when I returned. I liked the beard and thought it looked pretty good. But having a beard is an active commitment - the trimming, the daily careful shaving around it, etc. It became apparent that the maintenance aspect was an unseen cost of the rather passive decision to grow the thing in the first place. It no longer really made any sense to me.

So, I lathered up my shaving brush with a beautiful sandalwood soap and shaved my entire face for the first time since mid April 2006. It was a satisfying experience - the smell, the sensation, the scratching sound of the razor. When I rinsed off the suds and looked at myself in the mirror I was startled by the change.

I suppose I look the same now as I always did for all that time that I didn't have a beard at all. But then, how could that be possible? All the things I had seen and done in the meantime have surely made me a different person. And now, in that brief moment in the mirror, it seemed that all my experiences had been stripped from me, negated and washed down the drain.

Of course, that's a rather poetic overreaction. But for a flash, it seemed like I had turned the clock back 14 months. Of course, memories and experiences don't even need physical form to seem real to us. And, I have my blog and wonderful photo albums to recall my time abroad. So there was certainly no need to feel that shaving my beard from Russia had in any way distanced me from that time in my life.

I came back to my senses and had a little laugh in the solitude of my bathroom. After all, everything was exactly the same. And it was all extremely different.

Arms Length Self Portraits

New Family Ties

In May, the Alfa Fellowship held its first ever alumni function here in NYC. All the important players from Moscow were there, as well as an impressive complement of former fellows, future fellows, and associated dignitaries. The press release does it better justice.

Russian Business Leaders Mikhail Fridman and Peter Aven Recognize Alfa Fellows

New York , May 22, 2007 – Over 50 Alfa Fellowship Program Fellows, alumni, and friends gathered on the evening of May 18 to celebrate the inaugural Alfa Fellowship Program Alumni gala. Distinguished guests and speakers included Mikhail Fridman, Chairman of the Supervisory Board of the Alfa Group Consortium and of the Board of Directors of Alfa-Bank, and Peter Aven, President of Alfa-Bank. Also in attendance were Ambassador Vitaly Churkin, Permanent Mission of the Russian Federation to the United Nations, and Consul General Sergey Garmonin, Consulate General of the Russian Federation in New York .

CDS International, a New York-based nonprofit organization dedicated to promoting international business training and intercultural exchange, collaborated with the Moscow-based international education and cultural exchange organization, Center for International Fellowships, to organize the Alfa Fellowship Program's first alumni meeting since the program's inception in 2004. Mr. Fridman delivered the keynote address and Mr. Aven presented awards to the Fellows in recognition of their participation on the program. During his keynote address, Mr. Fridman stated, “As Russia and the United States move farther from the days of the Cold War, it is vitally important that we each develop a thorough and accurate understanding based on the new realities which form the modern Russian–American relationship. We believe the Alfa Fellowship Program is one way in which this understanding can be fostered and enhanced, and we are proud to sponsor the program and look forward to its continued growth in the future.”

As mentioned, each of the returned fellows in attendance received a beautiful plaque commemorating our participation in the program. Its very nice looking and I have decided that it will be a central item on my "wall of power". I learned about the wall of power from Arkady, our director in Moscow. In his his restaurant, one corner of the lounge is covered in photos of him during his political career as an early democrat and Yeltsin man. Its really very impressive. I'd like to have one too, someday. So here's my first piece.


Perhaps we should all have one little corner where we display our bona fides, if for no one else but ourselves. It could serve as a mirror that reflects far more than just the physical. A mirror of our professional appearance lest we forget how we look to other people.

Anyway, one purpose of the meeting was to begin setting up an alumni organization for the returned fellows. Alfa and CDS would like us to create the stateside network for the Alfa organization. It really sounded like a good idea to the dozen or so of us in attendance, so a steering committee has been formed to start putting ideas together.

Somehow, my job was to come up with a vision and mission for the soon-to-be-formed organization. Perhaps because I waxed philosophical during our meeting about how we have a unique voice in the Russian-American dialogue and that we should be aggressive in our vision. After all, an enormous bank and a leading international educational exchange facilitator would like very much to provide us with any resource we could possibly need.

Of course, all meetings of Americans interested in Russia eventually end up in a bar. I'm sure I made good points, but I have to confess that I waxed even more philosophical than before. Since we're still in the vision stage, its acceptable. Right?

Bookstore Now Open

Publishing, it seems, has become a hobby.

My photo books have received rave reviews from friends, family, Russians, Russophiles, and photographers. So, I've decided to offer them for sale here through the publisher's website.

In addition, the publisher now has blog functionality so I'm happy to announce that the entire blog (excluding this entry) is now available as a bound book. It's every entry ever made and a few additional photos. So, click here and grab a copy of the a-g-spot for the sake of posterity.

The small advertisements for the books that appear on the left hand side of this page also serve as links to the bookstore.

The publisher, of course, is blurb.com. The quality of these books is absolutely top notch. Even if you don't buy a copy of my work, please consider using this company for your own projects. They make it very easy to create impressive and high-quality books/albums/folios at a very reasonable price.

Another Look

I just completed a class called "Economies in Transition" about all the former communist countries and their respective paths to market-based capitalism. This was a very challenging course, a sense of uphill battle against time made all the more pressing by voluminous readings and long lectures listing the hurdles that these countries faced. The impediments to not just success, but a state of 'non-failure', are so many that the current economic condition in most of Eastern Europe seems almost miraculous.

At the end of the course, we were required to submit a paper. Of course, my interest being what they are I strayed back into looking at equity markets. Here's what came of it. (footnotes didn't convert to the blog. If you really have to know, I'll send you the full text on request!!)

Emerging Economies, Emerging Markets:
Equity Markets in Russia and Kazakhstan

Russia and Kazakhstan Are Getting More and More Attention
Russia and Kazakhstan are two of the more prosperous former Soviet states. Despite their comparatively authoritarian political systems, the governments are relatively benign compared to successor regimes in most other soviet republics. As such, economic prosperity sparked by strong global natural resources demand has translated into better domestic prosperity and increased attention from Western investors. Indeed, equity markets in both countries have surged over the past few years. There are two principal reasons for examining these markets in the context of their domestic economies: First, understanding how these economies in transition have reached this point is important in characterizing expected, or continued, interest from overseas investors; Second, understanding the status of nascent equity markets in such emerging economies will determine whether those same investors will be able to participate in an historically rare opportunity.

The Oil Boom Has Changed These Countries
Natural resources in general and oil in particular have lifted the fortunes of both countries in the recent past. Russia and Kazakhstan are important producers of energy assets in an increasingly energy starved world. In fact, Russia is second only to Saudi Arabia in net exports of oil, and first in natural gas. Kazakhstan, meanwhile, ranks 14th in net exports of oil and has an attractive natural gas sector. Not surprisingly, such large export volumes of an increasingly valuable commodity mean that the energy sector represents a significant percentage of national accounts. For example, the World Bank estimates that the petroleum industries in Russia and Kazakhstan probably accounted for 25% and 30% of GDP, respectively, in 2006. Indeed, the impact of rising global oil prices certainly has been a significant factor in the strong GDP growth in both countries in the beginning years of this century.

The Macroeconomic Backdrop is Very Positive
Recent oil prices have certainly provided a favorable tailwind for both Russia and Kazakhstan. Thanks to those exports, both countries now run significant current account surpluses, with Russia’s at about 8% of GDP. A persistent effort by the central banks to “sterilize” the foreign currency inflows means that foreign currency reserves have skyrocketed. Russia’s hard currency reserve of $305 billion is third only to export powerhouses China and Japan. Kazakhstan’s meanwhile, topped $15 billion at the end of 2006.

While certainly an encouraging external environment, both governments have exercised notable internal fiscal restraint in the face of a huge cash infusion. In an effort to forestall a case of “Dutch Disease”, both governments have attempted to segregate the inflows by setting up funds where the oil windfalls can be isolated and kept out of the annual budgetary process. These “stabilization funds” have been earmarked for special infrastructure and social expenditures in the future. Russia’s stabilization fund is now about $88 billion and Kazakhstan’s topped $13 billion at the end of 2006. Tax rates on natural resource extraction and the legislation creating the stabilization funds lead observers to believe that the windfall accounts will continue to grow as long as the price of oil stays over $27 per barrel.

With the bulk of oil revenues isolated in these special windfall funds, the governments have still exercised good fiscal management. Russia runs consistent budget surpluses as high as 8% of GDP while Kazakhstan usually maintains a net neutral budget process.

Both Countries are Moving Beyond Oil
The oil revenues, and the positive outlook for prices in the near term, have certainly been a welcome windfall. This is especially true given the rocky road to global economic integration that both Russia and Kazakhstan may have faced as transition economies if they had not had such desirable natural resources to rely upon. Future growth, however, will likely depend more on how quickly these countries diversify their economies. While economists don’t generally oppose resource abundance as a path to growth, resource dependence is often considered an impediment to meaningful long-term economic expansion.

As a legacy of the centrally planned Soviet economy, neither country has any other significant export industry where it exhibits a comparative advantage. This has made the economies very reliant on revenues from oil. Indeed, despite efforts to sterilize the influx of oil-based tax revenue, Russian GDP in 2005 may have increased as much as 0.4% for every dollar that the prevailing oil price exceeded a baseline of $24 per barrel.

Revenue diversification is a major topic in both Russia and Kazakhstan. Each government intends to deploy assets from the stabilization funds into national infrastructure of both a human and fixed capital nature. More specific Russian ideas to boost research and development spending as a percentage of GDP through grants and tax credits aims to spur growth in the high technology and small business sectors.

Inadequate Domestic Financing Leads to Foreign Financing
A key characteristic of most emerging economies is that they lack sufficient capital to fund internal development. This is certainly true in both Russia and Kazakhstan. Despite burgeoning foreign direct investment, capital inflows to industries outside of the oil and gas sector remain rather inconsequential. Indeed, even FDI with gas and oil investments is still lower in these countries than in other emerging economies.

While Kazakhstan has a relatively robust banking system that extends credit to commercial enterprises even in its neighbor Russia, Russia is still hobbled by its relatively weak banking infrastructure. This is evident in the number of cross-border transactions that Russian natural resource companies are initiating. That is, there remains no effective mechanism for the ample capital generated by natural resources companies to circulate back into the domestic economy. In fact, commercial loans account for only 17% of GDP there when they usually account for more than half of GDP in developed countries.

The net effect of this is that companies often have to consider overseas investors for at least some part of their financing needs. As a result, the domestic capital market is heavily financed by foreign investors. Indeed, Russian and Kazakh companies often list at least some portion of their shares outside of their home markets. Current Russian legislation dictates that new issuers list at least 30% of their shares on domestic markets, leaving companies free to raise significant amounts of capital in London and New York. While the tightened US regulatory environment in the post-Enron era has led to a lack of new Russian issues on US exchanges, there are still some 60 securities listed either directly or through ADR programs. London has become a more desirable destination since, and the LSE alone has 70 listings between its main exchange and its AIM board .

There Are Other Factors Contributing to Economic and Market Growth
Increased foreign interest and involvement on the domestic equity markets in Russian and Kazakhstan, however, are only a contributing factor to the explosion in those indices. Each country has important domestic trends that are also significant contributors.

Both countries are inheritors of the Marxist legacy of underinvestment in consumer products and services. For example, services accounted for only 35% of Russian GDP in 1990. Now that the prevailing ideology is no longer hostile to providing personal services, that sector of the economy is free to grow. The World Bank estimates that, as a result, services topped 57% of GDP in 2005 .

The centrally planned economy was faced with chronic housing problems thanks, at least in part, to its allocation of resources to military and heavy industrial projects. Now, market forces are rushing to compensate for the longtime underinvestment in both commercial and residential real estate. In 2005, for example, construction and retail trade accounted for almost 50% of the expansion in GDP .

Both countries, as mentioned, have plans to use the stabilization funds for increasing R&D spending. Some officials look to boost the participation of small businesses in the economy by using the oil windfall as a sort of national venture fund . While plans are not certain and implementation may be questionable, any effort to create a meaningful small business sector should add to the economic vitality and diversity of both countries.

Other forms of support for market growth can be found in financial reform. In Russia, for example, the government is converting the national pension system from a pay-as-you-go system to a system with at least some portion of self-directed investment accounts. The PIF, or mutual fund, industry has seen steady inflows from middle-income Russians as they shift a portion of their salaries into the capital markets.

As a result of strong growth in other parts of the economy, oil has become proportionally a bit less important. That is, oil related companies accounted for 66% of the Russian stock market in 2005, but only 60% in 2006 . Given a relatively stable to declining outlook for global oil prices, the energy industry’s representation in the Russian market is likely to decrease further still in 2007.

Equity Markets Look Poised for Continued, and Balanced, Growth in 2007
Russia, with its 6 initial public offerings raising $17.4 billion, ranked among the top IPO markets in the world in 2006 . This tally was certainly helped by the placement of the enormous Rosneft flotation. Indeed, Rosneft was a watershed in other ways. The strong domestic demand for the shares has led to contemplation of a regulatory change. Instead of offering 30% of shares domestically, Russian regulators now believe that the home market may be able to absorb as much as 50% of new issues.

In any event, strong domestic market demand has prompted other companies to announce their intentions for public offerings. In late December, the tally of announced flotations stood at 10 companies intending to raise $21.2 billion . The list includes state-owned financial giants SberBank and Vneshtorg Bank as well as retailers and a technology company. Notably, about two-thirds of the total funds would be raised by companies not in the natural resources sector.


Market Structures are Well Developed, But Still Evolving
Capital markets in the former soviet states have gone through several incarnations already since their founding in the early 1990’s. They continue to evolve as their respective economies transition further away from the centrally planned legacy. Already, though, they have begun to serve important roles in their domestic economies. By linking capital-starved sectors of the economy to foreign and pent-up domestic funds , these markets are serving the critical function of capital allocation to growing businesses that equity markets do so well.

The Russian equity universe comprises around 750 issues of all types of share classes. Total capitalization has surged with higher valuation and a larger number of issues coming to market. In general, though, issues are separated into as many as 3 “tiers”. Definitions are not standard among market players, with some focusing on company market cap while some others make distinctions based on trading volumes as a percentage of float, or liquidity.

The equity market is dominated by two exchanges, the Moscow Interbank Currency Exchange (MICEX) and the Russian Trading System (RTS), which together account for more than 95% of total trading volumes. Some regional exchanges have maintained relevance in the consolidated national market by developing specialized trading in certain issues. In particular, the St Petersburg exchange focuses on trading shares of Gazprom.

The MICEX is two years younger than the RTS exchange, but handles much more volume thanks to its advanced technology platform that allows a higher proportion of remote trades. The exchange focuses on trading the top 150 most liquid issues in the economy. It allows trading on a cash settlement market denominated in rubles as well as on a delivery-versus-payment market. Given the relatively high counter-party risks of trading in an emerging market with only limited securities law, the “security present” safety of the delivery-versus-payment market is much more popular.

While MICEX handles more than 80% of the total trading volume in Russian equities, the story is more subtle. The top ten companies on the exchange, for example, account for as much as 95% of the volume of the market. Indeed, Gazprom accounted for as much as 43% of total volume after its first month of trading on the exchange (February, 2006). Midcap stocks, conversely, only represented about 0.5% of total volume.

The other main exchange in Russia historically focused on a different end of the spectrum. The RTS long centered only on the RTS “Classic” segment of dollar-denominated cash trading with settlement as long as 30 days after the trade. This section of the market lists 396 stocks issued by 279 companies of all market capitalization and liquidity levels. The limited liquidity of many issues also means that the “Classic” section of the exchange is quote-driven in order to address potentially wide spreads. In addition, the market is not anonymous and has high levels of counter party risk.

In order to address those deficiencies, the RTS introduced a delivery-versus-payment (or “T+0”) exchange for the top 8 most liquid issues. Other issues outside the top 8 have begun to trade in this segment, too. Much like the MICEX, not surprisingly, the RTS “T+0” volume is dominated by the most liquid shares in the country, like UES and Gazprom. In fact, the exchange reports “T+0” trade volumes net of Gazprom data.

A recent disclosure, however, has significantly changed both the market share picture between MICEX and RTS and the overall impression of liquidity in the Russian market. A regulation effective January, 2007 requires all brokers and market participants to report any OTC trade if the security is quoted on at least one exchange in Russia. The OTC market was rumored to be quite large, but the first daily data release in February highlighted that the market is, in fact, much larger than even the most bullish commentators imagined. While the RTS Classic exchange volume totaled 4,718 trades for $1.1 billion in December 2006, the OTC market totaled 14,066 trades for $4.6 billion volume in the first 5 trading days of February 2007 alone .

Equity markets in Kazakhstan, while in decent structural shape, are not nearly as important a part of the national economy as in neighboring Russia. The equity universe in Kazakhstan is much smaller, with 94 companies issuing 68 securities. The market capitalization of the entire market stands at around $65 billion. More important, though, total equity capitalization represented only 19% of GDP in 2005, while that tally was as high as 72% in Russia.

Diversity of economic activity in each country varies and may account for some of the difference. Kazakhstan, after all, is slightly more dependent on natural resources and agriculture compared to Russia. But that difference is much smaller than the wide gulf between equity capitalizations as a percentage of GDP. Instead, the difference is likely a result of at least two important structural discrepancies.

First, Kazakhstan has a relatively well-developed banking sector that has been more efficient at providing funding to domestic businesses. Of the 19% year-over-year growth in fixed capital in 2006, at least 50% of it was internally financed . Indeed, Kazakh banks are even aggressively financing businesses in Russia. Given the more efficient flow of capital from natural resources to the private sector, there may be less impetus for private companies to list their shares publicly.

Second, the difference may arise from the varying levels of privatization that the respective governments pursued in the 1990’s. Russia’s headlong privatization left much of the country in private hands after the 1990’s while Kazakhstan’s path was much slower. Indeed, the Kazakh government founded a holding company to manage the 5 leading strategic infrastructure firms in the country (electricity, rail, telecommunications, post, and oil & gas). Holding portions of such large industries outside of equity markets may significantly affect overall capitalization levels in the country.

Russia and Kazakhstan are Emerging Markets to Watch
Russia and Kazakhstan can be best understood through the lens of an emerging economy. As such, the economy is relatively uni-dimensional, capital markets need outside financing, and trading on exchanges is heavily concentrated in top “champions” that may have a heavy amount of government control.

Still, even a cursory look at data shows that economies and equity markets in both countries are moving toward more diversity. In the case of Russia, equity markets have been shown to be much more liquid and diverse than thought only two weeks ago. Both countries have attracted a flood of foreign capital at first interested only in oil profits. That will probably remain a significant part of the investment case for some time to come. In the meantime, however, both countries look to be emerging as more balanced growth markets.

Bibliography

DePoy, Erik. “OTC Market Emerges from the Shadows.” Alfa Bank Equity Strategy (Feb 7, 2007): 1-3.

External Relations Department, "Information Notice." Central Bank of the Russian Federation. 2 Feb 2007. Central Bank of the Russian Federation. 4 Feb 2007 .

“Raising Capital in Russia and Abroad: Trends and Developments.” MICEX/LSE Joint Conference. Moscow, 1-2 March 2006

"RESULTS OF TRADES IN CORPORATE SECURITIES." Kazakhstan Stock Exchage. 9 Feb 2007. KASE. 10 Feb 2007 .

"RTS Classic Market: December 2006 Market Data." Russian Trading System Stock Exchange. 11 Jan 2007. RTS. 2 Feb 2007 .

"Russia." World Bank Country Economic Report. 2006.

“Russia Country Profile.” Economist Intelligence Unit. 2006.

"Russian Economic Review." World Bank. December 2006.

Sachs, J. and A. Warner. “Natural Resources and Economic Development: The Curse of Natural Resources.” European Economic Review 45, 2001.

Spilimbergo, Antonio. “Measuring the Performance of Fiscal Policy in Russia”, IMF Working Paper December 2005.

"Stabilization Fund of the Russian Federation - Statistics." Ministry of Finance. Ministry of Finance of the Russian Federation. 2 Feb 2007 .

Tabakh, Anton. "Infrastructure Overhaul, Consolidation, Globalization." UralSib Russia Equity Research (2006): 11-17.

"Top World Oil Net Exporters, 2005." Offical Energy Statistics from the US Government. Energy Information Agency (EIA). 10 Feb 2007 .

Weafer, Chris. “Monitoring Investory Activity in Russia.” Alfa Bank Equity Strategy (Feb 8, 2007): 1-5.

Моя Россия - My Russia

Last week, I reconnected with two colleagues from my first stint in Russia. We recalled the old days during an elegant wedding in Washington DC, far from the time and place of our early post-soviet privations. It was great fun, and great to see friends with whom reminiscence of common experiences is but one facet of our relationship.

Sean is among the better read people you could ever hope to meet, and perhaps as a result, he has an excellent facility with the language of emotion. He wrote me an email the other day that eloquently describes the allure of Russia. It floored me for being so evocative and accurate at the same time. I couldn't possibly paraphrase, improve, or otherwise capture his words.

So here they are.

After reading your blog, seeing your photo books, and hearing your stories I have a great yearning to go back, see it all again, take that train. Russia is just such a deep and transformative experience. There is something about the sight of a church, topped with onion domes on the edge of a field, the land stretching away beyond it. This is not just beautiful, but somehow, knowing that that stretch of land goes on and on into Asia and the Pacific, the small church seems all the more profound a statement of beauty, history, and human and divine aspirations.

Even the most beautiful churches and buildings in Western Europe lack that character of immense presence, which even the smallest of those Russian churches has, a presence that can only come from the history of human striving upon such a vast, harsh land and against such a brutal history.

Well, now, whatever else you do, you've made some part of that yours. That is something; more than most people ever do. There are a few lines from an early poem of Rilke's which I know well because they were in a book Tom had in Kalininigrad (Selected Poems of Ranier Maria Rilke translated by Robert Bly), and I copied them into my journal. They are the lines which open the poem:

Sometimes a man stands up during supper
and walks outdoors, and keeps on walking,
because of a church that stands somewhere in the East.

He wrote those after visiting Russia at the turn of the last century -- it was one to the great influences on his life. I think only a foreigner who truly experiences Russia can appreciate those lines and the almost indescribable lure of the place.

Hard Memories

I finished a photo album – finally. It took months to select my favorite photos, process them with photoshop, and arrange them in a pleasing format. My ambition also included writing introductory overviews. In all, it was a heap of work and while I started well, I didn’t seem to have the necessary gumption to get the job done. At somewhere near the 90% completion level the progress stopped. And didn’t move. I lamented this until one day it just sort of came together.

Actually, I had to take drastic measures. I purposely put myself in a position where I could do nothing but complete the remaining tasks. A pen, a notebook, an iPod, and an uncomfortable seat in an overly air-conditioned starbucks put me over the edge. The project was finished at long last. Off to the printer.

I have used internet photo publishing software in the past, like Kodak and MyPublisher. This time, I took a gamble on a new company called Blurb and their Booksmart software. Kodak and MyPublisher have very low limits on the maximum number of pages available in a single book; Blurb on the other hand was the only publisher who would produce anywhere near the number of pages I would need to catalog all that time in Russia.

After I finished, I checked the pricing. A nearly 200 page book of photos would cost some $50. Reasonable, but that’s only marginally more expensive than a 30 page book published with Kodak only a few weeks before. Thoughts of comic-book quality paper went through my head while I waited for the delivery to arrive.

It came after a week, and I was shocked. The quality is exceptional in absolutely every respect. This doesn’t look like a photo album assembled on the internet. The binding, the custom dustcover, the print quality, make it look like a coffee table book from a bookstore. The real benefit is that the professional nature of the book makes my photos appear much more impressive than they really are. I can’t express how happy I am that an important part of my life is so well presented. Check out Blurb and use it.

I was so inspired that I completed another volume over the following few days. Where the first volume chronicled my coast-to-coast trip, the second volume offers general images from living and traveling in Russia over the course of 10 months or so. Another nearly 200 pages of images in a book designed to match the first tome.

It finally came today. Now, the speed with which I completed the second book really points out how much I dithered during construction of the first one.

In any case, there's a sense of accomplishment that goes with this. And in a weird way, a sense of closure. In some ways this is the real end of the journey. Luggage has been put away; life has moved on; and finally the photos have been bound into books. Books that will serve as touchstones of wonderful memories that have already begun to slip slowly into the past.

Prosperity Theology

"Render to Caesar the things that are Caesar's, and to God the things that are God's"
~Mark 12:13-17

Manhattan, for all its long history, is really at best a study in change. Nothing has pointed that out to me more than being away for a year. Now, I walk around my neighborhood and notice the dramatic changes in that short time. Some are natural, some are strange, and some are downright discomfiting.

For the past couple of years, it seemed that Starbucks was going to take over the city. The chain's penchant for corner locations made the stores seem even more ubiquitous than they really were. I wasn't really prepared for the next step - mid-block expansion. Now it seems that one is never more than a few steps away from a standard-issue coffee shop. And it also seems that each one is doing pretty good business. Of course, at these prices the company may well be going for a high-margin, low-volume strategy. Still, Starbucks fills cultural, societal, business needs for large swathes of the Manhattan population. These stores have successfully become the living rooms, studies, and conference rooms of space-constrained New Yorkers.

But being plopped back in NYC after a year away has allowed me a new perspective. Starbucks isn't expanding in non-corner locations because of some sort of new location strategy. It's simpler than that - even the ludicrously profitable coffee business can't compete with the intense demand for this kind of corner real estate.

It seems that every corner in Manhattan south of 96th street has been converted into a bank branch. And these aren't small outposts in good locations. The banks are forcing supermarkets and other large-scale retailers out of these locations - and taking the whole space. No joke and no exaggeration. These branches are massive on any scale of analysis. And they're absolutely everywhere now.

That reflects, I suppose, the city's constant renewal and change. After all, it's Manhattan; there's probably no better symbol of the city than the rapid expansion of what are in effect money stores.

Except maybe one.

On W. 4th street near Washington Square Park, there's a grand old church. It's been there since 1860, and for many years has run a soup kitchen out of its basement on Sunday afternoons. That is, until recently. The building was sold, and is now being converted to housing. Not low income, in case you were wondering. No, this is Manhattan 2006. It's being converted into a handful of condo lofts selling for $6 million apiece.

The mind begins to boggle at just a glimmer of the symbolism and contrast.

And then it gets better. The sales slogan for the property is "Come Be Reborn." It's audacious, probably blasphemous, and insulting. As if salvation can be bundled along with a jumbo mortgage.

I suppose its fitting in some ways. Money and real estate are both religions in New York. Historically, it fits alright with Puritanism and Calvinism - strong currents in the early US. And now? Well, this is an era when the idea of prosperity theology - the belief that financial success is external evidence of God's favor - is gaining more and more traction.

In my belief system though, I have to believe that there's a special place in Hell for people who market luxury condominiums in a former church in this manner.

And a place for me, too, because I'd really, really like to have one for myself.