Capital Insurance
By STEPHEN MIHM
In 1988, the world tried to crack down on its bankers. Many nations, including the United States, adopted the Basel Capital Accord, which requires each country to ensure that its banks hold a certain amount of capital in reserve. Unfortunately, bankers have spent much of the last 20 years finding ways to evade the requirements of this agreement. Now a team of economists is proposing an alternative: capital insurance.
In accounting terms, capital is what’s left over after you subtract a bank’s liabilities from its assets. When times get tough, assets decline in value and liabilities rise, forcing banks to take steps to rebalance the equation and maintain the capital required by law. Banks do this by curtailing lending and liquidating assets — but in extreme cases, they may issue more stock,borrow from sovereign wealth funds or, in the latest instance, beg for (and receive) “capital injections” from the United States Treasury.
Is there a better way? Three economists — Anil Kashyap and Raghuram Rajan of the University of Chicago, and Jeremy Stein of Harvard — propose that banks be permitted to pay an insurance premium to a third party who agrees to inject capital into the bank in the event things go awry. For example, if a bank purchased a billion dollars’ worth of capital insurance from a sovereign wealth fund, the fund would deposit a billion dollars’ worth of a safe asset (Treasury bonds, for example) into an escrow account. If the bank ran into trouble, the billion dollars would flow out of the escrow account and into the bank’s coffers. If not, the money would revert back to the sovereign wealth fund at the end of the policy.
Stein and his colleagues say capital insurance could avoid the kind of regulatory arms race that leads to more regulation and more evasion — and the prospect of more crises.
Carbon Penance
By JASCHA HOFFMAN
We all contribute to climate change, but none of us can individually be blamed for it. So we walk around with a free-floating sense of guilt that’s unlikely to be lifted by the purchase of wind-power credits or halogen bulbs. Annina Rüst, a Swiss-born artist-inventor, wanted to help relieve these anxieties by giving people a tangible reminder of their own energy use, as well as an outlet for the feelings of complicity, shame and powerlessness that surround the question of global warming.
So she built a translucent leg band that keeps track of your electricity consumption. When it detects, via a special power monitor, that electric current levels have exceeded a certain threshold, the wireless device slowly drives six stainless-steel thorns into the flesh of your leg. “It’s therapy for environmental guilt,” says Rüst, who modeled her “personal techno-garter” on the spiked bands worn as a means of self-mortification by a monk in Dan Brown’s novel “The Da Vinci Code.” (Brown de-rived the idea from the bands worn by some celibate members of the conservative Catholic group Opus Dei.)
Rüst built her prototype while working at the Computing Culture group of the Media Lab at the Massachusetts Institute of Technology. She also designed the band to punish wearers if they don’t spend enough time talking to their carbon-fixing houseplants. But first Rüst may have to address a more mundane matter. When the spikes dug in, Rüst says, she noticed that the device “doesn’t hurt that much.”
Catwalk Clones
By AMANDA FORTINI
Viktor & Rolf, the Dutch design duo known for their quirky, theatrical aesthetic, tend to create clothing that, like the Surrealist art it is often compared to, can be high concept and more than a little bizarre. And so, when Viktor Horsting and Rolf Snoeren decided to create a fashion show for the Internet, they began with a typically unusual notion: this would not be an ordinary production, in which footage from a live event is later posted online. This would be a runway show that could exist only in cyberspace.
The spectacle, broadcast in October on the Viktor & Rolf Web site, was staged on a virtual catwalk in a virtual “grand salon” entered by way of a majestic marble staircase. The flashy clothes — geometric-print separates and
crystal-encrusted dresses, black frocks set off by furniture-size accessories — are worn by a digital version of Shalom Harlow, the Canadian supermodel, cloned many times over. As she struts down the catwalk in precariously high heels, techno music thumping in accompaniment, she occasionally passes herself; at times, three Harlows occupy the runway. In the grand finale, 12 incarnations of Harlow appear for a curtain call, while an oversize Viktor and Rolf hover above like puppet-masters.
Creating this nine-minute clip of virtual reality required quite a bit of actual work. During two 14-hour days, five cameras filmed at various angles to capture Harlow’s every nuance. The footage was then integrated into a digital backdrop — the real Harlow was transfigured into numerous pixelated versions that were then placed on a pixelated catwalk. And
although she — they — walk(s) with a slightly automated gait, the effect is eerily authentic. “We reproduce everything: the reflections, the shadows,” says Eric Tong Cuong, president of La Chose, the Paris-based company that helped create the video.
Of course, as several critics have fretted, the film raises the question of whether the traditional fashion show, with its limited audience, will be rendered obsolete. Rolf
dispenses with this worry, noting that the pair is planning a brick-and-mortar show next season. “It will be difficult to replace a live feeling of seeing fabric,” he says. Then again, maybe it won’t. “We can go much further,” Tong Cuong says. “We can make a catwalk on Mars! Or on Venus! Or on top of two buildings, like Spider-Man. Whatever! We can build anything virtually.”
Climate-Change Defense, The
By JONATHAN MINGLE
Few would fault someone who kicks down the front door of a neighbor’s empty house to put out a fire. Neither would the law, generally: in Britain, the common-sense defense of “lawful excuse” (a variant is known as the “necessity defense” in the United States) usually succeeds in precisely this kind of situation. Which leads you to wonder: What acts might the law permit in the name of fighting a threat of global, even catastrophic, proportions?
In September, a British jury shook up the world of green politics when it accepted a lawful-excuse defense for property damaged with the intention of averting even greater damage from climate change. In an effort to draw public attention to government support for new coal-fired electricity projects, six Greenpeace activists painted Prime Minister Gordon Brown’s last name on a smokestack at the Kingsnorth power plant in Kent. The plant’s owner, the energy company E.ON, claimed that the paint cost more than $50,000 to remove.
With supporting testimony from the NASA climate-change expert James Hansen and a representative of the Inuit community of Greenland (who described watching villages “eroding into the sea”), the protesters convinced the jury that the threat posed by Kingsnorth carbon was not only real but also immediate enough to justify their high-profile graffiti. What’s more, they claimed, by halting the plant’s carbon-dioxide emissions for a day, they averted more than $1.5 million worth of damage to human health and wealth around the globe.
The decision has elicited strong reactions, including concern that it will be used to excuse a wide range of normally criminal acts. Some legal analysts doubt that other courts will follow suit. Though he hasn’t publicly commented on the verdict, former Vice President Al Gore, for one, seems intent on ensuring that its reasoning is tested again soon. In a recent public forum at the Clinton Global Initiative, he called on young people to engage in “civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration.”
Cloth Car, The
By ALICE RAWSTHORN
The GINA Light Visionary Model is a two-seat roadster with a body made from cloth, developed by BMW. The fabric is a special polyurethane-coated Lycra that’s exceptionally strong, durable and waterproof. But it’s also flexible enough to stretch when fitted over the car’s aluminum frame, whose shape can be altered using electric and electro-hydraulic controls to suit different driving conditions.
The GINA, a concept car, was unveiled at the BMW Museum in Munich in June. Its fabric shell is made in four pieces and not only creases when the doors open but can also be “unsealed” to reveal the car’s engine. The front lights lie flat beneath the fabric when switched off and shine through eye-shaped slits that open as soon as they’ve been turned on. If the engine needs extra air, the grille at the front widens.
The interior is flexible, too. When the engine is switched off, the steering wheel and dashboard instruments, including the speedometer and fuel gauge, lie flat to create more space. Once the driver sits down, the instruments move out toward him and the headrest above the driver’s seat pops up.
The result is a versatile car that promises to be less expensive and more energy-efficient to manufacture than a conventional design. Concept cars play a similar role in the automotive industry to that of haute-couture collections in fashion, giving more practical designers an abundance of experimental concepts and technologies from which to pick and choose when building more humdrum creations. The BMW design team has already applied to standard cars some of the ideas developed for the GINA: one of the GINA’s production processes was used to make the hoods of the Z4 M Roadster and Z4 M Coupe, for example. But we probably shouldn’t expect to see cloth-covered Beemers on the road anytime soon.
Cold-Shoulder Science
By MATTHEW HUTSON
The warm welcome and the cold shoulder, it turns out, are more than mere metaphors. This year, two sets of studies revealed that feelings of social connection and sensory experience are related on a deep psychological level: getting the cold shoulder literally gives you the chills, and actual warmth can melt a figuratively frosty heart.
Research published in the journal Psychological Science by Chen-Bo Zhong and Geoffrey Leonardelli at the University of Toronto found that subjects who were asked to recall an experience of social exclusion and then asked to estimate the lab’s ambient temperature gave estimates that were more than four degrees colder than those given by subjects who’d been asked to recall an experience of inclusion. And subjects ignored during a ball-tossing game in the lab had a larger postgame appetite for hot coffee and hot soup than did players who’d seen more action.
In another experiment, published in the journal Science by the psychologists Lawrence Williams, now at the University of Colorado at Boulder, and John Bargh, of Yale, subjects were asked to hold a cup of either hot coffee or iced coffee for a moment on the way to the lab. Then they were asked to evaluate the personality of someone based on a written description. Those who held a hot drink found the individual more caring and generous than did the other subjects. In a companion experiment, holding a hot therapeutic pad induced subjects to act more generously.
Viewing cognition as responsive to physical cues, Williams explains, “takes into account the fact that we are physical beings” and that bodily and environmental factors “impact the ways our thoughts are structured.” The researchers studying the phenomenon argue that we probably learned to associate affection with warmth from childhood experiences of being held by a caregiver.
With the new data in hand, it’s tempting to suspect that the current economic climate is leaving investors out in the cold in more ways than one. On Sept. 29, when the Dow suffered its largest point-drop in history, only one stock among the Standard & Poor’s 500 rose: the Campbell Soup Company.
Crystal Chair, The
By ALICE RAWSTHORN
If there’s one profession that’s given license to indulge in control-freakery, it’s design. Why, then, did the Japanese industrial designer Tokujin Yoshioka leave it up to nature to decide how one of his new products, a chair, would turn out?
Because he thought the result would be much, much lovelier than anything he could have dreamed up himself. That’s why he filled a large glass tank with water and submerged in it a block of polyester fibers arranged in the shape of a chair. After adding a special mineral formula to the water, Yoshioka watched and waited while tiny crystals formed on the fibers and gradually grew to form an exquisite but entirely random structure: the Venus Natural Crystal Chair. He revealed the result to the public in October by exhibiting four tanks,each showing chairs in different stages of development — or crystallization — at the 21_21 Design Sight design gallery in Tokyo.
“Nature shows us a beauty that exceeds our imagination,” Yoshioka says. “On the other hand, it contains a strength that is al-most frightening.” But maybe not so much strength, in this instance. While Yoshioka claims that his crystal chairs are perfectly capable of being sat upon, he advises against trying to do so too often.