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Split Is Forming Over Regulation of Wall Street
Split Is Forming Over Regulation of Wall Street
By EDMUND L. ANDREWS and STEPHEN LABATON
WASHINGTON — As Congress and the Bush administration struggle to contain the housing and credit crises — and prevent more Wall Street firms from collapsing as Bear Stearns did — a split is forming over how to strengthen oversight of financial institutions after decades of deregulation.
The administration and Democratic lawmakers in Congress agree that the meltdown in credit markets exposed weaknesses in the nation’s tangled web of federal and state regulators, which failed to anticipate the effect of so many new players in the industry.
In Congress, Democrats are drafting bills that would create a powerful new regulator — or simply confer new powers on the Federal Reserve — to oversee practices across the entire array of commercial banks, Wall Street firms, hedge funds and nonbank financial companies.
The Treasury Department is rushing to complete its own blueprint for overhauling what is now an alphabet soup of federal and state regulators that often compete against each other and protect their particular slices of the industry as if they were constituents.
But the two sides strongly disagree about whether, after decades of a freewheeling encouragement of exotic new services and new players like hedge funds, the pendulum should swing back to tighter control.
One central battle is likely to be over tightening supervision of the risk-management practices of Wall Street investment banks and perhaps requiring them to keep higher cash reserves as a cushion against unexpected trading losses.
The Democratic proposals would subject Wall Street firms to the kind of strict oversight that banks have had for decades. If firms like Goldman Sachs and Merrill Lynch were required to set aside substantially bigger capital reserves, they would have that much less available for lending, trading and underwriting new securities.
Wall Street firms played a central role in packaging and financing trillions of dollars in high-risk home mortgages, and the losses tied to those mortgages are at the heart of the deepening crisis in the financial markets that has pushed the economy to the brink of a recession.
“You need regulation that is adequate to the scope of innovation and to the scope of activity,” said Representative Barney Frank, the Democrat of Massachusetts who is chairman of the House Financial Services Committee.
Mr. Frank said last week that Congress should consider creating a new regulator — or giving the Federal Reserve greater powers — to oversee all financial markets and intervene when necessary.
Mr. Frank, saying that government had failed to keep up with the explosion of new financial instruments, said regulators needed to re-examine capital reserves, risk-management practices and consumer protection without regard to whether companies were commercial banks, investment banks or nonbank mortgage lenders.
“You do it right, and it’s pro-market,” Mr. Frank said in an interview. “Right now, we have an investors’ strike going on, and restoring investor confidence is a top priority.”
But industry groups warn that heavy-handed regulation could dry up investment capital just when the economy needs it most.
“If we don’t tread very carefully on restructuring a very complex financial system, we might stifle the necessary animal instincts of a free market,” said Mark A. Bloomfield, president of the American Council for Capital Formation, a business advocacy group. “Every day, the cries of populism grow stronger and could trample good economic policy.”
Wall Street firms have also been major contributors to both political parties, and they are certain to oppose tough new restrictions. The Treasury Department appears torn.
On the one hand, Treasury officials say they are convinced that today’s regulatory system is fragmented and out of date. The Treasury secretary, Henry M. Paulson Jr., has talked about the need to re-examine capital requirements for financial institutions.
But both President Bush and Mr. Paulson, a former chief executive of Goldman Sachs, remain philosophically opposed to restrictions and requirements that might hamper economic activity.
“What we’re looking at in our blueprint is how to make our regulatory structure more efficient, less duplicative and more in line with today’s capital markets,” said David G. Nason, assistant secretary of the Treasury for financial institutions. “We’ve got five regulatory agencies focused on depository institutions. We’re one of the only countries in the world that separates securities from futures, and our regulation of insurance is solely at the state level.”
But the entire discussion took a stunning turn last week after the Federal Reserve abruptly stepped in to prevent a systemic collapse on Wall Street.
Invoking its authority as the nation’s lender of last resort, the Fed offered a $30 billion credit line to JPMorgan Chase to help it take over Bear Stearns, which was about to go bankrupt. Even more significant, the central bank announced that it would lend hundreds of billions of dollars to big investment banks through its “discount window” — an emergency loan program that had been reserved strictly for commercial banks.
The Fed’s involvement highlighted what many experts see as the growing disparity in regulation between Wall Street firms and commercial banks. Commercial banks submit to greater regulation, partly in exchange for the privilege of being able to borrow from the Fed’s discount window.
But starting last week, Wall Street firms were getting the same protection without subjecting themselves to additional scrutiny. Some administration officials said they had little choice but to regulate Wall Street firms more closely.
“In the short term, it would make sense to have one umbrella regulatory agency,” said Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, which insures deposits at banks and thrift institutions and is one of several federal bank regulatory agencies. “Capital levels are the most important tool we have at the F.D.I.C., and investment banks have lower capital levels than commercial banks.”
Among Democrats and Republicans alike, there is a growing consensus that the existing regulatory structure, involving more than half a dozen federal agencies as well state offices, were not equipped to prevent a host of questionable practices that aggravated the housing and mortgage meltdowns.
The practices included abusive loans by independent mortgage brokers; risky and opaque transactions by financial institutions; credit-rating decisions that turned out to be wildly optimistic; and the underwriting of loans by mortgage brokers that were often based on fraudulent or inaccurate information.
Just as the Sept. 11, 2001, attacks highlighted deep cracks between the nation’s intelligence and law enforcement agencies, the credit and housing crises are forcing policy makers to scrutinize cracks between oversight agencies that aggressive mortgage brokers and deal makers were able to exploit.
“To anyone who looks at the regulatory system over the last few months, it is quite clear that the financial world has evolved dramatically and the regulatory system has not caught up,” said Senator Charles E. Schumer, the Democrat of New York who is the chairman of the Joint Economic Committee.
Even though Mr. Schumer represents Wall Street’s home state and has many financial supporters on Wall Street, he said he was on “the same page” as Mr. Frank and was preparing his own plan for regulatory overhaul. Senator Christopher J. Dodd, the Democrat of Connecticut who is the chairman of the Senate Banking Committee, is preparing legislation as well.
But Mr. Schumer cautioned that the Bush administration’s deregulatory mind-set could make it difficult to do anything this year.
The Treasury Department is hoping to unveil its own blueprint for regulatory overhaul in the next few weeks. Last week, Mr. Paulson acknowledged that the problems exposed by the housing crisis were diffuse and complex and could not be solved with a single action. But he suggested that he did not want to take any drastic regulatory steps while the financial markets remained in turmoil.
“The objective here is to get the balance right,” Mr. Paulson said last week. “Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it.”
Given the philosophical differences about the value of government regulations, some experts were skeptical that Congress and the Bush administration would agree on more than cosmetic changes.
“There is a political will, but I’m not certain that it can overcome longstanding philosophic objections to dealing with free markets in a crisis environment,” said Arthur Levitt Jr., the chairman of the Securities and Exchange Commission under President Bill Clinton.
The Federal Reserve’s recent decisions to lend hundreds of billions of dollars to the nation’s biggest investment banks, and to underwrite JPMorgan Chase’s takeover of Bear Stearns, may have changed the balance of power.
The Fed reported on Thursday that investment banks had quickly taken advantage of the lending program and had taken out $28.8 billion in new loans by Wednesday. That did not include any loans that JPMorgan Chase took on through the $30 billion credit line it received as part of its deal to acquire Bear Stearns.
Goldman Sachs, Lehman Brothers and Morgan Stanley voluntarily disclosed that they had taken loans under the Fed’s new program, in part to reduce any stigma about it. But the volume of borrowing suggests that many other Wall Street firms took advantage as well.
The new borrowing could strengthen Mr. Frank’s hand in calling for tougher regulation, because it immediately raises the question of why investment banks should be allowed to borrow from the Fed without subjecting themselves to the same kind of oversight that commercial banks face.
But the broader issue for both Congress and the Bush administration is that even bank regulators did little to slow the explosive growth of high-risk subprime mortgages, many of which were “liar’s loans” that did not require borrowers to verify their incomes.
At least four federal agencies — the Federal Reserve, the F.D.I.C., the Office of the Comptroller of the Currency and the Office of Thrift Supervision — have some jurisdiction over mortgage lending. Making matters more difficult, state banking regulators had jurisdiction over the fast-growing array of nonbank mortgage lenders, which accounted for about 40 percent of new subprime loans before that market collapsed last August.
Except for the Federal Reserve, all of the federal bank agencies receive funding from fees paid by member institutions, and some specialists have long argued that the agencies competed with each other to woo institutions with lighter regulation.
Ms. Bair of the F.D.I.C. cautioned that industry and government turf battles would make it difficult to agree on a single regulator, especially a strong one. But she said the need for one was clear.
“We need to go in the direction of more regulatory consolidation,” Ms. Bair said. “It would make more sense to have some type of umbrella agency, if for no other reason than facilitating information.”
Gap in Life Expectancy Widens for the Nation
It comes with a nifty graphic
New government research has found “large and growing” disparities in life expectancy for richer and poorer Americans, paralleling the growth of income inequality in the last two decades.
Life expectancy for the nation as a whole has increased, the researchers said, but affluent people have experienced greater gains, and this, in turn, has caused a widening gap.
One of the researchers, Gopal K. Singh, a demographer at the Department of Health and Human Services, said “the growing inequalities in life expectancy” mirrored trends in infant mortality and in death from heart disease and certain cancers.
The gaps have been increasing despite efforts by the federal government to reduce them. One of the top goals of “Healthy People 2010,” an official statement of national health objectives issued in 2000, is to “eliminate health disparities among different segments of the population,” including higher- and lower-income groups and people of different racial and ethnic background.
Dr. Singh said last week that federal officials had found “widening socioeconomic inequalities in life expectancy” at birth and at every age level.
He and another researcher, Mohammad Siahpush, a professor at the University of Nebraska Medical Center in Omaha, developed an index to measure social and economic conditions in every county, using census data on education, income, poverty, housing and other factors. Counties were then classified into 10 groups of equal population size.
In 1980-82, Dr. Singh said, people in the most affluent group could expect to live 2.8 years longer than people in the most deprived group (75.8 versus 73 years). By 1998-2000, the difference in life expectancy had increased to 4.5 years (79.2 versus 74.7 years), and it continues to grow, he said.
After 20 years, the lowest socioeconomic group lagged further behind the most affluent, Dr. Singh said, noting that “life expectancy was higher for the most affluent in 1980 than for the most deprived group in 2000.”
“If you look at the extremes in 2000,” Dr. Singh said, “men in the most deprived counties had 10 years’ shorter life expectancy than women in the most affluent counties (71.5 years versus 81.3 years).” The difference between poor black men and affluent white women was more than 14 years (66.9 years vs. 81.1 years).
The Democratic candidates for president, Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois, have championed legislation to reduce such disparities, as have some Republicans, like Senator Thad Cochran of Mississippi.
Peter R. Orszag, director of the Congressional Budget Office, said: “We have heard a lot about growing income inequality. There has been much less attention paid to growing inequality in life expectancy, which is really quite dramatic.”
Life expectancy is the average number of years of life remaining for people who have attained a given age.
While researchers do not agree on an explanation for the widening gap, they have suggested many reasons, including these:
¶Doctors can detect and treat many forms of cancer and heart disease because of advances in medical science and technology. People who are affluent and better educated are more likely to take advantage of these discoveries.
¶Smoking has declined more rapidly among people with greater education and income.
¶Lower-income people are more likely to live in unsafe neighborhoods, to engage in risky or unhealthy behavior and to eat unhealthy food.
¶Lower-income people are less likely to have health insurance, so they are less likely to receive checkups, screenings, diagnostic tests, prescription drugs and other types of care.
Even among people who have insurance, many studies have documented racial disparities.
In a recent report, the Department of Veterans Affairs found that black patients “tend to receive less aggressive medical care than whites” at its hospitals and clinics, in part because doctors provide them with less information and see them as “less appropriate candidates” for some types of surgery.
Some health economists contend that the disparities between rich and poor inevitably widen as doctors make gains in treating the major causes of death.
Nancy Krieger, a professor at the Harvard School of Public Health, rejected that idea. Professor Krieger investigated changes in the rate of premature mortality (dying before the age of 65) and infant death from 1960 to 2002. She found that inequities shrank from 1966 to 1980, but then widened.
“The recent trend of growing disparities in health status is not inevitable,” she said. “From 1966 to 1980, socioeconomic disparities declined in tandem with a decline in mortality rates.”
The creation of Medicaid and Medicare, community health centers, the “war on poverty” and the Civil Rights Act of 1964 all probably contributed to the earlier narrowing of health disparities, Professor Krieger said.
Robert E. Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation, said one reason for the growing disparities might be “a very significant gap in health literacy” — what people know about diet, exercise and healthy lifestyles. Middle-class and upper-income people have greater access to the huge amounts of health information on the Internet, Mr. Moffit said.
Thomas P. Miller, a health economist at the American Enterprise Institute, agreed.
“People with more education tend to have a longer time horizon,” Mr. Miller said. “They are more likely to look at the long-term consequences of their health behavior. They are more assertive in seeking out treatments and more likely to adhere to treatment advice from physicians.”
A recent study by Ellen R. Meara, a health economist at Harvard Medical School, found that in the 1980s and 1990s, “virtually all gains in life expectancy occurred among highly educated groups.”
Trends in smoking explain a large part of the widening gap, she said in an article this month in the journal Health Affairs.
Under federal law, officials must publish an annual report tracking health disparities. In the fifth annual report, issued this month, the Bush administration said, “Over all, disparities in quality and access for minority groups and poor populations have not been reduced” since the first report, in 2003.
The rate of new AIDS cases is still 10 times as high among blacks as among whites, it said, and the proportion of black children hospitalized for asthma is almost four times the rate for white children.
The Centers for Disease Control and Prevention reported last month that heart attack survivors with higher levels of education and income were much more likely to receive cardiac rehabilitation care, which lowers the risk of future heart problems. Likewise, it said, the odds of receiving tests for colon cancer increase with a person’s education and income.
Depression, You Say? Check Those Safety Nets
The stock markets are spiraling like whirling dervishes, one of the nation’s largest financial institutions has flirted with bankruptcy and the former Federal Reserve chairman Alan Greenspan invoked the ghost of past calamities when he wrote that the current economic turmoil is likely to become the “most wrenching” since World War II. Meanwhile, home foreclosures are at their fastest pace in at least 30 years and in a survey conducted by USA Today and Gallup, more than half of respondents indicated that they had fears the downturn could become a depression.
Some innocent bystanders might be forgiven for wondering why that last word — “depression” — has started popping up. Is it possible our economy could speed past a recession into a full-blown depression like that of the 1930s, when American unemployment reached 25 percent?
Well, the economists are here to say that you can dig up the family silver and stop training the kids how to jump onto a moving train. While many who study the nation’s economic health agree that a recession has probably already begun, and that it may be long and severe, they also say the odds of a full-blown depression are almost nonexistent.
Why? Because so many of them have spent so much time studying the Great Depression and trying to figure out how to react more effectively if things turn really bad again. Take last week, for example.
“I used to give a lecture explaining that the Great Depression could never happen now because of the regulations that emerged from that crisis,” said Barry Eichengreen, an economist at the University of California at Berkeley. “But we’re learning that there is a shadow banking system, of hedge funds and investment banks, that are outside of those safety nets. What happened to Bear Stearns last week looked a lot like a 19th-century run on the bank. And that’s why the Fed reacted so quickly.”
Indeed, when the government moved last weekend to help save Bear Stearns, the fifth-largest securities firm on Wall Street, from bankruptcy, policy makers were motivated by concerns that the investment bank’s failure could start a chain reaction of collapses at other investment houses. Stopping those dominoes was such a priority that the Federal Reserve helped broker the sale of Bear Stearns to its rival JPMorgan Chase.
A century ago, such government hustle would have been unthinkable. Even the distinction between a recession (a significant decline in economic activity that lasts more than a few months) and a depression (a decline that is much longer and deeper) didn’t really matter, because turmoil in the economy was often taken for granted.
Between 1857 and 1929, while regulators largely stood idle, the American economy swung through 19 national boom-and-bust gyrations that sometimes threatened to wipe out whole industries within months.
But in the wake of the Great Depression, American policy makers began actively managing the economy with a handful of tools, including adjusting interest rates and using massive government spending to spur growth. Since 1945, there have only been 10 boom-and-bust cycles, most of them much shallower than earlier ones, and the unemployment rate has never topped 9.7 percent.
Much of that stability, economic historians say, stems from reforms designed to calm consumers during downturns, like the Federal Deposit Insurance Corporation, which guarantees most checking and savings accounts up to $100,000 if a bank fails.
But as the Internet boom and recent housing bubble demonstrate, even relatively stable periods can be part of a cycle of extreme ups and downs. The prolonged expansion that just ended had an unusually long run of more than six years. As a result, some are speculating that the crash will be equally drawn out.
“The biggest difference with this recession is that it’s starting in the housing market,” said Victor Zarnowitz, an economist at the Conference Board who is also a member of the National Bureau of Economic Research’s business-cycle committee. For the first time in more than 50 years, the nation faces a broad risk “that people’s most important asset, their home, will lose value,” he said.
As homeowners see the value of their homes decline, they become more likely to delay purchases of the big items — like automobiles, electronics and home appliances — that are ballasts of the American economy. When those purchases decline, large manufacturing firms, suddenly short on funds, could begin laying off employees. Those workers, uncertain about the future, might in turn stop buying Starbucks lattes and movie tickets, and in a worst-case scenario, that could spur coffee shops and theaters to begin layoffs of their own.
Such a chain reaction was one reason unemployment during the Great Depression was so persistent and widespread.
But today, say economists, fundamental changes make such contagion unlikely. For one thing, incomes are more stable. Many more Americans hold jobs in service sectors, like medicine or education. And more Americans work for the government, which is less inclined to fire people just because the economy turns gloomy.
Moreover, there are safety nets that can be traced to the Great Depression, like Social Security, unemployment benefits, food stamp programs. These “give people a sense of security even when they’re out of work,” said the Harvard economist Benjamin Friedman. “That establishes a floor for how panicked consumers become.”
Even if consumer confidence hit rock bottom, that most likely would not be enough, by itself, to cause a depression. For things to become really dire, the nation’s financial institutions would have to fail at the same time that unemployment began significantly rising. Only if banks suddenly closed, or it became impossible for companies to access short-term lines of credit, would things begin spiraling out of control.
A credit shortage, in fact, has played a significant role in today’s economic turmoil, and was the reason some economists began invoking the Great Depression. But those comparisons were more to stress how differently policy makers are behaving today than their counterparts did in 1930, when a wave of panics started that eventually caused one-fifth of the nation’s banks to fail.
Today, the Federal Reserve is so cautious about the stability of major financial institutions that regulators sometimes jump into action almost immediately, as they did in the Bear Stearns case. One goal of such an intervention, say economic historians, is to slow down the turmoil as much as possible. In the 1920s and early 1930s, policy makers became overwhelmed by a cascade of crises they were unable to temper.
“In the 1920s, everyone was still reeling from the First World War, which had realigned capital structures and boundaries and had put the defeated countries in positions where they had much less economic flexibility,” said Peter Temin, an economic historian at the Massachusetts Institute of Technology. In particular, one cause of the Great Depression was that policy makers in the United States and elsewhere were either reluctant or unable to increase their countries’ supplies of money, which at the time were often backed by gold.
“Today, we have a lot more flexibility and we can prop up banks and the economy to give us enough time to let things stabilize,” Professor Temin added. Already, some lawmakers are proposing to help refinance or purchase failing mortgages in order to slow down how quickly other problems might spread; that approach, however, might carry risks of its own, like encouraging irresponsible behavior and increasing government deficits.
Of course, all of these techniques do not guarantee an easy path to rosier times. Some economists and financiers say it’s likely that the current recession will extend for at least a year. Others think the American economy will suffer from an extended malaise as Japan did in the 1990s.
But whatever name economists give the current downturn, we are unlikely to see the bread lines, shantytowns and dust bowl of the Great Depression. More likely, these economists say, would be a sudden increase in the number of people selling belongings on eBay.
Hollywood, which until now has largely catered to American tastes, might begin more explicitly choosing scripts based on how they would play in rising economies like India and China. And while exports of manufactured goods might accelerate, the outsourcing trends that sent some American jobs abroad might reverse. Already, Germany-based BMW is expanding a South Carolina plant, betting that the weak dollar will make American workers cheaper than those in Germany or Japan.
Which isn’t to say that anyone is starting to hum “Happy Days Are Here Again.” Even the Federal Reserve chief, Ben Bernanke, has warned against becoming too sanguine.
“To understand the Great Depression is the Holy Grail of macroeconomics,” Mr. Bernanke wrote in a 1994 paper, when he was a professor at Princeton focused on analyzing the financial cataclysm that began in 1929. While economists have made great progress, he continued, “we do not yet have our hands on the Grail by any means.”
And one NOT on the economy, but on languages in Suriname
It comes with a song
And a slideshow
Walk into a government office here and you will be greeted in Dutch, the official language. But in a reflection of the astonishing diversity of this South American nation, Surinamese speak more than 10 other languages, including variants of Chinese, Hindi, Javanese and half a dozen original Creoles.
Making matters more complex, English is also beamed into homes on television and Portuguese is the fastest-growing language since an influx of immigrants from Brazil in recent years. And one language stands above all others as the lingua franca: Sranan Tongo (literally Suriname tongue), a resilient Creole developed by African slaves in the 17th century.
So which language should Suriname’s 470,000 people speak? Therein lies a quandary for this country, which is still fiercely debating its national identity after just three decades of independence from the Netherlands.
“We shook off the chains of Dutch colonialism in the 1970s, but our consciousness remains colonized by the Dutch language,” said Paul Middellijn, 58, a writer who composes poetry in Sranan Tongo.
Nevertheless, Mr. Middellijn said English should be declared Suriname’s national language, a position shared by many Surinamese who want stronger links to the Caribbean and North America. “Sranan will survive because nothing can replace it as the language of the street,” he said.
“It is a form of communication perfect not just for poets but for the Chinese groceryman or Brazilian miner who arrived a few months ago,” he continued. “Are they going to go through the trouble of learning Dutch? No way.”
The flexibility of Sranan, as it is commonly known, enabled it to evolve into the country’s most widely spoken language. Based largely on English, it crystallized here before the Dutch traded New York with the British for Suriname in the 17th century; the colonial powers switched places but the slave populations did not.
Sranan developed an overlay of words from Dutch, Portuguese and West African languages. Today Surinamese speak it interchangeably with Dutch, depending on the formality of the setting.
For instance, lawyers use Dutch in court proceedings, while shoppers use Sranan to bargain for fish in the market. Jokes and rap music are often made in Sranan, dismissively called Taki-Taki (derived from the English “talky talky”) in the past, but at cocktail parties diplomats struggle with Dutch and get by in English.
“I do not speak Sranan,” said Suprijanto Muhadi, the ambassador from Indonesia, the former Dutch colony that sent Javanese laborers here until the eve of World War II. “But a manservant I brought from Indonesia a year ago picked it up much easier than Dutch.”
The use of Sranan became associated with nationalist politics after Desi Bouterse, a former dictator, began using Sranan in his speeches in the 1980s. The slogan of his National Democratic Party, the biggest in Suriname, remains “Let a faya baka!” Sranan for “Turn the lights back on!” or, figuratively, get things working again.
But even though relations with the Netherlands are tepid, Dutch is taught in schools rather than Sranan. In 2004, Suriname became an associate member of Taalunie, a Dutch language association including the Netherlands and Belgian Flanders.
Meanwhile, amid periodic bursts of debate in Parliament to change the national language to English or even Spanish in a nod to geography, other languages here are thriving because of their use by descendants of escaped slaves and indentured laborers brought here by the Dutch from the far corners of the world.
To get a sense of the Babel of languages here, just stroll through this capital, which resembles a small New England town except the stately white clapboard houses are interspersed with palm trees, colorful Chinese casinos and minaret-topped mosques.
Slip into one of the Indonesian eateries known as warungs to hear Javanese, spoken by about 15 percent of the population. Choose a roti shop, with its traditional Indian bread, to listen to Surinamese Hindi, spoken by the descendants of 19th-century Indian immigrants, who make up more than a third of the population. And merchants throughout Paramaribo speak Chinese, even though the numbers of Chinese immigrants are small.
Venture into the jungly interior, where indigenous languages like Arawak and Carib are still heard with languages like Saramaccan, a Portuguese and English-inspired Creole spoken by descendants of runaway slaves who worked on plantations once owned by Sephardic Jews.
The linguistic diversity that makes Suriname exceptional also isolates it from its own hemisphere. Paramaribo, unlike many other regional capitals, has no direct flights to large cities like Miami or São Paulo. Instead, airlines fly to Curaçao in the Dutch Antilles or to Amsterdam, places with communities of Surinamese immigrants.
Dutch had a stronger presence in rural communities before a civil war from 1986 to 1991 destroyed many schools. As a result Sranan became even more critical for interethnic communication once peace was restored.
For a glimpse into Suriname’s linguistic future, visit Belenzinho, a neighborhood here with several thousand Brazilian immigrants, many of them gold miners. The storefront signs are lettered in Portuguese instead of Dutch or Chinese. Suriname has some 50,000 Brazilians, more than 10 percent of the population.
“All I need is Portuguese since my world is Brazilian,” said Ivanildo Vieira Cardoso, 38, a miner from northeast Brazil who was sipping not a Parbo, the Surinamese beer brewed by Heineken, but a can of Nova Schin imported from Brazil.
Whether Portuguese blends into Sranan or vice versa, scholars contend that linguistic choices here reflect a tension beneath the surface of a nationalist ethos that shuns ethnic identity for unity. Resentment has emerged against Chinese and Brazilians, recent immigrant groups that are economically successful. And because Sranan is the native language for Creoles in and near Paramaribo, groups like the Maroons, descended from runaway slaves, might chafe at making it the national language.
“Is it a language that unifies us or separates us because it is associated with Creoles?” asked Paul Tjon Sien Fat, a Surinamese linguist at the University of Amsterdam. “In our mind set, Sranan is black and Dutch is white. Suriname could not function without Sranan, but this is still an obstacle in formalizing its acceptance for many Surinamese.”
Faced with such quandaries, inertia may rule. If so, while Dutch would remain official, English is likely to gain ground. That seems to be the outcome reflected in bookstores here, with titles in Dutch and English far outnumbering books in Sranan, mainly bibles and poetry, which have gained a toehold among readers.
But even bookstore owners profess their love of Sranan. “Sranan is very smooth, with so many influences from everywhere, something that is purely and emotionally Surinamese,” said Debora van Etten, 46, a bookseller in Paramaribo’s old city. “Taking Sranan to the next level would be bold,” she said, “but for so many of us it would be a very big jump.”
Split Is Forming Over Regulation of Wall Street
By EDMUND L. ANDREWS and STEPHEN LABATON
WASHINGTON — As Congress and the Bush administration struggle to contain the housing and credit crises — and prevent more Wall Street firms from collapsing as Bear Stearns did — a split is forming over how to strengthen oversight of financial institutions after decades of deregulation.
The administration and Democratic lawmakers in Congress agree that the meltdown in credit markets exposed weaknesses in the nation’s tangled web of federal and state regulators, which failed to anticipate the effect of so many new players in the industry.
In Congress, Democrats are drafting bills that would create a powerful new regulator — or simply confer new powers on the Federal Reserve — to oversee practices across the entire array of commercial banks, Wall Street firms, hedge funds and nonbank financial companies.
The Treasury Department is rushing to complete its own blueprint for overhauling what is now an alphabet soup of federal and state regulators that often compete against each other and protect their particular slices of the industry as if they were constituents.
But the two sides strongly disagree about whether, after decades of a freewheeling encouragement of exotic new services and new players like hedge funds, the pendulum should swing back to tighter control.
One central battle is likely to be over tightening supervision of the risk-management practices of Wall Street investment banks and perhaps requiring them to keep higher cash reserves as a cushion against unexpected trading losses.
The Democratic proposals would subject Wall Street firms to the kind of strict oversight that banks have had for decades. If firms like Goldman Sachs and Merrill Lynch were required to set aside substantially bigger capital reserves, they would have that much less available for lending, trading and underwriting new securities.
Wall Street firms played a central role in packaging and financing trillions of dollars in high-risk home mortgages, and the losses tied to those mortgages are at the heart of the deepening crisis in the financial markets that has pushed the economy to the brink of a recession.
“You need regulation that is adequate to the scope of innovation and to the scope of activity,” said Representative Barney Frank, the Democrat of Massachusetts who is chairman of the House Financial Services Committee.
Mr. Frank said last week that Congress should consider creating a new regulator — or giving the Federal Reserve greater powers — to oversee all financial markets and intervene when necessary.
Mr. Frank, saying that government had failed to keep up with the explosion of new financial instruments, said regulators needed to re-examine capital reserves, risk-management practices and consumer protection without regard to whether companies were commercial banks, investment banks or nonbank mortgage lenders.
“You do it right, and it’s pro-market,” Mr. Frank said in an interview. “Right now, we have an investors’ strike going on, and restoring investor confidence is a top priority.”
But industry groups warn that heavy-handed regulation could dry up investment capital just when the economy needs it most.
“If we don’t tread very carefully on restructuring a very complex financial system, we might stifle the necessary animal instincts of a free market,” said Mark A. Bloomfield, president of the American Council for Capital Formation, a business advocacy group. “Every day, the cries of populism grow stronger and could trample good economic policy.”
Wall Street firms have also been major contributors to both political parties, and they are certain to oppose tough new restrictions. The Treasury Department appears torn.
On the one hand, Treasury officials say they are convinced that today’s regulatory system is fragmented and out of date. The Treasury secretary, Henry M. Paulson Jr., has talked about the need to re-examine capital requirements for financial institutions.
But both President Bush and Mr. Paulson, a former chief executive of Goldman Sachs, remain philosophically opposed to restrictions and requirements that might hamper economic activity.
“What we’re looking at in our blueprint is how to make our regulatory structure more efficient, less duplicative and more in line with today’s capital markets,” said David G. Nason, assistant secretary of the Treasury for financial institutions. “We’ve got five regulatory agencies focused on depository institutions. We’re one of the only countries in the world that separates securities from futures, and our regulation of insurance is solely at the state level.”
But the entire discussion took a stunning turn last week after the Federal Reserve abruptly stepped in to prevent a systemic collapse on Wall Street.
Invoking its authority as the nation’s lender of last resort, the Fed offered a $30 billion credit line to JPMorgan Chase to help it take over Bear Stearns, which was about to go bankrupt. Even more significant, the central bank announced that it would lend hundreds of billions of dollars to big investment banks through its “discount window” — an emergency loan program that had been reserved strictly for commercial banks.
The Fed’s involvement highlighted what many experts see as the growing disparity in regulation between Wall Street firms and commercial banks. Commercial banks submit to greater regulation, partly in exchange for the privilege of being able to borrow from the Fed’s discount window.
But starting last week, Wall Street firms were getting the same protection without subjecting themselves to additional scrutiny. Some administration officials said they had little choice but to regulate Wall Street firms more closely.
“In the short term, it would make sense to have one umbrella regulatory agency,” said Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, which insures deposits at banks and thrift institutions and is one of several federal bank regulatory agencies. “Capital levels are the most important tool we have at the F.D.I.C., and investment banks have lower capital levels than commercial banks.”
Among Democrats and Republicans alike, there is a growing consensus that the existing regulatory structure, involving more than half a dozen federal agencies as well state offices, were not equipped to prevent a host of questionable practices that aggravated the housing and mortgage meltdowns.
The practices included abusive loans by independent mortgage brokers; risky and opaque transactions by financial institutions; credit-rating decisions that turned out to be wildly optimistic; and the underwriting of loans by mortgage brokers that were often based on fraudulent or inaccurate information.
Just as the Sept. 11, 2001, attacks highlighted deep cracks between the nation’s intelligence and law enforcement agencies, the credit and housing crises are forcing policy makers to scrutinize cracks between oversight agencies that aggressive mortgage brokers and deal makers were able to exploit.
“To anyone who looks at the regulatory system over the last few months, it is quite clear that the financial world has evolved dramatically and the regulatory system has not caught up,” said Senator Charles E. Schumer, the Democrat of New York who is the chairman of the Joint Economic Committee.
Even though Mr. Schumer represents Wall Street’s home state and has many financial supporters on Wall Street, he said he was on “the same page” as Mr. Frank and was preparing his own plan for regulatory overhaul. Senator Christopher J. Dodd, the Democrat of Connecticut who is the chairman of the Senate Banking Committee, is preparing legislation as well.
But Mr. Schumer cautioned that the Bush administration’s deregulatory mind-set could make it difficult to do anything this year.
The Treasury Department is hoping to unveil its own blueprint for regulatory overhaul in the next few weeks. Last week, Mr. Paulson acknowledged that the problems exposed by the housing crisis were diffuse and complex and could not be solved with a single action. But he suggested that he did not want to take any drastic regulatory steps while the financial markets remained in turmoil.
“The objective here is to get the balance right,” Mr. Paulson said last week. “Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it.”
Given the philosophical differences about the value of government regulations, some experts were skeptical that Congress and the Bush administration would agree on more than cosmetic changes.
“There is a political will, but I’m not certain that it can overcome longstanding philosophic objections to dealing with free markets in a crisis environment,” said Arthur Levitt Jr., the chairman of the Securities and Exchange Commission under President Bill Clinton.
The Federal Reserve’s recent decisions to lend hundreds of billions of dollars to the nation’s biggest investment banks, and to underwrite JPMorgan Chase’s takeover of Bear Stearns, may have changed the balance of power.
The Fed reported on Thursday that investment banks had quickly taken advantage of the lending program and had taken out $28.8 billion in new loans by Wednesday. That did not include any loans that JPMorgan Chase took on through the $30 billion credit line it received as part of its deal to acquire Bear Stearns.
Goldman Sachs, Lehman Brothers and Morgan Stanley voluntarily disclosed that they had taken loans under the Fed’s new program, in part to reduce any stigma about it. But the volume of borrowing suggests that many other Wall Street firms took advantage as well.
The new borrowing could strengthen Mr. Frank’s hand in calling for tougher regulation, because it immediately raises the question of why investment banks should be allowed to borrow from the Fed without subjecting themselves to the same kind of oversight that commercial banks face.
But the broader issue for both Congress and the Bush administration is that even bank regulators did little to slow the explosive growth of high-risk subprime mortgages, many of which were “liar’s loans” that did not require borrowers to verify their incomes.
At least four federal agencies — the Federal Reserve, the F.D.I.C., the Office of the Comptroller of the Currency and the Office of Thrift Supervision — have some jurisdiction over mortgage lending. Making matters more difficult, state banking regulators had jurisdiction over the fast-growing array of nonbank mortgage lenders, which accounted for about 40 percent of new subprime loans before that market collapsed last August.
Except for the Federal Reserve, all of the federal bank agencies receive funding from fees paid by member institutions, and some specialists have long argued that the agencies competed with each other to woo institutions with lighter regulation.
Ms. Bair of the F.D.I.C. cautioned that industry and government turf battles would make it difficult to agree on a single regulator, especially a strong one. But she said the need for one was clear.
“We need to go in the direction of more regulatory consolidation,” Ms. Bair said. “It would make more sense to have some type of umbrella agency, if for no other reason than facilitating information.”
Gap in Life Expectancy Widens for the Nation
It comes with a nifty graphic
New government research has found “large and growing” disparities in life expectancy for richer and poorer Americans, paralleling the growth of income inequality in the last two decades.
Life expectancy for the nation as a whole has increased, the researchers said, but affluent people have experienced greater gains, and this, in turn, has caused a widening gap.
One of the researchers, Gopal K. Singh, a demographer at the Department of Health and Human Services, said “the growing inequalities in life expectancy” mirrored trends in infant mortality and in death from heart disease and certain cancers.
The gaps have been increasing despite efforts by the federal government to reduce them. One of the top goals of “Healthy People 2010,” an official statement of national health objectives issued in 2000, is to “eliminate health disparities among different segments of the population,” including higher- and lower-income groups and people of different racial and ethnic background.
Dr. Singh said last week that federal officials had found “widening socioeconomic inequalities in life expectancy” at birth and at every age level.
He and another researcher, Mohammad Siahpush, a professor at the University of Nebraska Medical Center in Omaha, developed an index to measure social and economic conditions in every county, using census data on education, income, poverty, housing and other factors. Counties were then classified into 10 groups of equal population size.
In 1980-82, Dr. Singh said, people in the most affluent group could expect to live 2.8 years longer than people in the most deprived group (75.8 versus 73 years). By 1998-2000, the difference in life expectancy had increased to 4.5 years (79.2 versus 74.7 years), and it continues to grow, he said.
After 20 years, the lowest socioeconomic group lagged further behind the most affluent, Dr. Singh said, noting that “life expectancy was higher for the most affluent in 1980 than for the most deprived group in 2000.”
“If you look at the extremes in 2000,” Dr. Singh said, “men in the most deprived counties had 10 years’ shorter life expectancy than women in the most affluent counties (71.5 years versus 81.3 years).” The difference between poor black men and affluent white women was more than 14 years (66.9 years vs. 81.1 years).
The Democratic candidates for president, Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois, have championed legislation to reduce such disparities, as have some Republicans, like Senator Thad Cochran of Mississippi.
Peter R. Orszag, director of the Congressional Budget Office, said: “We have heard a lot about growing income inequality. There has been much less attention paid to growing inequality in life expectancy, which is really quite dramatic.”
Life expectancy is the average number of years of life remaining for people who have attained a given age.
While researchers do not agree on an explanation for the widening gap, they have suggested many reasons, including these:
¶Doctors can detect and treat many forms of cancer and heart disease because of advances in medical science and technology. People who are affluent and better educated are more likely to take advantage of these discoveries.
¶Smoking has declined more rapidly among people with greater education and income.
¶Lower-income people are more likely to live in unsafe neighborhoods, to engage in risky or unhealthy behavior and to eat unhealthy food.
¶Lower-income people are less likely to have health insurance, so they are less likely to receive checkups, screenings, diagnostic tests, prescription drugs and other types of care.
Even among people who have insurance, many studies have documented racial disparities.
In a recent report, the Department of Veterans Affairs found that black patients “tend to receive less aggressive medical care than whites” at its hospitals and clinics, in part because doctors provide them with less information and see them as “less appropriate candidates” for some types of surgery.
Some health economists contend that the disparities between rich and poor inevitably widen as doctors make gains in treating the major causes of death.
Nancy Krieger, a professor at the Harvard School of Public Health, rejected that idea. Professor Krieger investigated changes in the rate of premature mortality (dying before the age of 65) and infant death from 1960 to 2002. She found that inequities shrank from 1966 to 1980, but then widened.
“The recent trend of growing disparities in health status is not inevitable,” she said. “From 1966 to 1980, socioeconomic disparities declined in tandem with a decline in mortality rates.”
The creation of Medicaid and Medicare, community health centers, the “war on poverty” and the Civil Rights Act of 1964 all probably contributed to the earlier narrowing of health disparities, Professor Krieger said.
Robert E. Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation, said one reason for the growing disparities might be “a very significant gap in health literacy” — what people know about diet, exercise and healthy lifestyles. Middle-class and upper-income people have greater access to the huge amounts of health information on the Internet, Mr. Moffit said.
Thomas P. Miller, a health economist at the American Enterprise Institute, agreed.
“People with more education tend to have a longer time horizon,” Mr. Miller said. “They are more likely to look at the long-term consequences of their health behavior. They are more assertive in seeking out treatments and more likely to adhere to treatment advice from physicians.”
A recent study by Ellen R. Meara, a health economist at Harvard Medical School, found that in the 1980s and 1990s, “virtually all gains in life expectancy occurred among highly educated groups.”
Trends in smoking explain a large part of the widening gap, she said in an article this month in the journal Health Affairs.
Under federal law, officials must publish an annual report tracking health disparities. In the fifth annual report, issued this month, the Bush administration said, “Over all, disparities in quality and access for minority groups and poor populations have not been reduced” since the first report, in 2003.
The rate of new AIDS cases is still 10 times as high among blacks as among whites, it said, and the proportion of black children hospitalized for asthma is almost four times the rate for white children.
The Centers for Disease Control and Prevention reported last month that heart attack survivors with higher levels of education and income were much more likely to receive cardiac rehabilitation care, which lowers the risk of future heart problems. Likewise, it said, the odds of receiving tests for colon cancer increase with a person’s education and income.
Depression, You Say? Check Those Safety Nets
The stock markets are spiraling like whirling dervishes, one of the nation’s largest financial institutions has flirted with bankruptcy and the former Federal Reserve chairman Alan Greenspan invoked the ghost of past calamities when he wrote that the current economic turmoil is likely to become the “most wrenching” since World War II. Meanwhile, home foreclosures are at their fastest pace in at least 30 years and in a survey conducted by USA Today and Gallup, more than half of respondents indicated that they had fears the downturn could become a depression.
Some innocent bystanders might be forgiven for wondering why that last word — “depression” — has started popping up. Is it possible our economy could speed past a recession into a full-blown depression like that of the 1930s, when American unemployment reached 25 percent?
Well, the economists are here to say that you can dig up the family silver and stop training the kids how to jump onto a moving train. While many who study the nation’s economic health agree that a recession has probably already begun, and that it may be long and severe, they also say the odds of a full-blown depression are almost nonexistent.
Why? Because so many of them have spent so much time studying the Great Depression and trying to figure out how to react more effectively if things turn really bad again. Take last week, for example.
“I used to give a lecture explaining that the Great Depression could never happen now because of the regulations that emerged from that crisis,” said Barry Eichengreen, an economist at the University of California at Berkeley. “But we’re learning that there is a shadow banking system, of hedge funds and investment banks, that are outside of those safety nets. What happened to Bear Stearns last week looked a lot like a 19th-century run on the bank. And that’s why the Fed reacted so quickly.”
Indeed, when the government moved last weekend to help save Bear Stearns, the fifth-largest securities firm on Wall Street, from bankruptcy, policy makers were motivated by concerns that the investment bank’s failure could start a chain reaction of collapses at other investment houses. Stopping those dominoes was such a priority that the Federal Reserve helped broker the sale of Bear Stearns to its rival JPMorgan Chase.
A century ago, such government hustle would have been unthinkable. Even the distinction between a recession (a significant decline in economic activity that lasts more than a few months) and a depression (a decline that is much longer and deeper) didn’t really matter, because turmoil in the economy was often taken for granted.
Between 1857 and 1929, while regulators largely stood idle, the American economy swung through 19 national boom-and-bust gyrations that sometimes threatened to wipe out whole industries within months.
But in the wake of the Great Depression, American policy makers began actively managing the economy with a handful of tools, including adjusting interest rates and using massive government spending to spur growth. Since 1945, there have only been 10 boom-and-bust cycles, most of them much shallower than earlier ones, and the unemployment rate has never topped 9.7 percent.
Much of that stability, economic historians say, stems from reforms designed to calm consumers during downturns, like the Federal Deposit Insurance Corporation, which guarantees most checking and savings accounts up to $100,000 if a bank fails.
But as the Internet boom and recent housing bubble demonstrate, even relatively stable periods can be part of a cycle of extreme ups and downs. The prolonged expansion that just ended had an unusually long run of more than six years. As a result, some are speculating that the crash will be equally drawn out.
“The biggest difference with this recession is that it’s starting in the housing market,” said Victor Zarnowitz, an economist at the Conference Board who is also a member of the National Bureau of Economic Research’s business-cycle committee. For the first time in more than 50 years, the nation faces a broad risk “that people’s most important asset, their home, will lose value,” he said.
As homeowners see the value of their homes decline, they become more likely to delay purchases of the big items — like automobiles, electronics and home appliances — that are ballasts of the American economy. When those purchases decline, large manufacturing firms, suddenly short on funds, could begin laying off employees. Those workers, uncertain about the future, might in turn stop buying Starbucks lattes and movie tickets, and in a worst-case scenario, that could spur coffee shops and theaters to begin layoffs of their own.
Such a chain reaction was one reason unemployment during the Great Depression was so persistent and widespread.
But today, say economists, fundamental changes make such contagion unlikely. For one thing, incomes are more stable. Many more Americans hold jobs in service sectors, like medicine or education. And more Americans work for the government, which is less inclined to fire people just because the economy turns gloomy.
Moreover, there are safety nets that can be traced to the Great Depression, like Social Security, unemployment benefits, food stamp programs. These “give people a sense of security even when they’re out of work,” said the Harvard economist Benjamin Friedman. “That establishes a floor for how panicked consumers become.”
Even if consumer confidence hit rock bottom, that most likely would not be enough, by itself, to cause a depression. For things to become really dire, the nation’s financial institutions would have to fail at the same time that unemployment began significantly rising. Only if banks suddenly closed, or it became impossible for companies to access short-term lines of credit, would things begin spiraling out of control.
A credit shortage, in fact, has played a significant role in today’s economic turmoil, and was the reason some economists began invoking the Great Depression. But those comparisons were more to stress how differently policy makers are behaving today than their counterparts did in 1930, when a wave of panics started that eventually caused one-fifth of the nation’s banks to fail.
Today, the Federal Reserve is so cautious about the stability of major financial institutions that regulators sometimes jump into action almost immediately, as they did in the Bear Stearns case. One goal of such an intervention, say economic historians, is to slow down the turmoil as much as possible. In the 1920s and early 1930s, policy makers became overwhelmed by a cascade of crises they were unable to temper.
“In the 1920s, everyone was still reeling from the First World War, which had realigned capital structures and boundaries and had put the defeated countries in positions where they had much less economic flexibility,” said Peter Temin, an economic historian at the Massachusetts Institute of Technology. In particular, one cause of the Great Depression was that policy makers in the United States and elsewhere were either reluctant or unable to increase their countries’ supplies of money, which at the time were often backed by gold.
“Today, we have a lot more flexibility and we can prop up banks and the economy to give us enough time to let things stabilize,” Professor Temin added. Already, some lawmakers are proposing to help refinance or purchase failing mortgages in order to slow down how quickly other problems might spread; that approach, however, might carry risks of its own, like encouraging irresponsible behavior and increasing government deficits.
Of course, all of these techniques do not guarantee an easy path to rosier times. Some economists and financiers say it’s likely that the current recession will extend for at least a year. Others think the American economy will suffer from an extended malaise as Japan did in the 1990s.
But whatever name economists give the current downturn, we are unlikely to see the bread lines, shantytowns and dust bowl of the Great Depression. More likely, these economists say, would be a sudden increase in the number of people selling belongings on eBay.
Hollywood, which until now has largely catered to American tastes, might begin more explicitly choosing scripts based on how they would play in rising economies like India and China. And while exports of manufactured goods might accelerate, the outsourcing trends that sent some American jobs abroad might reverse. Already, Germany-based BMW is expanding a South Carolina plant, betting that the weak dollar will make American workers cheaper than those in Germany or Japan.
Which isn’t to say that anyone is starting to hum “Happy Days Are Here Again.” Even the Federal Reserve chief, Ben Bernanke, has warned against becoming too sanguine.
“To understand the Great Depression is the Holy Grail of macroeconomics,” Mr. Bernanke wrote in a 1994 paper, when he was a professor at Princeton focused on analyzing the financial cataclysm that began in 1929. While economists have made great progress, he continued, “we do not yet have our hands on the Grail by any means.”
And one NOT on the economy, but on languages in Suriname
It comes with a song
And a slideshow
Walk into a government office here and you will be greeted in Dutch, the official language. But in a reflection of the astonishing diversity of this South American nation, Surinamese speak more than 10 other languages, including variants of Chinese, Hindi, Javanese and half a dozen original Creoles.
Making matters more complex, English is also beamed into homes on television and Portuguese is the fastest-growing language since an influx of immigrants from Brazil in recent years. And one language stands above all others as the lingua franca: Sranan Tongo (literally Suriname tongue), a resilient Creole developed by African slaves in the 17th century.
So which language should Suriname’s 470,000 people speak? Therein lies a quandary for this country, which is still fiercely debating its national identity after just three decades of independence from the Netherlands.
“We shook off the chains of Dutch colonialism in the 1970s, but our consciousness remains colonized by the Dutch language,” said Paul Middellijn, 58, a writer who composes poetry in Sranan Tongo.
Nevertheless, Mr. Middellijn said English should be declared Suriname’s national language, a position shared by many Surinamese who want stronger links to the Caribbean and North America. “Sranan will survive because nothing can replace it as the language of the street,” he said.
“It is a form of communication perfect not just for poets but for the Chinese groceryman or Brazilian miner who arrived a few months ago,” he continued. “Are they going to go through the trouble of learning Dutch? No way.”
The flexibility of Sranan, as it is commonly known, enabled it to evolve into the country’s most widely spoken language. Based largely on English, it crystallized here before the Dutch traded New York with the British for Suriname in the 17th century; the colonial powers switched places but the slave populations did not.
Sranan developed an overlay of words from Dutch, Portuguese and West African languages. Today Surinamese speak it interchangeably with Dutch, depending on the formality of the setting.
For instance, lawyers use Dutch in court proceedings, while shoppers use Sranan to bargain for fish in the market. Jokes and rap music are often made in Sranan, dismissively called Taki-Taki (derived from the English “talky talky”) in the past, but at cocktail parties diplomats struggle with Dutch and get by in English.
“I do not speak Sranan,” said Suprijanto Muhadi, the ambassador from Indonesia, the former Dutch colony that sent Javanese laborers here until the eve of World War II. “But a manservant I brought from Indonesia a year ago picked it up much easier than Dutch.”
The use of Sranan became associated with nationalist politics after Desi Bouterse, a former dictator, began using Sranan in his speeches in the 1980s. The slogan of his National Democratic Party, the biggest in Suriname, remains “Let a faya baka!” Sranan for “Turn the lights back on!” or, figuratively, get things working again.
But even though relations with the Netherlands are tepid, Dutch is taught in schools rather than Sranan. In 2004, Suriname became an associate member of Taalunie, a Dutch language association including the Netherlands and Belgian Flanders.
Meanwhile, amid periodic bursts of debate in Parliament to change the national language to English or even Spanish in a nod to geography, other languages here are thriving because of their use by descendants of escaped slaves and indentured laborers brought here by the Dutch from the far corners of the world.
To get a sense of the Babel of languages here, just stroll through this capital, which resembles a small New England town except the stately white clapboard houses are interspersed with palm trees, colorful Chinese casinos and minaret-topped mosques.
Slip into one of the Indonesian eateries known as warungs to hear Javanese, spoken by about 15 percent of the population. Choose a roti shop, with its traditional Indian bread, to listen to Surinamese Hindi, spoken by the descendants of 19th-century Indian immigrants, who make up more than a third of the population. And merchants throughout Paramaribo speak Chinese, even though the numbers of Chinese immigrants are small.
Venture into the jungly interior, where indigenous languages like Arawak and Carib are still heard with languages like Saramaccan, a Portuguese and English-inspired Creole spoken by descendants of runaway slaves who worked on plantations once owned by Sephardic Jews.
The linguistic diversity that makes Suriname exceptional also isolates it from its own hemisphere. Paramaribo, unlike many other regional capitals, has no direct flights to large cities like Miami or São Paulo. Instead, airlines fly to Curaçao in the Dutch Antilles or to Amsterdam, places with communities of Surinamese immigrants.
Dutch had a stronger presence in rural communities before a civil war from 1986 to 1991 destroyed many schools. As a result Sranan became even more critical for interethnic communication once peace was restored.
For a glimpse into Suriname’s linguistic future, visit Belenzinho, a neighborhood here with several thousand Brazilian immigrants, many of them gold miners. The storefront signs are lettered in Portuguese instead of Dutch or Chinese. Suriname has some 50,000 Brazilians, more than 10 percent of the population.
“All I need is Portuguese since my world is Brazilian,” said Ivanildo Vieira Cardoso, 38, a miner from northeast Brazil who was sipping not a Parbo, the Surinamese beer brewed by Heineken, but a can of Nova Schin imported from Brazil.
Whether Portuguese blends into Sranan or vice versa, scholars contend that linguistic choices here reflect a tension beneath the surface of a nationalist ethos that shuns ethnic identity for unity. Resentment has emerged against Chinese and Brazilians, recent immigrant groups that are economically successful. And because Sranan is the native language for Creoles in and near Paramaribo, groups like the Maroons, descended from runaway slaves, might chafe at making it the national language.
“Is it a language that unifies us or separates us because it is associated with Creoles?” asked Paul Tjon Sien Fat, a Surinamese linguist at the University of Amsterdam. “In our mind set, Sranan is black and Dutch is white. Suriname could not function without Sranan, but this is still an obstacle in formalizing its acceptance for many Surinamese.”
Faced with such quandaries, inertia may rule. If so, while Dutch would remain official, English is likely to gain ground. That seems to be the outcome reflected in bookstores here, with titles in Dutch and English far outnumbering books in Sranan, mainly bibles and poetry, which have gained a toehold among readers.
But even bookstore owners profess their love of Sranan. “Sranan is very smooth, with so many influences from everywhere, something that is purely and emotionally Surinamese,” said Debora van Etten, 46, a bookseller in Paramaribo’s old city. “Taking Sranan to the next level would be bold,” she said, “but for so many of us it would be a very big jump.”
