"Days of Gratitude" - William M. Denny

One of our faithful readers has just published his first book. It is an historical account of the steamship Gratitude. We hope you'll support our little community of readers and writers and purchase a copy.

Merry Christmas,
J. Sweeney

Merry Christmas - Happy Winter Solstice

We at WeeklyMusings would like to wish all of our readers a very Merry Christmas and Happy Winter Solstice! Whether you celebrate the magic of long-lasting lamp oil, the birth of Jesus or the end of the shortening of the days and lengthening of the nights, we can all join in the celebration of light and its increase in our world.

J. Sweeney

PS For our readers in the Southern Hemisphere, we are delighted to have you with us and hope that you enjoyed you longest day.

Open Letter to Senator Clinton

Dear Senator Clinton,

My wife and I are teachers and looking forward to buying a home in a better school district. We have been waiting for the market to correct itself rather than use an ARM. For the last few years prices in our area have increased much faster than incomes due to over-borrowing. We and other financially prudent families do not appreciate the idea of our government now meddling with the appropriate collapse of prices.

This is going to make more of us have to use terrible levels of debt to get into a home.

Please stop. Don't allow the Bush administration to bail out the banks and the millions of Americans that have not learned to balance their checkbooks. What the hell are you people in Washington doing?

Looking for a new candidate,
Joe Sweeney

Weekly Musings "A Booming Whimper"

Weekly Musings© - “A Booming Whimper”
10/4/07
J. Sweeney

I saw a lovely conversation with Charlie Rose and Alan Alda last night. They were discussing meaning in their lives and how near death experiences had served to focus their attention on the quality of their time and choices. They struck me as two thoughtful and worldly men entering the “wisdom” phase of their lives. I frequently give thought to the likely impact of the impending retirement of the “Boomers” and last night I began to hope that the impending retirement of the Boomers would translate into a golden age of volunteerism and reflection… well I got to Musing.

You’ve already read plenty about how the largest segment of our population is about to retire. Media outlets are quick to pander to the egotism of the Boomers with comments about how they have transformed every stage of life in our culture. Most of this is said with an eye on capturing a Boomer audience delighted and puffed up with self-importance. They are a large segment of the shopping population and have more dollars to spend on consumer items than their offspring or parents, so such marketing is effective.

I think the Boomer retirement will bring about some significant changes and it is possible that some of them will be positive. However, most of the impact will be felt as a shift in spending across the broad economy. You should expect a relatively flat housing market for the next ten years. There will be brief interludes of irrational exuberance. But, on the whole the number of people selling homes in order to downsize will match and at times exceed demand for single homes. Real estate will remain a local phenomenon until we have near instant transportation across large distances. So, there are some markets that will continue to appreciate in price, but for the most part price increases will be constrained to niche retirement and nursing communities.

Economic growth will be substantially slower over most of the next two decades. The productivity gains realized by the additional worker in most households (women to work) and the impact of personal computing will not be repeated in the near term. Productivity gains due to outsourcing will not be as large in the future. The low-hanging fruit has been picked and economic growth in various developing countries is slowly closing the gap in compensation that generates the bulk of savings.

The focus of spending on health and life extending technologies will eventually result in massive productivity gains due to increasing levels of intelligence in infrastructure, shipping and power generation. The enabling technologies are likely to arise from the fields of bioengineering and nanotechnology. This surge in productivity will not occur within the next fifteen years and should not be relied on for the rapid returns on investments realized in the 1990’s via Internet related technologies.

Due to inadequate planning and savings, most Boomers will constrict spending relative to recent levels in the final years prior to full-retirement. Fear, which seems to be the hallmark of the Boomers, coupled with anemic retirement investments, and low returns on savings will result in lower-than anticipated budgets for most. This constrained spending, on all but health related consumables, will have a downward pressure on revenues across the US economy.

Health failures will be substantially higher than planned for in the United States relative to other industrialized countries. Low levels of physical work, few vacations, and years of stress (often coupled with smoking) will bear a terrible fruit. Boomers who expected to live longer and healthier than their parents will require more maintenance drugs and surgeries. This spending and the fear of such spending will further erode their sense of financial security.

Now, the big one, currently Boomers are the most financially solvent and highest earning members of our economy. As stated so many times before, they are also the largest group. As Boomers begin to retire companies are looking forward to hiring cheaper replacements and realizing savings. What this means is that our economy will lose high wage earners and tax payers at the very same time that demands on benefit programs, like Social Security and Medicare, spike. The replacement workers will be fewer in number (companies looking for net attrition) and earn less on average than previous workers.

The required governmental outlays for retirees will be paid for in service reductions and tax increases. Lower government spending and higher taxes will lead to a recession in an environment with flat consumer spending.

While I would like to join the rosy picture club and paint for you an idyllic golden age of volunteerism and reflection I think it is much more likely that we will experience a sharp and prolonged recession. It will start in the next two years and it’s going to get nasty.

Buckle up.

A little thought on water...

I was taking a glass of cool refreshing water up to the office with me when a thought struck, "Water isn't clear."

The musing began thus:

Isn't it odd that water is so essential to life, the one liquid we most need, and it happens to be clear.

I wonder if anyone has thought about this before.

Wait, maybe it isn't clear. Maybe it just looks clear because being the liquid we evolved in it is both necessary and our light perception system (eyes and brain) filter out the distortions in water.

Our eyes and brains evolved in a medium of water and so the eyesight that evolved is one that manages the water distortions to such a degree that they virtually vanish...


So, that is what happened in my head on the way up from the kitchen.

Cool, now what do you think?

J. Sweeney

An Awful Juxtaposition

Weekly Musings – An Awful Juxtaposition

J. Sweeney
August 16, 2007

I am going to keep this brief. If they show up, please consider the two articles linked below. One is about women in Iraq forced to prostitution in order to feed their children. The other is about the engagement of the U.S. President’s daughter.

Some women are struggling to keep their children fed after their husbands died in a war started by a man who lives in a palace and gets to look forward to his daughter’s wedding.

George Bush deserves to be impeached. If he were a decent human being he would have resigned after no weapons were found. If the democrats were capable of leadership they would force his resignation or impeach him.

It is essential that we as citizens send a message to the world that our leaders are not tyrants, free to make war with our children and treasure without being accountable. We owe it to the dead in Iraq and to the millions suffering to hold our leaders accountable.

IMPEACH BUSH

http://www.cnn.com/2007/WORLD/meast/08/15/iraq.prostitution/index.html

http://www.cnn.com/2007/POLITICS/08/16/jenna.bush/index.html?iref=mpstoryview

Thank you Jessica (and Amazon)

Well, it finally happened. After years of working in software and building websites for others, I finally sold a simple product online to a customer. Using Amazon's website I listed and sold an old book. I'm heading to the UPS store to ship the book.

If I were making a list of things young people should know how to do, selling a product online would definitely be one of them. This is the equivelent of working at the corner store for a summer back in our nation's golden era. Partcipating in the exchange of goods and services as a provider not just as a consumer has value for young people trying to acquire a real sense of how society works.

Anyway, I'm off to ship the book. Who knows, this may be the start of a new way to fund my main hobby, stock investing...

J. Sweeney

"Mixed Progress"

The White House released the Administration's progress report on Iraq today. They claim mixed progress and are now trying to spin the results to seem like half of the benchmarks are met. You can read the report for yourself, and I think as a voter and taxpayer, you should. The results are not balanced. See for yourself. The White House seems unwilling to square with the American people. If this were a report card about a student's progress (something we all have experience with) the student would be failing.

You can argue that the benchmarks were too hard, and they do argue that in some cases. For example spending our money on captial improvements is not progressing fast enough to spend $10 billion in time. Maybe they need our congress over there... we could build a couple of bridges to nowhere for them.

Or, take the "Satisfactory Progress" rating they gave to the benchmark that the Maliki government deploy three additional brigades of Iraqi Army units in Bagdad. This disingenous rating was achieved by drawing forces from other units around the country, not by establishing new units as proscribed.

Once again this administration is playing fast and loose with the truth and demonstrates their aversion to accountability.

You're doing a hell of a job Bushie...

Democrats - Bill Richardson

I just watched an interview by Tim Russert of Governor Bill Richardson of New Mexico on the Meet the Press website. If like me you thought that he represented a reasonable candidate for the Democrats to nominate, it might be instructive.

He is a former Ambassador to the United Nations, Energy Secretary, and Congressman. The guy should know his stuff. Sadly, it looks like he knows politics and polls, but not foreign policy or consistency.

His call for immediate withdraw of all US troops from Iraq is a direct contradiction of his statements in his recent book. (Not named here to keep from giving him revenue.)

When pressed by Russert for a reason for the change: hot air.

Click the link above to go to the video clip. Once you get to the video page, the Richardson clip is down on the right. If the link doesn't work, head on over to the site via Google or your favorite search engine. Just watch and scratch off another Democratic hopeful.

J. Sweeney

Income Investor

Please take a look at the new Income Investor Blog at your convenience. On it I'll be posting content focused on building financial freedom. The first few posts will mostly be about building a foundation of knowledge. Motivating essays and How To guides will foloow.

J. Sweeney

Letter from Bob Casey

I received a letter from Bob Casey today asking for funds to support the campaign of embattled Democrat, Senator Tim Johnson.

I offer my brief reply here publicly in the hopes that others will share the message with Democrats and Republicans alike.

"Why would we want the Democrats to keep the majority? You have not ended the war or achieved anything substantive with it thus far. End the war, close all funding of private armies (Blackwater), and stop deficit spending or we will vote you out of office.

A former supporter,
J. Sweeney"


Here's hoping that our representative form of government begins to represent the voters.



Here's a fresh link to the Podcast project for Weekly Musings (c)

http://web.mac.com/josephesweeney/iWeb/Site/Podcast/Podcast.html

Weekly Musings PODCAST Project

The link here is to our new Podcast project. Please go and check out the new site. We'll be adding our Musings to the site soon.

Thank you,
J. Sweeney

iMac

We purchased an iMac to replace our failing PC. It's like someone handed us the keys to an arts studio...

WeeklyMusings - Too Much of a Bad Thing

WeeklyMusings © - “Too Much of a Bad Thing”

It was my custom in the months and years prior to the new millennium to gather my thoughts each week and attempt to put into specific language the swirling content of my mind. I came to call these expositions my WeeklyMusings. Events in the life of our great nation call me back to the task once more. Perhaps in these pages I can contribute some small part to the dialogue…

“The Lord of the Rings”, J.R.R. Tolkien’s masterpiece opens with a dappled mare pulling a cart down a well-worn country path. In the light of that sunny day we are introduced to characters I fondly recall from my youth. Seated on the cart is dear Gandalf the Wise. Soon he will call on young master Frodo in that most idyllic of settings, the Shire.

I love the Shire. I love the sunshine, and the rolling hills. I love the gardens, small paths carved by ponies and bare feet. I love the smell of fresh cut grass, of baking bread, and even the slow scent of pipe smoke blown in gentle puffs onto the breeze. It is a tranquil picture of domesticity, of quiet moments and friendly visits. How I wish I could raise my family in the peace of the Shire.

So, I sit tonight in a quiet room with a stopped clock and a fireplace that is always ready to receive a log. I sit down deep in a soft sofa, wrapped in a wool sweater that Gandalf would have reached for in his study had Mr. Tolkien thought to write him one. I sit here and contemplate whether my children and my wife will ever feel the innocent surety of a Shire life. I sit here and write of these things while my fellow citizens bleed on a battlefield across the sea and my brothers at home spend restless nights watching evil men plot evil deeds.

Is the dream of the Shire incompatible with the reality of modern man? Can such a place of peace and simple prosperity exist in a world torn by religion and resource scarcity? Am I merely delaying the inevitable call to arms and will one day soon yield to duty and like Cincinnatus of Rome, or perhaps even Frodo, go and fight, forsaking the labors I love for the most detestable of toils?

I came closer today than I have in many months to signing on for a tour of duty. Men are dying in the uniform of our nation.

I did not ever vote for George Bush. I wrote letters to my representatives in Congress, to the Senators from our Commonwealth, and to others urging that they resist what I perceived to be an unnecessary war.

In my humble opinion Mr. Bush was unfit for office due to a lack of executive experience and a history of poor judgment. He lacked the foreign policy experience and liberal education required of a global leader. But, elections have consequences, and if a democracy (or democratic republic) is to survive we must honor the results of elections. I was against the war, but like the election we must stand united once a decision is made or we are doomed to fall.

War is evil. It is always evil. But, sometimes evil is required for survival. The trouble with this war is not that we are losing, though it seems obvious that we are. The trouble is that this war was not required for survival. The consequences of voting for incompetence are now being showered upon us all.

We brought down a government of tyrants in a land of hatred. They are killing one another in the name of a fairy tale. They believe that God will reward them for their sacrifice, for their murders. They believe that it is preferable to exchange violence rather than compromise. They are never going to live in the Shire.

From where we are now I see no path that leads us to peace. These people are barbaric and beneath our contempt. So to those in this nation that would replace reason with religion, science with superstition. Our society is an opportunity for humanity. We are blessed by the bounty of nature and history and can make of ourselves nearly any truth we desire.

I long for the Shire; for a people of peace, learning, community, and tea. I am not a luddite. Far from a technophobe, I embrace the promise of modern technology as a way out of our many challenges. But while technology may solve energy needs, it will not solve the great human need to live in tolerance and peace.

Tolerance is not a lack of judgment, rather it is a willingness to accept the differences of others and to refrain from judging their personhood. But, tolerance does not require abdication of freedom and defense of one’s liberty.

My fellow citizens it is time for the United States of America to let Iraq fight for Iraq. It is time to bring our brothers and sisters home. It is time to spend the taxes raised in this nation on the future of this nation. We should be building schools here until they learn to build bridges there.

Money Managers

Friends,

A few days ago a friend's email had me pondering why professional money managers seem more willing to risk their client's money than individuals are to risk their own. Now, it might seem obvious to you that a person is more concerned about risking their own property than someone else's, but to me this conjecture doesn't hold up to evidence from personal experience.

For example, imagine that your friend lends you their car. Aren't you more cautious driving that vehicle than you are even your own? (I hope the answer is yes, otherwise please don't ask for a loaner.) Likewise when watching a friend's child, aren't you just a little more attentive and protective than usual?

So, why are professional money managers willing to take on higher levels of risk than individuals with their own money?

As the gerbil in my head ran on his rusty wheel, I began to muse...

There must be something in the way money managers are incented that causes them to alter their ethical bias away from protecting their client's fortunes toward risking it. I submit that the cause is the way that manager performance is measured. If you read investment prospectives you'll notice comments like "marketing beating performance for the last 10 out of 15 years". You might see marketing material with statements similar to, "twice the returns of the S&P 500 since inception". Of course it only mentions that inception of the fund was two or three years ago in the small print at the bottom or on the back of the advertisement.

Is it possible that money managers are measured like sports teams, by wins and losses? Is it possible that their careers depend on people looking at the number of times that they've beaten or fallen short of the average market or index returns? If their perofmance is measured by wins and losses instead of cumulative returns then they could be incented to choose a slightly riskier strategy than someone investing for the long-term.

The table below is an example of a "successful" money manager. The returns in the first column were generated by a random number generator and a slight (3%) upward drift. In other words the money manager is choosing riskier investments than the index but still getting the natural benefit of inflation.

The second column is the annual return for the money manager. The third column is showing his "wins" or "losses". A win is a year with an annual return greater than 3%, the average market in our example. A loss is any year when the manager's return is less than 3%, in other words a year when he does not beat the market.

Notice that our money manager is a winner! He beats the market 12 out of 19 years. He is beating the market 63% of the time! If this were baseball, that would be equivalent to a .632 batting average. He'd be worth millions.

However, look at the last column. The lowly individual investor in an index fund that is just treading water. He is beaten by the money manager 12 out of 19 times. In professional investing circles he is a loser. But, look at the final totals. The money manager with his .632 batting average has a cumulative return of only 65% whereas the individual loser has a more impressive cumulative return of 75%.

I did not assign these values for the purpose of proving my point. Instead I generated multiple examples randomly and then selected one for illustrative purposes. The problem here is not with the numbers. The problem is with how we track performance for professional investors. Too often the industry pushes the "wins" count, or batting average, instead of cumulative returns. Why?

I have some theories and will express them later, but for now here is the table. If you'd like a copy of the spreadsheet for your own modeling, please drop me an email. Special thanks to Shawn for initially sending me the email that got me musing.

J. Sweeney

Changes to Comments

Friends,

WeeklyMusings has changed the comment process to include a verification process meant to weed out comments added by spamming software and only allow comments by persons. Please feel free to continue to comment. It is our intention to continue the policy allowing anonymous comments. We would certainly prefer that people take ownership for their comments, but the anonymous feature allows people not registered with Blogger or Google to comment without having to register. The new verification process is not meant to restrict commenting by any person, it is only meant to stop comments added by software. For an example of the kind of commenting we are attempting to block please see the comment associated with the Senate Debate below.

Thank you and we look forward to hearing from you,
J. Sweeney

Income Investing

If you've never read the book, "The Richest Man in Babylon", you owe it to yourself to do so. I've bought and given away several copies of this book over the years. It was while reading that book that I first encountered the idea of generating income from capital as opposed to labor.

A little over two years ago the thought struck me that there are not really three economic classes in our country. There also aren't more than three as some would suggest by offering labels like upper-middle, lower-middle, etc. No, there are really only two classes in this country and the delineation is growing sharper with each passing fiscal quarter. What used to be a nation of some wealthy, many self-employed, and some laborers, has devolved into those that are paid money for their work and those that earn income from their invested capital.

Such distinctions may seem arbitrary at first but I submit that careful examination of the way these two classes are treated is proof enough of their existence. For example, the tax rate on money earned from work tops out at over 30%, while the tax rate on income earned from investments tops out at 15% for dividends and 20% for long-term capital gains. Money earned from a job is taxed before you can even buy your groceries. Money earned from investing is taxed only after all expenses on earning it have been paid. Could you work without paying for food? Is not your nourishment a cost of your labor? But, I digress.

If we continue to look we will find more indicators that the true class distinction is not between lawyers and doctors on the one hand and maids and waiters on the other, but on those that give their time and effort in return for pay and those that lend out their capital for income.

Now, this may all sound very obvious to you, but for a financially naive physics major like me it was quite the revelation. Post financial enlightenment I have endeavored to learn more about the workings of finance in the hopes of shifting my reliance on work to investing for income.

My first goal was to begin to save some capital to invest for income. I decided on a goal of 1% of annual income from investment as opposed to labor (so labor pay would only make up 99%). This goal seemed easily achievable. While it was achievable and simple in theory the practice required some pain. We all grow accustomed to certain creature comforts. Saving more money nearly always requires some sacrfices. So it was in our home.

Keep in mind I am not talking about retirement savings, 401(k)'s, IRA's, Thrift Plans, or any of the other tax preferred retirement vehicles. No, I am talking about saving money and trying to generate a real income from it with the eventual goal of parity with work-earned pay.

Imagine 20 years from now having twice your annual income with half of that money coming in every month whether you work or not!

"20 years? But I want that money now!"

Sorry, unless you were born lucky or can pick 6 random numbers in advance of their drawing by public officials, you are in the same boat as most of us and need to accumulate capital the old-fashioned way, saving it.

I am going to post Musings from time to time on this site, but periodically I will continue this theme of investing for income and the great class divide. All questions regarding saving, investing, etc. are welcome.

You can move your family from the stress of the labor class to the relative comfort of the investor class. It takes work, patience, and emotional fortitude, but it is the way to continue what your ancestors started when they came here to make a better life for themselves and their descendents.

Good luck and post a comment!

Joe

Casey vs. Santorum Debate

Well, I just finished watching the Casey vs. Santorum debate. I hate to admit it, but Santorum clobbered an empty suit. I can't in good conscience vote for Casey. He is so obviously unprepared for the job that it would be like voting for a democratic version of Bush. He simply isn't fit to represent the Commonwealth. When will the Democrats learn to nominate qualified candidates instead of simply endorsing the best name?

Reason and Faith?

The entire text of Pope Benedict's recent speech that so infuriated Muslims around the world is given below. I think that you will find it an interesting read if you have ever considered the question of faith and reason. Can you know the nature of things by reason and scientific method or must you approach them only through the authoritarian structures of religion?

Not surprisingly Pope Benedict hedges his bets in the speech below. He seems comfortable throwing stones at a world religion which eschews all reason in deference to the revealed word, but he remains unwilling to put to much trust in the system of science he credits for the improved lot of mankind.

If you read the text carefully, I think you will find a scholarly mind at work, but you may also note the absence of the compassion informed by grace present in so many of his predecessors comments.

Someone asked me the other night why the world seemed to be teetering on the brink of crisis. I said that I think the world is always poised thus and that what we are witnessing is not particularly difficult times but an unusual confluence of incompetence in world leadership. These men with their strong convictions and unyielding egos are dangerous both by way of their positions and their closed minds.

As we go forward our nation must renew itself by demanding greater competence from our leaders. Whether it is greater stewardship of the church or a deeper commitment to democratic principles from our leaders of state, we must expect and demand more.

Text of Pope Benedict's Speech

Faith, reason and the university: memories and reflections

Following is the speech given by Pope Benedict XVI at the University of Regensburg in Germany on September 12

Your Eminences, Your Magnificences, Your Excellencies, Distinguished Ladies and Gentlemen
It is a moving experience for me to be back again in the university and to be able once again to give a lecture at this podium.

I think back to those years when, after a pleasant period at the Freisinger Hochschule, I began teaching at the University of Bonn.

That was in 1959, in the days of the old university made up of ordinary professors. The various chairs had neither assistants nor secretaries, but in recompense there was much direct contact with students and in particular among the professors themselves.

We would meet before and after lessons in the rooms of the teaching staff. There was a lively exchange with historians, philosophers, philologists and, naturally, between the two theological faculties.

Once a semester there was a dies academicus, when professors from every faculty appeared before the students of the entire university, making possible a genuine experience of universitas - something that you too, Magnificent Rector, just mentioned - the experience, in other words, of the fact that despite our specializations which at times make it difficult to communicate with each other, we made up a whole, working in everything on the basis of a single rationality with its various aspects and sharing responsibility for the right use of reason - this reality became a lived experience.

The university was also very proud of its two theological faculties. It was clear that, by inquiring about the reasonableness of faith, they too carried out a work which is necessarily part of the "whole" of the universitas scientiarum, even if not everyone could share the faith which theologians seek to correlate with reason as a whole.

This profound sense of coherence within the universe of reason was not troubled, even when it was once reported that a colleague had said there was something odd about our university: it had two faculties devoted to something that did not exist: God.

That even in the face of such radical scepticism it is still necessary and reasonable to raise the question of God through the use of reason, and to do so in the context of the tradition of the Christian faith: this, within the university as a whole, was accepted without question.
I was reminded of all this recently, when I read the edition by Professor Theodore Khoury (Münster) of part of the dialogue carried on - perhaps in 1391 in the winter barracks near Ankara - by the erudite Byzantine emperor Manuel II Paleologus and an educated Persian on the subject of Christianity and Islam, and the truth of both.

It was presumably the emperor himself who set down this dialogue, during the siege of Constantinople between 1394 and 1402; and this would explain why his arguments are given in greater detail than those of his Persian interlocutor.

The dialogue ranges widely over the structures of faith contained in the Bible and in the Qur'an, and deals especially with the image of God and of man, while necessarily returning repeatedly to the relationship between - as they were called - three "Laws" or "rules of life": the Old Testament, the New Testament and the Qur'an.

It is not my intention to discuss this question in the present lecture; here I would like to discuss only one point - itself rather marginal to the dialogue as a whole - which, in the context of the issue of "faith and reason", I found interesting and which can serve as the starting-point for my reflections on this issue.

In the seventh conversation [text unclear] edited by Professor Khoury, the emperor touches on the theme of the holy war. The emperor must have known that surah 2, 256 reads: "There is no compulsion in religion".

According to the experts, this is one of the suras of the early period, when Mohammed was still powerless and under threat. But naturally the emperor also knew the instructions, developed later and recorded in the Qur'an, concerning holy war.

Without descending to details, such as the difference in treatment accorded to those who have the "Book" and the "infidels", he addresses his interlocutor with a startling brusqueness on the central question about the relationship between religion and violence in general, saying: "Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached".
The emperor, after having expressed himself so forcefully, goes on to explain in detail the reasons why spreading the faith through violence is something unreasonable. Violence is incompatible with the nature of God and the nature of the soul. "God", he says, "is not pleased by blood - and not acting reasonably ... is contrary to God's nature. Faith is born of the soul, not the body. Whoever would lead someone to faith needs the ability to speak well and to reason properly, without violence and threats... To convince a reasonable soul, one does not need a strong arm, or weapons of any kind, or any other means of threatening a person with death...".
The decisive statement in this argument against violent conversion is this: not to act in accordance with reason is contrary to God's nature. The editor, Theodore Khoury, observes: For the emperor, as a Byzantine shaped by Greek philosophy, this statement is self-evident.
But for Muslim teaching, God is absolutely transcendent. His will is not bound up with any of our categories, even that of rationality. Here Khoury quotes a work of the noted French Islamist R Arnaldez, who points out that Ibn Hazn went so far as to state that God is not bound even by his own word, and that nothing would oblige him to reveal the truth to us. Were it God's will, we would even have to practise idolatry.

At this point, as far as understanding of God and thus the concrete practice of religion is concerned, we are faced with an unavoidable dilemma. Is the conviction that acting unreasonably contradicts God's nature merely a Greek idea, or is it always and intrinsically true?

I believe that here we can see the profound harmony between what is Greek in the best sense of the word and the biblical understanding of faith in God. Modifying the first verse of the Book of Genesis, the first verse of the whole Bible, John began the prologue of his Gospel with the words: "In the beginning was the Word".

This is the very word used by the emperor: God acts, [text unclear] with logos. Logos means both reason and word - a reason which is creative and capable of self-communication, precisely as reason. John thus spoke the final word on the biblical concept of God, and in this word all the often toilsome and tortuous threads of biblical faith find their culmination and synthesis.
In the beginning was the logos, and the logos is God, says the Evangelist. The encounter between the Biblical message and Greek thought did not happen by chance. The vision of Saint Paul, who saw the roads to Asia barred and in a dream saw a Macedonian man plead with him: "Come over to Macedonia and help us!" (cf. Acts 16:6-10) - this vision can be interpreted as a "distillation" of the intrinsic necessity of a rapprochement between Biblical faith and Greek inquiry.

In point of fact, this rapprochement had been going on for some time. The mysterious name of God, revealed from the burning bush, a name which separates this God from all other divinities with their many names and simply declares "I am", already presents a challenge to the notion of myth, to which Socrates' attempt to vanquish and transcend myth stands in close analogy.
Within the Old Testament, the process which started at the burning bush came to new maturity at the time of the Exile, when the God of Israel, an Israel now deprived of its land and worship, was proclaimed as the God of heaven and earth and described in a simple formula which echoes the words uttered at the burning bush: "I am".

This new understanding of God is accompanied by a kind of enlightenment, which finds stark expression in the mockery of gods who are merely the work of human hands (cf. Ps 115). Thus, despite the bitter conflict with those Hellenistic rulers who sought to accommodate it forcibly to the customs and idolatrous cult of the Greeks, biblical faith, in the Hellenistic period, encountered the best of Greek thought at a deep level, resulting in a mutual enrichment evident especially in the later wisdom literature.

Today we know that the Greek translation of the Old Testament produced at Alexandria - the Septuagint - is more than a simple (and in that sense really less than satisfactory) translation of the Hebrew text: it is an independent textual witness and a distinct and important step in the history of revelation, one which brought about this encounter in a way that was decisive for the birth and spread of Christianity.

A profound encounter of faith and reason is taking place here, an encounter between genuine enlightenment and religion. From the very heart of Christian faith and, at the same time, the heart of Greek thought now joined to faith, Manuel II was able to say: Not to act "with logos" is contrary to God's nature.

In all honesty, one must observe that in the late Middle Ages we find trends in theology which would sunder this synthesis between the Greek spirit and the Christian spirit. In contrast with the so-called intellectualism of Augustine and Thomas, there arose with Duns Scotus a voluntarism which, in its later developments, led to the claim that we can only know God's voluntas ordinata. Beyond this is the realm of God's freedom, in virtue of which he could have done the opposite of everything he has actually done.

This gives rise to positions which clearly approach those of Ibn Hazn and might even lead to the image of a capricious God, who is not even bound to truth and goodness. God's transcendence and otherness are so exalted that our reason, our sense of the true and good, are no longer an authentic mirror of God, whose deepest possibilities remain eternally unattainable and hidden behind his actual decisions.

As opposed to this, the faith of the Church has always insisted that between God and us, between his eternal Creator Spirit and our created reason there exists a real analogy, in which - as the Fourth Lateran Council in 1215 stated - unlikeness remains infinitely greater than likeness, yet not to the point of abolishing analogy and its language.

God does not become more divine when we push him away from us in a sheer, impenetrable voluntarism; rather, the truly divine God is the God who has revealed himself as logos and, as logos, has acted and continues to act lovingly on our behalf. Certainly, love, as Saint Paul says, "transcends" knowledge and is thereby capable of perceiving more than thought alone (cf. Eph 3:19); nonetheless it continues to be love of the God who is Logos. Consequently, Christian worship is, again to quote Paul [text unclear] worship in harmony with the eternal Word and with our reason (cf. Rom 12:1).

This inner rapprochement between Biblical faith and Greek philosophical inquiry was an event of decisive importance not only from the standpoint of the history of religions, but also from that of world history - it is an event which concerns us even today. Given this convergence, it is not surprising that Christianity, despite its origins and some significant developments in the East, finally took on its historically decisive character in Europe. We can also express this the other way around: this convergence, with the subsequent addition of the Roman heritage, created Europe and remains the foundation of what can rightly be called Europe.

The thesis that the critically purified Greek heritage forms an integral part of Christian faith has been countered by the call for a dehellenization of Christianity - a call which has more and more dominated theological discussions since the beginning of the modern age. Viewed more closely, three stages can be observed in the programme of dehellenization: although interconnected, they are clearly distinct from one another in their motivations and objectives.

Dehellenization first emerges in connection with the postulates of the Reformation in the sixteenth century. Looking at the tradition of scholastic theology, the Reformers thought they were confronted with a faith system totally conditioned by philosophy, that is to say an articulation of the faith based on an alien system of thought. As a result, faith no longer appeared as a living historical Word but as one element of an overarching philosophical system.
The principle of sola scriptura, on the other hand, sought faith in its pure, primordial form, as originally found in the biblical Word. Metaphysics appeared as a premise derived from another source, from which faith had to be liberated in order to become once more fully itself. When Kant stated that he needed to set thinking aside in order to make room for faith, he carried this programme forward with a radicalism that the Reformers could never have foreseen. He thus anchored faith exclusively in practical reason, denying it access to reality as a whole.
The liberal theology of the nineteenth and twentieth centuries ushered in a second stage in the process of dehellenization, with Adolf von Harnack as its outstanding representative. When I was a student, and in the early years of my teaching, this programme was highly influential in Catholic theology too. It took as its point of departure Pascal's distinction between the God of the philosophers and the God of Abraham, Isaac and Jacob.

In my inaugural lecture at Bonn in 1959, I tried to address the issue, and I do not intend to repeat here what I said on that occasion, but I would like to describe at least briefly what was new about this second stage of dehellenization.

Harnack's central idea was to return simply to the man Jesus and to his simple message, underneath the accretions of theology and indeed of hellenization: this simple message was seen as the culmination of the religious development of humanity. Jesus was said to have put an end to worship in favour of morality. In the end he was presented as the father of a humanitarian moral message.

Fundamentally, Harnack's goal was to bring Christianity back into harmony with modern reason, liberating it, that is to say, from seemingly philosophical and theological elements, such as faith in Christ's divinity and the triune God. In this sense, historical-critical exegesis of the New Testament, as he saw it, restored to theology its place within the university: theology, for Harnack, is something essentially historical and therefore strictly scientific.

What it is able to say critically about Jesus is, so to speak, an expression of practical reason and consequently it can take its rightful place within the university. Behind this thinking lies the modern self-limitation of reason, classically expressed in Kant's "Critiques", but in the meantime further radicalized by the impact of the natural sciences.

This modern concept of reason is based, to put it briefly, on a synthesis between Platonism (Cartesianism) and empiricism, a synthesis confirmed by the success of technology.
On the one hand it presupposes the mathematical structure of matter, its intrinsic rationality, which makes it possible to understand how matter works and use it efficiently: this basic premise is, so to speak, the Platonic element in the modern understanding of nature.
On the other hand, there is nature's capacity to be exploited for our purposes, and here only the possibility of verification or falsification through experimentation can yield ultimate certainty. The weight between the two poles can, depending on the circumstances, shift from one side to the other. As strongly positivistic a thinker as J Monod has declared himself a convinced Platonist/Cartesian.

This gives rise to two principles which are crucial for the issue we have raised. First, only the kind of certainty resulting from the interplay of mathematical and empirical elements can be considered scientific. Anything that would claim to be science must be measured against this criterion. Hence the human sciences, such as history, psychology, sociology and philosophy, attempt to conform themselves to this canon of scientificity.

A second point, which is important for our reflections, is that by its very nature this method excludes the question of God, making it appear an unscientific or pre-scientific question. Consequently, we are faced with a reduction of the radius of science and reason, one which needs to be questioned.

I will return to this problem later. In the meantime, it must be observed that from this standpoint any attempt to maintain theology's claim to be "scientific" would end up reducing Christianity to a mere fragment of its former self.

But we must say more: if science as a whole is this and this alone, then it is man himself who ends up being reduced, for the specifically human questions about our origin and destiny, the questions raised by religion and ethics, then have no place within the purview of collective reason as defined by "science", so understood, and must thus be relegated to the realm of the subjective. The subject then decides, on the basis of his experiences, what he considers tenable in matters of religion, and the subjective "conscience" becomes the sole arbiter of what is ethical.
In this way, though, ethics and religion lose their power to create a community and become a completely personal matter. This is a dangerous state of affairs for humanity, as we see from the disturbing pathologies of religion and reason which necessarily erupt when reason is so reduced that questions of religion and ethics no longer concern it. Attempts to construct an ethic from the rules of evolution or from psychology and sociology, end up being simply inadequate.
Before I draw the conclusions to which all this has been leading, I must briefly refer to the third stage of dehellenization, which is now in progress. In the light of our experience with cultural pluralism, it is often said nowadays that the synthesis with Hellenism achieved in the early Church was a preliminary inculturation which ought not to be binding on other cultures.
The latter are said to have the right to return to the simple message of the New Testament prior to that inculturation, in order to inculturate it anew in their own particular milieux. This thesis is not only false; it is coarse and lacking in precision. The New Testament was written in Greek and bears the imprint of the Greek spirit, which had already come to maturity as the Old Testament developed. True, there are elements in the evolution of the early Church which do not have to be integrated into all cultures. Nonetheless, the fundamental decisions made about the relationship between faith and the use of human reason are part of the faith itself; they are developments consonant with the nature of faith itself.

And so I come to my conclusion. This attempt, painted with broad strokes, at a critique of modern reason from within has nothing to do with putting the clock back to the time before the Enlightenment and rejecting the insights of the modern age.

The positive aspects of modernity are to be acknowledged unreservedly: we are all grateful for the marvellous possibilities that it has opened up for mankind and for the progress in humanity that has been granted to us.

The scientific ethos, moreover, is - as you yourself mentioned, Magnificent Rector - the will to be obedient to the truth, and, as such, it embodies an attitude which belongs to the essential decisions of the Christian spirit.

The intention here is not one of retrenchment or negative criticism, but of broadening our concept of reason and its application. While we rejoice in the new possibilities open to humanity, we also see the dangers arising from these possibilities and we must ask ourselves how we can overcome them. We will succeed in doing so only if reason and faith come together in a new way, if we overcome the self-imposed limitation of reason to the empirically verifiable, and if we once more disclose its vast horizons.

In this sense theology rightly belongs in the university and within the wide-ranging dialogue of sciences, not merely as a historical discipline and one of the human sciences, but precisely as theology, as inquiry into the rationality of faith.

Only thus do we become capable of that genuine dialogue of cultures and religions so urgently needed today. In the Western world it is widely held that only positivistic reason and the forms of philosophy based on it are universally valid. Yet the world's profoundly religious cultures see this exclusion of the divine from the universality of reason as an attack on their most profound convictions.

A reason which is deaf to the divine and which relegates religion into the realm of subcultures is incapable of entering into the dialogue of cultures. At the same time, as I have attempted to show, modern scientific reason with its intrinsically Platonic element bears within itself a question which points beyond itself and beyond the possibilities of its methodology.
Modern scientific reason quite simply has to accept the rational structure of matter and the correspondence between our spirit and the prevailing rational structures of nature as a given, on which its methodology has to be based. Yet the question why this has to be so is a real question, and one which has to be remanded by the natural sciences to other modes and planes of thought - to philosophy and theology.

For philosophy and, albeit in a different way, for theology, listening to the great experiences and insights of the religious traditions of humanity, and those of the Christian faith in particular, is a source of knowledge, and to ignore it would be an unacceptable restriction of our listening and responding. Here I am reminded of something Socrates said to Phaedo.
In their earlier conversations, many false philosophical opinions had been raised, and so Socrates says: "It would be easily understandable if someone became so annoyed at all these false notions that for the rest of his life he despised and mocked all talk about being - but in this way he would be deprived of the truth of existence and would suffer a great loss".

The West has long been endangered by this aversion to the questions which underlie its rationality, and can only suffer great harm thereby. The courage to engage the whole breadth of reason, and not the denial of its grandeur - this is the programme with which a theology grounded in Biblical faith enters into the debates of our time. "Not to act reasonably, not to act with logos, is contrary to the nature of God", said Manuel II, according to his Christian understanding of God, in response to his Persian interlocutor.

It is to this great logos, to this breadth of reason, that we invite our partners in the dialogue of cultures. To rediscover it constantly is the great task of the university.