Monday, August 31, 2009
The same can be said of the savings rate, and here Andrew Kaplan plays with figures to show that US income is so unequally distributed that the top 1% could theoretically account for all the savings in the US. It is getting dangerous, I feel - I sense (I hear) among many ordinary people an inchoate rage against the financial elite, as well as against the remote political class that services them.
This concentration of wealth and power is exactly what sparked the American revolt of the 1770s. But a colonial secessionary war is quite different from a civil war; making peace after the latter is much harder. "O Freunde, nicht diese Töne."
... in my view, the big crisis is ahead of us. It may come in 4 or 5 years' time, maybe only in 10 years' time, but the total breakdown of the system is ahead of us and it will devastate the global economy. (4:18 on)
You have to decide whom to believe. Including Steve Keen, it's said that only 12 professional economists worldwide foresaw the crunch, although there are 10 - 15,000 practising in the US alone. So the majority verdict is useless. To me, Faber has the ring of truth.
The good news, such as it is, is that we may have a few years to prepare.
As to perceived turning points, I looked at this last December:
Sunday, August 30, 2009
Wikipedia says, "All British passports are issued in the exercise of discretion by Her Majesty's Government under the Royal Prerogative. In any event, discretion must be exercised reasonably and not on a whim, and even though there is no statute governing the issue of passports, such prerogative powers are susceptible to the normal processes of judicial review (Council of Civil Service Unions v Minister for the Civil Service  AC 374)."
I've read somewhere that there was a time when the British could travel abroad without a passport. And according to "Stiggy" on the No2ID message board, it's still legal to do so - I'd be interested to know if this is so, and how it could be done.
Keiser got wide attention in July when he referred to Goldman Sachs as "scum" and (I think, not incorrectly) said that the practical results of some of their activities were worse than terrorist atrocities. Protests like this make no difference, except that they may relieve hearts clogged with helpless anger: what we've learned recently is that the shameless tenacity of politicians and bankers will outwear public indignation.
But society may change when everyone gives up looking to the the über-scum to help, and concentrates instead on personal benefit and survival. I think I may not even bother to vote in the next General Election.
Oh, and Nathan Martin also directs us to an article by Robert Kiyosaki, who compares the market to a dead frog galvanized by ever-higher charges of financial electricity until "Pretty soon the dead frog will be fried frog." Kiyosaki cites demographic change as a major threat in the long term.
David Davis points out that the £45,000 true cost of a university education is not always recouped by graduate earnings. (See also Charles Hugh Smith's piece, "Is Higher Education Worth a Lifetime of Debt?")
I have read that there is a positive correlation between shoe size and IQ. Public policy is to buy big shoes for everybody so they get smarter.
... if we won it, how come we look back on the Second World War from conditions we might normally associate with defeat and occupation? We are a second-rate power, rapidly slipping into third-rate status. We have a weak currency and shrunken armed forces, deployed as auxiliaries in wars that are not in our interest, and we are largely governed from abroad.
Our Parliament is a bought and paid-for puppet chamber. Our culture and customs have been debauched and our younger generations corrupted, as subject populations are, with drink, drugs and promiscuity.
We are compelled, like an occupied people, to use foreign measures to buy butter or meat, and our history is largely forgotten or deliberately distorted in the schools to suit anti-British dogma. Those schools are unable to educate most of our children up to the levels of our main rivals, so ensuring that we provide no challenge to them. Our country has been Balkanised into provinces and regions. Our language is invaded by foreign words and expressions. Our food and most of our consumer goods are imported, along with our TV programmes and films.
The remaining veterans of the supposedly glorious struggle, far from being gratefully honoured, often live in pinched poverty, scared of feral youths, or die neglected in squalid hospitals in a country many of them no longer recognise as their own.
A little over-egged, but still tremendously good.
Saturday, August 29, 2009
Meanwhile, the Daily Finance is sanguine about the US banking system, reporting the view of several analysts that the total number of failures will merely be in the hundreds, as opposed to Nouriel Roubini's "much too high" 2008 prediction of 1,200.
Tuesday, August 25, 2009
Let me try to reason out the consequences, however inexpertly.
So, as everyone scrambles to cut spending and get out of debt, unemployment will soar. Since there is a great deal of international trade, the hit will be felt internationally.
Then government finances will come properly unravelled, especially in countries that have generous social welfare provisions. Worldwide, sovereign states will look for anyone who has real money to lend.
This should result in higher interest rates, but that would make the cost of debt, and its sustainability, extremely difficult, both for states and for corporations (and the burden on the latter will tend to result in even more unemployment and more claimants on the government). A rise in rates would also hit holders of long-term government debt, which may be one of the reasons the Chinese have been swapping that for shorter-dated Treasuries. A collapse in bonds will affect the capital value of pensions and investments, oh dear.
Another way out is default on debt. But who will be hit by that? Not just foreigners, but our pensions and managed investment funds.
A third way, which given that we have history to learn from doesn't seem likely, is the true hyperinflation approach. Germany in 1923, Hungary, Argentina, Zimbabwe... do you really see this happening here?
Then there's the downgrading of debt, with corresponding falls in the traded value of the currency. We've seen some of that - what, 20% off the pound? - so maybe there's more to come from that direction. Except other countries may follow suit. In 1922, if you were a far-sighted German, I suppose you might have sold marks and bought dollars; what currency would you buy now?
Or there's "more of the same" again - talking up the economy and pumping in cash until you spend because you daren't leave it to rot in the savings account.
Which way will it go? Where will it all end?
Monday, August 24, 2009
And the total number of visitors to Professor Robert Black's blog has leapt 50% in the last week. They also serve, who only stand and wait.
The more I read around, the more uncertain I become. All I have is my instinct, that things are out of control and we're being told fairy stories to lull us.
Mish's argument is that "The credit bubble that just popped exceeded that preceding the great depression, not just in the US but worldwide. Thus, it is unrealistic to expect the deflationary bust to be anything other than the biggest bust in history. Those looking for hyperinflation or even strong inflation in light of the above, are simply looking at the wrong model." If he's right, it's cash is king, for a long time to come.
Thursday, August 20, 2009
But it seems to me that if you want private solutions for problems which all have (or will have), but not all can afford, then you must address the question of inequality of resources.
Peter Rogers, co-creator and producer of the Carry On film comedies, once remarked he would 'do anything for my actors except pay them.' Similarly, so much is done for us in the UK, perhaps so badly, in the way of health and education (to name but two functions), when it might work so much better if we had the money personally and could make our own decisions.
We are witnessing a concentration into ever fewer hands on both sides the Atlantic, not only of power but of economic wealth. Every dollar and pound is a vote in the daily election of goods and services. To use the terms of the French national motto, if we wish for liberty but mistrust fraternity, then perhaps we should contemplate some redistribution of wealth to restore a greater degree of equality.
For example, how about some form of credit card (funded from general taxation and directed to individual accounts) that can only be spent on defined areas of need, but the holder to determine how to use his/her budget to best effect? Something like the educational voucher idea, but radically extended?
Wednesday, August 19, 2009
Meanwhile, Leo Kolivakis looks at the looming meltdown in US pension schemes, mirroring what's going on now in the UK.
Long term, it looks like down with house prices (since the younger generation will have much less free income to take on debt) and (thanks to the oldies' rising income need) down with stocks.
Nurture your young.
- Paul Craig Roberts (htp: Jesse)
- Robin Hanson
But how much could we still do in the way of more efficient use, and non-use, of energy? According to this DTI report based on 2001 stats, the home uses 31% of the nation's energy (see Chart 1.3 on page 9). Chart 1.6 shows that in 2000, space heating accounted for 40% of all non-transport energy consumption.
More woolly pullies?
Tuesday, August 18, 2009
The house has a fabulous view southwards, across fields and woods to the silver river and the sea beyond. This is an Area of Outstanding Natural Beauty, which is also a Site of Special Scientific Interest, so it should be highly protected. However, the field immediately in front is owned by a farmer who wants planning permission to build six houses on it. He's tried several times before, and although he's on the local council himself, he's been turned down each time, so far.
I jest to the owner of our house: "Have you tried dropping a few rare species in the field?"
"There are rare species. The Authority wrote a letter to him saying that they would be conducting a field survey. When he got the letter, he mowed the whole field - right down to the ground. Then he sprayed it all over with weedkiller."
Saturday, August 15, 2009
Friday, August 14, 2009
"How much is the Telegraph?"
"Okay." She rings it up. "Do you want the paper?"
She folds it and puts it to one side.
Thursday, August 13, 2009
It is well known that GP Jim Swire, who lost his daughter in the atrocity, attended the trial in the Netherlands and became convinced that Al-Megrahi was innocent of the charge laid against him.
It is also most interesting to read a blog set up two years ago by Robert Black QC FRSE, Professor Emeritus of Scots Law in the University of Edinburgh. His blog supports Swire's contention and discusses the way in which the legal case against Al-Megrahi was conducted. The very first post contains this paragraph:
It is my firm view that the crucial incriminating findings made by the judges were unwarranted by the evidence led in court and were in many cases entirely contrary to the weight of that evidence. I am convinced that no Scottish jury, following the instructions traditionally given by judges regarding the assessment of evidence and the meaning and application of the concept of reasonable doubt, would or could have convicted Megrahi. So how did it come about that the three distinguished and experienced judges who concurred in the verdict felt able to convict him?
Black summarises and comments critically on numerous points of evidence and the court's findings in relation to each. He posts again today and says:
The families of Pan Am 103, as victims, deserve justice; they deserve to know the truth. My own dark thought is that any decision made by Mr MacAskill will not really be based on compassion but on political expediency. There seems to be a desire to get Mr Megrahi out of the country and to have the appeal halted at all costs. Perhaps the Crown Office and governments fear what might be revealed as the appeal continues.
Black's blog stat counter shows that he has had only some 33,000 visits since October 2007. Perhaps, reader, you will look at what he has to say and encourage others to do so.
Tuesday, August 11, 2009
Libertarian laissez-faire needs to mean more than simply standing aside and watching the rich and powerful cock it up for everyone. Paradoxically, libertarianism implies some kind of rule-setting and limitation of power.
Does that seem reasonable?
Monday, August 10, 2009
If you have any suggestions as to what other currency to use instead, I'd be glad to read them. I fear that future weakening of the British pound and the US dollar may well undermine apparent future recoveries on their stock exchanges.
Sunday, August 09, 2009
1. Basing their economy on manufacturing
2. Running a trade surplus
3. Saving money instead of spending it on more imports
4. Not paying others to provide services they can perform for themselves
5. Not lending money to encourage more new businesses to start up (despite the fact that, as I learned years ago, 80% of new enterprises fail within two years)
6. Allowing women to stay at home
7. Saving jobs in order to preserve the skill base
We should all be so stupid.
A couple of days ago, I tried reading The Guardian newspaper again, and although there were one or two peanuts to pick out of the ordure, mostly it was, as I said to my wife, "Facebook for tw*ts". The writers even include their pictures in their by-lines so you can see they're still congratulating themselves on how well they used to do in the sixth form debating society.
But I think The Economist may have beaten them by a short head this week.
Gerald Durrell, in "My Family and Other Animals", tells how as a child he let his sister take care of some orphaned baby hedgehogs while he was away. He told her to be strict with the milk, not to overfeed. When he came back, he found that she'd fed on demand and they'd all died, because they couldn't stop demanding.
We live in a society that has plentiful cheap food, readily available and aggressively marketed alcohol, easily obtainable tobacco, easily found illegal drugs (and glamourised a thousand times by the media), computer games everywhere. It's surprising that anything gets done.
Libertarians overestimate the amount of control we have over our behaviour, I think. Sartre argued stubbornly against the theory of the unconscious, because it undermined his philosophy of existentialism. I incline to the Buddhist analysis, that we continually form strong attachments and only the most determined can break the chains. Few manage it on their own. Some would say only 5% per year break free of alcohol, and perhaps a far smaller percentage stay off it permanently.
In our debates on liberty, should there be some discussion about restrictions that make us more free?
Perhaps more practical is the Transition Towns initiative, which has already recruited Totnes and Monmouth, for example.
And an even wider perspective is offered by Charles Hugh Smith's thoughtful "Of Two Minds" blog, which is founded on the principle that individual survival is necessarily a collective issue. He believes in this so firmly that he is making his book* available for download free of charge. * "Survival+: Structuring Prosperity for Yourself and the Nation"
The battle will be over how to get the economy's winners to pay for an increasingly costly poor. ... In a future with higher taxes, the divide between rich and poor would be the central economic challenge.
- Economist's View
We're in for a big theoretical debate with highly practical consequences. Liberty, individualism, redistribution of wealth, where the wealth comes from in the first place, what is the Good Life... There must be somewhere between Goldman Sachs and Karl Marx. I don't like the two-party State (cosy-cosy) and I don't like bipolar philosophy.
New Deal (htp: Credit Writedowns)
Has he got this right?
And how about us in Britain? Can anyone make sense of it for me?
Saturday, August 08, 2009
I started this blog two years ago, because I thought precious few people sniffed what was in the wind - though I've since discovered that there are quite a few, mostly in the US, who did. I don't know why the UK is so poor at this, unless it's to do with not being used to retaining much of our income. Or a hangover from aristo-landlord days, of pretending to be uninterested in money but always expecting it to be there when needed.
But where can I go from here? There's not much point in continuing to cry iceberg when the ship's side is ripped open. Both Karl Denninger and James Kunstler are saying today that the disaster is far from over, the difference between the two being that Denninger still believes in fixing it with due legal process and decisive action, whereas Kunstler has no such hope and almost looks forward to the final scene because it will usher in a postmodern bucolic age and restore human values. (Kunstler's latest echoes what I've said recently, about drawing some cash for just in case.)
I feel like the Chinese philosopher who dreamt he was a butterfly and when he woke, was not sure whether he wasn't a butterfly dreaming he was a Chinese philospher. The sun shines (beautifully today), I have my teaching to prepare for September, I am proceeding with my plan to revive my IFA business. And yet these projects seem insubstantial, a soapskin full of emptiness.
For now, I have to go on with the assumption that Denninger is right - that when it gets bad enough, tough action will be taken and we'll pull through. That's the horse I'm backing. For I don't believe the proto-Marxist fantasy that a better society will rise out of a collapse, especially not on an overcrowded island like the one where I live.
Off on my hols again next week; and when I get back, time to tackle real life.
A small number of review papers funnelled large amounts of traffic through the network. These acted like a lens, collecting and focusing citations on the papers supporting the hypothesis.
Worse, science can be "spun":
One paper reported no beta amyloid in three of five patients with IBM, and its presence in only a "few fibres" in the remaining two patients; but three subsequent papers cited this data, saying that it "confirmed" the hypothesis.
This is an exaggeration at best, but the power of the social network theory approach is to show what happened next: over the following 10 years these three supportive citations were the root of 7,848 supportive citation paths, producing chains of false claim in the network, amplifying the distortion.
This leads one on to consider the implications of social network theory. I suppose it's a talent for this that helped Mao and Stalin rise, but also it may explain how people in other fields (e.g. finance and banking, the media) can be both successful and dangerously dumb. (Remember Mao's bright idea of 1958, culling sparrows because they ate crops? The resulting explosion in the crop-gobbling insect population forced him to ask Russia for thousands of birds to restock).
And have you watched the celeb version of "Who wants to be a millionaire?" and been struck by the ignorance of some of them? Yet they know enough (of what they need to know) to make a sight more than most of us. The technique seems to be, get the job first, then learn how to do it from those around you. Duffers try to learn first, then apply for the post, by which time it's gone. Look at chancer Blair as against plod-towards-it Brown. (Some say that Blair has never read a book; but then, he doesn't need to. As Disraeli said, "When I want to read a book, I write one.")
Connected to social network theory is Cass Sunstein's notion of "group polarisation", where like-minded people get together, not only reinforcing their views but making them more extreme. I suppose this has implications not just for political caucuses and media advisers, but for how we choose our newspapers.
And what blogs we read.
I'd turn that around. I think that for some, being unhappy is what stimulates the mind. That doesn't mean that I believe it's a good thing; it's just that your brain accelerates, looking for a way to survive. Having taught Looked After Children for a couple of years, I'd say that typically, although they were academic under-achievers, they were unusually sharp for their age in other ways. Maybe that's also why girls from broken homes become sexualised earlier.
But the one thing that all this cleverness doesn't address is the root of the cleverness itself. It may seem an impertinence to judge people one hasn't met - though that is the bread and butter of the modern media - but would you regard, say, Stephen Fry or Dawn French as happy, well-balanced people?
A clever person is more likely to out-argue you than to put right anything about themselves. I've read that psychoanalysts find highly intelligent patients the hardest to cure; and that successful entertainers avoid seeking a solution for their neuroses, because it might turn off the tap of their talent.
I hope for a world that is fit, not for heroes nor for geniuses, but for the dully contented.
Thursday, August 06, 2009
"ITV's £105 million operating loss is peanuts," said the trader. "We at GS paid out £1 billion more in bonuses than we got in bailout money last year. The guys at ITV don't think big enough. If they don't wise up fast, they could be in danger of making a profit."
This alleged development lends credence to the long-standing speculation that the American and British governments are secretly planning the creation of a "Super-Turkey", merging all remaining manufacturing, banking and finance into a giant loss-making enterprise that will employ increasing numbers of the population until everybody starves.
Wednesday, August 05, 2009
Tuesday, August 04, 2009
The Children’s Secretary set out £400million plans to put 20,000 problem families under 24-hour CCTV supervision in their own homes.
They will be monitored to ensure that children attend school, go to bed on time and eat proper meals.
(htp: Mark Steyn)
Soon, I shall wake up and discover it was all a dream.
Monday, August 03, 2009
On average, that is. I think we can take the Blair's real estate coup in Connaught Square as not untypical of what will happen in the best end of the market. Speaking of whom, I note that Tony's practising the "sneer of cold command" these days. Pitiable, really.
Sunday, August 02, 2009
Why do I feel oddly reluctant? Do you feel the same?
An answer to that, might go a long way to explaining why we aren't as happy as we think we ought to be.
I think it's something to do with identity, and the personal past. We cling on, afraid that we'll fall endlessly if we let go; but maybe we're gripping an anchor on the sea floor, and will float towards life when we open our hands.
Saturday, August 01, 2009
As it happens, this year's Key Stage 2 SATS English (for 11-year-olds) was about low-environmental-impact housing - the Earthship.
Should I be for or against? Is this Marie Antoinette territory - a dreamworld for the well-heeled - or is it the way forward for us all?