| British Telecom's racist engineers |
[Jul. 7th, 2009|05:37 pm] |
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I've been having connection problems with my broadband connection. I spoke to my ISP, (Be unlimited) and they told me to check a few things and talk to BT.
There then followed the usual exchanges with BT where we insisted they fix the problem, and they insisted on charging us for the privilledge.
So at around 1am last night we got back onto our ISP and asked them to check the line where BT refused. They diagnosed a line fault, and had a BT engineer at the house in the morning. (it pays to buy the Pro package) The engineer that came to house was as sullen as expected, what was not expected was his opinion that all imigrants should "go home" especially as my wife is Asian, (ethnic Chinese) to quote my wife via IM:
it was the subsidiary one they were from...'openreach'
most engineers are taciturn...and a bit stern...but yeah, was taken aback by his line of talking, questioning and that infamous 'go back to where you came from?', with that tone...
So for anyone who wants a decent ISP I'd recommend Be, they offer blindingly fast service, (I get 15Mb where BT could offer me 3Mb peak) not to mention a 24 hour help line by people (in Bulgaria) who know what they're talking about. Mine cost me £21 a month, but you can get it cheaper here: https://www.bethere.co.uk/
More than that if you chose to use Be and you live in London, I'll come around to your house and setup your connection free of charge. Sadly there doesn't seem to be a way of getting rid of BT entirely, but I am determined to try. |
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| coming soon :) |
[Jun. 19th, 2009|08:07 pm] |
Japan, (koo, hampton, etc.)
Macro view as to why not.
Krugman "we owe Japan an apology" and "voters want to repay debt"
Macro consequences of repaying debt
Wolf
European banks, (Posen) confidence and the lack thereof
trimtabs http://tinyurl.com/m3wy79
rough outline for later. |
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| QFE |
[Jun. 19th, 2009|09:35 am] |
How might Labour escape this trap? One possibility is to campaign against the Treasury’s assumptions. It is certainly possible that Mr Darling is too pessimistic, as his predecessor, Mr Brown, was too optimistic. At this stage, we simply do not know. Yet it would be risky to hope for the best. It would also be embarrassing to reject the forecasts of Labour’s own chancellor.
Another possibility would be to argue for higher taxes. Here the difficulty is that the numbers are so large. Merely to eliminate the reduction in public spending as a share of GDP planned for the three years after 2010-11, receipts must rise by 5 per cent of GDP, or £60bn in current prices, to reach 41 per cent of GDP. This would be equivalent to raising the basic rate of income tax by as much as 12p in the pound.
The great American satirist H.L. Mencken once declared that “nobody ever went broke underestimating the taste of the great American public”. I am more worried by a political version of this cynical view: the idea has grown up among politicians that nobody ever lost an election by underestimating the electorate’s intelligence. But at the heart of the next general election will be hard choices, for whoever wins. A democracy should debate those alternatives openly and honestly.
[link] |
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| from pad to screen |
[Jun. 1st, 2009|06:40 pm] |
an end to dollar exceptionalism. Nixon, plaza, louvre, nobody else was granted such leeway, the pound was cut adrift after WWII.
Now Geithner is in China, like Paulson before him, to see the bank manager about his overdraft.
Koo's book is quite good btw, despite the screwy font (Hiroshige book) that and putting the footnotes at the end of each chapter instead of collating. I figure they just do things differently in Japan. Though the book itself was produced in Singapore.
GM declared bankruptcy today, share price went up. "A fool and his money are soon parted" :) |
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| The shape of things |
[May. 31st, 2009|12:26 pm] |
Watching Gibson yesterday he said at some point that humans were motivated to find the shape of things, and likened it to a character in one of novels trying to find the shape of cyberspace. I understand what he meant by that, because I was motivated, at least in part, to research finance/economics because I was interested in the shape of the system itself.
However, it wasn't until I read Tim O'Reilly's write-up of Google's Wave demo that it really chimed with me. The first thing that came to mind was a documentary I saw about modern Jazz and the affect that Ornette Coleman's album The Shape of Jazz to Come had on the Jazz world. Or indeed, the Amen Break which spawned an entire subculture. It's about the affect something can have on living and growing system, like a phase change.
I expect in the months coming up to launch, you will see a lot of FUD and delaying tactics by people with vested interests to protect. So you better see what all the fuss is about, and then read Tim's Post if you want to have an idea of what comes next.
You can read Tim's post right here. Get to it! |
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| Imaginary spaces |
[May. 31st, 2009|01:49 am] |
I've just watched No Maps for These Territories which is an odd documentary film about the science fiction author William Gibson. I've read most of his books, and was strangely disappointed recently to find that he's on twitter. It's nothing to do with ethos so much as it works better if he's this gnome like creature from a bygone era writing stories about places he's never been and things he doesn't understand. It means he's not faking it, and he really is just making it up.
I mention this because in the film he mentions the day that his dad brought home an early television, only there was no TV at the time, then there was a test card at odd hours, then there were live broadcasts. The eagle had landed.
I remember when there was no internet, hell I remember when there were no computers or computer magazines. I remember going to ad-hoc computer fairs. These were not places to buy stuff, no, these were a motley selection of people who had brought their computers in and had them running odd programs on pasteboard tables. So the public could crowd round and have a look. Only there were never any crowds, just people who thought it was a jumble sale, and the odd proto geek like me, who at least knew what a computer was, and wanted to look at a few in the flesh so to speak. I still have the original copies of Personal Computer World where they did the first reviews of the Sinclair Spectrum and the Apple Lisa, the progenitor of the first Macintosh.
I remember compiling Mosaic from source on a UNIX box and surfing the entirety of the internet, (as it existed back then) in one evening. There used to an email that listed new sites as they became available. There was no google. I remember hearing about Netscape for the first time and switching to it as it allowed you to have background wallpaper. I preferred the terminal lab for internet work before the web existed as it was quieter, and I knew how to access everything from Archie & FTP, to WAIS and gopher, etc. via email.
I recently told somebody that I built my first computer with a soldering iron, and they replied, "and you think that's something to be proud of?"
The world has changed, if you want to know where it goes next look at this, now try to imagine life without gmail.
Like the man is reputed to have said, "the future is already here, it's just not evenly distributed" |
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| Right of reply. |
[May. 29th, 2009|11:18 pm] |
In which I disagree strongly with political opportunism dressed up as economics, in a discussion thread on Naked Capitalism presented here in full:
I'm a Neo-Keynesian, English, and a Socialist.
Krugman, like Friedman and Keynes before him, is a public intellectual. But in adopting the "it's Krugman so it must be economics" argument I think you're misrepresenting his argument. Which IMO is not economic but political. If anything he's speaking to public policy.
I think the world has three roads out of this, one is pure Austrian, but since politicians don't want to be lynched, and have a vested interests in staying in power they will not go that way. Minsky was an "Austrian" but he wrote a biography of Keynes, and said effectively that he thought most people misunderstood the message. This would be the quickest, but there is no guarantee of anything especially that the rich and the politically connected would survive. IMO vested interest militates against this more than the common man.
The second is what could be thought of as "Austrian lite" in that you support the system, but allow things to fail. you could for instance force debt holders to take a haircut, and give the ordinary man some debt relief.This will hurt in the short term but clear out the mess quicker, if it was allied to the kind of program that Anon1 alluded too, then this would be over much quicker IMO. But this too is too politically divisive. The petulant child that is "the market" will spit the dummy, so it must be coddled. The illusion that the average college grad can some day become a multi-millionaire with very little work is so much a part of the "American Dream" (which doesn't mean what you think it does according to Vanity Fair) that is seemingly sacrosanct. Lehman was a start, but they looked into the abyss and were afraid.
The third, is a form of "manage down and muddle through" presided over by a Monetarist, (Go watch Bernanke fawn in front of Friedman. Somewhere around 2000/2001) or simply check his Bio. With initial "help" from Paulson, Ex CEO of Goldman, and Geithner, a backroom technocrat, thrust into the limelight by ill circumstance. This is a thoroughly right wing establishment affair. It will take years and will happily wear Keynesian clothing as cover, but it too preserves the wealthy and the senior debt holders, at the expense of the common man, who at the end of the day will be paying most of the taxes.
This isn't socialism, not even close. It has no social conscience for a start. Where is the new "new deal", the G.I bill? The generation that went through the second world war begat the boomers, who begat the current soft handed crop, who think that the SUV, the McMansion, and the plasma TV are a birthright. When will they be tested by austerity? When will they find the same spirit? The backbone that took their grand parents through a depression and a war, back to back? Or indeed the drive that takes the immigrant and the underprivileged out of the slum.
I'll have an economic argument with you, if you're willing to have an economic argument. A very simple form of which Neo-Keynesians and Monetarists agree upon is that the government should step in to bridge the output gap, to inject liquidity into the system, so to ensure the monetary/payment system continues to function normally.
You could run a line of thought that said that if the USA did step back from military adventurism, then the world would be a more dangerous place. This would cause countries to re-arm, this would create demand for a useless consumption good, (armaments) which would not crowd out anything else, and would provide employment. This would do in a longer time frame what full militarisation did in a short time frame at the advent of the Second World War. Namely pull the World out of a global depression. There need not be a war, re-armament on a global scale, and the spending brought about by a more uncertain future should do the trick.
If you want to make an economic argument, make it, if you want to make a political argument don't dress it up as economics. Paying down debt is not incompatible with stimulus, and endless growth is the philosophy of a cancer cell. [link] |
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| news of the screws |
[May. 28th, 2009|08:00 pm] |
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The market sold off while waiting to find out if "foreigners" would continue to buy US Govt debt. They did, so markets rallied.
The news that was ignored was the housing and jobs data:
The U.S. delinquency rate jumped to a seasonally adjusted 9.12 percent from 7.88 percent, the biggest-ever increase, and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said today. Both figures are the highest in records going back to 1972. Fixed rates rose to 4.91 percent, Freddie Mac said, and an increase in bond yields earlier this week shows rates may continue rising.
The three-year housing decline is proving resistant to efforts by the Federal Reserve and the Obama administration to keep homeowners current on mortgages by allowing them to refinance or sell to buyers enticed by affordable terms. Prime fixed-rate home loans to the most creditworthy borrowers accounted for the biggest share of new foreclosures at 29 percent, MBA said, a sign job losses are hurting homeowners.
“If people don’t have a paycheck they can’t support a mortgage,” Jay Brinkmann, the MBA’s chief economist, said in an interview. “The longer the recession lasts the more people run through their savings reserves, leading to higher delinquencies and higher foreclosures.” [link]
Perhaps now would be a good time to think about how you're going to live, (and what you're going to live on) in the future, you know it makes sense. [HT SMI] |
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| (no subject) |
[May. 28th, 2009|12:31 am] |
I was pondering a catchy title, thinking I would go with this credit card story from the Consumerist:
Your Advanta Business Card account is funded by an independent trust which owns the balances you owe on your account and provides funding for new transactions. We expect the trust to stop funding activity on our accounts. The trust also restricts our flexibility to fund activity on your account. Unfortunately, as a result, effective May 30th all Advanta Business Credit Card accounts, including your account, will be closed.
This means that you will not be able to use your card or account for new transactions, including purchases, checks and balance transfers beginning on May 30th. We understand that you may have written checks on your account before May 30th and we will make every effort to honor those checks that are presented to us for payment by June 3rd. If you use your Advanta card to make automatic recurring bill payments, you will need to make alternative arrangements for those payments promptly. [HT ZeroHedge]
When I thought to check the Bloomberg ticker for the price on the US 10 year. It would appear it had a big day but not the sort that will please the US Govt, or the Fed.
The yield on the 2 year note increased 2 basis points to 0.97 percent. The yield on the 3 year note climbed 3 basis points to 1,49 percent. The yield on the 5 year note soared 11 basis points to 2.41 percent. The yield on the 10 year note catapulted 17 basis points higher to 3.72 percent. The yield on the bond rocketed 14 basis points to 4.63.
The 2year/10 year spread is a record 275 basis points. [HT Alphaville]
Which means that the US mortgage rate, (which is based off the 10 year) is likely to rise.
Then there is news that Moody's have cut Nomura's credit rating two levels.
Kind of an odd day to kick off really. I was busy ignoring it to be honest. I'll be paying more attention tomorrow |
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| Tired. |
[May. 24th, 2009|02:51 am] |
I remember reading long ago, in the footnotes of Wired magazine, a lament for the departing editor, then the magazine changed. It used to be this amazingly vibrant and offbeat thing. Like somebody had taken lightning and bottled it. I used to buy it in a drab art supplies shop in Lincoln. It was amazing.
“We decided to put the Internet-founding subculture behind us, and be more mainstream with technology. We banned Burning Man and drug culture and the letters TCP/IP,” he said.
Which would account in no small measure for the car & clothes adverts and for why it sucked so hard, the more awards it won. There are high crimes and misdemeanors, the destruction of the old Wired is one of the former, the "relaunch" of Wired UK in the current economic environment is one of the later.
If Wired in it's current form is killed by that which spawned it, it's not a tragedy, just the natural order re-asserting itself. I figure I better stop here lest I say harsh things. |
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| probably |
[May. 22nd, 2009|07:31 am] |
Should I comment on the credit outlook of the UK? Probably. Given the size of the debt overhang of UK PLC, the fact that it was put on negative credit watch was not a surprise. I imagine when it happens to the USA thought, that that will spook a few people. Still pondering entry about Japan's relevance to the US, but the story is still evolving.
In other news, I'm this week's star letter in Micro Mart, now that did surprise me.
Happy birthday LJ! |
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| On the cards |
[May. 14th, 2009|06:34 pm] |
Frankly amazing article about customer profiling by credit card companies at the NYT. Like this bit:
But giving credit cards to riskier customers posed a problem: How do you know which cardholders will pay something each month, providing fat profits, and which will simply run up a huge tab and then disappear?
The Ph.D.’s arrived at two solutions. The first was to create thousands of new kinds of cards with their own credit limits, terms and interest rates. Such a strategy theoretically protected companies by limiting how much a cardholder could buy and by charging sufficiently high interest rates to ensure that if a few cardholders walked away, the companies still made plenty of money.
The other solution was learning to predict how different types of customers would behave. Card companies began running tens of thousands of experiments each year, testing the emotions elicited by various card colors and the appeal of different envelope sizes, for instance, or whether new immigrants were more responsible than cardholders born in this country. By understanding customers’ psyches, the companies hoped, they could tell who was a bad risk and either deny their application or, for those who were already cardholders, start shrinking their available credit and increasing minimum payments to squeeze out as much cash as possible before they defaulted.
There are some real gems in the article, long but definitely worth it, go read. [HT Radar]
This article however, is complete tosh, if LLL is such a savvy user why is he not following basic computer security, you know, anti-virus, anti-spyware & firewall? The tag line for the article:
In short, alongside the ethical considerations surrounding casual piracy, there are also very good technical reasons why people should not try this at home
Is IMO a bit of blatant scare mongering propaganda, courtesy of FAST. If you read as many computer magazines as I do, you get used to the industry line. But it's never OTT. Things must be getting desperate if they're fostering such pseudo technical tosh onto otherwise respectable newspapers. |
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| economics is a harsh mistress |
[May. 9th, 2009|02:47 pm] |
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It's not until you wander around amongst normal people that you realise how strangely, not to say savagely, that economics and it's associated disciplines, warps your world view.
Economics is like a glowing ball of pure energy, (to use an in-joke as metaphor) ideas & knowledge in their pure form. The rush you feel when you first plug-in is electrifying, and, it must be said invigorating. It renders what to others is a never ending stream of bad news, as a simple series of data points, value neutral. Stepping stones on your way to understanding.
What it doesn't say up front is that as the scales fall from your eyes, you cannot go back. What is learned, cannot be unlearned, and where once was simple shades of grey they is now vivid living colour. The lives and cares or ordinary folk seem very far away, and even if you do unplug, you can never regain the naivete.
Be careful what you wish for, because like the man said, when you look into the abyss, the abyss looks also into you. |
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| miracles do happen |
[May. 6th, 2009|10:46 pm] |
BT are widely regarded as crap, the sort of crap that is legendary. Yet for some reason, (and I'm presuming it was all because of Be, my fabulous ISP) we have changed phone numbers, and billing in one day and still maintained an internet connection. BT's systems were down all morning, even the primary support line was telling people to phone back later, yet given that people have been known to be off the grid for weeks when this happens I'm back inside a day. Not only that, my download speed is now 4mbs faster. Yup, that's a whole 100% faster than the average internet speed in the UK. Meanwhile I'm rocking 15mbs truly spiffy!
So take a bow BT & Be, you have accomplished the seemingly impossible :) |
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| The Road |
[May. 4th, 2009|01:10 pm] |
I learned this lesson a long time ago, when playing an old computer game called Populous. In retrospect it taught me a great deal. I used to enjoy playing the game, until the computer got "stupid" It appeared to get stuck, and truth to tell, damn near wiped me out, It volcanoed me until the mountains hit the roof, but the game didn't end since I still had one hut. Surrounded by boulders I was hemmed in, (he couldn't attack) so I set the behaviour of the hut to "accumulate" so that there was one man pacing about outside, and as a new one spawned very minute or so it just merged with the pacer. This went on for hours. The computer, following it's only directive kept up with the volcanoes. I was however, determined I was not going to lose. At some point in what was probably a glitch, my pacing man, was jumped by the force of a volcano onto the rocks, "with one bound Jimmy was free."
Thus it was the man walked down from the mountain, and singlehandedly went to every computer owned building in turn and took it over. I nominated the pacing man the leader and set all buildings to accumulate. He walked around personally and even though the computer got somewhat desperate towards the end, sending in knights, en mass, my man was implacable. I never played the game the same way again. Humans I noticed play populous in a very specific way. You could only build on flat ground, so the game was one of making flat ground then building on it.
So in playing the game against other humans I would find out where it was they were flattening land, and then earthquake it. A low power drain miracle, do three of those on the trot, and it would really mess up the land. Humans would then retaliate. Unlike them, if they earthquaked me, (though often they'd escalate and volcano if they could) I would ignore the disruption and go elsewhere, and set what remained of my huts on that patch to accumulate. To be honest with you, harassing people was the most fun, because you were playing back to back, (pre-internet) you see the emotion on their faces. Once I had a man that was "big enough" and I had enough power, I'd do the modern day equivalent of cluster bombing, only with volcanoes, right in the middle of their green and flat population center; you only needed five or six in a checker pattern to really screw up a map. Then I'd send in a few knights, on random attack, and steer my Goliath around personally, knowing I had plenty of time as they were busy flattening land I'd just volcanoed.
Truth to tell, that in playing like the computer I was able to sweep all before me, as people were expecting to play against another human, not a smart computer, but it also took all the joy out of playing other humans, even after I explained how I did it, it became about winning and not about playing.
Why this sudden reminiscence? Because after that I stopped playing against humans and came up with a slogan "attitude beats technique" Which is mirrored in this rather discursive article by Malcolm Gladwell, in the New Yorker, entitled: Why David beats Goliath. Who knew that Basketball could be so interesting :)
HT Paul Kredosky |
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| (no subject) |
[Apr. 29th, 2009|07:54 pm] |
I make no bones about thinking of myself economically as a Neo-Keynesian, in outlook, but having read a few links on Alphaville today, (they need your votes :) I was once again spitting feathers, and pissed off enough to write this.
Monetarism Defiant is the title of an interesting article about Anna Schwartz, Milton Friedman's accademic counterpart to many of the most important works of monetarism. It even makes the following salient comment, Though I would vehemently dispute that monetarism was "right" when it comes to public policy.
“At first, central bankers and governments did not accept our theory,” recalls Schwartz. Margaret Thatcher was the first to understand that the monetarists were right, following their rules when she came to power in 1979, taming inflation and reinvigorating the British economy. The U.S. followed during the early 1980s, led by Paul Volcker, a Friedmanite then at the head of the Federal Reserve, who, with Ronald Reagan’s strong support, ended raging inflation, though not without a lot of short-term pain. “It was a strenuous experience,” Schwartz remembers. As Volcker tightened the money supply, making credit harder to come by, unemployment spiked to about 10 percent; many firms failed. But starting in 1983, the inflation beast defeated, a new era of vigorous growth got under way, based on innovation and long-term investment.
However, as Martin Wolf points out today:
For better or worse, the authorities have decided to bail out their financial systems with taxpayer money. Almost all the affected countries should be able to afford to do this, at least on the IMF’s numbers. So now, having made the fundamental decision to prevent bankruptcy, they must return their financial systems to health as swiftly as they possibly can.
Even so, that will prove to be a necessary, not a sufficient, condition for a return to robust economic health. The overhang of debt makes deleveraging inevitable. But it has hardly begun. Those who hope for a swift return to what they thought normal two years ago are deluded.
The real issue here is the amount of debt, both in the wider financial system, but crucially, amongst consumers. The clue is in the name, consumersism. What do consumers do? they buy/consume goods & services. In advanced Western societies, something akin to 60-70% of GDP is consumer spending. People buying stuff. If people stop buying stuff, then you get what's known as an "output gap" the difference between actual/potential production and consumption. What this means is that you have to cut production, (jobs) to the level where output = demand. The resulting unemployment depresses consumption further, this vicious cycle results in disinflation/deflation. This not news to the Japanese who've been dealing with this for years. Crucially the Japanese had high savings and very little debt. this is not so with most heavily leveraged Western consumers/economies.
That aside however, the subtext that "inflation is always and everywhere a monetary phenomenon" and of necessity bad, has been the driving force for the past 30 years or so. However this neglects one minor flaw. What is that flaw? Wages. I can see you're looking confused, so I will explain:
In order for a consumer economy to grow there must be wage growth, since people must be able to afford the cars, fridges, ipod's and HDTV's in a range of colours and fragrances, that are the output of an advanced Western economy. Otherwise you end up looking like pre-revolutionary Romania. Where everyone has money, but there is nothing in the shops to buy.
If wage growth does not keep pace pace with the advances and costs of new consumer goods, then consumerism stalls. If there are no buyers for the latest good or service, then why "produce" them at all? For most of the post war period in the West, wages grew steadily if unevenly. But the Seventies brought many problems. In the UK there was the "winter of discontent" where workers went on strike demanding higher wages, and Britain became the sick man of Europe and had to go cap in hand to the IMF. This was a large part of why Thatcher came to power. This could be characterised to post revolution Romania, where nobody has any money but the shops are full of Western consumer goods. Monetarism changed that.
The monetarists seized the socio-economic high ground and determined to tame inflation, and thus save the world from boom and bust. Or so they thought. Yet in order to do this they needed to do something about a prime driver for inflation, namely wage inflation. For the Western world to enjoy the "long boom" inflation must be low, but if inflation is low, implying wage growth must be low, how does Joe public afford the HDTV? The answer: debt The average working stiff, and many of the aspirant middle class must take on debt to fuel consumption. This too is a problem since if the purchases are debt fuelled this will give rise to consumer price inflation Which is why in the later years of the boom, the goods would be made in China.
Importing cheap goods is essentially importing deflation/disinflation, and exporting inflation, since cheap goods are being imported to the West, but the global economy is a zero sum game. At a macro level the numbers have to net out to zero. Why? Because Martians aren't giving us money, thus allowing the Earth to run a deficit. Much like China buying US treasuries to hold down the Chinese currency and thus make exports more competitive, which in large part allowed/required the US to run a current account deficit.
The decision to crimp wage growth was a political decision, made for economic/ideological reasons, in my opinion it is the reason for today's bust. This could have been stopped at any point after Nixon abandoned Breton Woods in 1971, but it was not because the heretics of the Chicago school wished to purge us of our sins.
You may think this is working up to some exhortation to reconsider communism, or exhume Marx, "soak the rich!" but this is actually a economic argument. (If I were to characterise it it would be much like the argument between the Franciscan monks and the catholic church over the vexed issue of whether Jesus owned the clothes he wore. Or Luther's ninety-five theses. Both of which were essentially arguments within the Catholic church itself.) It's an argument about how best to manage the system of capitalism. Looked at objectively, what has happened under the principles of monetarism, is that the rich have gotten richer, and the poor and middle classes have, if not gotten actively poorer, stagnated, and taken on massive debts that will take years to repay. Yet the monetarists are still "right" clearly this is some form of the word right that I was previously unaware of. In the 1960's one job was enough to maintain a house and family. Now it's a luxury if your partner gets to stay home, with most couples working, and some even working two jobs just to make ends meet. Is this progress?
If I'm going anywhere with this it's to try and put across the idea that many of the arguments you have heard over the past 18 months and will hear again are very old, and they're couched as natural laws, or rules of finance by men in white coats & tweed suits, with title's such as Professor or Dr. Some even have medals, and Nobel prizes, but theirs is just an opinion. For instance there is still no real agreement on what actually caused the Great Depression, with each school having their own explanations & interpretations. You do not have to accept any of them at face value. In fact probably the best advice to be had came from Buddha himself:
Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense. [link] |
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| dark passage |
[Apr. 26th, 2009|10:17 pm] |
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For those of you not living under a rock, (or not living in the UK) it would have been hard to miss the sharp intake of breath, not to mention astonished gasps, and gnashing of teeth that followed the UK's 2009 budget which was the usual political theater, which I had to explain to her in advance. For the record I'd have to say that I agree with Prof. Buiter on this one, who posted the following to his FT blog:
Alistair Darling is a good chancellor of the exchequer. He has presented a Budget that does essentially nothing - a good budget, given the dreadful economic circumstances.
[...]
Mr Darling is doing his best to clean up the mess left by his predecessor, Gordon Brown. The fiscal profligacy of Mr Brown, now prime minister, after New Labour’s first term and his leadership since 1997 in the global financial regulatory race to the bottom have left the UK suffering from multiple imbalances. It is in its worst fiscal shape ever in peacetime - in the G8, only the US and Italy come close. It has a bloated financial sector, including a banking sector that is too large to save unless state support is restricted to the UK high street banking bits of UK-based global banking groups. It has a distorted and moribund housing sector and excessively indebted households. [link]
Shock and awe, but for all the wrong reasons. As Paul Mason (Newsnight's economics editor) says: "Til now no pain. Now shock + anger"
The economist went with a frontal assault, with a leader article, which does a fine hatchet job on Gordon Brown, openly calling him dishonest and comparing him to none other than Richard Nixon. Which I have to say I thought was a little OTT, in light of editor of the FT's missive about the flawed first draft of history Especially when you consider the overly rosy prognosis from the Economist Intelligence Unit, in the catchily titled headed for the rocks, we can all point the finger.
They did redeem themselves a little however with a second leader, entitled a glimmer of hope if only for the picture that went with it. Gallows humour where you need it most :)
I suppose I may have been willing to grasp the hatchet more thoroughly, had I not read this rather long article by Michael Pettis, especially this bit:
What does this grab-bag of stories add up to? The point I want to make is that if the purpose of the stimulus package is temporarily to slow the rate of contraction, it will probably succeed. This may be an important result. On Tuesday when I as being interviewed on CCTV 9’s Dialogue, I suspect host Tian Wei was a little exasperated by my unrelenting pessimism about economic prospects and asked “So should the government do nothing? Doesn’t it have to do something?” (I am paraphrasing).
Of course it does, and I am not criticizing it for making stupid moves. As I argued on the program, the government is faced with a tough choice between measures that boost employment and spending in the short term but may exacerbate China’s difficulties over the longer term and measures that speed up the pace and quality of China’s transition but may result in unacceptably high unemployment in the short term.
They seem to be doing the former, and I cannot complain or criticize since this is a political decision and not an economic one. The point, however, is that the paths facing China are not one leading to economic contraction versus another leading to economic recovery. The paths as I see it lead either to a very deep, short-term contraction followed by a healthy and balanced recovery, or to a slow contraction that may take many years and may result in much slower productivity growth over the next decade or so – perhaps we could call it a US-style crisis versus a Japanese-style crisis.
The moment I read that it resonated. Why is China getting some slack when Brown & Darling do not? Well you may ask.
That said I was fairly impressed this week by a BNP Paribas credit analysts report. It was truly scathing:
Output gap is huge and deflationary and capacity utilisation continues to drop
With the output gaps in the US and Eurozone (Charts 3 and 4) as large as they have become on the back of the collapse in global demand, it has led to an unprecedented collapse in capacity utilisation (Chart 5). To believe that demand will spring back vigorously over a short period is simply indulging in fantasy.
The graphs were not pretty, but the analysis was right on the mark IMO.
However, having watched passively for a week without engaging in the stories behind the events, I have to say that I have come away with a new sense of the worth of my own beliefs, and large slug of contempt for the peddlers of "good news" as regards the future of the economy and the equities markets.
I understand why they're saying it and even sympathise with their plight. I just think that as we transition from the bit of the roller coaster ride that softens you up, into the part that really begins to terrify you. That our elected leaders and the people we turn to for news, should actually 'fess up to the public and tell them what to expect. We've been through two world wars and a depression in the past hundred years, without much in the way of internecine strife or open revolt. FDR didn't shirk responsibility in his inaugural address, nor did Churchill in his bulletins. They told it like it was. I think somebody in power needs to do the same. I'm all for Prof Buiter's call for a UK Government of national unity, but I think that means owning up to the fact that the situation is too dire to be handled alone, and that we need all hands to the pumps. A large portion of Crow has to be eaten, but while the Government thinks it may win the next election that isn't going to happen.
If the Tories get in, then I think the safety interlocks on the coaster get switched off, and the ride gets that much harder and more "real" people need time to prepare for that, and it just isn't happening.
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| Eating Bear |
[Apr. 26th, 2009|09:28 pm] |
"Sometimes you eat the bear, but sometimes the bear, he eats you" -- The Big Lebowski
I've hardly moved in, and thus only half configured, so everything is more trouble than it should be, but this video of Eric Rosenfeld, one of the partners of LTCM (HT Paul Kedrosky) is completely fascinating for economics/finance geeks. Even more so if you've read the book. It's a great story in itself, much like Galbraith's The Great Crash 1929 it's gripping, and really gives you a feel for what it must have been like to live through it. But for all of that it comes down to a few simple rules, which even the "smartest guys in the room" are prone to trip over, and which ultimately caused their downfall, namely:
Leverage
Complexity
Chasing yield
"drinking the cool-aid"
Misunderstanding/mispricing risk (when correlation =1)
In the end LTCM were too big & too interconnected to fail. But the Fed arranged for the banks to bail them out, only now the Fed is being forced to bail out the banks. The read across from 1929 and the current crisis is simple and direct, the same rules apply. Who you may ask is going to bail out the Fed? Who indeed. |
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| The once and future king |
[Apr. 25th, 2009|10:34 pm] |
A productive day of sorts. Finally got OSX installed on the new system, including network, audio and most importantly, my graphics card, all working. The odd twinge here and there but I'm sure I can smooth that out given time. She who must be snuggled had a fit when I brought back a retail copy a while back. But if you're going to use it, it's the reasonable thing to do. Looking forward to Snow Leopard to be honest. Looks like they're working on some really slick technology under the hood. as well as being a 64 bit release.
Now I just need anti-virus and decent outgoing firewall and I may be able to move in. Will need a new mouse though, since the Pro Mouse I have was misbehaving. Keyboard's OK though, if a little spongy. Need to get used to where the keys are, (US layout) keep hitting \ when I go for the delete key. May have to see if I can't find a UK keyboard. Speech marks are a bit awkward.
Minor problem with the screen since I've reached the limits of how far I can expand the image, and it's still has black bars. Will have to look into that. But overall fairly pleased. |
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| time and tide |
[Apr. 24th, 2009|08:03 pm] |
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I've been aware of twitter since it was in beta, but it was only today that I signed up for it, largely as a way of culling some tabs, since I had the odd one or two here and there and whole block of them in the hinterlands. No sooner have I joined than people I've never heard of subscribe to my feed, I find this odd, but it's another country, I figure they do things differently there. I also noticed a range of applicable stuff once I flicked through some of my tabs, lose a few gain a few, so it goes. |
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