Saturday, 27 December 2008

British Politics 2009: Sweden v Italy?


Robert Peston: Journalist of the Year 2008, surely? So what are we to make of his Christmas Eve statement that:
"As a nation, our fortunes in 2009 will be conspicuously tied to the fortunes of our banks as never before........ the balance sheet of the British public sector can be seen as the aggregated balance sheet of some substantial banks - because the state now controls three banks, Northern Rock, Bradford & Bingley and Royal Bank of Scotland, and will have a huge stake in a soon-to-be created fourth, LloydsTSB/HBOS. It means that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state."

Paulie labels this UK Plc, and he's onto something. Dear old Ralph Miliband quoted Paulie's mentor, Kautsky, as once saying, " ..the capitalist class rules but it does not govern." But if the fortunes of the State per se are now so tightly tied to the fortunes of finance capital this may not be remain quite so inevitably true.

That hoary old Marxist chestnut of a question, the relative autonomy of the State, may rear its head again. A thousand undergraduate essays on old Ralph and sad Nicos will be dusted down and regurgitated. But the old essays may be missing the point. It may be that the thing to explain in 2009 is not the 'gap' between direct class power and State action which Miliband and Poulantzas tried to theorise, but the speed and nature at which this gap decreases.

One potential logical move, for finance capital, when faced with a situation where their basic instruments of profit are owned by the State, is to find a Berlusconi type figure: someone who will run the State much more directly in the interests of the capitalist class as a whole, or even a specific fraction of it as in the Italian situation. Britain has a different history to Italy of course, and the availability of 'hero innovator' types from the private sector is really quite limited. But I wouldn't bet against Cameron 'bigging up' - perhaps even 'ennobling' and pushing onto the front bench - a few folk like Branson.

Meanwhile Gordon has to plug away at his son of the manse act and at least pretend its all going to be Sweden: the temporary nationalisation of the banks pending their fattening up and resale. But in reality no such resale is going to happen anytime soon. Gordon - or his successor - is going to be running the British arm of international finance capital for its owners for a good while yet.

So the political question of 2009 is - to put the matter in anachronistic Marxist terminology - who will come out on top in a clash between the direct logic of finance capital and the logic of a (relatively autonomous) capitalist state. It seems the future of our country rests on this battle.

Thursday, 25 December 2008

Academic Papers I'd Buy if I Were an Academic: no.1 in a Series

Optimal Migration: A World Perspective
Abstract:
"We ask what level of migration would maximize world welfare. We find that skill-neutral policies are never optimal. An egalitarian welfare function induces a policy that entails moving mainly unskilled immigrants into the rich countries, whereas a welfare function skewed highly towards the rich countries induces an optimal policy that entails a brain-drain from the poor countries. For intermediate welfare functions that moderately favor the rich however, it is optimal to have no migration at all."

Like the Bud, I'm blown away by the question: a world perspective on migration. It's the right question. It's so, so difficult to ask.

Tuesday, 23 December 2008

Christmas Costume Dramas Are Not The Answer...


"The inability of mankind to imagine happiness except in the form of relief, either from effort or pain, presents Socialists with a serious problem. Dickens can describe a poverty-stricken family tucking into a roast goose, and can make them appear happy; on the other hand, the inhabitants of perfect universes seem to have no spontaneous gaiety and are usually somewhat repulsive into the bargain. But clearly we are not aiming at the kind of world Dickens described, nor, probably, at any world he was capable of imagining. The Socialist objective is not a society where everything comes right in the end, because kind old gentlemen give away turkeys. What are we aiming at, if not a society in which 'charity' would be unnecessary? We want a world where Scrooge, with his dividends, and Tiny Tim, with his tuberculous leg, would both be unthinkable. But does that mean we are aiming at some painless, effortless Utopia? At the risk of saying something which the editors of Tribune may not endorse, I suggest that the real objective of Socialism is not happiness. Happiness hitherto has been a by-product, and for all we know it may always remain so. The real objective of Socialism is human brotherhood. This is widely felt to be the case, though it is not usually said, or not said loudly enough. Men use up their lives in heart-breaking political struggles, or get themselves killed in civil wars, or tortured in the secret prisons of the Gestapo, not in order to establish some central-heated, air-conditioned, strip-lighted Paradise, but because they want a world in which human beings love one another instead of swindling and murdering one another. And they want that world as a first step. Where they go from there is not so certain, and the attempt to foresee it in detail merely confuses the issue."

Orwell, Can Socialists be Happy ?, December 20th, 1943

Monday, 22 December 2008

Red and Green

Paulie directs his readers to a Liberal Conspiracy debate over the car bail outs. Is the difference between Left and Green simply over the the relative importance they attach to jobs per se, rather than a wider sense of 'the good life'? Does the green movement have a tin-ear for workers' concerns? Conversely: has the Labour Movement, and most especially it's left, lost all touch with the difference between sectional interests, albeit those of the oppressed and disadvantaged, and the broader good ? (even if that 'broader good' is expressed in classic terms of 'the working class as a whole' in some more traditional quarters....or even if the more jargon ridden amongst them might describe a Left vision of the 'broader good' as being a 'hegemonic aspiration'. ).


The answer to every one of these questions, it seems to me, is a 'yes' with a variety of different qualifiers. Therein lies the problem for anyone with a spark of radicalism in them.

Leftism surely can't mean conservatism. It can't mean, to take a non-ecologically relevant example, supporting the absurd 'People's Woolworth's' campaign. Woolworths was a crap store selling crap things. I do not mourn its passing. The issue is finding a quick transition into new work for its employees, not pretending it should be saved for the nation. Calls for TU action beyond this are blinkered in my view. Socialism has to mean progress of some sort, surely?

Yet the Greens need to find of a way of concretising their call for industrial and commercial transformation. The Green New Deal is fine as far as it goes - but it's high level Keynesianism at root. Even if it was a adequate programme to confront the crisis - and, remember, it was designed before the worst of the credit crunch - it is an inherently top-down series of measures. People - workers and their organisations - need to be able to contribute.

At this point, lets remember not just Mike Cooley and his fellow Shop Stewards at Lucas Areospace, but also what came out of it: a Centre for Alternative Industrial and Technological Systems (CAITS). I can't find it on Google any more - perhaps it's folded, which would be very sad. Instead we have the purely Green Centre for Alternative Technology, which even boasts of being visited by the Duke of Edinburgh....

The Left and the Greens need each other, and need each other badly. Neither has a workable vision of the future without the other.

Sunday, 21 December 2008

Seasons Greetings Comrades

Here once stood a funny video - but one which wouldn't stop playing. Check it out on the link.

Via

Friday, 19 December 2008

"Hang on a minute, lads. I've got a great idea"



So says Michael Caine at the end of the Italian Job, as the crooks balance precariously in a coach with its back end - the end with the gold in - perched half way off an Alp. One wrong move and the gold slips out of the door and down the mountain - but trying to pull it back towards the criminals means approaching the gold and tipping the whole coach off the mountain.

Why does this quote remind me of that scene?

"We know that by pulling out money, we’re not serving anyone’s good. Including ourselves." Gao Xiqing, president of the China Investment Corporation. This is the famous modern “balance of financial terror.” If Chinese officials started pulling assets out of the U.S. and touched off a run on the dollar, their vast remaining dollar holdings would plummet in value, losing the savings of the Chinese as well as ruining the American economy. In other words - the whole coach tips off the cliff.

But there's more: Caine says the film ended the way it did because there was going to be a sequel:

"In the coach I crawl up, switch on the engine, stay there for four hours until all the petrol runs out. The van bounces back up so we can all get out, but then the gold goes over. There are a load of Corsican Mafia at the bottom watching the whole thing with binoculars. They grab the gold, and then the sequel is us chasing it."

Yeah, I can see America doing quite a lot of 'chasing' after all this, even if they get out of their coach alive - that is, get away with a bad recession rather than a full blown repeat of the 1930s. But who, exactly, will they be chasing?

Where's All This Going to Stop?

Look at the graph. What are the implications of that line showing US financial profits to be so much higher than the line showing profits from non financial firms? Doesn't it strike you as a bit, well, odd.

It was argued, until the credit crunch, that it wasn't odd at all: we had somehow shuffled into a new and more stable world where 'financial innovation' and the e-economy had upped the return on capital in the way industrialisation had done 150-200 years ago. So naturally financial services would have higher than average returns. All perfectly normal. Everything for the best in the best of all possible worlds. I wonder how that opinion is holding up?

Two views.

"In 1999 or 2000, I gave a talk ... about capital markets and how they worked. ....So I wondered, How do I explain derivatives?, and I used the model of mirrors.

First of all, you have this book to sell. [He picks up a leather-bound book.] This is worth something, because of all the labor and so on you put in it. But then someone says, “I don’t have to sell the book itself! I have a mirror, and I can sell the mirror image of the book!” Okay. That’s a stock certificate. And then someone else says, “I have another mirror—I can sell a mirror image of that mirror.” Derivatives. That’s fine too, for a while. Then you have 10,000 mirrors, and the image is almost perfect. People start to believe that these mirrors are almost the real thing. But at some point, the image is interrupted. And all the rest will go."

Gao Xiqing, president of the China Investment Corporation, The Atlantic. Via the inevitable, and inevitably good on matters Chinese, Blood and Treasure.

Or, put in terms of classic Marxist political economy by the heirs of Paul Sweeny,

"...stagnation ..[is] the normal state of the monopoly-capitalist economy, barring special historical factors..... It was the reality of economic stagnation beginning in the 1970s... that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianism” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles.” ... With corporations unable to find the demand for their output—a reality reflected in the long-run decline of capacity utilization in industry —and therefore confronted with a dearth of profitable investment opportunities, the process of net capital formation became more and more problematic..... Hence, profits were increasingly directed away from investment in the expansion of productive capacity and toward financial speculation, while the financial sector seemed to generate unlimited types of financial products designed to make use of this money capital. ..Since financialization can be viewed as the response of capital to the stagnation tendency in the real economy, a crisis of financialization inevitably means a resurfacing of the underlying stagnation endemic to the advanced capitalist economy. The deleveraging of the enormous debt built up during recent decades is now contributing to a deep crisis. Moreover, with financialization arrested there is no other visible way out for monopoly-finance capital. The prognosis then is that the economy, even after the immediate devaluation crisis is stabilized, will at best be characterized for some time by minimal growth, and by high unemployment, underemployment, and excess capacity. "

I think I'll hold onto that neat qualifier "at best" slotted into the penultimate line of the Monthly Review quote. It's the optimistic view.





Wednesday, 17 December 2008

"...& I'll Cry if I Want To.."

I've been trying to avoid it - no, honestly, I really have - but I can't stay away from the slow implosion of the SWP. It's being covered with perhaps rather ill-hidden glee by a website run by a former ally of theirs in Respect here, and here, and here and...well no doubt a lot of other places as well by the time you get to read this post. Across the Irish Sea Splinty's joined in as well - and the debate on his post is much more sophisticated than on the Socialist Unity site. Comrade Tom Cobbleigh and all are also having their say.

These are most definitely not 'my people'. When I was politically active they would have despised me as a reformist. Or possibly as a Stalinist. Or both. & the distaste, politically speaking, would have been pretty mutual, although that never stopped me being friends with and even sharing flats with SWP members when I was young. But I do accept that twice in my life time - around the Anti-Nazi League at the turn of the '70s/80s and in the Stop the War Coalition - they played pretty vital roles in popular front style movements. (Even if, for reasons of internal theology, they always describe these patently cross class initiatives as 'united fronts', sometimes qualified by the mirth inducing suffix '..of a special type'.)

I've posted before on how the problems within the SWP resonate with my experience in the 1980s Communist Party. & like the CP of old they now seem to have reached the point where they have many more ex members than actual current members. Membership is small and broadly stagnant - ours was dropping of course - and sometimes inflated for the purpose of keeping the troops' spirits up. Effective purchase on political developments is usually more imagined than real. So the question arises of how to make the organisation relevant. The argument gets wrapped up in all sorts of Marxist obscurantism - and is, initially, filtered through purely organisational disagreements and petty 'office politics' amongst the full timers - but it's basically about asking the question, " If we just keep on keeping on why on earth should we expect anything to be different?" The would-be grand priests of theory and of faction then march onto the polemical stage and offer finely honed analyses of Why You Lot Have Been Doing It All Wrong And Why You Should Take My Line (WYLHBDIAWAWYSTML*)

But it's over. In retrospect I can see the people running Marxism Today knew this a generation ago. A Party no longer feels like the correct organisational form from which to change consciousness and culture, even if it is indispensable for fighting elections and pretty helpful in organising demonstrations and the like. A comment from someone called 'ejh' in the Splinty discussion puts this eloquently:

"...it doesn’t really matter if whichever organisation you’re discussing has a better line on this or that, a healthier approach to party democracy, deeper roots in the working-class, a more bottom-up approach to policy-making, a more disciplined approach, a more flexible approach, a less opportunistic approach or whatever the criticism of choice may be. Nobody is making any meaningful progress at all with whatever approach they take, and that’s because the whole idea has come to a dead end. The political habits and ideas on which it depended have withered away."

He goes onto link this to a more general decline in the very idea of working class solidarity, which has clearly also occurred. The manual working class, both unskilled and, especially, skilled is much, much smaller than it once was. An awful lot of the psychic identity of the old organised Labour movement was built on that identification with (predominantly male) manual work alone. The new working class jobs are generally white collar and tend to involve doing repetitive tasks in a sterile environment (think about call centres, or various service industries). As yet, no organisational culture has grown up around such jobs that can be seen as anything like the old trade union workplace solidarity.

But even if it does I can't see a place within it for a 'revolutionary party' of supposedly tightly knit cadres holding the Truth. It's possible one day soon we'll find ourselves with a new 'culture of resistance' as different from what went before as, say, the 'New Unionism' of the 1880s was from the Chartist struggles of a generation previous. I'm sure many current and ex SWP - and Communist, and other left party - members will be part of that culture of resistance.But they won't be a party.

*Co-incidentally also the name of a small railway station that was one of the 'Little Moscows' in the 1930s Rhondda Valley. Dr.Beeching closed it.(N.B. Note for my more serious dialectical friends: this is a joke....)

Tuesday, 16 December 2008

Once You've Been Evicted From the House It's A Long Way Back.

It's really no use trying to buck the curse of Big Brother. Not even like this. (Actually, especially not like that).

30% bigger than annual government spending on health and education combined

See that big orange bubble, second from the left on the top row ? The one labeled 'Bank Debt Guarantee - £250bn'?

Well it's not a guarantee anymore: Peston says it's now a more or less direct subsidy, at least for the next five years. & it's 30% bigger than annual government spending on health and education combined. Mason said some time ago this was the Minsky solution to a Minsky crisis - the moment when banks became utilities.

But before anyone on the Left starts dancing in the aisles let's remember that the banks - and therefore all of us - have a really tricky task ahead. A failed generalised financial business model - a failed style of political economy if you like - has to be unraveled. The banks are hand in glove with the hedge funds and need to retreat from these speculative positions ; the pensions industry depends on these speculative profits. & the banks aren't going to start lending like a drunken sailor again to the mortgage market or small businesses unless they have some substitute for this easy speculative money. In any event, nations with large current account surpluses, whose money the banks and hedge funds have been playing with in the final analysis, may want to take their ball away and go for some expansion of domestic demand. I've argued this won't always be possible and will never be easy - but there is certainly some scope, and the greater the scope for such domestic investment by China and the rest of the countries in surplus the less money for the City and NYSE to play with.

In short: in Britian, our homes and our pensions are intimately tied to a model of political economy whereby our financial sector 'churns' and speculatively exploits other countries' savings. The model can't be put back together again anytime soon. It's broken. We're going to have to work longer and harder for less pay.

On the upside, though, the question of 'what the banks should do' is now as legitimate a political question as how to run the NHS. It's not a private matter suitably addressed only by pointy headed 'experts'. Hitherto the only 'political' question about the economy was who could run it best- the actual mechanisms of the economy itself was assumed to be outwith political debate. The content and structure of the economy are now political again.

Monday, 15 December 2008

Even in Recession, There Will be Jobs To be Had


"At 11.30 on the morning of 1 May 1931 [President] Hoover pressed a button and switched on the lights of an American triumph, the Empire State building...It was the loftiest structure on earth...feet high...constructed with 600 million bricks, containing 67 elevators and 6400 windows...capable of accommodating 25,000 office workers....

It was now a monstrous white elephant. Only 20% of its space was was rented and by 1934 the building was losing a million dollars a year...Many of its floors were closed off and one Dartmouth honours graduate was delighted to secure the job of flushing all its unused lavatories every day to prevent chemicals in the water from marring the porcelain finish." (My emphasis)

(The Dark Valley, A Panorama of the 1930s, Piers Brendon, Pimlico, 2001, p73)

Silliest Web 2.0 Comment 2008 Award


We have our first nomination - and from a Nobel prize winner as well. Though I suspect the sub editor deserves an individual nomination in the 'Buffoon's Headline' category as well. But back to the Nobel prize winner who tells us:

"The spread of information on the Internet has given the world a new tool to forestall conflicts"

Clearly, this person has never been to the discussion threads at either Harry's Place or Socialist Unity.

HSBC could not immediately be reached for comment

Donald McKenzie in the LRB:

".... a hedge fund depends[on] a prime broker. These are usually big international banks, which typically hold funds’ money and act as custodians of their portfolios, transferring money or securities when trading demands. (... funds’ computer systems are directly linked to those of their prime brokers.) Prime brokers are a major source of leverage: they lend to funds, often using securities in the fund’s portfolio as collateral. A prime broker is also usually the first port of call when a fund is selling short and needs to borrow the securities in question. Indeed, a fund’s prime broker, or other investment banks, will often in effect do some of its trading for it, by means of what’s called a ‘total return swap’. "

Doh. Not so much prime brokers as prime morons:

"A report in the Financial Times said HSBC Holdings Plc had emerged as one of the largest victims, with potential exposure of about $1 billion. HSBC could not immediately be reached for comment."

Tom mentions that Superwoman has got something to say about it all though - it's all the government's fault apparently. Obviously.

It seems to me that the relationship of the hedge funds to the rest of the City is akin to that of the Elizabethan Court to the piratical activities of Drake, Hawkins and Raleigh. They're happy enough to take the ill gotten gains when conditions make it OK to do so but faint in mock shock and horror when it is revealed to them how such gains originate. Indeed, Good Queen Bess was probably regularly not 'immediately reachable for comment' by the Spanish Ambassador but, if she was, she'd no doubt have blamed the lax enforcement of international maritime law. ...

Like e-Bay - but Evil

The economic crisis has led to a sudden and massive collapse in the credibility of previous theories of benign, self correcting free markets and problem free globalisation: for the Masters of our Universe it's like running over an intellectual cliff and looking down to discover there is nothing holding you up.

One of the interesting effects of this is how little shards of knowledge which have always been floating about in obscure bits of academic literature get picked up and re-examined. A new significance is suddenly found in ideas and experimentally grounded data which once, because they didn't 'fit' the prevailing theory, were sidelined as curiosities. This, of course, is classic Kuhnian sociology of knowledge: a paradigm shift occurs. The most obvious way in which this is happening is the sudden and world wide rehabilitation of Keynesianism, 'crass' or otherwise.

But it's not just the economic foundations of previous macro economic norms which are beginning to fail. People are starting to look again at stuff which undermines the very idea of a narrowly rational 'economic man', who bases their decisions on the marginal utility of this or that good or service. It seems Gran was right: most of us really do act as though 'a bird in the hand is worth two in the bush'. This is apparently called 'the endowment effect'.

But it would be a mistake to imagine that paradigm shifts work their way through in the supposedly disinterested cloisters of academe. 'Practical men', as Keynes might have it, may or may not be the 'slaves of long dead economists', but they also create the world which Brahmin intellectuals like John Maynard attempt to corral into some kind of intellectual order. So perhaps we shouldn't be surprised that some bastard has discovered a way of making horrendous amounts of money from 'the endowment effect'. Jeff explains how it works and describes it as,

" ...about as close to pure, distilled evil in a business plan as I've ever seen........ It is almost brilliantly evil, in a sort of evil genius way."

Via Marginal Revolution

Friday, 12 December 2008

Counting to 32 Slowly or Taking Too Big a Risk?


Fianna Fail have made their first steps towards setting up shop in Northern Ireland. Discussion on Slugger seems to suggest there are some grounds for expecting some kind of rapprochement with the SDLP, even if full merger is probably not currently on the agenda. The Slugger regulars seem to think the calibre of the individuals involved in the FF initiative is quite high.

This follows the formal re-marriage of the Tories and Official Unionists, and the setting up of an all-NI constituency branch of the British Labour Party, which I posted about here and drew Paulie's disapproval in doing so.

I was confused by the Tory move. Now I'm even more confused. What do the locals think?

Well, the only other bloke on Blogger who lists Eurocommunism amongst his interests is up for it,

"The establishment of competing UK-wide and all-island parties in our province would give local politics the shake up it is so badly in need of, move beyond conducting politics on a sectarian basis and offer people here a choice of a better quality than that currently being provided by our hopeless provincial groupings."

Splinty also has a very low opinion of the actual calibre of local politicos in the six counties - and has indicated a deep cultural and political Republicanism, albeit from a far left perspective, which leads him in general to favour Fianna Fail over Fine Gael. So I'd guess he wouldn't object. Garibaldy and South Belfast Diary do a double act on the background to all this, starting from the stand point of a Irish Labour Party which must, surely, be expecting to receive a 'Dear John' letter from the SDLP. That's the very same SDLP which the Democratic Left -nee Workers Party nee Republican Clubs nee Official Sinn Fein aka 'the Stickies' - told its Northern members to join when it merged itself into the Irish Labour Party. (Do keep up). But perhaps all this is by the by.

So what might all this mean? Let me try to structure a paragraph from which I have surgically removed a dozen or so 'ifs' to aid clarity: in a few years, it is possible that the debating chamber at Stormont will be dominated by two big blocs, one including representatives of the governing party of the Republic of Ireland and one including representatives of the governing party of Great Britain. There would also be two sizeable minority parties - Sinn Fein and the DUP - whose formal political position was to be more 'nationalist' than the parties with the links to the two governments, but which increasingly get sidelined into policy positions which made them sound more and more like provincial ( in both senses of the word) parties. The politics of the six counties will have been 'normalised' to acceptable European standards. This, in a sense, is the honourable case for what Cameron has done with the Official Unionists - and it might even open up some space for the election of at least some Labour members to Stormont. (Though, as Garibaldy points out, the prospect of New Labour types getting it together with the old Workers Party folk with their past fondness for North Korea is quite an entertaining thought.)

Alternatively, it could all go horribly wrong. It's one thing the two governments standing guarantor to the Good Friday Agreement – because that is their position in reality – whilst the local parties get on with their dysfunctional 'cold shoulder consociationalism'. It's quite another if the two governing parties are actually locked in direct electoral combat with the local NI parties. That might encourage a bit more grand-standing to the tribal gods by the local parties on both sides - and, in the North, the tribal gods are vengeful and violent as we all know...

Thursday, 11 December 2008

It’s The (Political) Economy, Stupid

OK. Let's imagine a world where you're born physically resembling George Clooney's only slightly less good looking elder brother. Let's make you smart at school as well – smart enough to become an Ivy League Professor. Hey, no, let's double or treble the smarts – let's give you a Nobel Prize. More than that even, let's assume you can not only do the pointy-headed stuff but that you can also write in clear and simple language for the lay person. So let's – just for the sake of argument you understand - call you Paul Krugman. You are, let's face it, blessed, even if there is a degree of professional sniping at you. Never mind all that business about Obama as Santos: you are what Jed Bartlet would have been if he'd failed to get elected as State governor in the first place and stayed in academia. (Well, if he had been Jewish rather than Catholic – anyway, you get the point).

What's your take on the crisis, then? Well, you've appointed yourself John Maynard K's representative on earth. First, fix the banking system by throwing loads of money at it and even possibly temporarily nationalise it on the Swedish model. But this won't work on its own – so next come the fiscal measures: basically get those armies of people divided into the famous diggers of holes and fillers in of same, all on a govt subsidy. (I, er, paraphrase). If these things don't work first time (did someone mutter the word 'Japan'?) – do them again, with more money, until they do. Then – and only then it seems – might systematic reform be on the agenda:

"And once the recovery effort is well underway, it will be time to turn to prophylactic measures: reforming the system so that the crisis doesn't happen again... anything that has to be rescued during a financial crisis, because it plays an essential role in the financial mechanism, should be regulated when there isn't a crisis so that it doesn't take excessive risks. .... Now that we've seen a wide range of non-bank institutions create what amounts to a banking crisis, comparable regulation has to be extended to a much larger part of the system.

We're also going to have to think hard about how to deal with financial globalization. In the aftermath of the Asian crisis of the 1990s, there were some calls for long-term restrictions on international capital flows, not just temporary controls in times of crisis. For the most part these calls were rejected in favor of a strategy of building up large foreign exchange reserves that were supposed to stave off future crises. Now it seems that this strategy didn't work. "

The problem in confronting this is purely technical or ideological it seems:"Some people say that our economic problems are structural, with no quick cure available; but I believe that the only important structural obstacles to world prosperity are the obsolete doctrines that clutter the minds of men."

Our pseudo-Bartlet might be right about the desirable macro-economic measures - though even there, in this article at least, I suspect he's under-valuing the deeper long term effects of the shift in international investment, productive capacity and productivity to the BRIC countries, and the problems this creates in following his prescriptions - but he's certainly wrong about the nature of the barriers to change. It ain't just a matter of some super-Fabian/Bloomsbury brain-box finally convincing the Treasury to stop believing Finance Capital knows its own best interests. It's the fact that in both America and, even more, in Britain our economy(ies) are disproportionately based on Finance Capital in its most speculative form. What makes us rich again - or at least, what restores the status quo ante – is precisely the restoration of minimally constrained, globalised Finance. We get 'well' by recreating the sickness.

Or we change. That might involve a degree of – I'm so sorry to be so old-fashioned here – well, class struggle: a determined political popularisation of the concept of there being a different way of running the economy, based on looking after the interests of most of us rather than the Hedge Funds and international financiers. More than that though - it has to involve a fairly clear idea of what else America and, especially, Britain might actually do, rather than leech off the crumbs of the financial casino. & I've not heard anyone address that issue as yet, except in the all-purpose (but probably correct) Jeremiah economics of the Greens.

&, sadly, the class struggle is currently being undertaken by only one side.

P.S. Krugman doesn't explain why we shouldn't just have financial regulation by shooting the bastards. (Actually, I'm against this - except immediately after reading about things like this.)

.

Wednesday, 10 December 2008

Political Blogging v Political Commentating

Not normally an argument I'd care to enter: every one else seems to have their positions worked out and nicely packaged up with a whole set of buzzwords I'm still getting to grips with.

But today at least, the bloggers are wining hands down. They're talking about the welfare reforms - Stumbling's playing Devil's Advocate, Harpy most definitely isn't, Osler tells us it won't work in Rochdale, the Plump one sees scary historical parallels and even the Ipswich French Connection is taking a break from his usual travels around the Anglo-French ultra-left to say something sensible.

Meanwhile, Kettle and the BBC think a slip of the tongue in a ritualised Commons 'ya-boo-sucks-to-you' exchange is the key issue of the day.

Brest Hill Castle United v Bear Guard Home Villa: Match Postponed


You'll need to click on this to increase its size I'd imagine, but it's worth it. From here, via the very wonderful Strange Maps, which also has a helpful commentary on the etymology.

But Language Log picks holes in the underlying thinking - and the underlying politics:

"...
there's a ... fundamental flaw to this project. Calling these glosses "true names" is nothing more than the etymological fallacy on a grand geographic scale. Does rendering New York as "New Wild Boar Village" really tell you "what the people saw when they first looked at a place, almost with the eyes of children"? ..... Even when the toponyms are .... descriptive, rather than relating to the settlers' origins, the names are hardly pure and childlike. In many parts of the world, place names actually tell messy narratives of colonial encounters or other cultural contact situations. Wiping away all that history might make the world seem more like Tolkien's Middle Earth, but it doesn't tell us anything "true.""

British Mid-Market Newspapers Explained


Thank you b3ta.com challenge, thank you .

Tuesday, 9 December 2008

Plug: Eyewitness in Greece

For those of you - like me - who can't work out what's going on* in Greece, try this bloke. He's an English EFL teacher in Thessaloniki and seems to be giving interviews to CNN, SKy and the Beeb as well as keeping his blog up to date.

*Or more to the point, why it's going on for so long.

Banish those 'getting bullied out of your dinner money' school blues forever !


OK: I'm freaked. I'm not normally too paranoid about personal anonymity stuff, but now I'm freaked.

I'm a school governor. We're building a new school - it's part of the Blairite Building Schools Eventually, sorry, Building Schools for the Future, programme. There's a lot I could write about the glories and inequities of this massive but madcap PFI scheme but that's not my purpose now.

No: I want to talk about school dinners, and not in a Jamie Oliver sense either. The kids pay for their food with a plastic card at the moment - it's suppose to stop them getting bullied out of their money but it's not 100% effective as, after all, you can make someone spend their money on you whether its cash or on a card. It also saves the school quite a lot of faffing about as it means we have totally cashless catering.

But we have another option for the new building: biometric cashless catering when the plastic cards would be replaced by fingerprints or even, I suppose, retina scans. The Head declined this cutting edge proposal I'm rather glad to say. But I wonder how many schools out there are quietly building up a data base of the next generation's biometric data - and I wonder how long before that data escapes into the either.

Monday, 8 December 2008

Grown Up Writing

I think many currently illegal drugs should be legalised. So does Shocko. But the difference is he can write about it beautifully, in the full knowledge it's not a cost free judgment call.

There should be more of this kind of writing - writing which acknowledges moral and political complexity, and yet still faces up to the need to come down on one side of an argument. I think the Fatman does it routinely, even if I don't always agree with every conclusion. It's grown up writing.

Grrl Power?


Barbie has cut Bratz off at the knees.(Via) This is their last Xmas:

"Mattel...after a four-year legal dispute with MGA Entertainment Inc., touted its win in the case Wednesday after a federal judge banned MGA from making and selling its pouty-lipped and hugely popular Bratz dolls.

"It's a pretty sweeping victory," Mattel attorney Michael Zeller said. "They have no right to use Bratz for any goods or services at all."

U.S. District Judge Stephen Larson rocked the toy industry with his order that MGA must immediately stop manufacturing Bratz. He allowed MGA to wait until the holiday season ends to remove the toys from store shelves."

In other news: one in three toys tested in the States was found to contain toxic chemicals such as lead, flame retardants and arsenic.

I can't help wondering how many lawyers were employed on the Barbie v Bratz case compared to those involved in combatting the poisonous toys?


A Rub of the Green: What is Cameron Upto ?


For reasons I don't pretend to understand Cameron is pushing through a formal Tory rapprochement with the all but electorally dead Official Unionist Party. Slugger O'Toole is full of it. Along the way Cameron has given several hostages to fortune, including really problematic statements such as," I'm not neutral on the question of the union." Such statements seem problematic to me because they feed the 'auld ghosts' of the ur-Republican view, rather than move politics onto any kind of a new terrain. I genuinely struggle to see what is in all this for the Tories. So it feels a bit irresponsible to put it mildly.

From a distance, Northern Irish politics seem stuck in a kind of shadow boxing mode. Yes, the guns have been put away - or almost all of them anyway. Yes, we have formal power sharing - when the elected representatives can be bothered to decide they'll talk to each other, which, to be frank, isn't that often. But they really don't seem to talk about the 'elephant on the sofa': the demographic shift.

One of the ironic effects of Direct Rule was that the long term existence of a higher birth rate in the Catholic community actually began to have demographic effect, because the Brits gave more jobs to people from the nationalist communities thus stemming the traditional flow of emigration. The balance now stands at something like 43:57, down from the 1/3rd - 2/3rds split of the 1960s. Some time around 2040 there will be an adult nationalist majority. Followed shortly, one presumes, by a referendum in favour of Irish unity. But when the last British soldier and civil servant leaves there will still be a million people living there who, unless something changes, will be extremely resistant to incorporation into a united Ireland.

In this context Cameron's intervention seems...well a bit bonkers.

I also learned on Slugger that the (British) Labour Party has now authorised the setting up of a NI wide CLP, although this is several steps away from formally standing candidates in any elections in Northern Ireland, which would still require the explicit approval of Labour HQ. This too gives rise to a certain foreboding, although, at a push, I could just about grasp the logic of NI Labour candidates standing in European elections if jointly sponsored by both British and Irish Labour parties, as both sides of the argument over the border seem to approve of EU membership and, indeed, EU links are often touted as one way of decreasing the relative importance of the border in the politics of the North. But even this has to be seen in the context of the existence of the SDLP with its firm (if much diminished) base in one community but not the other. So it could still go very wrong.

In any event, Europe may be a bit of an exception: I can't quite see how a Labour candidate affiliated to the British Labour Party could possibly appeal to both communities in elections to Westminster, Stormont or any local council. & surely it is paving the way for some kind of cross community unity, to minimise the possible consequences of that '2040 moment', that is the big longer term contribution British politicians can make to the future of the North of Ireland.

Saturday, 6 December 2008

Deja Vu ?

"Money managers apparently don't want to buy into the UK housing market, even when the risk is covered by HMG. And they may have the same qualms about buying any kind of asset-backed security, even when it's gilt-edge or underwritten by taxpayers.

So there are two alternatives. One would be O'Neill's* state-owned, state-funded bank.

The other would be a longer-term, broader more ambitious version of what's already happening here and in the US. Which is that banks could package up loans to businesses and households and then exchange them for cash from the Bank of England.

In effect, we as taxpayers would be funding the bulk of the real economy.

It sounds extreme. There are big and serious issues about whether such an initiative would be perceived by international investors as seriously weakening the strength of the public-sector balance sheet, such that there would be a damaging run on the pound.

And it would probably only persuade our banks to lend more if there was a commitment from the Treasury and the Bank of England that this funding from taxpayers would be available for many years (certainly much more than three years) - which would represent a radical re-making of how capitalism operates.

However, such a substantial increase in the provision of credit by taxpayers has to be a serious option, because the sunny economic uplands won't be visible again until a solution is found to the vicious, inexorable contraction of lending."

Or so says Robert Peston, anyway. I've heard about this kind of thing before, in another context. Or something which sounds very like it, anyway. But surely this is not possible in our bright shiny new globalised world where states aren't supposed to have a monopoly on anything?

(*Jim O'Neill, the chief global economist of Goldman Sachs has called for a state bank that will provide the vital credit that our commercial banks cannot or will not provide )

Weird, Off-Topic Posts (No.2): Too Complicated Even for Quantum Physicists

The Max Planck Institute publishes various journals, including the one pictured. They thought it would be nice to do one on Chinese issues, and commissioned someone to source a nice Chinese poem to put on the cover. They even got it translated and cleared by a local sinologist. Alas, not a very good sinologist.

Language Log explains that it is actually an advert for a strip club:
" With high salaries, we have cordially invited for an extended series of matinées
KK and Jiamei as directors, who will personally lead jade-like girls in the spring of youth,
Beauties from the north who have a distinguished air of elegance and allure,
Young housewives having figures that will turn you on;
Their enchanting and coquettish performance will begin within the next few days."


The Long March to a fully globalised world continues. But not always in the right direction.

Friday, 5 December 2008

SWP: Time to Share the Love. No, Really, I Mean It.


A generation ago I was in the old CPGB - I joined because I was impressed with the magazine Marxism Today. The party I joined was both small and in the throws of a civil war. The argument, as I recall, was partly about the relative importance of class and party, as opposed to reaching out towards wider strata. It got unpleasant and it got dirty, as slow motion divorces often do - and, in the end, both sides lost, though hardly for reasons to do with the argument per se. But it did provide a rather engaging spectator sport for much of the rest of the Left.

I can't imagine what has brought this to mind after all this time - oh wait, yes I can: the SWP is about to do a revival of our old theatrical review. They've dumped their leader and a civil war is threatening. So, obviously, there is a part of me which wants to go straight into the tried and trusted tropes of 'the Judea Popular Front' and '1456th time as farce'. Plus make a few encoded comments about how Peter Taaffe et al must be rubbing their hands in glee at the prospect of seeing their number 1 competitor in a pretty crowded market place go off into internal strife.

But...I'm older now. That kind of cheap shot is too obvious, and really, really...well, just boring. The reality is that Left political groups, in the main, encourage, even produce, a kind of emotionally two dimensional behaviour. The quixotic search for 'the correct line' gives a sort of ideological cover for the most childish and vicious sort of in-group/our-group definitions of reality. In all honesty, I sometimes wonder if this has put more people off socialism than even the collapse of the Berlin Wall...

I disagree with the SWP. I think their ideas contain the seeds of totalitarianism - they are Leninists,after all. If pushed I could produce a long list of political questions on which I think they've fucked up. But I think the original motivation which brought them to Left politics was, for almost all of them, not that different from mine.

So here's a word of advice: have a good, dignified divorce. Argue out your differences and then part in disagreement but some kind of mutual respect. Don't let 'politics' be winner-take-all in an emotional sense. Think of the kids.

Sinn Fein Leader has Container Confiscated at Customs

The BBC says so,

"My spies at Belfast City Airport tell me that when the hirsute Sinn Fein President made his way through security recently a large bottle of fluid was confiscated. Closer inspection revealed it was anti-wrinkle cream. Given that Gerry Adams is such a smooth political operator I can only assume this must have been a gift for someone else."

(H-T the inevitable Slugger - does anything move in those six counties without it appearing within 30 seconds on his site? )

BNP Membership List Blowback

Bugger: but it's only email addresses, thank god. & at first glance the list looks well out of date - too many 'aol.coms' in there for it to be very recent. So it's intended as a 'frightener' - but some people will receive some unpleasant spam I'd guess.

Redwatch, unfortunately, have a few pictures. But I'm not interested in giving them publicity, so I'm not going to supply a link.

Happy Days Unlikely to be Here Again for Some Time

Earlier this week Martin Woolf posted this graphic in a FT article. His argument was that the world has run out of willing private sector borrowers, and that governments will have to take their place - but that this can't go on for ever. There will come a point when no one trusts 'government paper' any more. The countries on the left of the graph - those with huge surpluses - have to expand domestic demand to absorb these surpluses. In doing so they will export demand to the deficit countries - who almost certainly face further, perhaps dramatic, currency depreciation - and pull the global economy away from the abyss and a general move towards protectionism.

In the subsequent discussion various pointy-heads make the point that both Germany and Japan are set up as export focused economies and that shifting this is not going to be easy. Similarly John Ross has already noted that,

"..[if] China’s balance of payments surplus were to fall by half under the impact of pressure on exporters and cheaper imports due to the higher exchange rate, while its savings level remained the same, this would required $175-$200 billion extra a year investment in China’s domestic economy. While there is no financial constraint on this, due to the high savings rate, the task of physically gearing up the economy for such a scale of extra-investment programmes is gigantic."

& this is not even to attempt to think about what 'increasing domestic demand' might mean for the countries holding the largest trade surpluses of all - the oil exporters. For many of them, their entire economy is based on pumping the stuff out of the ground and shipping it overseas: for the Gulf States and Saudi there is a real question as to where they actually have enough people to stimulate purely domestic demand to the level required. Here's a thought: after you have given each of, say, the one million Bahrainis free university education, a rent free mansion and two gold plated limos what else can you do ? After all, 60% of their exports and 30%of the GDP comes from oil - Saudi Arabia has 27 million people, but their oil dependence is even more striking: 90% of exports and 45% of GDP. 'stimulating domestic demand' to this sort of level surely just ain't possible.

Meanwhile, Woolf makes the point that the German surplus more or less keeps the Eurozone afloat and in balance, despite the massive French, Spanish and Italian deficits. So we still have the old 'German horse and French rider' model of how the EU works - but this must surely break down eventually. I'd certainly try to avoid attracting attention at the next EU summit if I were José Luis Rodríguez-Zapatero: it is not immediately clear to me why a German Christian Democrat, even a Keynesian influenced one, should pay for social democratic programmes in Iberia.

So who does that leave most exposed? Well, the States of course. But Empires don't collapse through one shock. They will manage their declined gradually, though not without considerable political and no doubt psychic pain as it becomes apparent that their days as top dog are perhaps numbered.

Oh: and Britain, Turkey and Australia. If Woolf is right we, more than anyone else, have to become poorer, work harder and put more of our savings into productive enterprise, not housing and other consumption goods.

The thing is, if I understand Woolf correctly, this is the happy scenario. If it doesn't happen we have a return to protectionism and the 1930s.

Thursday, 4 December 2008

Three Japanese Snippets

Male bras. (No, I don't understand either).

Blood Groups: the Japanese equivalent of horoscopes or Myers-Briggs tests apparently, and hugely popular as an explanation for all personal issues. Just in case you were wondering, here's some examples of the incisiveness of the personality insights you can gain from looking at things this way.

  • Type A Reserved and prone to worry, sensitive perfectionists such as Britney Spears and Adolf Hitler.
  • Type O Decisive, self-confident, curious, and ideal for sport, including Elvis Presley and the Queen.
  • Type B Cheerful caring, flamboyant free-thinkers such as Jack Nicholson.
  • Type AB High-maintenance, distant, suited to arts, such as Mao Zedong.

& they're about to release a Manga version of Das Kapital. ( H-T Dave)