Crisis? What Crisis?

Crisis. It's such a convenient word, isn't it? Perhaps that's part of the problem. Everyone uses it and everyone means slightly different things by it. So folk on the Right like David Moller can quite easily and correctly say of the current financial crisis that,

" In marked distinction from those wearying arguments of the 1960s, 1970s and 1980s, it would seem that that great knockabout debate on capitalism versus communism has been put to one side."

Capitalism, on this view, isn't in crisis; it's just undergoing one of its necessary periodic convulsions prior to resuming its upswing. It's just the normal business cycle writ a little larger than usual. Some Marxist economists seem to agree, implying that the current problems are a dramatic, but containable, wobble in a new Kondratiev Long Wave Boom.

But I would argue we are facing three very closely interlinked structural problems, each of which, on its own, has the capacity to spiral out of control Long Wave or no Long Wave.

Firstly,we have a systematic failure of the heartland of the global financial system which is now spilling over into a more general economic crisis as unemployment figures rise across the developed world and trade volumes plummet. A response will come from the people hurt by this. Given that the Forward March of Labour has long Halted, this might amount to no more than a spate of possibly dramatic but politically superficial riots. A few governments might fall, as in Iceland, but that doesn't necessarily mean anything meaningful will have changed. Well nothing except one thing: the idea that we live in the best of all possible worlds ...the search for alternatives, however long and arduous the process, will be given new impetus.

Secondly, however, the financial crisis is intimately tied to a shift in geo-political power: put plainly North America is getting relatively poorer and the BRIC countries, especially China, and the oil producers are getting relatively and absolutely richer. People like John Ross say it is the imbalance in savings/investment and consumption between these two blocs that is at the heart of the current crisis. Indeed, America has been living high off the hog on China's savings. There's a stalemate here at the moment; China owns so much of America it doesn't want the dollar to fail, and pulling its money out - even if there was another safer currency to put it into - would automatically start that process. But this 'balance of financial terror' might not last for ever. In fact I'd be really surprised if it did. After the current credit crunch is over, China isn't going to be pouring its money back into Wall St again with such gay abandon. It's going to hedge, diversify - and perhaps even focus on domestic development, not foreign investment. & at the back of my mind is the unpleasant thought that the ownership of Top Dog Nation status rarely changes hands without some kind of armed conflict, even if that all seems a million miles away today.

Thirdly, the environmental crisis rumbles on. I am not one of those who believe that capitalism is solely responsible for this - I remember all those wasted cotton fields in Soviet Central Asia - but, to put it as mildly as possible, we're talking about those famous market signals of neo-liberalism taking a bloody long time to price in the destruction of our habitat, aren't we? What was that someone mumbled at the back about 'the Tragedy of the Commons'? This one isn't going away and is, of course, intimately connected to the whole question of the economic rise of the BRIC countries as well as the wasteful habits of the West. It remains to be seen whether even the forceful upward swing of a Kondratiev Long Wave - assuming that they exist, which is disputed - can counteract environmental disaster.

None of this means capitalism is going to collapse. It doesn't even necessarily mean it's going to be widely questioned, at least in the short run. It does mean however, there is no feasible return to 'glad confident morning' for the snake oil salesmen of the flat world of globalisation.

What capitalism now has, even though some are afraid to admit it, is a crisis of confidence in its own powers. & it's right to have such doubts.

Protectionism ? Globalisation's Doing Just Fine Without It

Mason reminds us we don't need to just worry about the bogeyman of protectionism (though it is a real bogeyman).

"The world economy incidentally has a head start on the protectionists: global exports have slumped - by an average 40% annualised rate in the developed world. This is not caused by "protectionism": it is caused by the fragility of globalisation, which I interpret not as a "threat to globalisation" but a flaw within it. Multi-country supply chains and the end of vertical integration, both features of the last 20 years, have caused the export-supply economy to react like a tortoise in fear. Each economy has withdrawn to its shell once credit began to dry up."

Education: End the Religous Divide

Accord: it's a Good Thing.

It's simply a campaign aiming to ensure that faith schools cannot discriminate against non members of that faith when considering admissions or employment applications.

This is my idea of a secular society. I don't care if people of faith manage schools as long as they don't prevent my children going to them, stop my friends being employed in them or teach the kids unbalanced stuff about religion, science or personal relationships. & I'm happy to say lots of religious people agree, as well as atheists and agnostics.

Now they need your help. In the coming weeks the government is bringing forward its Equality Bill, many of whose clauses directly affect the issue of inclusivity and exclusivity in education. Accord's aim is to make sure that it removes the exemptions that allow faith schools to discriminate in their admissions, curriculum and employment practices.

They need as many supporters as they can get. Join their list of supporters by registering here for regular email updates and campaign news. & do post it on your own blog if you have one.

No (Mock) FT, No Comment

Ad from the mock Financial Times website, available here in downloadable pdf. Via

Disrupting the City?

Two snippets from the Today programme this morning brought the craziness of the current impasse into sharp focus for me.

First, we had the 'anarchists-are-coming-to-get-us-better-dress-down-and-hide-under-bushes' story about City fears of violence next Wednesday on the G20 protest. Rick exhibits a healthy dose of skepticism about whether this will prove anything more than an opportunity for the corporate security staff and police to play soldiers. No doubt some folk in black ski masks may smash a few windows for the cameras though....and the cameras will then depart allowing the police to, ahem, robustly restore order. Cue shocked Daily Mail headlines. (Not about police brutality)

Secondly, we heard that Barclay's shares have soared on news that it won't have to seek financial aid from government. Cue 'green shoots of recovery' headlines in the press no doubt.

To fully understand the relationship here, I advise a careful reading of Willem Buiter's blisteringly angry article on moral hazard which touches on the Barclay's tax memo debacle amongst other issues. You may particularly wish to note his view that,

"Financial nonfeasance, misfeasance and malfeasance thrive on opaqueness, complexity and lack of transparency.....banks ... may be reluctant to accept the state as a major shareholder [because of] the more intense scrutiny of what the bank has on its balance sheet that this is likely to imply."

He goes further:

"What we have seen and continue to see in much of the border-crossing financial sector, however, is a ... literal form of moral hazard: a lack of morals in some key participants in the financial system dance causing major hazards to the financial well-being of millions of powerless victims. Corrupted morality putting at risk genuine, wealth-creating financial intermediation, innovation and risk-taking. This is moral hazard strong..... It makes me sick to see an entire branch of human endeavour brought into disrepute by the actions of a relatively small (but still far too large) number of masters of the universe. There will have to be a reckoning, and not just in the court of history."

Unlike Naomi Klein et al I have nothing against Starbucks per se. I've never really understood why they always get their windows stove in. I don't own a dog on a string and I've no idea how to make a petrol bomb. On the four or five occasions I've ever been in the middle of a demo which turned into a riot I've always beaten a hasty and cowardly retreat.

But I think I know who the real enemy is. & it's not the Class War Buffoons.

Steel City, Sure - But Still Sensitive

I learn from the FT that Britain - or at least Companies House - has a department of sensitive words. Crooked Timber has some fun suggesting potential work for a putative American equivalent. Certain words are seen as “sensitive” because they are thought to convey an impression of authority or trustworthiness and you need special permission to use them in a company name.

The indicative list of such words is more or less understandable - with one glaring exception:

"Sheffield - if you wish to use a name that includes the word 'Sheffield', we will need to establish details of the company's location and its business activities. We will also consult the Company of Cutlers in Hallamshire."

Yorkshire folk - so sensitive they need protective legislation. Who would have guessed ?

Public Sector Blues & New Labour as a Personal Development Cult

It's almost always a mistake to believe that people who say stupid things are stupid. Generally they're not. Generally they're just incapable of seeing why they're so wrong because to do so would involve examining some deeply held, perhaps even unconsciously held, set of assumptions.

I take as my case in point David Blunkett who today tackles the phenomenon of opinion polls shows public sector workers preferring to vote Tory. How can this be he asks, when Labour have poured so many millions into the public sector? Briefly he considers whether this can be put down to,

".. the uncertainty arising out of radical reform of public services; a feeling of insecurity about whether the workforce is valued; and the general instability that comes with rapid change."

But, no, this doesn't make sense to the sage of Sheffield: privatisation worries might be ten fold more pertinent under the Tories. So Blunkett thinks it's because they're they're simple, frightened folk who don't really understand what is going on:

"The pressure to improve services and to overcome outdated practices has led to workers feeling that the devil they don't know is better than the devil they do. ....The simple fact is that they are expressing an instinctive opposition to those who are currently in charge - the present "establishment". It's not possible to believe that rational men and women would want to vote away their jobs, to undermine the public services to which they have devoted their lives. It has, therefore, to be much more about lashing out, expressing a feeling of insecurity and of fear."

Insecurity? Fear?I shall resist the temptation to refer Mr.Blunkett to the title of a book expressing the traditional Labour creed called, ahem, in Place of Fear. Because I don't believe that is the real reason why Labour are losing the loyalty of the public sector.

Quite apart from the fact many public sector workers can see that much of the so called 'massive' investment in public services has flowed straight out again in the form of exploitative PFI contracts, I think the real reason is that the Blairite 'modernisation' of public service has done the exact opposite of what it set out to do. In theory, it is all about dismantling unhelpful bureaucracy, focusing on the service user and breaking from 'provider capture'. In practice it has been experienced as the crushing of a strong, if inchoate, older ethos of public service, the imposition of huge new bureaucracies (especially around procurement and 'joint working') to achieve more and more marketisation of public services and a top down target driven regime. In short it has been about not trusting the public sector.

Thanks to the Fatman, I see some in academia are comparing this to Stalinism. & Mark Harrison, a genuine expert on Soviet economics, writes extremely entertainingly on this theme.

But for me it's the wrong analogy. New Labour aren't so much Stalinist as like one of those creepy Californian personal development cults: when they face criticism from public sector employees one can almost hear them muttering 'get with the programme' under their breathe. Change on the preset lines offered by the 'personal development' is self evidently good and resistance to change is obviously a sign of a lack of responsibility for one's own failings. The idea that the preset objectives of the course itself might be open for discussion is simply unthinkable. To raise such a possibility is threatening - after all, if these objectives are questionable why have so many people paid so much money to sit in a room doing the course in the first place?

I think what the opinion polls are saying is that the public sector workforce are silently slipping from the seminar room without waiting for the motivational personal development speaker to finish. Cult devotees like Blunkett may pursue them down the corridor haranguing them to come back and 'have the courage to change' but there is a grim determination in the stride of the staff as they head away from that softly intimidating atmosphere.

Where's My Pitchfork ?

Tom over at Labour and Capital doggedly works his way through the smoke and mirrors provided by the financial sector to justify its own behaviour. His patient unravelling of their arguments about executive pay and 'agency' theory are a model of intellectual engagement and sheer hard graft. Despite once describing himself as a 'weedy social democrat' in my comments box, but I think what he does is more useful than almost all the stirring denunciations of the evil bankers and the rule of capital from the Marxist blogosphere.

Well , mainly I do. But every so often one come across something like this on Bloomberg's about Hedge Fund pay levels:

"The industry’s top earners last year were James Simons of Renaissance Technologies Corp., who took home $2.5 billion; John Paulson of Paulson & Co., $2 billion; John Arnold of Centaurus Energy LP, $1.5 billion, and George Soros of Soros Fund Management LLC, $1.1 billion, according to a survey published in the April issue of Institutional Investor’s Alpha magazine.

Average pay at hedge funds was $794,000 in 2008, down from $940,000 a year earlier, Alpha magazine reported. ....Chief executive officers earned an average of $2 million last year, while chief investment officers made $1.4 million, according to Alpha’s survey. Senior portfolio managers took home $1.1 million and senior traders were paid $790,000."

This is a quote from an article about hedge fund pay falling by 25%.

At times like this Tom's social democratic patience is the furthest thing from my mind. I want a pitchfork, a burning brand and the rest of the peasantry to join me in in a Jacquerie. I really mean it. These levels of remuneration are beyond comprehension.

But even breaking a few windows seems a horrible crime of unpardonable magnitude according to the Press.

..in an entirely routine way...

Yesterday, in an entirely routine way, a frail 87 year old woman had two cancerous growths removed from her head in a day surgery hospital on the south coast of England. A skin graft was taken from her leg to cover the areas where the growths were removed. She was scared stiff, despite the presence of her son. The NHS staff concerned, from the consultant down to the receptionist, were kindness and professionalism personified.

& this is what is at risk when people talk of cuts after the next election. The civilised bit of our society. The bit which got my Mum treated within a week of diagnosis.

1 min 56 seconds for all non-economists

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

I nicked this from Alice, but it seems to be a Onion production.

I Think too Small Sometimes

Willem Buiter examines why the European Central Bank can't easily do Quantitative Easing, the anti-deflationary move de jour. It's a hugely technical article that I'm not going to pretend I fully understood (Any of my fellow non bankers care to explain a seigniorage Laffer curve without consulting Google? Thought not). But the idea at the heart of it seems simple enough to me: a central bank can only properly function as such if it has the backing of a tax raising state.

In normal times, a lot of effort is put into making this backing as ambiguous as possible to reassure markets that they are free from direct political control - hence the so called independence of the Bank of England. But the BoE is 100% owned by HM Treasury. The ECB is owned by 27 national central banks, each with their own constitution and particular relationship to their home state.

Buiter indicates that the markets are pricing in the possibility of default by some Eurozone national governments - particularly Ireland, Greece, Portugal, Italy and Spain (in that order of risk). So,

".... it is reasonable for the EBC/Eurosystem to insist on a joint and several guarantee by all 16 Eurozone governments for any Eurozone government debt acquired by the ECB...... Such a joint and several guarantee does not exist at the moment - a reflection of the absence of a fiscal Europe and a fiscal Eurozone...The ECB has no fiscal back-up. There is no guarantee, insurance or indemnity for any private credit risk it assumes. "

So it can't easily do Quantitative Easing. Which would seem to suggest either clever folk like Buiter convince them to sort out some 'held-together-with-string' temporary fix (which he doesn't think will work given the Fortis experience), something big has got to change in the democratic architecture of Europe or, simply, deflation beckons across the Eurozone.

Back in December I wrote,

"That hoary old Marxist chestnut of a question, the relative autonomy of the State, may rear its head again. A thousand undergraduate essays ...... 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."

But I was talking about the UK, not the EU. I think too small sometimes.

Almost Over

First Jacqui Smith and now McNulty remind me of a completely unscientific theory I hold.

When political parties decompose, something is revealed about the nature of their fundamental sociological appeal. Most politicians of all parties are basically honest – but each party attracts a penumbra of character types to whom the particular party's presentation is fundamentally in tune with their personal psychic nature and self conceived sociological position.

So when the Tories were decomposing in the nineties we had Hamilton and Aitken et al- basically grubby men taking money in brown envelopes from the rich and powerful. This is 'Rotary Club' level corruption writ large. The nod, the wink, the funny handshake – 'it's only business' after all. The political culture set in place by Alderman Roberts' daughter trailed a small town shopkeeper brand of corruption.

Others will judge whether Smith or McNulty have broken any rules. But their offences, if that is what they are, are the offences of the middle manager: the bloated expenses claim, the 'second jacket on the back of the office chair' to convince the higher-ups that work is being down. The cultural underbelly of a successful PowerPoint presentation. &, of course, the game playing indulged by all in large organisations driven by bureaucratic rules and targets.

Once reduced to such stereotypes no party can sustain itself in office. The base is too narrow. Hegemony has collapsed in the eyes of the vast mass of apolitical people. I think Labour is teetering on the brink of that now.

Ross McKibbin is right:

"Who would care if the Labour Party, politically and morally decrepit as it is, lost the next election? Would anyone lose a night's sleep knowing that the present government was no longer in charge of our futures?"

Polanyi Quotes

Thirty years after I ignored the book on an undergraduate reading list, I'm tackling Karl Polanyi's 'The Great Transformation - the Political and Economic Origins of Our Time'. For a book originally published in 1944 it's holding up quite well.

I especially like his insistence that 'labor, land and money' are fictitious commodities.

"...labor, land and money are obviously not commodities; the postulate that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them...Labor is only another name for a human activity which goes with life itself...nor can that activity be detached from the rest of life... land is only another name for nature, which is not produced by man; actual money, finally, is merely a token of purchasing power which, as a rule, is not produced at all, but comes into being through the mechanism of banking or state finance."

So what would happen if the market mechanism was the sole director of these fictitious commodities? Well, 'the demolition of society':

" In disposing of a man's labor power the system would...dispose of the physical, psychological and moral entity 'man' attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime and starvation. Nature would be reduced to its elements, neighbourhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally the market administration of purchasing power would periodically liquidate business enterprises, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society."

Suddenly I'm nostalgic for social democrats who meant it.

Duncan: I'm Locked Out...

Duncan has an interesting post about the desirability of falling house prices. He's right, but I wouldn't want to argue the point on the doorstep if I was standing for election. But we do need to get more of the nation's wealth into productive enterprise and have less locked up in housing.

I posted a comment referring to the government's mortgage rescue scheme and he asked for more details. When I tried to post them I was denied entry to his comments for reasons I don't understand. So, just in case he comes by, the link to the basic details of the scheme are here, and the trade paper lays out its flaws here and here.

Barclays Memos Again

Sunny Hundal at Liberal Conspiracy is trying to assemble a list of as many blogs as possible which have published links to the wikileaks site where the legally restricted Barclays tax avoidance memos can be found. (I did so back at the beginning of the week - this post contains the link: it's already the single most visited post I've ever made).

Sunny hopes to be able to demonstrate that “The quality of confidentiality is lost if the information is available from other public sources.” This would undermine Barclays case against the Guardian.

So if you have a blog, do post and do let Sunny know. Remember, linking to a site is not the same as downloading. N.B. newsjiffy says if you link from as blog hosted in Australia you might be liable for a whacking fine.

You can also Twitter using Twitter tag #barclaysmemo

Beau Bo D'Or contributed the image - do feel free to download it (to save bandwidth) and use on any post you might make.

A Bit Late In the Day

I know everyone else played with this slogan generator weeks ago, but it's taken me all this time to think of a joke...

Hold the Front Page: Leftwing Blogger Does Some Basic Thinking..

I've used this blog to try to explore what it might mean to be a 'socialist' in these strange times. Its' title is an obscure reference to the fact I stopped party-political - though not community - activity almost 20 years ago, when the party of which I was a member, the CPGB, collapsed. So I felt like Captain Oates leaving the tent...but now, having somehow 'returned to the tent' as it were, I have found myself less than impressed by the Left of today, as I said here.

In particular I've been less than impressed by the Left's response to the current economic crisis and by the seeming poverty and purely rhetorical nature of their economic policies. So it's good to see Boffy's Blog coming up with a lengthy, detailed and austerely defended 4 part analysis of co-operatives. The key contemporary issues are covered in part 4 - but there are links to the three previous pieces on the subject which constitute a historical account of various Marxist views on the subject, going right back to Marx and Engels themselves.

He also provides a link to an Italian paper setting out a 'workable transition to socialism to be achieved through a system of producer cooperatives', from a partially Gramscian point of view.

I'm not saying I agree with any of this - I just don't know, I haven't had time to digest it. I suspect I'm much more prepared than Boffy is to think positively about consumer, as opposed to worker, controlled co-ops, since I no longer consider myself a Marxist (or nothing more than a 'ex-ish' Marxist anyway). But, my, I'm so pleased to see debate of this nature beginning....

Housing Again

Every so often I post about housing association finance - which normally ensures even less readers than usual*. But, sod it, it's my blog and I'm going to take this opportunity to claim a 'I-told-you-so' moment.

Moody's, the Financial Ratings Agency, have released a report on the creditworthiness of the sector and especially on the five big associations they rate: Affinity Sutton Group, Circle Anglia, Sanctuary, Shaftsbury and Places for People. These are very big organisations - Places for People alone owns or manages around 60,000 homes.

The report helpfully explains how Moody's ratings work:

"..ratings are composed of two principal inputs: the association’s intrinsic credit profile (Baseline Credit Assessment or “BCA”); and the likelihood of extraordinary support from the central government in case of need."

& what do you find when you look at appendix 3? A list showing that their Baseline Credit Assessments are relatively low, but the likelihood of extraordinary support from government is 'high', thus making them very creditworthy indeed.

So the big guys are seen as very creditworthy because the government backs them. (Which does seem to rather undermine associations' fight not be considered as public bodies, but I digress...)

Nonetheless, one in five associations - not the ones mentioned above - are seen as having shaky finances. This is very largely because they have business models based on sales, not just rental income, and the sales have dried up. Moody's notes the recently introduced split of funding and regulatory functions and says the two new bodies - the Homes and Community Agency and the Tenants Services Authority - need to get their act together because,

" ...the institutional capacities to assist weaker associations now require more ‘joined-up’ policy and actions, which may be tested under what may be the worst recession in decades."

18% of the country live in housing association owned properties. Just thought you'd like to know that.

*Did you see what I did there? I used the word 'readers' in the plural without apparent irony...

A Shrinking City?

So the experts who translate these things for us mere mortals are giving Lord Turner's report on financial regulation a decidedly muted reception. Indeed, the idea that there can even be apolitical regulation is coming in for a bit of a bashing more generally. As far as I can make out, Turner's report is an attempt to put Humpty-Dumpty together again, to restore the City of London to a position where it can feasibly reclaim its role as a major - and hugely profitable - world financial centre.

But never mind whether Lord Turner's proposals will help achieve this - is it actually even a plausible long term aim?

One aspect of the current situation is that it is a crisis of international economic power relations: America - and the West more generally - have been living off the surpluses generated by the BRIC countries and oil producers. World trading arrangements and currency dealings have been calibrated to facilitate this. (If I was still a young hot head I'd start muttering about financial imperialism at this point in the argument, but I'll spare you the purple prose). These have broken down to an extent, and the BRIC countries, most especially China, need to be given a greater voice in how the system works. This must imply that, if and when a more stable system is successfully put together again (that might take some time), these countries will get more out of the new status quo than they got out of what went before. So, in relative terms at least, The US and its epigones - like the UK, above all - will get less.

In the light of this, what are we to make of Robert Peston's warning not to throw out the baby with the bathwater? He says,

"We can perhaps all agree that the UK became too dependent on growth generated from the City.During the past few years, when 10% of economic output, a third of growth and many tens of billions in tax revenues were generated by financial services, we did have far too many of our eggs in one basket.Many would say our dependence on the City was the culmination of decades of failure to broaden the base of our economy: an indictment of the industrial policies of successive governments.But to say that the City became relatively too big and important does not mean we should shrink it to nothing.That would be a fast route, almost certainly, to penury."

At one level this is true: over-night change in our basic national economic structure is simply not plausibly. But we can't go back to where we were before. This isn't simply an emotional spasm of leftism in response to the amoral and anti-social behaviour of the financial world (though I'm with Richard on that one).

No: its about a hard-headed sense of what's happening in the world. If the financial system via which savings transfers from East to West is broken, and the East wants more power in any revised system, then our comparative advantage as a nation in these issues will begin to seep away. Not instantly, of course - and perhaps not even without a few false dawns of temporary upswings along the way. But the probable line of development is clear.

So quite apart from the important and necessary debate on what else this country should do, we also need to be clear about what we want to do with the City - a smaller, more humble City sure, but still a financial centre.

Here's a idea: let's have a system of finance with a three fold purpose, enshrined in statute:

• To direct capital to productive, innovative, employment creating enterprises;
• To ensure a adequate return on the pension funds of millions of people
• To provide mortgages at a safe and sensible level.

& a system of regulation which made judgments on these grounds and these grounds alone.

Memo to Barclays Bank

Hope you don't mind me sending this over by carrier pigeon. I suspect you've still got that corporate pigeon loft, haven't you? & do forgive me if any of my writing is smudged - I've tried to use a quill pen out of respect for your general approach to life but one simply can't get the blotting paper these days...

Anyway, let me stop rambling and get right to the point old chaps. I see you've taken an injunction out against the Guardian to get them to take down those internal memos of yours about tax avoidance from their websitethingymajig. (Jolly bad show one of you own folks giving them to Vince Cable, what?).

Well, I'm really sorry to be the one to have to mention this but I'm afraid - and I know this might shock you- the Guardian aren't the only people to have a website. Amazing, I know. There's this really bolshy one called Wikileaks. I'm afraid your documents are there. & I'm afraid in Sweden, US, Latvia, Slovakia, UK, Finland, Netherlands, Poland & Tonga as well.

& that blighter Richard Murphy has downloaded them. He says the fact they're on Wikileaks puts them into the public domain. I imagine you might want to check that point with your lawyer chappies - and perhaps you might want to quibble a bit about their legal bill for getting the injunction in the first place? Just a thought.

Update: Sunny over at Liberal Conspiracy is collecting blogs which link to the wikileaks site, in the hope this might void the legal basis of Barclay's argument about confidentiality. So if you have a blog, do post and do let him know. Remember, linking to a site is not the same as downloading. And newsjiffy says if you link from as blog hosted in Australia you might be liable for a whacking fine.

42,698,030th

I'm the 42,698,030 richest person on earth! Discover how rich you are! >>

Via Stumbling

(But I don't quite believe it- I suspect it hasn't taken the recent fall in the value of the pound into account. I don't feel as if I'm any higher than the top 50,000,000th...)

I've Got That Sinking Feeling

Say what you like about John Ross - he does give good graph...




Advice for the shortsighted: blow up that second graph and check the dates the black line represents.

New Blog

Miners, Winstanley, Hovis and a juvenile blog title. Brilliant. What more do you need ? Off you go now and boost his stats...

Stories From My Youth (no 3291): Goodbye Gasometers

When I was approaching my early teens the country went through a massive infrastructural change: thousands of gasometers came down and all the gas pipes were changed to take North Sea gas which had some mysteriously different quality to the previously used coal gas.

Can't we have a similar programme written into the budget which goes for universal house insulation? Surely it is the perfect Keynesian counter-cyclical measure:

• It is a one-off capital project;
• It would be labour intensive at time of rising unemployment;
• It would spread employment opportunities to where people actually live, not require them to move; and
• It would leave the country with a vital strategic heritage of reduced Co2 omissions.

What's not to like? (Apart from the cost of course - but, hey, as we've seen with the banks, what's a few billion between friends?)

The Recession Moves At Different Speeds for Different People

The markets are going up. Is this the first sign of our being in a short, sharp 'V' shaped recession, or is it just a 'sucker's rally' as Larry Elliot would have it?

I haven't got a clue. Or at least I don't pretend to be able to call the markets. But I do accept that the recession will end at some point: this , I agree, is not the final crisis of capitalism. Much, I suspect, will depend on the the ability of the G20 to refashion a new set of global trading relationships.(I'm not holding my breathe, but you never know...)

But even if that works it is important to remember that the recession moves at different speeds for different people. Re-stabilised markets are not the same thing as a re-stabilised economy and society. The unlikely coupling of Gary Younge and Max Hastings both make that point in their different ways in the Guardian this morning. Younge looks forward to a resurgence of the Left as the magic of invincibility falls away from the financial Masters of the Universe. Hastings quietly notes the similarity of the current period to that of the phoney war of 1939 and early 1940. As yet, the recession has only hit a minority. Whoever is in power after the next election will govern at a time when it hits the majority. This is not necessarily a happy prospect for the Tories. Elliot puts this into perspective:

"Normally, Alistair Darling would be preparing a budget next month of such austerity that it would put Sir Stafford Cripps to shame. But the chancellor is considering an expansionary package that will lead to a further increase in the budget deficit. On some estimates, the Treasury may need to borrow £180bn next year to balance the books – 12% of GDP and unprecedented in peacetime (and probably wartime, for that matter)."

Cuts are coming. Big time. 2010: the year of living dangerously.

But I still remain to be convinced our barely functioning labour movement - well, barely functioning by the standards of the 1970s, anyway - is going to be the only or even main vehicle via which resistance raises its head. David Harvey, the doyen of Marxist theorists of neo-liberalism, seems to be saying something similar here. But his alternative, or supplementary, vectors of resistance seem cloudy and ill-defined.

As are mine, I must admit.

High Finance Theory Comes Round To Common Sense

One of the few points of agreement between a basic leftwing view of the world and the general opinion of the famous man or woman on the Clapham omnibus is that , in essence, the Stock Market is little more than gambling. This opinion is routinely patronised as not understanding the essence of high finance in almost all public discussions. We have been endlessly assured that the Stock Market allocates capital to productive enterprises in an efficient way.

I only mention this embarrassing feature of 'leftwing common sense' because, it appears, it is gaining some support in unexpected places. Willem Buiter of the LSE and FT - and formerly of the Monetary Policy Committee - wants the derivative markets to operate on an insurance basis rather than a gambling one. Only things which can be owned in some real sense - rather than just bet against - can be insured. This would massively downscale such trades in his view:

"It is certainly likely that notional outstanding stocks of derivatives and the trading volumes would fall to a quarter or less of their 2007 levels if derivatives could be used only to buy insurance, not to place bets."

But this is necessary because, actually, leaving things as they are is a recipe for proving those simple minded leftwingers - and the folk on that Clapham bus - right:

"The lotteries or bets that are the essence of contingent claims/derivatives markets could increase allocative efficiency if they permitted the given, exogenous risk in the economy to be born by those most able to bear it. Instead that risk has ended up with those most willing but not, judging by results, most able to bear it. .... It creates more opportunities for going bankrupt. Defaults and fear of defaults ..... are a source of macro-endogenous risk, even if no individual trader has market power or attempts to manipulate markets. Bets taken in the CDS markets..... or through spread betting cause massive redistributions of wealth and income that can destroy real resources, influence the prices of ‘outside’ assets and bring down otherwise viable economic entities. "

Luxembourg? What's That About Then?

The UK's holdings of US Treasury paper goes down $27bn in a year - surely a sign we've needed to pull out some savings to cover financial gaps since the crisis began?

& Luxembourg's holdings go up by $28bn. What's that about?

Ah, could it be that's what it is about. Luxembourg was a tax haven and the 'hot money' has fled to the alleged safety of the dollar?

From the Guardian today.

Wall St Versus Silicon Valley: The Choice Obama Will Struggle To Avoid

Fascinating article in the latest NLR from Mike Davis, of City of Quartz fame. The bulk of it is a detailed account of the electoral geography and demographics of Obama's victory, which tells us the precise detail of what I suspect most of us vaguely knew: he won the suburbs, he won the young and, crucially, he won the Hispanic vote which is changing the nation.

Towards the end of the article, however, he turns to the economic sociology of Obama's victory. The American labor movement, despite having, in John Edwards, 'a almost chemically pure' candidate who spoke in authentic social democratic tones, lost their way and remained ineffectual and divided: Obama can ignore them seems the implication.

But Obama does represent sociological change nonetheless: his is the 'Silicon Presidency'. Google CEO Eric Schmidt was at his side during the campaign and inside the transition team. The executives and employees of Cisco, Apple, Oracle, Hewlett-Packard, Yahoo and Ebay overwhelming supported him rather than McCain, including financially.

" A fundamental power-shift seems to be taking place in the business infrastructure of Washington, with ‘New Economy’ corporations rapidly gaining clout through Obama and the Democrats while Old Economy leviathans like General Motors grapple with destitution and welfare, and energy giants temporarily hide in caves.

..... Schmidt and his wired peers, together with the ever-more-powerful congressional delegation from California, become the principal stakeholders in Obama’s promise to launch an Apollo programme for renewable energy and new technology."

Why this alignment?

"Pessimists worry that the Valley is locked into the first stages of the Detroit product-cycle syndrome: the heroic age of Henry Ford followed by tailfins and corporate sclerosis. (Thus Web 2.0 has been criticized as mere product development rather than technological innovation.) The Obama Presidency, from this perspective, can ride to the rescue with Kennedy-scale commitments to basic science as well as stable subsidies to markets like renewable energy, smart utilities and universal broadband that are otherwise whipsawed by volatile energy prices or abdicated by corporations."

The tech industries, implies Davies, are seen as the last 'capitalists with clean hands', given the crisis.

"...the future of every corporation or sector depends upon wise investments to ‘control the state’..... But of all the new Democratic investors, only the tech industries, with their captive universities and vast internet fandoms, still retain enough public legitimacy (domestic and international).... and internal self-confidence hypothetically to act as a constructive hegemonic bloc rather than as a mob of desperate lobbyists."

Yet Obama has called back from the intellectual grave the centrist economists of the Clinton era to serve in his administration. They will struggle, vainly according to Davies, to restore the status quo ante where the financial system generated 40% of all corporate profit in the US. But waiting in the wings is a different fraction of big capital, with a radically different agenda. The contradictions between these two approaches - Davis speculates a weakened dollar may become 'the dog collar' on any Green New Deal - may yet lead to 'protracted stagnation, not timely tech-led recovery'.

Things to Do in Musical Theatre Without Lloyd Webber

About a month ago I mentioned the forthcoming musical of the 1916 Easter Rising.

But Blood and Treasure goes one better: he brings news of Das Kapital: the Musical.

I'm particularly looking forward to the treatment of the evidence from the Blue Books around the struggle for the 8 hour day. I can see it going well with a thumping techno beat.

& The Tendency of the Rate of Profit to Decline just begs to be set to a big , soulful torch ballad. It could be the 'Don't Cry for Me Argentina' of the 21st Century...

Of General & Special Cases

John Bellamy Foster talks the history of 20th Century economic thought, and explains how today's Keynesians have implicitly accepted that they're making a special case, not a general one. But their master thought it was the other way round:

"In referring to his analysis as “the general theory” Keynes distinguished this from orthodox neoclassical theory, which he referred to as a “special case,” the characteristics of which “happen not to be those of the economic society in which we actually live,” and which therefore led to results which were “misleading and disastrous....

Today figures like Krugman are seen as partly challenging these conclusions, and as representing the return of Keynesian economics. But this is not a return to Keynes in the sense of his general theoretical critique of capitalism’s fundamental flaws. Rather it is a return to Keynesianism as a “special case” of “depression economics,” where monetary policy is ineffective and expansive fiscal policy needs to be given priority. The ascendancy of neoclassical economics, which bastardized and subordinated Keynes’s mildly critical view of capitalism, is not itself challenged."