A very British arrangement

Pope Benedict says " In our own day, the State finds itself having to address the limitations to its sovereignty imposed by the new context of international trade and finance, which is characterized by increasing mobility both of financial capital and means of production, material and immaterial. This new context has altered the political power of States.

Today, as we take to heart the lessons of the current economic crisis, which sees the State's public authorities directly involved in correcting errors and malfunctions, it seems more realistic to re-evaluate their role and their powers, which need to be prudently reviewed and remodelled so as to enable them, perhaps through new forms of engagement, to address the challenges of today's world. Once the role of public authorities has been more clearly defined, one could foresee an increase in the new forms of political participation, nationally and internationally, that have come about through the activity of organizations operating in civil society; in this way it is to be hoped that the citizens' interest and participation in the res publica will become more deeply rooted."

We are all getting a little frustrated, arent we?

If the banks want to drive themselves to the brink of collapse, then let them do so and let them die. There has to be a better way...

All we need is a simple measure of "too big to fail", or should I say, "too big to pay its way". The following three measures to be applied to all large organisations, not just banks:

1) Total amount of company debt (to include loans & all off-balance sheet shenanigans)
2) Total number of employees (to include contractors and out-sourced suppliers)
3) Total tax revenues from profits and wages (direct / indirect etc.)

The profit numbers have been massaged, and so the following ratios would be more reliable:
- debt per employee, and
- tax revenue generation to debt

These would show which companies are pushing the debt mountain too high, and so can topple share prices, or worst still the economy.

So what you are saying is that there is not going to be ANY real regulation to stop the mess we're in now happening again. All the fine words when our money was being doled out to the banks are meaningless once the money is in their coffers. All that will come oput of this is a permanemt underwriting of bank lending by the taxpayer.

When you think the Government can't get any worse or more incompetent something like this happens.

You couldn't make it up

what a legacy gordon brown will be leaving this country: hundreds of billions of pounds worth of debt for our children and their children to pay off without the guarantee that they'll put down appropriate legislation to protect us from this happening again....

makes me sick.

On a more earthly note, could this damp squibb have anything to do with the Financial Services Global Competitiveness Group co chaired by Alistair and Win Bischoff. Another quaint British trait - you know, when our institutions in the City are embarrassed by a huge mess-up form a committee of the great and the good of that institution to advise the Government what to do to put it right.

well put paul. i notice you wisely decline to omit any mention of the the magic circle of finance. it might be a good bit of public service to trace who is related [by blood or socially] to whom in the financial world. You'll find it a tight little group.

new labour is based on the false belief the markets are the best organiser of national structures [privatisations, pfi, no regulation etc]. This is why they say 'regulation doesn't work' [which is pure chicago school dogma]. Do they don't say regulation doesn't work when it comes to the highway code, car design, fireworks, trading standards, air traffic control or medicines etc?

the second false belief of new labour/whitehall is the city is an asset to the uk. when clearly it is a liability with the public defacto taking unlimited risk.

so they have spin to perpetuate the darkness where people in the shadows can continue like before.

it is not surprising a govt that oversaw the credit crunch and commodity bubble is intellectually unable to reform it. It is beyond their competence. They were clearly psychologically defeated before they started.

these are also the same people committing the uk to decades of debt without an electoral mandate to do it. Tony was a foreign policy disaster and gordon turns out to be a financial disaster. So much for their egos.

what we are watching is the power of the financial oligarchy to protect their interests and continue the automatic wealth transfer from the many to the few. An ancient power. Which is why, traditionally, even the head of state has to ask 'permission' to enter the city.

Why isn't australia on its knees? They still have rates at 3%. What did they do right that the uk has not?

there are things that can be done to sand box the public from the greed of a few.

It is perhaps instructive to compare today's 'long goodbye' with 'the very rushed hello' of 20 May 1997 when Labour's statement on The Bank
of England and Financial Stability was dumped on Ken Clark and Speaker
Betty Boothroyd - a few minutes before it was delivered to The Commons:

https://www.publications.parliament.uk/pa/cm199798/cmhansrd/vo970520/debtext/70520-05.htm

This was 'back of the fag packet' 'policymaking on the hoof' at its very worst - as Ken Clark rightly complained at the time. It was all news too to Howard Davies who was pulled out of a conference in Argentina to head up the FSA as part of a political ploy to break up 'the Manchester Mafia' (of Eddie George and Davies at The Bank of England and Terry
Burns at The Treasury) by Gordon Brown and his then acolyte Ed Balls.

That this should have ended in tears and virtual collapse of the UK
banking system should never, ever be forgotten ........ But looking
back at Brown's 1997 statement it's interesting to note very similar
warm words to those of Darling's statement this afternoon. Darling's
role in the 1997 debacle in this area after Blair hit the ceiling is
set out by Andrew Rawnsley in 'Servants of The People' and Geoffrey
Robinson's account. But on 20 May 1997 Brown told The House that the
'stability of the financial system as a whole' would remain the role
of The Bank of England and the FSA as it became known would have the
lead role on 'prudential supervision' a role it then comprehensively
screws up ....... So why now is macroprudential supervision going to
the plonkers at the FSA? There is no logic whatsoever to this move -
as George Osborne is I gather pointing out (echoing Kenneth Clark MP).

A terrible sense of deja vu should now be descending on the nation??

didn't the people at the fsa admit they were terrified by the treasury into not regulating? even Tony gave that famous speech warning people off enforcing regulation.

Without a separation between retail banking and the funny stuff there can be no way forward. The banking industy can hoot and scream as much as it likes but I totally fail to see why the British taxpayer should be expected to stand security for a bunch of bonus-driven chancers. It is unjust, unfair and unacceptable.

The reason this government fails to implement such an important piece of legislation is because it hopes that the high-rollers in the City will start producing the huge profits of yesteryear and bail out the UK government from its debt crisis. I am sorry, Darling but it just won't happen, because it can't! Too many people have been burned too badly to indulge in such risk taking.

This is the time for massive reforms in the finanical and state sectors. This is the time to make individuals responsible for both the losses and the profits. This is the time for change, for progress, for improving all our lives. This is not the time for the same old stale porrage poured out meal after meal after meal.

Chapter 8 of this document - on competition in banking - is also a bit rich coming from a Government's whose Lord Mandelson airily dismissed
the concerns of the OFT and others over LloydsTSB's takeover of HBOS?

No mention either of the obstacles posed by the social security system
to real banking innovation for the poor as proposed by Mohammed Yunus
and The Grameen Bank proposals for Coventry and Glasgow in last night's
BBC Scotland programme by Sally Magnusson (though perhaps this issue is
one that Newsnight and others can come back to during this consultation):

https://bbc.kongjiang.org/www.bbc.co.uk/programmes/b00lljc6

I also fell about laughing when I got to the section telling us how Gordon 'Son of The Manse' Brown will 'learn the lessons from the collapse of the Presbyterian Mutual Society in 2008' .... or was
that inserted as Alasdair Darling's little joke I wonder?! (see:
para 9.55) Though I'm sure it wasn't funny for Presbyterians who
lost their shirts .......

The other serious counter-cyclical issue missed by HM Treasury here is of course the major expansion of state-owned assets that has resulted
from the banking bailout - much of this taking no doubt the form of
buy-to-let properties that have been repossessed by banks and which
are thus now the property of the people? If this Labour Government
was half-way socialist or half-way competent such assets would now
be being used imaginatively to e.g. ease the housing crisis ......

One practical example of what is possible comes from my home city of Dundee where the so-called Vision Building at Seabraes - prime site
visible from the railway - had lain vacant since it was built a few years back as part of Digital Media Park. Come the collapse of the
commercial property market this empty building reverted to the bank
- an HBOS subsidiary now owns it; and come the banking bailout this
is now a state-owned asset ......

But then a few weeks ago, as this penny was finally dropping, the local letting agent in Dundee got together with the local art college and they had the brilliant idea of opening this empty high-tech Vision Building up for the annual art college Degree Show!

They attracted 7,000 visitors the first weekend - not to mention the appearance of big-wigs and a super-model from the V&A in London and
not only boosted the cultural profile of Dundee but on conservative
estimates generated £1.5 million in additional tourist spending ...

https://www.theherald.co.uk/features/featuresartsreview/display.var.2508143.0.Inspiration_of_an_empty_building_allows_a_fresh_vision_for_art_show.php

Now that is just one example of how a banking and property crisis can be turned to long-term advantage if the people and the bankers get together at local level and show some imagination.

So after nearly 2 years...this is it!
We witnessed the the total systemic failure of the entire banking system.

'Underwhelmed' is an understatement.

In the words of Doris Day..."Move Over Darling".

Maybe JJ's been right all along!

...well, she certainly seems to have convinced Bernie Ecclestone! ;o)

This comment was removed because the moderators found it broke the house rules. Explain.

BankSlickerminustheR (#14) For some reason, some would prefer others not to look rationally at the bare, unadulterated, non-eupemized, statistics.

That in itself is complicit and is predatory, in my view. All one has to accept as a premise is that those concerned do not see what they are doing as they do not look at the consequences of their behaviour, i.e. they are 'cognitivists', not behaviourists. This solipsistic view of the world started becoming de rigueur in the 1960s as the study of error. Over the years it sadly came to account for psychology becoming an 80% female subject at the expense of behaviourism as misguided students came to believe they were studying the ways of sound thinking reality rather then error-making.

Please note BlogDog - there are published facts here which as collated in one place are in the public interest.

erratum (#17) "studying the ways of sound thinking (reality) rather than error-making."

#17 JJ

Have you ever read Georgescu-Roegen, The Entropy Law & the Economic process, 1971?

If not, then I "think" that you should (note that I am not "telling" you to do this).

G-R's position is that science has been seduced by relentless Arithmomorphism (aka Arithmomania!). Taking the achievements of the mechanistic school (e.g. Newtonian mechanics) and applies this to natural / social sciences. All this despite the Physicists rejection of the mechanistic law of nature!

Modern science is flawed and wasteful BECAUSE of its Arithmomorphic obsession, not in spite of failings to achieve it. Fraudulent science is the result of trying to apply Arithmomorphic concepts when none so exist, not through the weakness (or absence) of the models. The very tool is flawed, not the workmen (workwomen) who don't know how to apply it.

Even Whitehead later became disillusioned with all-out logic:
"there are no whole truths; all truths are half-truths. It is trying to treat them as whole truths that plays the devil."

Materialism is the fallacy of misplaced concreteness personified:

https://bbc.kongjiang.org/www.bbc.co.uk/blogs/newsnight/paulmason/2009/05/welcome_to_shizuishan_city.html

#16

Numbers can be manipulated by anyone through the medium of statistics to support or attack a point of view. There is no more absolute truth in numbers as there is in opinions although many would like to convince us otherwise be it a financial analyst in 2007 doing making the numbers fit his bosses desires or a civil servant compiling unemployment figures or an armchair social analyst with a grudge.

As Kurt Godel points out any mathemaical problem (in a pure mathematical sense in its highest form)is limited by the bounding axioms (frame of reference if you like), you change the axioms, you change the entire framework of the problem and the answers it gives. This is clearly related to Einsteins relativity also. Nobody wants to (is in their interests to) accept the massive broader implications of this. Only now are a few top mathematicians and physicists starting to imply at something beyond a world that functions purely on the numerical and take up the earlier work.

On the one hand you accuse self interested parties of the use of reason to manipulate the system and social prejudices for thier groups advantage. You use a similar systemic framework of numbers to justify your position (very eloquently I might add).


But is it the truth of it?


To Paraphrase Churchill .. He (anyone) uses statistics like a drunk uses lamp posts...for support rather than illumination.


Jericoa

Hawkeye_Peirce and Jericoa (#19;#20) "Even Whitehead later became disillusioned with all-out logic"

Logic and mathematics is just a system of tautologies to be used in the management of empirical evidence. You, I, and others are using this technological reliability in order to write and post here. Once one starts undermining that, one is behaving self-contradictorily, anarchistically and irrationally, for what should be obvious reasons.

I have been systematically highlighting empirical observations which are easy to corroborate or refute. The standard response, alas, is to do neither these days, but to irrationally argume with reality even though argument is a logical process itself. That in my book is the behaviour of the 'mentally' disturbed. Many people are more crazy than they know.

The Second Law of Thermodynamics is a simple statistical law which describes physical events. Too many people these days use logic and maths as creative literary metaphors. The recent degradation of education is largely to blame.

Look into the statistical evidence which I have posted - if you can still find it. Deception works via censorship and obfucation. People make money out of it.

jericoa (#20) "But is it the truth of it?"

Yes.

Paul
You touched on the destructive force that was arguably a trigger for this crisis.
"no regulations are in place to stop speculators piling into oil and commodities once again"
Why are speculators allowed to get their grubby hands all over commodities? To my mind they are the absolute epitome of a human parasite. Unless something is done to stop speculators piling in there's a real risk any recovery will be kicked back...possibly further back than from where it started.

#23

Alas I fear the commodities speculators are not to blame.

The global economic model is reliant on continual growth to keep people in work.

Continual growth is no longer possible because there are too many people on the planet who want to consume like the USA, so when we try to grow now we immediately hit the buffers of commodities availability and prices (crude at $150 a barrel, record steel prices, copper prices etc etc etc etc). That is one major factor that facilitated the crash.

There are not enough resources available at reasonable prices for the world to continue to grow..so we cant..so the global economic model is busted and needs to change to a throughput model not an eternal consumption and growth model.

That is a huge change and is not in the interests of the incumbent financial institutions and large corporations in particular whom have become incredibly powerful under the current economic system and often fund political parties and actively lobby them constantly, they have the resources to do so.

George Bush was a huge friend of Big business, all his policies on energy and foreign policy reflected that. They would rather stay extraordinarily rich and have huge influence than do the right thing and are happy to keep the populous in the dark. Pretty crappy really.

Leading governments and banks are not even talking about a change to a throughput economy (e.g. through a much more sophisticated VAT system and a vastly simplified income tax system). They are trying to reinstate the existing Chicago school of economics consumption and growth model as described above through a combination of denial,greed and the external influence of big business on the incumbent political parties.

The only logical long term solution to resolve the current unsustainable state of affairs is for everyone to work less and be happy with less in a throughput economic model not a consumer / consumption economic model. That does not mean our lives need be any less fulfilling..probably the opposite.

E.g. under a throughput model a family can save to buy a gas guzzling fancy turbo charged car if that is what turns then on, it is their choice but the VAT on that would be 70% (say) as a reflection of its use of non renewable resources and climate damage, alternatively they could buy a wind turbine for their house, the VAT on that would be minus 70% say (a discount).

The whole economy / tax system would run on those lines in order to keep the global model in balance, you would be rewarded in your pay packet and consume on the basis of the value the activity has to society as a whole. Isnt that supposed to be the point of taxation and salary and VAT?

It is a massive change and in a global economy all the world economies would have to sign up to it simultaneously for it to work.no good having 70% VAT here on fancy cars if they have 10% in France.

Clearly that will not happen any time soon so a good realistec starting point may be for countries to start to become self sufficient within their own borders at least for their basic needs.

We have the technology now such that we do not need to spend 75% of our time in the fields just to feed ourselves. The technology and mechanisation dividend has not been passed on to the majority in the form of a reasonable standard of living and more time with their families and friends.

Instead we are culturally driven ever on to desire more stuff and work hard to get more stuff.

Usually the stuff does not make us happy and the wealth generated by that system gets concentrated within a growing number of super rich (was it not ever so?).

Billions of people worldwide with wide eyes fixed upon the living standards in the west are hoping to jump onto this consumer bandwagon where we throw away 30% of all the food we buy, comprise 10% of the world population but consume 70% of the energy.

Should we be surprised that the economic wheels have fallen off?

I could be totally wrong of course.as I am not a high flying Harvard trained economistwhat do I know

It is remarkable how effective the incumbants have been in obscuring what is the bleedin obvious!

18. We demand struggle without consideration against those whose activity is injurious to the general interest. Common national criminals, usurers, profiteers and so forth are to be punished with death, without consideration of confession or race."

Today, this is of course proscribed by the Lisbon Treaty's ECHR. The libertarians have been very busy making it illegal to stop them, in fact, I think they now get bonuses instead.

Thanks to Hawkeye Peirce for making me feel very guilty about the 438 unread pages of Georgescu-Roegen sitting on my 'unread seminal works'
shelf .... wedged in between James Clerk-Maxwell's 'Theory of Heat'
and Janos Kornai's 'Anti-Equilibrium' ...... but the great dilemma
is whether to prioritise this reading over Gunnar Myrdal's 1939 essay on 'Monetary Equilibrium' .... cumulative causation, Sweden, Wicksell
etc etc or go and read the full text of last night's Dimbleby Lecture
by HRH The Prince of Wales which seemed rather good on gardening too?

But first: the chip shop and then settling down to Newsnight and The
Wire methinks with a bottle of cider (even if the binmen here in City
of Discovery are still looking for how to recycle green cider bottles).

Wonder how the G8 Leaders in Italy will be spending Thursday night? I rarely read the 'News of The Screws' but guess we'll find out soon!!!

Jericoa #24
The speculators were responsible for the triggering of the crisis but in no way the cause, it has been well reported that something like $30 of that $150 barrel of oil you mention was due to speculators.
The problem of rising comoditity prices is obvious but for manufactures that come up against China it is deadly. China operates a policy of central purchasing controlled by the government and forward buys to insulate it's manufactures from the rising commodity prices it creates. I personally now of cases where a British busineses has deliberately quoted to make something right the way down to just the cost of material, just to see how far they had to go, they were still too expensive!
So what exporting (rare to find any manufacturer that does not export, could give you examples of some as high as 85%) industry we have left when this recession ends may get to see the recovery and fail.
If you look back to the end of WWII our recovery was lead by our exporters. Steel was in short supply for many years and was allocated by government policy to companies that could demonstrate strong export earnings. It was a period of time that extended into the 1950's that was known by all manufacturers as 'export or die' the fact that the sixties was a swinging time was all down to the success of that period especially when you consider there was the extra financial burden at the time of the new fangled NHS.
So now we're told we the whole nation is in similar straits financially and what's government policy to get this country out of complete and total debt.

Even More Debt................

neilrobertson (#26) The statistics one needs to understand what's going on today are not those of Georgescu-Roegen or any others who have a penchant for magical writing, but the basic tools developed by evil-ones like Galton, Pearson, Spearman and Fisher etc (all extremely evil eugenicists). Just over 30 odd years ago it was impossible to be a psychologoist without having mastered this technology. Today, in our ever more feminised, mentalistic, times, that's all changed. Guess why?

Bear the properties of this distribution in 'mind' - it's very simple and it's all to do with tails...

Immigration and feminization have been tools of demographic 'warfare' judged by the outcome measure - biological fitness (TFR).

#27

I had not appreciated the full extent of the Chinese government's central buying / hedging role concerning commodities. It adds up to a very bleak picture as you say, unless there is some global consensus to change things on the lines of a throughput economy we are heading down a blind alley where we bounce along the bottom for many many years.

Any recovery almost immediately hits the buffers of comodities prices, worse than that, any manufacturing outside China will have to be cutting edge innovative / made nowhere else or it will not be able to compete (if I am understanding you correctly).

There will be an explosion in an unemployed and disenfranchised underclass that will refuse to go away long term because growth can no longer be sustained long term as it was before.

The gap between the have and have nots will continue to rise and there will be a great deal of unecesarry suffering as a consequence of that.

There is an answer to it, but it is an answer nobody in power is willing to take.

Like any great change in history the change will have to come from the bottom up not the top down and the starting point will be a growing general awareness that the mechanisation and technology dividend our ancestors struggled for has been stolen by self interested and greedy global elite, not as a deliberate conspiracy, merely as a consequence of one aspect of the darker side of human nature itself, greed.

With the technology we have now there is no excuse for the way the world is and the way we live, it is within our grasp as human beings for the first time to provide a base level of education, enough food, clean water, housing and sanitation and sustainable energy for everyone to meet their basic needs comfortably and spend the rest of thier time in enjoyable pursuits. We can create millions of jobs by instigating that change and all with a sense of greater purpose for something good at the end of it.

Will we be mature enough to take that option by our own decision? Or will we struggle to reinstate that which is no longer possible and have the requirement to change imposed upon us environmentally or by some other means?

I know which one I would prefer but I don't hold hold out much hope for it the way things work at the moment.

In the meantime I am off now to watch my daughter compete in her sports day which I will enjoy tremendously but I had to take a precious day off work to do it.

In fact there should be no need for me to take a day off work because there is no need for me to work 40 hours a week in the modern mechanised world. I only work 40 hours a week and struggle to find the time for the things that really matter because I am in bondage to the illusion of 'continual growth' fed by human greed.


The first thing to do is to raise awareness some of us have started a website forum called the lobbygroup for like minded people to chat, try to find a way forward and, as the name suggests lobby for it to be instigated.

You can find it ready now at lobbygroup.org but it will be a waste of time if noboddy shows up to create the manifesto we have set up templates for.

Jericoa (#29) "There will be an explosion in an unemployed and disenfranchised underclass that will refuse to go away long term because growth can no longer be sustained long term as it was before.

The gap between the have and have nots will continue to rise and there will be a great deal of unecesarry suffering as a consequence of that."

Are you sure you understand what has driven this?

What we've witnessed in recent decades is a pseudo 'social justice' model (a priori argument see elsewhere on this mythology) implemented as policy which, as a critical hidden false assumption, is the myth that people are equals bar the levelling of economic (read environmental) opportunity.

This has literally been economic and social suicide, as it has turned large numbers of lower ability people into debt-slaves, whilst creating unsustainable, ethereal service-sector enterprises (~80% of our economy) as an inevitable consequence giving the impression of equality through mass consumer expenditure on borrowed money. Now that it's pay back time, there's nowhere to pay it back from except via more indebted people in the future. The only problem there, is that we have below replacement level fertility which is at its highest in mroe able part of the population, so politicans' social justice 'solution' (read petrol on the fire) is to import more low skilled immigration and whilst raising the birth rate in the underclass (of all races).

Whoever orchestrated this nightmare (check out the demographics if this is all unfamilair) have effectively done what neutron or biological weapons of mass destruction could never do as there is nobody to blame but ourselves.

Counter-evidence welcome - but just evidence please, not argument as I'm just putting into words the way the data pans out as best I know it.

#28 This may or may not come as reassurance: but propping up Georgescu-Rogan on my bookshelf - no doubt like the proverbial Churchillian drunk
leaning against a statistical lampost - are two similarly iconoclastic
volumes by Oscar Morgenstern on 'Predictability of Stock Market Prices'
[1970 - with the Welsh Nobel Laureate Clive Granger who went on to do
work on spectral analysis of times series] and Morganstern's 1963 second 'completely revised' (soc!) edition of his 1950 Cowles Commission and Princeton classic 'On The Accuracy of Economic Observations' - a book most orthodox economists are perhaps still too scared to read?!!

https://homepage.newschool.edu/het//profiles/morgenst.htm
https://en.wikipedia.org/wiki/Clive_Granger

Oskar Morgenstern began 'On The Accuracy of Economic Observations'(1950)
with a Latin statistical warning: 'Qui numerare incipit errare incipit'.

And Morgenstern's elephant is also lurking in this economist's room ....
You probably know the story but when Oskar M was working with Johnny von
Neumann at Princeton during 1941-2 on their monumental 'Theory of Games and Economic Behaviour' Neumann's wife Klari (who used to bring them the coffee - vast quantities of which were being drunk by the two great men)
made clear that she would only read the book if there was an elephant in in it. Her hobby at that time was collecting elephants made of glass and other sorts of material. So in order to maintain the supply of coffee and appease their feminist critic, the guys did indeed hide an elephant in their 632 page mathematical treatise on 'Theory of Games and Economic Behaviour'! [Clue: Take a closer look at their graphical illustration of a partition Figure 4 .... and watch out for the trunk and the big ears!]

https://en.wikipedia.org/wiki/John_von_Neumann
https://homepage.newschool.edu/het//profiles/morgenst.htm

neilrobertson (#32-#34) As I've said before, people have tended to get a little intoxicated with derivatives...(of Games Theory etc ;-). These, having done my bit with inferential statistics I'm now happier with descriptive statistics at the population level. I'm also sure as sure as one can be that people are largely what what they are as a consequence of what they're made out of and what continues to make them, i.e their genes. We are currently making a mess of Europe (the USA is a dead loss) by not producing enough of the right people and by importing too many of the wrong people. It's as simple as that basically. Basic maths/stats suffices. I've done with the hard stuff.

Unless we do something very soon, we will go the way of Sub-Saharan Africa, Bangladesh and Pakistan. We can't control Global Warming, but we could do something about National Dimming (as the PRC is).

Note how some of their brighter folk want to come here? Tinkering with the economy via QE won't make much difference whilst the indigenous birth rate and low skilled immigration rate is as it is.

People are focused on trivia. :-(

So, a day after the Bankers Charter is brought out to an underwhelming sigh of disapointment the Nationwide says it is going to start providing sub-prime mortgages again! Coinsidence? Maybe its because QEing has given them the funds to do this, or maybe its because they know that no one will stop them. Still at least when a local public service you or a relative depends on is cut in the years ahead, when your taxes go up, and you are working until your 70 you can take some comfort in knowing where your money is being spent!

neilrobertson (#32-#34) As I've said before, people have tended to get a little intoxicated with derivatives...(of Games Theory etc ;-). These, having done my bit with inferential statistics I'm now happier with descriptive statistics at the population level. - writes Jaded Jean
(comment #35).

I have a lot of sympathy with this .. it is indeed astonishing how all these City whizzkids ignored the blindingly obvious as they bamboozled themselves and others with their far too fancy mathematical 'modelling'.

As a visual reminder of such pitfalls you might be reassured to learn
that a little further to the left on this same economist's bookshelf I
have strategically positioned a copy of 'The Economics of a Declining
Population'(1939) by Professor Brian Reddaway of Cambridge University
whose 'Reddaway Method' of starting first with the close analysis of
descriptive statistical data (without the use of machinery) was still
being drummed into students in the Department of Applied Economics in the late 1970's. One of his homely tips - using a ruler to extract the correct numbers from official tables of statistics - is recalled in a nice obituary of the great man by the excellent Martin Weale of NIESR:

https://www.independent.co.uk/news/obituaries/professor-brian-reddaway-650006.html

But having said that, I have to part company with you over Bangladesh!!
As pointed out above (my comment #12) so-called 'developed' countries
have a lot to learn from Bangladesh (not least in the area of banking).

https://en.wikipedia.org/wiki/Muhammad_Yunus

And that other great economist Amartya Sen is also from a family with roots in East Bengal (present day Bangladesh) though he is an Indian!

https://en.wikipedia.org/wiki/Amartya_Sen

This comment was removed because the moderators found it broke the house rules. Explain.

What if it is?

We appear to have a blogdog who seriously thinks that the entire science of human individual differences (genetic and biological/behavioural diversity via assortive mating and reprodiction) is offensive.

#41

We also appear to have a serial 'single issue poster' whom via persistent volume and consistency of message (in various guises) seems rather determined to promote a particular point of view. A view which is often tenously linked to the blog theme on the basis of 'everything comes down to genetics anyway' so genetics must be relevent for every discussion topic.

The 'blog dogs' have been pretty tolerant of you actually.

I try to control my self confessed 'posting habit' to keep it relevent, diverse and not to 'overpost' unless a good thread gets going on a partuicular topic which several people join in on.

I also try to avoid 1 or 2 line postings..this is not a chat forum. I am sure I dont follow my own rules sometimes, but I do try to.

I think if you followed the guidance above everybody would be happier...including the blog dogs and maybe even yourself...who knows!

Jericoa (#42) "I think if you followed the guidance above everybody would be happier...including the blog dogs and maybe even yourself...who knows!"

I do. I really do think that I have something very useful to say to people in our times.

Don't you? Have you learned anything yet?

Addendum (#43) Do you fully understand what the removed post covered and its full implications?

Funny, the internaional nature of banks didn't seem to be such an issue when it came to UK bailout money!

stayingcool (#45) "Funny, the internaional nature of banks didn't seem to be such an issue when it came to UK bailout money!"

Sadly, most of the people who find their way into politics and similar professions, do so having learned that truth is a matter of persuasion (often of themselves alone). They have no time for inconveniences like uncertainty except where this legitimizes their certainty. This should be clear from whom they surround themseves with as advisors, and in the UK, who managed their fundraising.

There are no better words for it than 'venal' and 'corrupt', except we have to be realistic and accept that it's all legal, so, in effect, those involved are trapped by their own system of contingencies. Nothing ever changes this other than a clean sweep, and as that requires dramatic changes to exiting law, that means dictatorship, i.e. revolution not reform :-(.

#46

Probably your best blog ever....I just hope you realise why!

Paul

This Might be off thread a bit, but is there any chance of the BBC journalists telling the UK taxpayers how much the War in Afghanistan is costing the taxpayer we can all see how much it is costing in human lives at the moment, It seems the journalists of BBC are very good at telling taxpayers how much the Banking Crisis has cost the UK, but when it comes to Wars the silence is deafening !

BankSlickerminustheR (#47) That's far too uncertain/ambiguous.

The city and its regulators as an entity is not capable of learning anything at all ever, it has not the capacity for judgement or reason, it is a machine.

It is a machine that was historically a great servant to society (in the round), a melting pot for investment and re-investment to generate wealth and innovative new technologies to free us from endless hours of mundane toil in the fields or factories just to meet our basic needs.

That same entity is now becoming a parasite run by shysters with no greater purpose in mind than self enrichment, enrichment not through the innovative development of mechanised efficient products and services to improve our lives. It is enrichment by manipulation of atomic level indentations on computer hard drives in such a way that they end up with more positive indentations on their hard drives than their competitors. Often this enrichment occurs without a product being invented or a service being provided or a commodity being delivered to the docks or there beeen atangible investment in anything productive.

It has become that way because we have reached a tipping point in our development where the benefits from technology and mechanisation are now so great that it is no longer a matter of developing more of it, it is a matter of sharing it more fairly and managing the technology we have got to be more in harmony with our resources and our beautiful home (the Earth). Take a walk outside on a sunny day...you will see what I mean.

The dividend to humanity of technology, mechanisation and efficiency in food and energy production has not been felt by most people in the world, instead the huge dividend has been converted into atomic level indentations on computer hard drives and used to generate unbelievable wealth for a very few to shuffle between them upon the roulette table of global finance. The gap between rich and poor has never been greater.

The strange thing is those select few in the ranks of the super rich never seem to be particularly happy souls to me, I see far more happiness and contentment amongst the ranks of the modest and largely silent majority.

So why do they do it to themselves? Why do they do it to us? Why do we let them?

I dont know the answers but I am interested in at least asking the right questions which along with others at the lobbygroup.org we hope to at least have a go at solving it.


onward ho.

No.50. Jericoa

I agree that in Britain we have enough technology to provide for a good quality of life while working only 3 days a week. However, in order (i) to make rich men richer, and (ii) to improve the standard of living of developing nations, we must keep working 5 days per week. Of course, the rich men (like Bono and Bill Gates) partly cause the financial distortions which keep the developing world poor.......

I believe the average British worker would be happy living on average wages and working 5 days a week, as long as their job was secure. What makes them unhappy is the threat of unemployment, and the cost of bailing out a bankrupt financial sector and the cost of bailing out a bankrupt public sector. The average person should also be protected from taking on high levels of personal debt and other self-destructive liberal indulgences, despite their moaning about the Nanny State......

So, I would settle for a bit of legislation which curbs the ability of the rich to benefit at the expense of the average British worker. However, the USA must also introduce such legislation, as that country has a history of attracting "wealth creators" through undercutting Britain and Europe with a low tax regime, and encouraging the brain drain from Europe to America.

Given the USA will not act like an adult (it's still a young nation afterall) and introduce fair legislation and fair taxation, we have little hope of any real improvement for the average British worker. The worker must be kept in his place: working hard to pay off his debts, and continuing to make rich men richer, and slowly slowly helping the peasant classes of China, Brazil, India, Korea, Africa improve their living conditions. Unfortunately, Britain is likely to see high levels of permanent unemployment, as we have little in the way of unique products to sell in the international marketplace......

#51

I agree your assessment is the most likely outcome taking into account the current global modus operandi.

I dont hold out much hope for something more equitable to appear that is neither communism or capitalism but would be an ideology none the less which takes account of the power of modern technology to reduce suffering and improve quality of life while maintaining the variety aspects of capitalism brings.

I dont hold out much hope for something like that but I do believe it is possible and i at least feel better for trying to raise awareness of that possibility.

In a nutshell the imbalance at its heart comes from our technology being far in advance of our 'maturity' as a species to use it effectively tom increase the sum total of hapiness in the world.

We have all this power now but we dont (or refuse to) use it to its best advantage. There is a form of human utopia within our grasp now but we are too busy fighting each other or screwing each other over to put an extra buck in our pockets to realise that possibility and make it happen.


As Homer Simpson would say.

DOH !!!

A Senecan Praemeditatio (Seneca 4BC-65AD)

[The wise] will start each day with the thought....
Fortune gives us nothing which we can really own.
Nothing, whether public or private, is stable; the destinies of men, no less than those of cities are in a whirl.
Whatever structure has been reared by a long sequence of years, at the cost of great toil, and through the great kindness of the gods, is scattered and dispersed in a single day.......................

No.53. superiorsnapshot

But Seneca didn't have nuclear weapons to protect his civilisation from ruin. Hence, his sense of insecurity.

Nuclear technolgy has protected the advanced nations for many decades now. Maybe we should roll it out to less developed nations. If all countries had a nuclear capability, the whole world would surely be protected......

Why the plea for this very British idea of fairness ? Seneca's critics levelled charges of hypocrisy - I would be more charitable and label him an ironist.

It looks like the power elite have acted with a similar sense of ironism; socialism for the rich, capitalism for the rest. And what is the belief system that engenders this ?

In a word - money.

( I think Pink Floyd wrote a song about it - made them a fortune !)

For us here in UK, it may be easier to live with some higher taxes and eventually higher inflation, than to recant our beliefs and way of life.

That is what they're banking on.

#55

''For us here in UK, it may be easier to live with some higher taxes and eventually higher inflation, than to recant our beliefs and way of life.''

I think the level of underlying unemployment may act as the catalyst to change.

You will not be able to con the increasingly skilled mass ranks of the unemployed with a life prospect consisting of benefits and training courses for jobs that will never exist again in a mechanised high technology society, a society limited in its growth prospct to generate more jobs by the availability of natural resources and its own high efficiency.

The 'lost generation' with lots of time on thier hands may decide that a life as described above is no life at all and look for an alternative with nothing to lose.


They may take a look around and say 'hang on a minute, there must be a positive role for all in society if we make the best use of technology and share out the genuinly productive work that is left for humans to do more fairly'.

3+ million people plus another 2 million on 'incapacity' represents quite a lot potential political will whom have the time to do something with it.

It just needs a certain number of people and a certain spark o bring them all together and motivate them.

I make no wonder the government is pumping billions into 'training courses' for non existant jobs!!!

#21 JJ

"Too many people these days use logic and maths as creative literary metaphors."

I agree, but do you not accept also that too many people apply logic and maths in realms where such conduct is misleading? Credit to #33 for 'Qui numerare incipit errare incipit'. I am not undermining logic or maths, merely suggesting that it does not have universal jurisdiction. Maths is our servant, not our master.

I can tell from your posts that all you have done re Georgescu-Roegen is look him up on Wikipedia. Had you scratched beneath the surface you will observe two things. Firstly, he does not use Thermodynamics as a metaphor, but a very real physical phenomena. Any economist whose models defy the laws of Thermodynamics are not just wrong in a "metaphorical" way, but are fundamentally flawed in that they contravene the laws of Physics. Humans can't bootleg entropy - i.e. create perpetual motion machines, yet this is what the Solowists believe. For an accessible overview see:

https://www.eoearth.org/article/Energy_and_economic_myths_%28historical%29

Secondly, (and more importantly, the one that if you read it will probably send you into a hopping rage) is that he makes some stark accusations of relentless Arithmomania. I'll wager that G-R was indeed a far greater mathematician than many of his economist peers. Only a true mathematician understands when to apply maths, and more importantantly when to accept its limitations. This appears to be where Whitehead and Russell parted company - alas with the more contrite views of Whitehead being oppressed - possibly the greatest intellectual failure of the 20th Century.

I note that you also say: "The standard response, alas, is to do neither these days, but to irrationally argume with reality even though argument is a logical process itself."

Are you referring to Dialectics here?

JJ

Just watched Newsnight tonight.

Sir Malcolm Rifkind was wheeled out for the panel in support the war in Afghanistan.

I looked him up on Wikipedia....and low and behold, he's another cognitivist!

They're pretty consistent...and it scares the pants off me!

And now young George Osborne says that a Conservative Government will scrap the FSA.

Partly because it was Browns baby and proud boast for almost a decade before the wheels came off.

Yes, that is the way of tribal party politics.

The 'losers', as always are guaranted to be the hapless English PAYE taxpayers, whatever the politicians decide.

C'mon Paul, you seem to be getting a tad lazy with your blog, or did the guests on newsnight tonight sap your will to live to the extent that you cant bring yourself to enter into the arena anymore.

Join the club.

I am starting to get the sense now though when the great and the good economic elite are interviewed that they no longer believe what they are saying themselves but are carrying on out of habit in the absence of any other ideas.

Let me get this right, the answer to the US woes is...another stimulus package to get people spending and consuming again to restore growth.

I am not surprised you left the table after about 2 minutes.

How do you cope?

Next time you get to corner these guys can I suggest one question for you
on our behalf, you can pitch like its a question from the ignorant masses to humour us / avoid direct embarresment.

Here it is

''A contributer to my blog would appreciate the opinion of an expert to put his mind at rest on a question that is unsettling him as he cant seem to find an answer and I would like to ask you it on his behalf if i may.''

'We need continual growth to create jobs, especially as we make things using less human labour year on year through the continous efficiency business demands to remain competitive and generate profits. That seems ok up to a point but won't we reach a point where we can no longer grow because we are too efficient to sustain a consumer society while maintaining socially acceptable levels of employment and within the limits of available natural resources.

Are we at that point?

Is that not the real cause of the economic problems?

Does that not mean we need an entirely new model?

What is it?


Ok..so that is more than one question but I am sure you catch my drift.

#60

I totally agree. I'm becoming very disappointed that even Newsnight dare not field any counter point questions let alone guests. Without someone like Herman Daly up against Stiglitz we are only hearing the tired (failed) rhetoric being regurgitated:

[Unsuitable/Broken URL removed by Moderator]

"As long as corporate executives value profit, and as long as individual consumers value the acquisition of goods, society will continue to heed the advice of mainstream economists."

Is Daly camera shy? Has anyone in the BBC either read his work or even approached him for comment - or have the editors bottled it following Taleb's explosive appearance last year?

https://www.youtube.com/watch?v=ABXPICWjFIo

This 10 minutes of Newsnight changed my life. It started my journey of curiosity into the (under)world of finance and economics.

Phase 2 of my awakening was the following:

https://www.amazon.co.uk/Ecological-Economics-Ecology-Essays-Criticism/dp/1840641096/ref=sr_1_11?ie=UTF8&s=books&qid=1248260382&sr=1-11

I read it in less than a week during my commute to and from work. It is concise, cogent and compelling. Why did I have to seek this out myself - why isn't a public service broadcaster raising these issues??

If all else fails, maybe I'll badger Justin Rowlatt instead!

Dear Mods,

Re: the file:

[Unsuitable/Broken URL removed by Moderator]

This link was not a pdf, but the following:

"This is the html version of the file........ Google automatically generates html versions of documents as we crawl the web."

It is human (and BBC machine readable) HTML.

To supplement my point #61, perhaps this section sums up the problem:

https://books.google.co.uk/books?id=utXvIcsz4YoC&pg=PA137&lpg=PA137&dq=herman+daly+roegen+perpetual+growth&source=bl&ots=QXBRw2ONlJ&sig=l7mENopoyM86tpDUCeBkrcnoCqY&hl=en&ei=rvVmSrvGIpCy-AbTn5Fi&sa=X&oi=book_result&ct=result&resnum=1

The likes of Daly & Georgescu-Roegen are dismissed by neo-classical economists as "not really economics". What they probably mean to say is that Daly and G-R are not playing ball in the field of Chrematistics, and given that this narrow aspect has taken over modern economic doctrine, they are right.

However the wires have become crossed. It is Daly & G-R who truly understand REAL economics (and its position as a subset of the environment - not the other way round).

#62

Its good to know I am not going insane and others feel equally angry about the emerging 'great 21st century deception'.

Like yourself, the thing I really, really dont get is why in a society with a free press dont the right questions get asked of the economic elite on the lines of #60 above on a daily basis / hourly basis.

WHY!!!

its just a ******* question!!!

If me and hawkeye and inumerable others here are missing some fundamental point can someone PLEASE put us out of our torment at least so we can sleep at night comfortable in the knowledge that the people who run the world have a clue about what they are doing and where they are taking us!!!

Paul, we know you read the posts, can you put us out of our misery please one way or another.

#63

I have a deep and growing frustration that there are numerous concepts, which for ease of use, laziness or downright dysgenic conspiracy we all take for granted but which never get seriously discussed or challenged. In no particular order:

a) Growth can go on forever: only feasible if we ignore / exclude the economy's true interaction with the environment (e.g. Daly's point that Economists view the economy as one without mouth or anus)

b) The wit of man created our current wealth / standard of living and will go on forever - we may be the trigger action for many clever things, but the real work horse is 4 billion years of solar energy locked up in natural (organic) resources

c) Science is progress - actually it is suffering from diminishing returns (I've posted before on the concept of "intellectual high-grading")

d) Money is concrete - actually it is prone to re-discription (see below)
https://bbc.kongjiang.org/www.bbc.co.uk/blogs/newsnight/paulmason/2009/05/welcome_to_shizuishan_city.html

e) The real world is mechanistic - actually, Newtonian / Laplacian views of nature / natural systems do not work. Physics is struggling to retain these aspects, yet social science seem ever more obsessed with Arithmomania (See G-R)

f) Complexity is a good thing - the more complex something is (machine, society etc.) the more fragile it actually is. Complexity is as much a curse as a blessing (see Joseph Tainter Collapse of complex societies)

Paul,

Loved the piece on Newsnight tonight, those guys should be taken out of their comfort zone much more often and given difficult questions to answer. It seems however they have learned the trick of simply not showing up if they think they will be asked questions they do not like.

Interviewing empty chairs is un-conventional journalism but you cant let them get away with it. Your journalistic grittyness is definately the way to bring them out into the arena.It was written on thier faces how deeply uncomfortable it was for them to have aBBC journalist camped outside the RBS building asking people to answer questions. Well done and thank you!

First they ignore you,

Then they laugh at you

Then they fight you

Then you win.

#64 Hawkeye or should I say brother hawkeye, we are definately on the same wavelength accross the full range as per your post. It is a genuine relief to know there are others out there.

Noli illigitami carburundum... (probably spelt wrong even in latin but I am sure you will get the gist)

No.64. Hawkeye_Pierce

I agree with you. The issues you raise are all covered within mainstream economics and, as you point out, it is a sad reflection on the media, and society in general, that these issues are not discussed in a more potent way.

When I first began studying economics, it was drummed into me that the whole aim of economics was to find the most effective ways of allocating and distributing the planet's scarce resources.

The current British government has been in power for more than 10 years, but what exactly are its long term policies on managing the necessities of life, such as food production, electricity, gas, transport, housing, water, health care, education, policing, national defence etc, etc? The government and the opposition parties have never had any real substance, and simply relied on spin and presentation to cover up their general lack of effectiveness.

Now we have a financial crisis, an energy crisis, a housing crisis, an environmental crisis all on our hands at once, but our politicians do nothing but talk, and repeat empty slogans.......

" When I first began studying economics, it was drummed into me that the whole aim of economics was to find the most effective ways of allocating and distributing the planet's scarce resources. "


HaHaHaHaHaHaHaHaHa........................

next they'll be telling us price reflects utility, and governments reflect the wishes of the majority, and wages reflect workers value to society..................chuck away that mirror !



https://en.wikipedia.org/wiki/Wage_slavery

BankSlickerminustheR (#58) "They're pretty consistent...and it scares the pants off me!"

Yup....scary isn't it. It's just group politics of course. I haven't worked out whether they lack insight into what they're doing, or are truly duplicitous. Not that it matters. It's just collective behaviour and its consequences that matters, not intentions.

Ugh. Of course there is horrible gloom - when the government won't even take the minimal measure of separating retail banking from casino banking, much less break up the big banks, it's obvious to anyone following the situation and not hypnotised by the straight media (yes that includes you, Paul!) that we'll have another fall soon, and next time it'll be a lot worse with hyperinflation.

All real new ideas (often actually sensible old ideas) like government control of the money supply, criticism of the 'growth' imperative, banishing usury, etc which don't fit into the usual range between Keynesianism and Monetarism are studiously ignored. Got quite excited to see your report on the protest by various religious leaders in the City last week, only to have that dashed by the interviews with people who couldn't explain the direct connection between compound interest, the 'growth' psychosis, and damage to the environment.

It's not complicated: a) the bank creates money to lend at compound interest; b) in order to 'pay back' the loan, the borrower generally has to pay several times the original amount; c) bank gets fees, interest and original loan paid in real money earned through productive work and/or scavenged from the landscape; d) worker/business/environment often left depleted yet 'growth' achieved.

Yes incredible advances in technology, etc have happened under this financial system but can it really be said to be 'responsible' for the advances?

The reality is that the banks have just pulled off the biggest transfer of wealth from working people to themselves ever. Dare we call it robbery? Our tax money is now tied up for generations to prop up trillions in financial ephemera, while the real economy goes to the wall. Michael Hudson and Max Keiser are writing well about this; Ellen Brown and Thomas Greco are suggesting far more interesting alternatives than fiddling with interest rates or capital to loan ratios.

It would be good to see more coverage of these, not just the latest fix-up suggested by flailing government pols and bureaucrats. You're still the best on air, though -

Of course this supine, spineless government will take no real preventative measures to curtail future financial sector greed and excess.
Labour came to power whilst getting into bed with the masters of the universe. They were in awe of them and became 'intensely relaxed'(mandy) about wealth becoming concentrated in fewer and fewer individuals and corporations.
They are now reaping what they have sewn. Labours third way has found out the pitfalls of free markets, i.e they are a-moral, now they do not have the time nor the stomach to turn back the clock or regulate meaningfully.