Of course, it’s been half a century since Cuba has had a real new leader. This is one of the down sides to life extension.
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One of the few financial journalists who rumbled Gordon Brown years ago, Allister Heath, gives his verdict on yesterday’s UK budget. Devastating detail all the way through. Allister is also pretty scathing about UK Liberal-Democrat economics spokesman, Vincent Cable, who tends to be deferred to as the “politician who talks sense on the economy”. April 23rd, 2009 | 3 comments - (Comments are closed)
 There is no doubt that – apart from some smart writers like Liam Halligan – not many people in the financial journalist profession saw the current crisis coming or predicted its full extent. Clive Davis, over at his blog, makes that point by linking to an article that goes into what is rather mysteriously called the “shadow banking” sector: ie, any institution that gets involved in trading in or holding credit, such as hedge fund. I wrote about misconceptions surrounding this issue the other day. So why were financial journalists or many economists unaware of the gathering storms? Well, assuming that they were oblivious, my explanations are as follows. I’d be interested in the comments. Here goes: First, over-specialisation in the economics profession. One of the great benefits to me in discovering those Austrian economists such as Ludwig von Mises and writers like Henry Hazlitt all those years ago as a callow youth was that it reintroduced me to the days when “political economy”, as it was known in the 19th Century, was not hung up on mathematical models or big, wooly macro-economic systems, but addressed the incentives, laws, and actions of man. I had the benefit of getting a good grounding in microeconomics, in understanding an economy as a dynamic process that changes through time, not a set of artificial “games” with nonsense such as models of “perfect competition”. Second, I think that for many journalists who did learn economics, the sort of ideas that have given me and other classical liberals/libertarians some insight into the gathering storms are simply not on their intellectual radar, or if they are, they are led to believe that people with surnames such as Hayek, or von Mises, or Friedman, are somehow eccentric, even malevolent creatures. Most of them have either read their JK Galbraiths, or their Krugmans, and get their views from the still-powerful tradition of Keynesian economics. The idea that fiat, state-monopoly money and Big Government – the two are related issues – lie at the core of the issue just does not apply to a group of folk who generally tilt left in their politics (although this is far less the case than in other parts of journalism, in my experience). Also, as a result of overspecialisation, a journalist who writes about, say, the government bond market may not always join the dots when it comes to information coming out in a different area of the economy. There is also the fact that as sectoral journalists covering their beats such as energy, retail, telecoms, etc, get involved in the day-to-day job of covering these things, that the broader trends get obscured because of the sheer volume of stuff that journalists deal with. Given how financial journalism has developed as a profession in the last two decades – I have some insight into this via my day job – I am not too sure how to deal with this. Part of the trouble may even be what I might call the “showbiz” trend in financial journalism: reporters at channels such as CNBC often talk about the market in a sort of sports-coverage way: who’s up, who’s down, etc. There are reporters – the FT’s Gillian Tett springs to mind – who have been very good at trying to keep on top of how the credit markets have evolved and some of the risks associated with that. And there are commentators and investors such as Jim Rogers, for instance, who have been pretty astute at seeing the disaster and warning about it. But a lot of people, as Clive Davis says, have not been aware of the magnitude of what has hit us. Maybe, however, Mr Davis has to remember the flip-side of this coin: we may now be blind to the chances of a pretty rapid recovery, at least in some parts of the world. April 23rd, 2009 | 14 comments - (Comments are closed)
The title of this article written some months ago by noted US economist, Arthur Laffer, has never been more apt after I finished reading through the UK government’s latest outrage, its annual budget statement. A new, top rate of income tax of 50 per cent comes in from next year, applying to annual incomes of £150,000 and above. The government, which probably knows it is doomed anyway, has made the base calculation that the Tories won’t dare to repeal it. I actually am not too sure about that: while £150,000 a year is a lot of money, for many self-employed folk with lumpy income streams, such a new tax band will hit them very hard in marginal terms, encourage further emigration from the UK, deter anyone with any entrepreneurial brio from entering the UK, and probably reduce, not raise, revenues. It is also a boon to the tax-planning and accountancy profession, since anyone who can restructure their affairs to convert income into a capital gain – CGT is just 18 per cent in the UK – will do so. Update: I share Guido’s reaction. No wonder, by the way, that the G20 nations – hypocritically – chose to attack “tax havens” and create a global tax cartel. If you are someone like Gordon Brown or The Community Organiser, the last thing you need is for your high earners to escape abroad. But I’d be willing to bet that there will be quite a rush now of people out of this country. Expect to read lots of stories about how “Mr X, who runs a small business in the Midlands, said he was heading off to Australia/Canada/wherever to get away from high-tax, high-crime Britain”. Expect there to be a relentless, drip-drip of such stories in the months ahead. (Mr Jennings snorts about my mention of Australia: yes but at least there are other benefits to moving there). Update: Madsen Pirie of the Adam Smith Institute and some top wealth management folk give the budget a thorough hammering over at CNBC. The guy from Denton Wilde Sapte is particularly good. April 22nd, 2009 | 27 comments - (Comments are closed)
Samizdata commenter Marc Sheffner (thanks Marc!), spotted this story in a thread comment about this. Makes you so glad that all our precious details are going to be looked after by those clever political folk and their friends, does it not? Talking of IT, the debut UK edition of Wired has a look at some of the folk that run Britain’s IT and other vital infrastructure systems. April 22nd, 2009 | One comment - (Comments are closed)
I am not terribly convinced by this:
That does rather ignore the fact that, in the early 1970s – in the period of “calm” that this writer talks about, we had stagflation, the collapse of the Bretton Woods banking system, etc. Hardly very calm. And if the system was calm, as claimed, how come it collapsed? (Hint: it was not the fault of evil private bankers or tax havens). In the absence of a return to sound money and an end to fiat monetary systems, there may be something to be said for rules to at least limit some of the damage that monetary mistakes can cause. This is a second-best solution, I would say. I have heard it argued, even by some pretty ardent free market types, that there is a case for splitting the roles of risk-taking investment banks from those of more utility-like retail banks, as under the old US Glass-Stegall rules in the US. But had Glass-Stegall been in force today – it was abolished in the late 1990s – it would not have been possible for investment firms such as Morgan Stanley and Goldman Sachs to remodel their businesses as full-service banks, as happened in the autumn of last year when those firms were partly bailed out by the taxpayer. The ironies abound. On this issue of the “shadow banking” system, the author and others need to understand how the business of securitising debt and selling it off to investors started, as well as why hedge funds and other non-bank institutions developed. This market, and the fiendishly complex derivative products that drove it, was given much of its early impetus by a banking regulation system, known as the Basel system, that told banks they had to set aside a certain portion of capital to one side to protect against risk. It was, if you like, a partial acceptance that fractional reserve banking, if it is allowed without any “safeguards”, is dangerous. But what happened? Banks took out tradable insurance policies, such as credit default swaps, and used this insurance to get a better credit rating, and hence, reduce the amount of capital they set aside. The “shadow” banking system, then, and the derivatives market that gets so much heat, was partly driven by regulations, as well as by the application of sophisticated – if flawed – mathematical and scientific techniques to the business of finance. The article does at least, in a backhanded sort of way, recognise that not everyone is signed up to the narrative that “unregulated capitalism” has failed. I am glad that has been noted. After all, it is a myth that supporters of capitalism, such as yours truly, oppose regulations per se: what I oppose is state-imposed, one-size-fits-all regulations. For example, if a privately run stock market wants to create its own listing rules to build and develop a reputation for high standards, it will be in its self interest to do so, since a track record for honesty, transparency and efficiency reduces the costs of capital because investors are more willing to hold equities traded in honest places rather than dodgy ones, and so on. If the state has a role, it is that of going after thieves and fraudsters. And as we have seen in the case of US Ponzi scheme conman Bernard Madoff, the powerful US Securities & Exchange Commission did not act, despite certain suspicions about him, for years. By focusing on the basics, rather than trying to regulate everything under the sun, the state might even do some good. April 21st, 2009 | 13 comments - (Comments are closed)
Obama’s speciality is shaping up to be particularly dangerous because it’s hard to dispute given the average American’s sensibilities. No call for liberty and constitutional principle seems convincing when Obama is arguing that those relying on government giveaways should have to follow government-set rules. That is, once you’ve allowed them to go ahead with the handouts, the political game is almost over. Under the guise of “managing the taxpayers’ money”, Obama and his crew are rewriting mortgages, deciding executive compensation, tossing out CEO’s. And note carefully that his plans for where taxpayers’ money should go continue to swell, from healthcare to the environment to energy policy to expanded “national service” programs. When taxpayers’ money is everywhere – and Obama is doing his best to make sure it is – then Obama’s control is everywhere. The Octo-potus is claiming his space and flexing his grip. As far as he’s concerned, it’s Barack Obama’s country. We’re just living in it. If all those ‘libertarians’ who dallied with The Community Organiser had been reading our own Paul Marks, who was onto Mr Obama’s agenda months ago, they would have saved themselves a lot of buyer’s remorse. Welcome, Instapundit readers. Some rather grumpy folk out there wondered where there was a link to one of Paul Marks’ comments (the archives on the side of this blog, so please use them!). Anyway, here is one reference. April 21st, 2009 | 64 comments - (Comments are closed)
Coffee House links to the latest example of a government minister/official leaving potentially sensitive information on the train. As usual, one expects such stories to undermine yet further the credibility of government-created ID systems and databases. But I think it was our own Brian Micklethwait who wrote, a few months back (cannot find the link, sorry) that there is a chance that such “cockups” are deliberate. What if such papers are being left lying around to create a false trail? Fanciful? Maybe. But it may just be that such officials are not quite as moronic as these stories suggest, or at least that another intepretation is worth thinking about. Oh scratch that: they are all morons! April 21st, 2009 | 7 comments - (Comments are closed)
Good on the Libertarian Alliance for publishing this. As it says, Guido Fawkes, aka Paul Staines, is more than able to take care of himself, but given some pathetic attempts by the Daily Telegraph and a few others to sneer at him (what the heck has gone wrong at the Telegraph?), it is nice to have friendly comments. Paul has probably raised the profile of the LA indirectly, quite a bit. He should get an award at this year’s annual LA conference. Even if it is not the whole truth, I think it is very, very good to be able to have it said that a “libertarian blogger has brought down minister X or civil servant Y”. The very fact that folk are going around saying this, or hinting at it, is gold-dust to libertarian activitsts such as the LA and its counterparts. In his way, Paul is doing for the free market movement what the Tea Party folks are doing, maybe, in the US. In fact, I’d be willing to state that relatively speaking, Paul’s site is now the most influential political blog in the world. I mean, is there a French, German or, heaven help us, an Italian equivalent? Just askin’. April 20th, 2009 | 15 comments - (Comments are closed)
Roderick Long links to some good material about The Watchmen, both of the graphic novel and film made out of it. I saw the film at an IMAX cinema a few weeks ago. Stupendous in some ways; very violent, an interesting morality tale to boot. And not to mention one of the hottest female heroines I have ever seen and er, a blue guy in the buff. (A girl sitting next to me went bright red watching the enhanced Dr Manhattan and she got such a fit of the giggles that it proved dangerously infectious). Here is a pretty good collection of reviews. Mr Long also has wise words on the Tea Parties. Talking of which, here are some related thoughts from Maine. April 20th, 2009 | 11 comments - (Comments are closed)
The account of Gordon Brown’s vile political career will not remotely surprise Samizdata regulars but this summary of the man who is now, hopefully, in the final phases of his career before reaching oblivion is a great read. Tom Bower’s article reads like a judge’s sentencing comments about a particularly nasty gangster. April 20th, 2009 | 6 comments - (Comments are closed)
I know that people like me are supposed to write newspaper columns because we have a certain command of the English tongue. However, there are times when even the most experienced of us is forced to struggle. How, after all, can one describe Jacqui Smith, our Home Secretary? The adjectives come thick and fast, but all seem insufficient to describe this ambulant catastrophe. Preposterous, corrupt, dim, incompetent, sleazy, incapable: none of them is quite the job. I remember the newspaper parliamentary sketchwriter, Edward Pearce (no relation) once remarking, apropos the late Tory grandee William Whitelaw, that no-one would be Home Secretary if they could get a job refereeing sumo wrestling. April 18th, 2009 | 12 comments - (Comments are closed)
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