We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Well, why should the English-speaking world have all the fun when it comes to a banking disaster?
Société Générale, France’s second-biggest bank, has revealed that one of its traders in Paris had committed a 5bn euro (£3.6bn/$7.1bn) fraud.
3.6bn quid. However one looks at it, that is a lot of money. The Telegraph story I linked to has named the guy who is alleged to have perpetrated the fraud; the meltdown easily surpasses the collapse of Barings, the blue-blooded British bank that went down due to massive losses incurred by derivatives dealer Nick Leeson back in the mid-90s.
What early conclusions can one draw? First of all, it is not possible to argue that the more heavily regulated banking systems in continental Europe are inherently superior to those wild, anarchic Anglos. At the very largest banks operating out of Paris, New York or London, it seems that human venality, incompetence and dishonesty is no respecter of cultural differences. What investors need to realise is that banks contain human beings with all the weaknesses, as well as virtues, humans have. Regulatory zeal has not prevented frauds; and yet every time there is a fresh SNAFU, a chorus goes up demanding some new set of regulations – “something must be done”. In the end, the only course is to catch the wrongdoers, lock them up or force them, if possible, to repay the folk they have swindled.
To say that 2008 has started badly in the financial markets is an understatement; with banks like Citi taking huge losses linked to the falls in the US housing sector, this latest, Gallic twist of bad financial news is the last thing that investors needed. Jobs have already been axed in the City; it is likely to get worse before it gets better.
Here is a list of recent monster banking frauds.
“He must be a credit to his country and his newspaper abroad; he should be either a bachelor or a solidly married man who is happy to have his children brought up abroad; his personality must be such that our Ambassador will be pleased to see him when the occasion demands. He must know something of protocol and yet enjoy having a drink with the meanest spy or the most wastrelly spiv. He must be completely at home in a foreign language and have another one to fall back on. He must be grounded in the history and culture of the territory in which he is serving; he must be intellectually inquisitive and have some knowledge of most sports. He must be able to keep a secret; he must be physically strong and not addicted to drink. He must have pride in his work and in the paper he serves, and finally he must be a good reporter with a wide vocabulary, fast with his typewriter, with a knowledge of shorthand and able to drive a car.”
Ian Fleming, former Reuters and Sunday Times journalist, intelligence officer, and creator of 007. Quote taken from this book, on page 171.
Pretty good guidance. Suffice to say that this applies just as much to women as men, of course (Mr Fleming was not what you would call PC).
It has been a mad-cap few days; the FTSE 100 index of shares oscillated by 9% today, an incredibly volatile day and although it ended higher after the Fed tried to kick-start the US economy with a sharp rate cut, we are not out of the woods yet. Although Britain may not have some of the problems of the USA, we have the disaster of Northern Rock. It looks as if the British government has decided that it is so desperate to avoid being tarnished as a government that nationalised a failed bank that it will, instead, create an elaborate set of government guarantees to enable a consortium of investors, led by Richard Branson, to run Northern Rock and over a period of time and with luck, repay the loans. It is a no-win situation for the taxpayer, of course, who bears the risk of this venture. It also adds to moral hazard and undermines the necessary fear of going bust that should, in a healthy economy, act to deter unwise lending practices (that is harsh, I know, but consider the long-term problems of not letting this happen).
Anatole Kaletsky is far too much of an economic intervenionist for my liking, but his article today is pretty good. His comments on Brown are damning.
Some time ago I made vaguely praiseworthy comments about Richard Branson, in the context of the airline industry. Well, we are all entitled to revise our opinions; I am not really sure I like what the Bearded One is up to, or his rather undedifying association with a deal involving huge amounts of public funds.
Update: Tim Worstall has some further thoughts.
Good piece by Jeff Randall today on what the rapid rise of gold implies. Gold at $1,000 an ounce looks eminently plausible. Mind you, there is a fair bit of speculative froth here. I like the fact that Jeff, who must have felt very out of place during his time as a journalist for the BBC, approvingly quotes F.A. Hayek’s views on banking and gold.
Let’s not forget that Gordon Brown, you know, that clever chap from the University of Edinburgh, once a centre of the Scottish Englightenment, flogged Britain’s official gold reserves for a mere $275 an ounce. Vote Labour!
Interesting story at Bloomberg saying that despite the blandishments of President Sarkozy, who is currently diverting the celebrity pages of the press with his amorous adventures, Frenchmen and women living in Britain do not want to return home to a land still hobbled by taxes and regulations.
They certainly cannot be staying in Britain for its weather.
Statistics of the sort unearthed by Matthew Elliott here are of the kind that any ambitious Tory MP, anxious to hammer the government, should memorise by heart.
One of the briefing notes that I get from a stockbroking company has this to say:
I see from the headlines that this Government seems to be reverting to type over the treatment of fee paying schools. When times get tough, “lets put a bit of trendy legislation through attacking those nasty ‘rich’ people” in a desperate attempt to divert attention away from the state of the economy. The definition of ‘charity’ used to be ‘for the public good’; it would be difficult to find a better description of that than educating a seriously large section of the ‘public’ (even if you are Middle Class you are still part of the Public), to a much higher level then the average at absolutely no cost to the Exchequer, and with money that has already been taxed at 40%.
The definition of ‘charity’ (where Public Schools are concerned), now appears to exclusively mean ‘benefiting those in poverty’ which, were it applied universally, would put virtually every charity in existence in a bit of a quandary. The problem with this type of legislation, is that it is almost impossible to defend against because it will always be the majority ganging up on the few (remember fox hunting?), especially when the few are perceived as the privileged minority. The UK establishment seems to be doing its normal reaction to success, which is not to lambaste the failures but to drag down the achievers.
The circular refers to this story. Now, ideological purists for classical liberalism might well argue that charitable tax breaks are a problem, since they immediately beg the question of who gets to decide who is entitled to the tax break and why. Far better, of course, to get rid of the taxes in the first place and let people spend as they wish; part of the case for low, flat taxes of course is that it will remove the need for a vast stage-army of accountants, lawyers, “tax planners” and the like who earn a high living on what is essentially paper-shuffling rather than genuine wealth creation. But, but… we live in the world we have, not Galt’s Gulch. Hence the current attack on tax breaks and government interference in private schools should be seen for what it is; an attempt to further undermine any semblance of independent education in the UK.
Of course, Samizdata regulars will know that for real radicalism about education, we need to embrace the notion of removing compulsory schooling across the board, but I’ll discuss that again in the future, no doubt.
Christopher Hitchens recently mentioned a small, if telling example, of how Hillary Clinton fibbed about how she got her first name. It is a small detail, not the sort of thing to necessarily cause my blood pressure to rise dangerously, but it is revealing about what sort of character she is. Rather like Tony Blair claiming to have seen Newcastle FC legend Jackie Milburn, when that would have been an impossible feat, given Blair’s age when he made the claim.
These little details, they get noticed.
It was a bit of a shock to read, in my old local newspaper, that F-15 fighter/bomber aircraft used by the US Airforce are suffering quite so much from wear and tear. They are currently based at RAF Lakenheath, west Suffolk.
At one stage, East Anglia, the flat bit of the UK, was rather like a gigantic airfield with more than 100 airfields for British and American fighters, bombers, recon aircraft and transportation. Even after WW2, when the Liberators, Flying Fortresses, Mustangs and Thunderbolts no longer buzzed around, the area played host to the jets of the Cold War era. It was a common experience on my parent’s farm to be walking around and suddenly, at about 100ft above the ground, a pair of Jaguar jets or an American A-10 “tankbuster” would come over (the latter was eerily quiet, and had an enormous 30mm cannon mounted in the nose). Now it is almost all gone. In a silly sort of way I rather miss the din of jet aircraft. But then, we won the Cold War. It is never a mistake to remind ourselves of that fact.
Check out this Bloomberg headline. No doubt one of the editors thought this was nicely “ironic”, etc, and I get their point. Even so, I fail to see why a Vegas stripper or waiter is not as able to judge the wisdom of where to put nuclear waste as say, Hillary Clinton.
The Daily Telegraph asks:
“Just what do chalet girls get up to?”
I have been skiing several times and judging by the partying I er, saw (honest, guv), quite a good deal. As for the chaps, well…
For, despite the warnings of the accursed health and safety apparatchiks, who enjoy nothing more than closing paths of self-discovery, the human spirit will not be tamed. That is the important lesson of Hillary’s life, a lesson that is worth passing on to children growing up in a world where everything must be measured and known.
– Michael Henderson, talking about the late Sir Edmund Hillary, who died last week:
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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