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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In response to a recent response of the economic collapse of Portugal, commenter EndivioR had the following to say:
I lived in Spain during Gonzalez and Aznar. Foolishly, as I saw motorways roll out across the plains, buildings shoot up, high-speed trains whistle past, and cool graphics appear on TV news intros, I thought that some seriously good country management was going on. Now I realise that “economic miracle” means what it says. A miracle is something that defies the laws of nature. Spain is a mirage floating over the quicksand of unredeemable loans. I hope there are still people around there who know how to steer a donkey.
Oddly enough, Spain and Portugal remind me of something I have seen before. In the 1990s, we had a telco bubble. In mobile telephony, most places had two or three digital 2G mobile networks built. The spectrum was usually obtained cheaply by these companies, and the resultant networks were valuable, and useful, and there was a good return on the capital put up to build them. One or two companies made enormous amounts of money by figuring out something was happening early in the piece, building suddenly immensely valuable companies, and selling out, often to incumbent telcos who had read things less well than they had. Telecoms equipment manufacturers made huge amounts of money as their business was suddenly much bigger than it had been before. Other people got excited by this, and governments got excited by this, and there was an enormous piling in by new entrants to this industry. The equipment manufacturers (many government backed) wanted to follow up their first round of sales with subsequent rounds, and there was massive pressure to keep building. Many of the people and organisations who entered this business late were, shall we say, more dubious than some of the earlier ones. In many cases, they were the well connected rather than the prescient.
One thing that came from this, towards the end of the bubble, was a lot of what is known as “vendor finance”. Someone probably well connected wants to make money by building a telco, and probably selling that company on to someone else once it was built and had a customer base. A telecoms equipment manufacturer would lend the new telco money which the telco would then use to pay the manufacturer to build the network. This was all great as long as the network could be build, credit remained cheap, the network could gain customers and profits could be gained from these customers. In short, it was great as long as the bubble continued. Lots of people were making money as long as the bubble continued, and didn’t really care how it continued.
Of course, few of these things remained true. Credit became expensive, and what customers newer telcos could gain were very low value customers. For a time, mobile phone companies were valued simply on the number of customers, with little attention paid as to whether they were good customers. However, this eventually stopped, as it had to. Credit became expensive. Vendor financed networks defaulted on their debts and went bust. The companies that did the vendor financing went bust too. Bye bye Lucent. Bye bye Onetel. Amazingly, the banking system as a whole did not go bust for more than five years after this.
Which makes me think of Spain and Portugal. These countries joined the EC (as it was then) in the early 1980s after many decades of authoritarian government: poor, and woefully lacking in infrastructure. They lacked the capital markets, the expertise and the international connections to build modern infrastructure themselves, but there was the potential to catch up rapidly if they were exposed to international markets and international practice.
The avenue through which they did this was the EC and later EU, of course. The benefits of rejoining the international economy were immense, and EU aid and expertise did help them and pay for infrastructure. The scale of this in the 1980s and early 1990s was surprisingly modest, actually, and the infrastructure that was built was fairly hardly argue with. Motorways from Madrid to Malaga, or Lisbon to Porto, eminently sensible, and the economic value created by the motorways obviously exceeded costs. Given that they were and are tolled, a fair bit of this value was even captured by the people who built and financed them. Looking back now, it seems fairly obvious that market mechanisms could have build the 1980s and 1990s developments. The sad thing is that market mechanisms did not build them, and Spain and Portugal instead got used to the EU way of doing this. Money flowed from France and (particularly) Germany and French and German banks via the EU institutions, and this money flowed back to France and Germany to the companies who did a lot of the work in building them. Vendor financing, shall we say. No particular harm was done, as long as the infrastructure being built was actually economically sensible.
However, the French and Germans and French and German banks, and the Spanish and the French and German engineering companies got used to this. The inevitable greasing of wheels and protection and paying off of the well connected created a while class of people whose interests were in this continuing, long after anything was economically sensible. So in the late 1990s and 2000s, Spain and Portugal got huge networks of motorways in absurd and pointless places. (One evening several years ago, I drove in the evening along the old road from Regua to Vila Real in Portugal. It was a scary, winding, narrow single carriageway. The next day I discovered that there was a new road, which was a beautiful dual carriageway, four lane motorway, apparently being used only by me). These later ones tend not to be tolled, as if you were to toll them it would become immediately obvious how few cars were using them and how economically pointless they are. Then, things got nuttier. Spain got an enormous network of high speed trains. These are particularly good from the EU aid point of view, as there are two different European technologies – one French and the other German – and the contracts can alternate between the two. Pointless, but great in terms of being financed by German banks and then bought from the Germans. Then Spain got the world’s largest system of wind farms. The further we went along, the more pointless the things being built actually became. We started more or less with sense, but because the incentives were all wrong, this evolved into madness.
So here we are. The EU vendor finance bubble has ended. The French and (particularly) the Germans created this mess, because their banks and their industrial companies were benefiting in the short term. Blaming the Spanish is beyond the point. The Spanish let the Germans lend them money and then build them stuff with the lent money, and they were foolish to do this, but it appeared they were having a rapid miracle of modernity, and given the history, I can see why they wanted to believe this. The German banks are screwed, after doing the bidding of the German government. If the German government has to bail them out, well they created the mess.
Except, the political class made the mess. As that political class keep wining and dining one another as they discuss how to make things worse fix things, it is actually the German taxpayer doing the bailing out. The mess is certainly not the fault of the ordinary bloke making Volkswagens in the factory in Wolfsburg, but he has to pay for it. Hopefully the anger of such people is with the German political class and the European political class, rather than with “The Spanish” or “The Southern Europeans” amorphously, because it is the political class who are responsible.
In the case of the vendor financed telco bubble that I discussed earlier, the companies that did the lending and the borrowing generally both went bankrupt, their assets gobbled up by new and more sensible companies. In the case of governments that have done the same thing, cleaning up is messier. The German and Spanish political classes are not just going to go away, however much we wish they would.
Perhaps there is anger with the German political class. Support for the traditional Christian Democrats and Social Democrats appears to be in serious decline, which has led to support for the Green party approaching 30%. Which is not going to help. It is hard to see any scenarios in which we are not totally fucked.
That is one suspected reason for why the Icelandic government was so eager to roll over for the Dutch and the British – they were willing to bankrupt the nation to get their snouts trotter-deep into the EU troughs. If this means I can’t join the EU I regard the referendum result as a double win.
– Commenter Bjarni
“So far, George Osborne has taken the comfortable line that the eurozone meltdown is nothing much to do with Britain. As a result, he has chosen not to question the shoddy compromises, the straight lies and the probable illegality that have characterised Europe’s response to its greatest financial and political crisis since the 1930s. But the disaster will hit us, too. Britain is a shareholder in the ECB, and Britain is a core part of the bail-out mechanism. It is time that we started to poke our nose in, to demand honesty and transparency, and to stop sending good money after bad. Above all, George Osborne has an urgent duty as Chancellor to construct a firewall that protects Britain as much as is possible from the catastrophe that now looms over Europe.”
– Peter Oborne.
For many months and years, commentators – many of them at the Daily Telegraph – have predicted the eventual collapse of the single European currency. So far, it has failed to happen, if only due to the fanaticism of the European political class. But maybe, just maybe, the endgame is upon us. This is going to be nasty; some big banks could have to write off a huge amount in the way of bad loans.
And to think that a few years ago, it was claimed that the euro could rival, or even overtake, the dollar as a reserve currency. I am still a dollar bear, but who would want to bet on the euro?
I remember reading this book, The Rotten Heart of Europe, when it came out, and its author has that dubious pleasure of being able to say, “I told you so”.
Did Steve Holliday, Chief Executive of the National Grid, let the cat out of the bag or deliberately set it amongst the pigeons when he said, on Radio 4 last week, that our National Grid is going to have start being “smarter” about who gets electricity and who doesn’t? Delingpole reckons he’s an imbecile, and maybe he is. I didn’t hear the actual Radio 4 interview, so do not now know if he was blurting out an embarrassed admission or proud proclamation of inanity, or on the other hand offering a more careful and considered warning, thus to alert politicians to the consequences of their excessive policy greenness of recent years. Whatever the old school newspapers (that story, by the way, says that Delingpole is right) make of this story, it is already going walkabout in the new media.
Slowly, the counter-attack against global greenery is taking shape. First it was Climategate, which is now, finally, finding its way inside the heads of the kind of people who rule the world. The scientific excuses for greenery are collapsing, not just in the heads of skeptics, but in the heads of the kind of idiot politicians who originally accepted these excuses without bothering to scrutinise them. Now the consequences of greenery are becoming clearer. Blackouts. Nothing says “failed politicians” like power cuts.
For Britain, a big moment will arrive when it is finally, truly accepted, by enough British people to make this acceptance stick, that these blackouts are being imposed upon us by, and by means of, the European Union, and that our Prime Minister is not our Prime Minister, any more than the District Commissioner of your province in India was your District Commissioner. Today, the news is, yet again, that David Cameron is going native. I’ll believe this when it starts having consequences, in the form of Britain doing things that the EU forbids, and when they threaten to chuck us out, and when Cameron says: go on then, I dare you. I wouldn’t put this past him. He seems to be the kind of leader who follows his followers.
But, more generally, I am not angry about this tendency for the world more and more to be ruled as a single entity by the kind of people who now rule it. Telephones and atom bombs have seen to that. The former technology has long meant that they can talk to each other rationally, and the latter one has for more than half a century meant that they must. These people are now, more and more, all on the same side. I just wish they were ruling the world rather better than they actually actually are now ruling it.
In the matter of greenery, the world’s rulers have perpetrated and continue to perpetrate a huge folly, and personally I am very grateful to the probably imbecilic Steve Holliday for having made this fact that little bit clearer.
What I’ve described is essentially a top-down process, yes, that has gone bottom-up, as I’ve described so far, across official levels at Departments very widely. Now we have to make sure that nothing has fallen between the cracks in the stakeholder engagement process, but I think this issue of top-level Government buy-in to it is very important. I see it as a feature of the way that the new Government goes about its business. The approach of Cabinet Committees, with Ministers taking them very seriously, officials being energised by the fact that Committees will come back, rather than the Committee process being in any sense a formality, is something that in a lot of processes, not just relevant to the NRP, is galvanising much better across Government co-ordination in a very productive way. I think this applies to the NRP, as to lots of other things.
– Lord Sassoon, Commercial Secretary to the Treasury, makes everything clear. Helen Szamuely found it here.
… Kenneth Clarke invariably supports anything with “european” in front of it. If they re-named ebola virus “european virus”, I expect he’d declare himself in favour of that, too.
– Owen Morgan commenting on James Kirkup’s Daily Telegraph blog
“So 2011 is the year of the “beneficial crisis”, when the EU will try to exploit short-term economic hardship in order to eliminate the powers of national governments and to create a new pan-European political structure. If it succeeds, it may go on to become a great world power. If it fails, it will start to revert to a collection of nation states.”
– Peter Oborne
He makes a persuasive argument that as far as the architects of the EU superstate were concerned, the sort of crises we are living through – such as the Irish/Greek debt problems – are not problems for the eurozone, they are actually very useful stepping stones towards creating their own new version of the Holy Roman Empire, except that unlike the HRE, the new state will be one run on corporatist, heavily regulated, lines.
Matthew Lynn, one of the better finance journalists out there, has a column up over at Bloomberg News about the fact that, as of October this year, there will need to be a new boss at the European Central Bank. The term of Jean-Claude Trichet, a Frenchman, is due to expire. Lynn runs through all the various choices currently deemed available, and says they are, for various reasons, bad. For instance, if an Italian gets the job, this will piss off the Germans, already seething at the cost of trying to protect Ireland and Greece. If the job goes to a German, that will annoy the “peripheral” countries worried – rightly – that membership of the currency bloc means, effectively, rule by the most powerful economy. And so on.
But then again, this sort of issue reminds me of why the eurozone was a doomed venture in the first place. Far from removing all this nationalism, the issue of who gets to run the single currency remains fraught with geo-political tension, for the very simple reason that no genuinely popular pan-European polity exists. As we have seen in various referenda, European voters have, time and again, voted No to things such as the European Constitution, only to see their legislators switch a few items and then ram such items through national parliaments. There is widespread public cynicism about much of the current European “project”.
By contrast, while there is always a fair amount of speculation leading up to the choice of chairman of the Federal Reserve system in the US, I don’t recall seeing debates about whether the job should go to a Texan, or Californian, or Floridan, etc. Debate normally is based around general fitness for the job. One thing that does come out of the Bernanke experience, it seems to me, is that it is wrong for a central banker to have a purely academic background, as Bernanke does, and not to have any hands-on experience in running an actual private sector bank.
Of course, one prime requirement of a central banker is to be able to perform the role of legalised counterfeiter without smirking too much on camera. The issue of whether we should have central banks at all, is another matter.
“What you need to know about Ireland’s economic crisis is that it’s not about Ireland: a small country of slightly more than 4 million people and an economy of roughly $200 billion. It’s about Europe. For decades, Europe has pursued two great political projects. One is the democratic welfare state, designed to improve economic justice through various social safety nets. The other is European unity, symbolized by the creation in 1999 of a single currency — the euro — now used by 16 countries. The fact that both contributed to Ireland’s troubles suggests that Europe could be on the brink of a broader crisis.”
Robert Samuelson.
He’s a steady-as-she-goes, moderate voice of, well, good moderate sense. And he’s just said that the welfare state and the creation of the euro are going to tip Europe over a cliff. When Tory MPs said this a decade ago, they were called “swivel-eyed extremists”, and in Mrs Thatcher”s case, deemed to be insane.
To anyone with a vaguely libertarian perspective observing the relentless creep of regulatory politics into ever more aspects of civil life, it has long been self evident that as a practical matter the statist right are largely interchangeable with the statist left. After all David “I see no liberty” Blunkett was simply standing on the shoulders of Michael “there is something of the night about him” Howard, no?
Hence the recent remark by the dependably dismal John Major that he likes being in coalition come as no surprise to me whatsoever. Indeed the only thing that ever so slightly raised one eyebrow on my part was his willingness to left the mask slip.
And with this in mind, I left a comment on Norman Tebbit’s blog in response to this:
“I respect those who are working in UKIP, but I would hope that you would respect us Eurosceptics in the Tory Party too.”
“Well I would respect you a lot more if you were not aiding and abetting the people who have turned the Conservative party into a party of Big Euro Statism… but the fact is they could not have done it without folks such as yourself helping to keep a critical mass of genuine conservatives voting for the party despite profound unease with the likes of Cameron, Major et al.
If you are hanging in there because you seek to take over the Tory party (re-take really) and drive out the twerps who now freely admit they are ideologically fungible with the left (something I have been pointing out for a decade, so Major’s remarks are hardly a revelation to me)… ie you remain a Tory so you can do a UK version of the Tea Party… well great, that is certainly something I could get behind… but if you are just going to be enablers for people who frankly do not share your conservative views, then with all due respect Norman (and I do mean that) you are part of the problem rather than part of the solution, and that is a great pity.”
Singleton’s conclusion:
… it is not just fish where the EU is damaging us, but in financial services, manufacturing – indeed, its ever-increasing regulations impose unnecessary costs across the whole of our economy. Greenland, which retains free trade with the EU, shows that we can have the benefits of European exports, without the costs of its diktats. It’s surely time that we, too, said goodbye to Brussels.
Okay, cards on the table, Singleton is a sometime Samizdatista and a good friend of mine. But more pertinently, he is one of those free marketeers who is, unlike many of our breed, highly sensitive to mood, to atmospheres, to appearances, superficialities, surface trends, straws in the wind, stylistic nuances. He may not always be right about who is hot or who is cool (as opposed to merely who is right), but he is always thinking about such things. He is, after all, a paid journalist working for a major British broadsheet newspaper, who is trusted by that newspaper with editorial as well as writing responsibilities. When he writes stuff, he is typically wearing a suit. He is, in other words, the exact opposite of your typical old grump UKIPer. The significance of this piece of his about Greenland and the EU is not just in what it says, but in its timing. If Singleton reckons that now is a good time to be saying such things, that says something to me, as in something else besides what he is actually saying.
As still current Samizdatista Johnathan Pearce has often said here in recent months, especially in comments, something important just might be stirring in little old Blighty. It’s as if “we”, whoever exactly we are, have been sitting on our hands, waiting for Gordon Brown to depart, and then waiting to see how David Cameron would turn out (given that his mere words communicate so very little). Now we are beginning to learn, and now we are beginning to find our voices and to exert some actual pressure.
Who the hell do you think you people are?
– Nigel Farage MEP uses the TV cameras in the European Parliament in Strasbourg to berate the Euro-elite and to create another few minutes of video that is now starting to make some waves, particularly in the USA. Which means that it is that much more likely to get noticed over here also. That “people” should probably have come after the first “you” rather than the second, but it will do. As a major British Newspaper has now noticed, the Euro-project is starting to look not just seriously corrupt and seriously nasty but also seriously vulnerable.
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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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