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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The words are mainstream anarcho-lefty stuff, but the name being quoted is a bit of a departure for the place where I spotted this. I took this photo in March, in Leake Street, which is a tunnel under Waterloo Station where graffiti artists do their best and their worst, with results that constantly change. Thank my Photoshop clone for how clear those words are. I went through the Leake Street tunnel again today and wondered if this sign had survived, but of course there was no sign of it. Here is how Leake Street mostly looks.
Contrary to what most people had assumed, banking in the United States had been highly stable in the decades before deposit insurance. Of course, depositors were concerned about their safety, but this made them cautious in whom they banked with. They demanded reassurance from their banks, and the banks gave it to them. Pressure from depositors forced the banks to be conservative, to lend carefully, to keep their leverage ratios low, and to disclose their broad positions. The bankers themselves were conservative even in their dress, but this was itself reassuring, and the solid architecture of the banks’ offices reinforced the notion that they were pillars of the community with solid roots in it. The key to banking was maintaining the confidence of depositors and not taking that confidence for granted.
Before deposit insurance, a bank that took too many risks would eventually undo itself. It would do well for a while, increasing market share and generating better shareholder returns than the fuddy-duddy banks, which would feel the pressure. However, come the inevitable downturn, the cowboy bank would experience heavy losses on its questionable lending, liquidity would tighten, and a point would come where the frightened depositors would run for their money: the cowboy would be literally run out of business. These occasional crises were unpleasant, but good for the long-term health and even stability of the system: the runs would expel the cowboys from the system and give a salutary reminder to those who survived. The system itself was rarely seriously at threat, because the depositors would redeposit their funds with the safe banks. There would typically be a flight to quality, a transferring of funds within the system, rather than a run on or threat to the system as a whole. Thus, it was the threat of a run that kept the bankers in line.
Once you introduce deposit insurance the situation changes profoundly. Deposit insurance allows the bankers to take their depositors’ confidence for granted. This takes the pressure off the bankers, who can now safely increase both their lending risks and their leverage ratios, thereby increasing returns to their shareholders (or, in modem Wall Street, to themselves). For their part, the depositors are no longer concerned with the risks their banks are taking, but only with the rates they get on their deposits. Consequently, deposit insurance subsidizes risk-taking, so leading to excess risk-taking with the deposit insurance agency and, ultimately, the taxpayer, picking up the tab.
Nor does the damage end there. With deposit insurance, there is no longer any run to fear and even the most insolvent banks following the most unsound “shoot to the moon” investments can now remain in business indefinitely, attracting more funds and staying in business by merely raising deposit interest rates. The process of competition then becomes utterly subverted: instead of allowing the conservative banks to drive out the cowboys, even if it takes a little time, the process of competition now rewards the cowboys and penalizes the good banks. It therefore pays to become a cowboy and, eventually, all banks do.
– From Alchemists of Loss by Kevin Dowd and Martin Hutchinson (pp. 271-2). Pictures of the two authors here, taken at the launch of the book last Wednesday evening at the Institute of Economic Affairs.
It’s full time in Bloemfontein, and England have crashed out of the 2010 World Cup. Meanwhile, at Old Trafford we have a double change with Ryan Harris back into the attack.
– Cricinfo passes on the bad news.
The sort of dependence that results from exchange, i.e., from commercial transactions, is a reciprocal dependence. We cannot be dependent upon a foreigner without his being dependent on us. Now, this is what constitutes the very essence of society. To sever natural interrelations is not to make oneself independent, but to isolate oneself completely.
– Frederic Bastiat
Oh never talk again to me
Of northern climes and British ladies;
It has not been your lot to see,
Like me, the lovely girl of Cadiz
Although her eye be not of blue,
Nor fair her locks, like English lasses,
How far its own expressive hue
The languid azure eye surpasses !
– George Gordon, Lord Byron
Never has there been a worse time to be a US ally.
– Daniel Hannan finally admits that he was wrong to have backed Barack Obama for President
We are incredibly heedless in the formation of our beliefs, but find ourselves filled with an illicit passion for them when anyone proposes to rob us of their companionship.
– James Harvey Robinson, via Dale Carnegie’s classic How To Win Friends and Influence People
Full government control of all activities of the individual is virtually the goal of both national parties
– Ludwig von Mises
“The beliefs and attitudes that this president has internalized are to be found everywhere—in the salons of the left the world over—and, above all, in the academic establishment, stuffed with tenured radicals and their political progeny. The places where it is held as revealed truth that the United States is now, and has been throughout its history, the chief engine of injustice and oppression in the world. They are attitudes to be found everywhere, but never before in a president of the United States. Mr. Obama may not hold all, or the more extreme, of these views. But there can be no doubt by now of the influences that have shaped him. They account for his grand apology tour through the capitals of Europe and to the Muslim world, during which he decried America’s moral failures—her arrogance, insensitivity. They were the words of a man to whom reasons for American guilt came naturally. Americans were shocked by this behavior in their newly elected president. But he was telling them something from those lecterns in foreign lands—something about his distant relation to the country he was about to lead.”
Dorothy Rabinowitz, Wall Street Journal.
I am not sure whether it is very smart for the WSJ to have a headline referring to Mr Obama as an “alien” in the White House – that will only reinforce the view, held by parts of Mr Obama’s more extreme fans, that his critics are racist bigots. And it is also far from the first time that a supporter of Transnational Progressivism has held office – think of the dreadful Woodrow Wilson, for instance, or to a lesser extent, Jimmy Carter. But it certainly is notable that more and more people are drawing the conclusion that Obama and his associates don’t seem to care for their country very much, or pander to some of the silliest Blame-Amerika-First lines.
Of course, had WSJ readers been following Paul Marks on this blog, none of this stuff would be a surprise.
“We are building socialism … and as long as we are building socialism but have not yet built it, we will also have homeless children.”
– Anne Applebaum quotes Nadezhda Krupskaya in this review of Children of the Gulag
The ultimate cause of the problem with the banks was indeed chronic government interference, in the form of implicit and explicit guarantees supplied to them free of charge, which hopelessly weakened the entire industry. Reserve ratios – the percentage of deposited cash which is actually retained by the bank rather than lent out – has fallen from over 50% in the 19th century to 2-3% today (or a negative percentage in Northern Rock’s case). That could not have happened in a free market, at least not on an industry-wide scale; nobody would lend to a bank if it tried to take on that much leverage without a government guarantee.
The banking industry had been rendered so unstable by government intervention that it was only a matter of time before it had a crisis, and the crisis could have been brought about by any number of proximate causes. Unfortunately most commentators blame the proximate causes, the particular individuals who happened to be involved at the time, and “free markets”.
In a free market, firms fail from time to time; they aren’t bailed out, people don’t expect them to be bailed out, people arrange their affairs accordingly and so the failure of one firm doesn’t bring down an industry or an economy. Banks were a long way from being a free market.
– “Some Guy” (that’s what he calls himself) commenting on the Bishop Hill piece also linked to below by Johnathan Pearce in connection with Matt Ridley’s inglorious career as a banker
“Mediocracy prides itself on being progressive. Its critics (to the extent they are permitted to survive, and allowed to express themselves) are derided as conservative, reactionary, and so on. However, the kind of progress that mediocracy promotes is rather specific. Curiously, it often takes tribal life as its paradigm. Movement ‘forwards’ is movement towards a model of a pacifist, egalitarian community, not exploiting the environment, sharing all tasks equally, with each member answerable to the whole community. Other kinds of change are considered inappropriate, and therefore not described as ‘progressive’: e.g., greater freedom from state interference, fewer restrictions on commercial activity.”
Mediocracy, by Fabian Tassano, page 142.
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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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