Random Thoughts

Inside job
I happened to catch a rerun of the Oscar winning 2010 documentary film “Inside Job and it was a sobering experience, as it illustrated to me how in many respects nothing has changed, and its probably if not when the next financial crisis hits. Incidentally, there’s a copy of the film online available via the internet archive here.

There are many myths about the financial crisis. The first is that this was some sort of bolt from the blue that nobody say coming. bollix to that is all I can say! The first time I heard the term “credit crunch” was in the early 2000’s, on the BBC money programme who were reviewing the Japanese asset bubble. In 2006, Irish economist Morgan Kelly discussed the probability and consequences of a property bubble bursting and its effects on the Irish economy.

Others such as Raghuram Rajan, George Soros, Satyajit Das, Christine Legarde, Bethany Mc Lean, all flagged up warnings at various points (from as early as 2005) of the impending crisis. However they were ignored by those from within their ivory corporate and government towers. Thus this “out of the blue” argument only applies if we assume that those in charge were snorting so much coke that they simply didn’t hear the warnings.

Another myth is that everything was the fault of Gordon Brown and G.W. Bush. In truth the bulk of the blame has to be laid at the feet of Thatcher and Reagan and their deregulation of markets. Bill Clinton also must take some of the flack for his repeal of the Glass Steagall act.

To draw an analogy, if the warehouse full of oil soaked rags burnt down, its hardly fair to blame the newly appointed nightwatchman Gordon Brown for it, given that it was some else’s decision to fill the warehouse with the rags while bricking up the fire exits and selling off the fire extinguishers. Okay, senior nightwatchman G. W. Bush has to take some blame for letting his frat house friends play all night poker games in the basement, without checking to see they weren’t smoking. But clearly the bulk of the blame has to go past adminstrations and the laissez-faire polices they initiated.

And the scary thing is that it was more luck that anything that meant the measures taken by governments actually worked. The few trillions in bailout money was a fraction of the hundreds of Trillions in at risk assets. In essence governments in the US, UK and Europe successfully managed to bluff the markets by throwing enough money around and hoping the spiff’s would be too busy lining their pockets to bother doing the maths. By contrast, in Iceland, which offered similar guarantees on its deposits, the markets smelt a rat, called their bluff and found the Icelandic’s wanting. So we really did dodge a bullet back then.

And where are the guys who caused this crisis? On their yachts or still in their corporate or government ivory towers! Several have gone into academia, where they are teaching the next generation of business studies students the same old tosh that got us into this crisis in the first place. This is like the nightwatchmen far from being fired being put promoted to head of training! Very few have lost their jobs or fortunes, nevermind gone to prison.

Recently Jon Steward drew attention to the fact that a group of US teachers who faked exam results face jail…while virtually none of those responsible for the biggest economic crisis in history have ever, or will ever see a night in jail.

Perhaps more worrying are the signs that we haven’t learnt the lessons of the crisis. Recent events such as LIBOR, the Forex scandal, the impending bankruptcy of Greece and possibly Italy, all this talk of Brexit and renegotiating the UK’s EU membership all point to the fact that those in power haven’t learnt a thing.

And the very fact we have a Tory majority government suggests the bulk of the electorate have forgotten too. Keep in mind the Tories, were talking about jailing people for benefits fraud, but not a day in jail for traders doing the same. Because the real lesson of the crisis was that beyond a certain tipping point everyone is at risk of being carried along by events beyond their control.

If in theory for example a US investment firm were to come out tomorrow and reveal that they’d done something silly and were now at risk of bankruptcy, or an Italian or Greek bank were to do the same, or a large UK manufacturer were to suddenly realise its business model isn’t viable outside of the EU, well what then? We could be looking at more bailouts, but where’s the money going to come from? Will the public support another round of bailouts? And even if they do, suppose the markets call the government’s bluff and they find said government unable to meet its obligations? We could be looking at a crisis of such proportions it will make the Great Recession look fairly tame.

UKIP’s cult of personality
I’ve been saying for quite a while that UKIP is little more than the cult of the Nigel. Without him UKIP are just a bunch of has-been ex-national front members . And we saw that last week with a “challenge” to his leadership. Well that is too say that several in the party came out with statements which seemed to criticise Farage, but instead they criticized various shadowy figures around him.

This is classic cult behaviour. The all seeing leader can do no wrong, he is infallible and always right about everything, ever! So the faithful instead blame either those outside the cult or his “advisors” for the leader’s mistakes. No doubt they’ll soon be burning his critics in wicker men while chanting “Sumer Is Icumen In”.

Needless to say, I’d be hugely embarrassed to be anyone one of the loon’s who actually voted for them. Although it was handy to know that there’s 3.8 million racists in the country and that this is but 7% of the population.

Coal rollers
Speaking of right wing loons, in the US there’s a fad being brewing called “coal rolling”, where they rig up their SUV’s to emit large clouds of smoke as a sort of two fingered salute to environmentalists. It just goes to show the extremes things have gone to under the tea party antics of America. The reason for opposing action on climate change has little to do with science and everything to do with a wrapped ideology.

And since were talking about it, its not just climate change that’s the worry but air pollution, which has a severe effect on the health of many. Tens of thousands of excess mortalities each year in the US are caused by air pollution. But such is the insanity of the US these days. Its the equivlent of driving around blowing cigarette smoke in people’s faces.

Meanwhile, to those who “don’t believe in climate change”, well Florida is slowly slipping into the Atlantic, an unprecedented strong el-Nino is forecast this year over the Pacific, we have a record breaking drought in California that has left the state desperate for water. And meanwhile if you live in the central US and you built that bunker in the yard to save you from Obama’s death panels….well its been raining so hard bunkers and storm shelters have started to rise out of the ground and float away.

Gun fight at the Waco Corral
A major gun fight erupted between rival biker gangs in Texas this week. I mean we have a country where people can own guns unregulated, including many in criminal biker gangs, what could possibly go wrong with that?a shootout involving several hundred people which left 9 dead!

And before anyone quotes me the 2nd amendment of the US constitution, yes and that was written when guns were muzzle loaded muskets with a fire rate of 1 every few minutes and an accurate range of a few metres (be interesting to see a re-run of this fight involving musket wielding bikers…presumably on penny farthings! “stand and deliver” and all that :))). Now unless we’re proposing to go back to those days one has to acknowledge that gun violence is a serious problem. The idea that adding more guns to the mix will somehow make everyone safer is of course ridiculous and is not born out by the facts.

Migration
There are some who say that the solution to migration is the fortress mentality, i.e. bar the door, send them home, turn back the boats. The short comings of this strategy have been laid bare by events in Asia. There the Thai’s, under pressure from their own brand of UKIP bigots, very naively enacted a draconian policy on migrants. However as they discovered when try to implement it on a group of boat people, they weren’t going to cooperate, not least because they were too desperate to do so….I mean why else do you think they were crammed into a small boat in the middle of the ocean? Felt like a scenic cruise?

So to those Katie Hopkins followers in UKIP who want to do the same, you would have to be willing to do some pretty awful things to stop immigration this way. People that suitably desperate aren’t going to turn around simply because you asked nicely, or even if you point guns at them, largely because turning around is probably not an option for them even if they wanted too. The solution is long term measures to help stabilise these countries and stop corrupt regimes abusing their power (perhaps by not being said leaders buddies and helping them launder their ill-gotten gains).

The deadly game
The Beeb sent a journalist into Qatar to investigate the state of venue construction….and the locals arrested him! Yes, that’s the world cup in 2022 for you.

The Beeb were hoping to investigate claims by newspapers, such as the Guardian, which claimed a very high death toll (one or two a day) of migrant workers on these projects. In fact its now possible that 62 workers will die for each match that is ultimately played at the 2022 world cup…not including the players who collapse due to heat stroke!

In short, FIFA’s decision to hold the games here isn’t merely the matter of a few brown envelopes changing hands, its about FIFA selling the soul of football.

Worse than Yugoslavia
I’ve described before how the conflict in Syria threatens to be worse than the Yugoslav civil war. Well the current estimates are that the casualty rates in Syria alone (nevermind Iraq) are up to similar levels, with vastly more people displaced, and the destruction of some of the world’s most historic monuments. With Palmyra now in ISIS sights, its possible that the entire region might slide into an abyss, from which there may not be an easy return.

And keep in mind, that if Iraq and Syria falls, its almost certain to involve the West eventually. There is simply no way the US or its allies could allow the likes of ISIS to end up controlling that much of the world’s oil. An invasion of Iraq, and possibly Syria too, is now a very real possibility.

I’m reminded of a prediction prior to the last Iraq war that the invasion of Iraq would led to “a hundred Bin Laden’s” and that US troops would be occupying the region for generations to come. Well now the Iraqi’s reckon we’re facing a thousand Bin Laden’s. Don’t you hate it when people get these things right, then drastically underestimate how screwed we are!

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