Destructive destruction

As opposed to the "Creative destruction" long heralded as Capitalism's (oxymoronic) driving force we appear to have met Capitalism's opposite and equal (possibly greater?) force - Destructive destruction. While elected politicians (or unelected technocrats) are furtively attempting to "manage democracy" in the quest for sovereign fiscal survival and implementing, brazenly political, social engineering - the financial institutions are betting against them succeeding in a knee-jerk quest for profit. Unfortunately, whatever the governments do the very financial institutions they are attempting to save will manipulate the outcome to their own short-term financial benefit even if this leads to their own eventual, predictable, economic downfall. Free-market theory demands that even when facing the distinct prospect that the world's economic system is collapsing nothing should or can be done to prevent it committing suicide.

Rather than Bulls and Bears what we have is a Mad Dog that won't let go of the bone. The same financial machinations that brought us to the edge of darkness are still out there Trading, Shorting, Hedging and generally trying to find a way to make money at someone else's expense right up to and until the lights go out. A sort of financial "Doomsday" scenario where they keep firing financial missiles until there is nobody alive to claim victory.

Lemmings going over the Free-market cliff.

We're facing a somewhat stark choice. Democracy, Liberal Democratic Capitalism or Managed Democracy, State Capitalism. The present trend is towards the latter duo. Certainly the present Merkel/Sarkosy manifestation of a Euro solution is anything but Democratic and an attempt to save themselves and their banks by denying others their right to choose. By inflicting austerity upon the less fortunate they imagine they'll be able to avoid the same fate themselves. For this the others will pay. Those with the most money to lose will set and impose the rules and woe betide those that don't obey. Somehow I don't think this is going to work. Aren't they missing something here? Haven't they got this backwards? Isn't it those who must obey that can spoil the plan by just saying no more surrender of democratic rights and ask for the UK model - in the EU but out of it. Sadly if the errant, fiscally irresponsible nations (who loaned them the money in the first place?), chose to go for a UK model they'll take the UK down as a result - banks and all.  If you were looking to set up a brilliant "can't win" position this is it - a lose/lose situation.

So here we are entrapped by a system that we're trying to save whose very tenets prevent us doing just that - an oxymoron indeed. Or is the true oxymoron "Moral Hazzard"?

Pro tempore

In the same way as after "The Big One" Earthquake along the San Andreas Fault everything East of it, from the Rocky Mountains to New York City, sinks - Germany will leave the Euro. It may take a few small economies with it but France, Italy, Spain and the rest of them will be left floundering in Euro mire. Belgium, Hungary and Austria are about to admit defeat any day now. Angela is fervently denying she's riding that horse into town - all the more reason to believe she will. By extracting Germany it takes the Euro off the equivalent of a Gold Standard and immediately allows for it's devaluation. This will solve nothing for those left in it other than not have Germany tell them what to do. Brilliant!

The Euro is saved - pro tempore - somehow the beleaguered remnants have to come up with about half a trillion in new money a year for the indefinite future to save their rotten banks - even Binary Fission wouldn't suffice. As the ECB will have gone back to being the Bundesbank they'll have to open another central bank rapido, presto, tout suite to run the printing press.

Meanwhile the population of the remaining Eurozone take to the streets in an anti-austerity avalanche of protest and a bunch of Fascists get elected. All non-citizens are thrown out. The Deutschmark becomes the new reserve currency, forms a fiscal union with Switzerland, Lichtenstein and the Cayman Islands - the City of London empties and moves to Frankfurt. The pound overvalues against the Euro and everybody in Britain goes shopping in France and the Republic of Ireland - the UK borrows money from the Germans to survive under a deal where the Bundesbank runs Britain - ex-servicemen storm the Houses of Parliament - Chancellor of the Exchequer beaten to death with Zimmer frame. The USA foolishly pegs the Dollar to the Deutschmark in an attempt to keep oil priced in US Dollars, goes into a Depression and invades the usual suspects and several unsuspecting countries - they elect a Montana Militiaman as President and the Capitol is moved to a small shack near Helena. The Middle East falls apart. The Taliban invades Pakistan causing a war with India and China buys Africa when nobody is looking. The UN moves to Beijing and Israel is thrown out. The Greeks find oil. There is an Influenza pandemic started by a sick chicken in Baluchistan, due to a lack of funds a third of the world's population dies. Notts County win the FA Cup.

Is this something like the solution you are suggesting?

Theory

There is, of course, one very good reason that no matter who is elected they instantly renege on policy promises and revert to getting as much as they can for themselves and their mates before losing the next election -  Theory.  Any word in the dictionary can be placed in front of "Theory" and claimed as a best-practice canon of effective thinking on everything, anything and nothing simultaneously. The best thing about a Theory is that you can have one about things that don't exist, don't work and can't happen and win a Nobel prize for it. This is of little benefit to those supposedly living under it's influence. But given that a real insight is lacking it's better to have a Theory than admitting that you don't have the first clue. Theory is an excuse to stop scratching your head - and justify inflicting your opinion on as many people as possible.

There is little or no point in trying to explain a Theory to the vast bulk of the proletariat and even less in trying to explain one to Politicians - to whom complexity and getting elected are incompatible. This results in Cherry-picking simplistic elements of a Theory for public consumption while leaving the bulk of it's content and ramifications hidden from view to all - including themselves. The need for an aristocracy of thinkers is thus required to develop and prosthelytize Theory. Given that you can have a Theory about everything, anything and nothing then if you don't like one you can find thinkers that come up with another one that you do. This eventuates in conflicting Theories all regarded by their creators and supplicants as indisputable. Upon such things are Policy promises based. Sadly upon such things are nations and societies based.

Which brings me to the Theory of using a cow as a cigarette lighter. This would require positioning cows at all those smoking compounds outside bars, restaurants and office buildings - although for reasons of cows' sensitivities, restaurant locations, other than vegetarian ones, might be a little heartless - unless you blindfold them, but this would cause an additional fire hazard. A Piezo Crystal thingy in the nose or up it's ass would provide ignition. I call this "The Big BIC Theory". This Theory would work a treat in India. It would also provide a purpose for cows past their best milk producing years and make "I'm just popping over to the Abattoir for a quick smoke" common parlance. Even if smokers weren't around, to utilise this flame-off, a burning taper sticking out of all cows bums and noses would have a dramatic effect both on the release of methane into the atmosphere and upon the cost of street lighting. Why no political party in New Zealand has adopted this as a policy promise bemuses me.

Back to the subject of time travel - to a time when cows were pre-industrialised. Why bother? What's the point of arriving in the past and immediately catching Cholera, TB or the Plague and being referred to as "yee" - even if you can't expire. Do you have to take your own toilet paper with you? Anyway time as a continuum is only .... you've got it - a Theory. If it were available time travel would put an end to the retirement age dilemma and reduce health-care costs immeasurably as you'd be constantly sent back to a time when you were healthy and could work for a lower wage - or alternatively sent into the future and be dead. The Time Machine would be called the "See Ya" and located in every hospital, unemployment office, airport, police station and bank thus dealing with any and all social inconveniences at the push of a button.

If everybody had a time-machine would there be anybody left?

Now the Euro. How much would it cost to build a time machine - a few hundred billion, a trillion, ten trillion - certainly a lot less than saving the present financial system. Then we could all keep going back to 2006 and avoid the Global Financial Crisis. Despite the absence of time travel our politicians are attempting to do it by pretending it still is 2006 and using your money to wipe out the intervening years. So here you have two Theories, both of which claim that you can travel back in time, neither of which exist, work or can happen.

Return of the Gooh Gooh

The exchange rate is the least of it. Protectionism and all the monetary constraints of economic collapse ensue. But the gist of your argument is that, as with the UK, Sweden and Denmark, you're better-off out of the Euro so why then propose an expensive (unworkable, unaffordable) solution to save it? You're knocking down your own argument. Rather than a single economic zone the Euro is an economic chimera of smoke and mirrors developed from an original treaty designed for the benefit French farmers.

The UK's economic performance is abysmal - so unfair to Sweden and Denmark to compare their performance based solely on a shared ability to flex exchange rates. The only thing that keeps the UK out of an Italianesque tradgedy is, as you say, that it is fortunately not in the Euro -  as a result, they are able to devalue against it - the saving grace along the way is the US Dollar weakness - already ending as American money heads for home in panic. This does not mean that the UK economy is doing any better or that their banks aren't just as vulnerable as the likes of France's when debtor nations try to repay loans with garbage currencies - however they are aligned. By the way, aligned to what?

When you devalue your Mickey Mouse currency against the Euro you can't buy as much in Euros (or anything else) as you used to which then impacts on all those that remain in a real currency - badly if enough countries revalue - so they have to try to hold down the value of their real currency. This can't happen. Result Mickey Mouse inflates.

Usually the country invents a name for it's new Specie (I've always liked "Gooh, Gooh" - as in the Italian Gooh Gooh or the Spanish Gooh Gooh) and defaults on any debt not marked in that currency - basically declare bankruptcy without the discharge. Their economies immediately go into several years of ass tightening and reappear when enough time has passed for everybody to have gotten over being stiffed by them. Of course, up to now, this hasn't included the likes of Italy - new territory indeed.

What we have here is a problem that can't be solved within the Box of present economic theory - why? - because the Box is a mirage with vaporous walls of synthetic debt. A faith based belief economic system with one commandment - growth. The only requirement to be a supplicant is to have "confidence". No lasting solution can be found within the confines of this thinking - just more of the same. Given the all-pervading nature of the present belief system an alternative can not be found in time to prevent an economic equivalent of The Rapture, slash, End of Times.  If the Box is an illusion then there is no "outside the Box" to think in. As Weed used to say to the Flowerpot Men - "Time to go home" - or was that the Wooden-tops?

Germany's biggest advantage is that it's labour costs have remained reasonably flat (they started high in line with their productivity) while the others' shot up by 30% with little or no increase in productivity - who in their right mind drinks Retsina. Italy has gone nowhere in a couple of decades thanks to Berlusconi and a peculiarly Italian version of the free-market. One of the few things that sets Italy apart from the other failing economies was the lack of a property bubble. This is of little consolation.

I advise that in order to come up with a successful solution to the Euro shenanigans you might resort to recreational narcotics, hallucinogenic drugs or go into a trance - an induced coma might be a better long term condition.Which is what the likes of EC Commissioners and The ECB must have been in when they allowed Greece in.

The Bankers' last Haka

We appear to be well into the Uncertainty Principle already - if the Market reaction is anything to go by. Germany and France are at opposite ends of this principle. Germany has stopped so it knows where it is and France has to keep moving to avoid finding out. Unfortunately the two of them have to come up with a compatible solution. Germany knows it has just about enough money to deal only with it's own problems but France hasn't. So France wants to keep the fiction going long enough for time to heal the wound while Germany - no stranger to overwhelming debt - sees no point in securing what amounts to France's, and the rest of Europe's, debt as part of any deal. Meanwhile the British are baffled - at the mercy of the banks that created the problem in the first place. The City of London runs the country via political proxy.

Seeing that most of the transactions take place Offshore beyond regulation any threat to withdraw from the City of London is pretty hollow. All the foreign banks are already outside most UK regulation and taxation which is why they came to London to begin with. The UK banks are only subject to UK authority on the money they earn domestically or repatriate - largely used to pay themselves. Regulating this is a bit of a problem as the whole convoluted system is designed to avoid oversight. It is also designed to avoid jail. Any solution, to the inequity of bankers' moral hazard being taken at the expense of taxpayers, would have to remove the Offshore ability of accumulating unregulated debt globally while the risk falls domestically upon those with clean hands. This would require the regulations to apply universally, bring offshore havens into the fold and remove any burden on the public purse to bail out banks and private financial institutions. This will mean reversing most of what has happened over the past 40 years. Not a bit of wonder that bankers won't tolerate the thought of it. To make the present financial behaviour illegal would see most of them end up in prison.

What is a decent salary for a banker? They already get a base salary that is well above the norm and, under the present circumstances, more than they deserve. The bonus culture is their way of winning the bet before the result is in. The bonus culture in corporations is not that much better than in banking. This time the fools that carry the risk are the shareholders. Guaranteed minimum 100% of salary bonuses, stock options, retirement plan contributions are all based on numbers manipulated by the recipients of this largesse. The growing importance and influence of CFOs reflect this apparent anomaly as they orchestrate the numbers. The movement of vast quantities of money into private retirement plans, under favourable government tax rules drafted on the advice of financial institutions, guaranteed rising stock price P/E ratios that allowed corporate management to falsify omniscience and overpay themselves. All very comfy until there is a market crash. At which time the shareholders take the hit and management continues to pay itself more than they are worth or are the recipients of, wholly undeserved, giant redundancy packages.

Economies run on infrastructure and spending - any money not designated to improve those should be dropped from the plan. The beneficiaries of this infrastructure should be properly and proportionately taxed for it. This would include equitably apportioning corporate and finance profits towards national prosperity rather than individual wealth. By this means the possibility of a popular revolution on the street may be avoided.

You're wrong about Libya being the first no troops (or very few) on the ground example of regime change by us. Afghanistan was rid of the Taliban with similar minimal help - unfortunately keeping it Taliban-free has resulted in many more boots on the ground than originally estimated and an open-ended obligation. We'll have to conjure up the war on terror though to justify our arrival in Libya in large, heavily armed, numbers. Not beyond the realm of possibility once the Libyan factions start a civil war. Syria will become our new best friend when US troops leave Iraq and Iran gains more influence there. Hence the lack of action against Assad Jr. - unless of course he looks like actually losing at which point we'll back the most friendly looking, non-islamic, alternative. There is an interesting Middle East dynamic developing where their democracy is a challenge to our democracy. Let's not forget all our oil bearing despotic arab allies fearfully eyeing the rise of democracy. We're in a bit of a conundrum.

By the time NZ won the Rugby World Cup I was prepared to support anyone else, including France, winning the bloody thing just to get it over with. You've got to start thinking that it is all a set-up with the winner pre-arranged on an as-needed basis (a bit like Formula One motor racing). I'll be truly relieved when the last flag, poster and sign of the World Cup is removed from every nook and cranny of this country. A country that, sadly, believes that rugby is the world's most important game and, even more sadly, is the only game their boys can play reasonably well. The Haka thing at the start of the game should be banned - a time-waster and unfair to those without their own Haka to perform. Although every nation that has more than 8 vowels in the players' names has one. When Tonga or Samoa play NZ they try to out-Haka each other. The French walk-up is only news-worthy because NZ (and the IRB) expects the other team to stand around doing nothing while on the receiving end of loud noises, rude signs and throat-slitting actions. My suggestion is that all teams have a pre-game dance routine. Highland dancing for the Scots, a Jig for the Irish, coal-mining movements for the Welsh and a Morris dance for the English. The possibilities are endless, Line-dancing for the Americans, Tango for the Argies, some sort of Ninja deal for the Japanese, Can-Can for the French - what the fuck the Canadians and Suth Ifricins do is up to them.

Debt, Banks, Growth - pick any two

Your scenario of a new 2 speed European Economic Union of is wholly dependent on it creating growth - as in economic expansion permitting debt to reduce as a proportion of GDP. Unfortunately a return to assorted devalued national currencies will achieve the opposite as historical sovereign debt will still be measured in Euros and exports from the few remaining Euro countries (especially Germany) will be too expensive and trade will shrink not grow. The knock-on effect on China's exports would be significant - spreading the grief.

You can tackle sovereign debt, bankrupt banks and growth only by picking two of them to tackle at once not all three. There isn't enough money. Especially as regulation permitted European Banks to loan to European Community countries at leverage rates of up to 250:1 under the now miasma of "they couldn't default". Meaning banks are incapable of surviving either a default or a devaluation of currency by any of it's debtor nations (the equivalent of default). So given a choice of two out of the three the logical pick is to tackle sovereign debt and adopt policies for growth not austerity and let the Banks go under. Government then will have to cover the lost customer deposits up to a fixed value and not assume leveraged debt of untold trillions. This could be between 40 to 250 times cheaper than bailing out the banks. The retail divisions of the Banks would be nationalised to keep the branch doors open.

Alternatively, you could just run the printing presses and inflate your way out. This would, of course, destroy the personal wealth of the elite which is why we'll hang-in with the present fallacy as long as possible while they sort out a plan B. Primarily time to move their wealth into something or somewhere less likely to evaporate. Taxpayers will be milked to extend the transfer period of their wealth to a safer haven.  France will not be one of those havens - nor, probably, would it be a first team selection to remain in the new Euro given it's bank's exposure to Italy et al. The Irish, Portuguese and Greeks will sensibly default on their debts immediately they are relegated to the second division of Europe. This leaves you with Spain and Italy as the lead weight around the neck of Europe - sadly no matter what stroke they adopt the rest of Europe is likely to sink with them unless they cut them free.

However you cut it there is no elegant solution. The unpalatable fact is that we're in a Depression - a creeping one. Country by country until the tilting point is reached. Why anyone is surprised by this astounds me. We knew when the Global Financial Crisis struck that hundreds of trillions of debt were out there in the form of CDO and CDS and other assorted toxic, exotic, financial instruments conjured-up by banks looking to increase leverage to historic (lunatic) levels in the pursuit of profit and bonus - recklessly stoked by the Fed's cheap money window. Now we're looking to leverage sovereign wealth to historic levels to bail banks out of their atrocious bets, aka investments. Seeing that countries are vilified for debt at 1.2 to 1 then their ability to leverage at up to 250 to 1 to cover their banks' debt is less than nil. As is the belief that the solution to gargantuan quantities of debt is yet more debt. Pay off your credit card with another credit card.

Globalisation has exacerbated all this as with Lehman Brothers. Everybody cheated, either by borrowing more than they could repay or lending more than they could expect to get back. The choice is clear. Accept that the present financial structure has imploded and needs colonic irrigation or drown in an ocean of debt. Whatever the outcome we're not going to avoid walking around shoulder deep in shit for a long time to come. Although this may be more palatable than the present position of standing on your head in knee deep excrement.

Immoral Hazard

Just wondering if you've got an elegant solution to the world's economic problems - because somebody has to or we're all toast - the smoke alarms are squealing.

The world's most erudite financial gurus have exhausted their usual panoply of platitudes and recklessly thrown our fiscal survival into the embrace of politicians. There is a flaw in this as politicians are local and the problem is global - so any solution from them will be more about re-election that resurrection. What makes this even more unlikely is that politicians don't know the full extent of what they're dealing with. As a result they are having a panic attack. Prior to being pressed to assume the mantle (stress position) of economic saviours politicians were told to "get off out of it" by the very same financial professionals that are now demanding that they take over.

Is this because the money-men know the size of the problem and their inability to solve it or another attempt to have the public purse bail them out of losses on innumerable bad investments and protect their bonuses? How, one may ask, does a bank that passed the health check "Stress Test" a few months ago suddenly find itself close to bankrupt - if they were telling the truth? Certainly a few billion for Greece wouldn't bring the world's economy to the suburbs of Armageddon were it not for the other tens of trillions of morally hazardous toxicity out there. The political terror that it is all about to collapse has led to a reluctance to save nobodies' banks but our own - it may be dirty, underhand and morally hazardous but it's our dirty, underhand, moral hazard.

The PIIGS (note the extra I for Italy) go under and the BRICS hoard money while I'm particularly amused by the choice of terminology for an economic disaster prognosis - as in "hard" or "soft" landing. It strikes me that if you are going to end up dead it hardly matters. This brings to mind the advice given if the parachute fails to open - "Cross your right leg over your left leg as it is easier to screw you out on a left hand thread".

Now is about time to eviscerate the hubris of economists - a delusional sense of esteem best illustrated by the self-bestowal of a Nobel Prize. It is not one of the Nobel prizes established by Alfred in 1895. Economists invented this one for themselves in the 1960's - they must have regarded themselves as too important to be left out. So they got the money from a bank, appointed their own committee of economists, and gave themselves prizes for coming up with ideas that looked good on paper but demonstrably haven't worked. Were it not for the prestige of the Nobel name most if not all of these ideas might have met the abortive fate they deserved. There should be a reverse Nobel Prize in Economics committee that takes back these awards based on performance and the whole groundless aggrandisement immediately abandoned. I too would like a Nobel Prize, in what hardly seems to matter, unfortunately it would be hard to find a bank able to cough-up the dough right now.

Rather than have the New Zealand Symphony Orchestra and the New Zealand Choral Federation go to the trouble of learning all the Rugby World Cup participating nations' National Anthems - given the economic condition of most of them - it would have been easier, and possibly more appropriate, to have learned only Meatloaf's "I want my money back". This, at least, would more accurately reflect the attitude of the players who are complaining that there's not enough money for them in it. So little in fact that the NZ All Blacks might not show up for the next one. Not much of a threat as a team of NZ economists could find a bank to pay them to form their own team. Global Rugby looks to be heading the same way as Global Finance - Money Rules, OK - except when there isn't any.

Neutrino Money

Other European nations are telling Greece, Ireland, Portugal and Spain what to do - although it won't be long before they form a Monk's Circle. The US and UK are telling all the Europeans what to do and the Chinese are telling everyone what to do - as in "Culturally, you need to change your way of living and change your way of spending” - to what? Military enterprises is what.

A truly enterprising US military can go a long way towards saving the American tax-payer $698,105,000,000 a year. Once corporatized as Army Inc., Air Force Pty. or Navy Plc. and monetised by the selling of shares on the open market the income can be used to pay-down Sovereign Debt. Rather than be inefficiently run by elected politicians and appointed uniformed career apparatchiks these Military enterprises will then be guided by the prevailing Free-market conditions, driven solely by the profit motive and answerable to their stockholders. Sponsorship, Branding Rights, Product Placement and Transfer Fees would add to the cash flow. This would also provide a lot more clarity as to the real objective of their business activities. Sadly, in the present economic circumstances, China would end up owning most of the US Army, Navy and Air Force - and possibly the Italian ones as well.

It stretches the imagination to assume that the present fiscal reality is just a special case within an immutable, if somewhat increasingly nebulous, Economic Theory. Meanwhile none of those tasked with our financial survival can fix their own problems, never mind anyone else's, trapped as they are with a doctrine that demands few, if any, rules. Doing the same thing over and over again and expecting different results leads, as Einstein remarked, to insanity - and, in this case, economic melt-down. Kant introduced the analytic-synthetic distinction, in which mathematical proofs are synthetic rather than real. This applies equally to the present concept of money which is about as synthetic as it gets

.

Europe needs between two to four trillion synthetic Euros or, as it might now be more reasonably described, "Neutrino Money". The issue seems to be who is going to synthetise them. The European Commission, the European Central Bank and the International Monetary Fund would appear unable to dig up someone willing to wave the magic financial wand.  Any solution involves existing money changing hands and all three letter acronyms don't have any of that available - enter CERN. By abandoning the Euro and embracing the Neutrino as the European currency money can be everywhere it is needed before anyone even knows there isn't any.
.

 "A Teller says "How much do you want". A neutrino walks into a bank".

This is only possible since the Gran Sasso National Laboratory in Italy claimed to have measured particles travelling faster than light - Neutrinos from CERN are arriving 60 nanoseconds faster than the speed of light allows. This is important if true - to the unwritten, unpublished and un-peer-reviewed theory that Einstein was wrong and for the past 100 years physicists have had their heads up their asses. This theory (The Fuck Spacetime Theory) is based on the fact that nobody understands the present one and anyway it doesn't work. So QED it is wrong. If there are particles hurtling around Space faster than light then they are outside of Time and can be everywhere in the universe all at once in no time at all - at least to us. This explains the the need for physicists trapped in Einstein's Relativity Shtick to invent extra dimensions and universes in an attempt to get around the blindingly-obvious incompatibilities with Quantum Mechanics.

When pondering "entanglement" of particles one might be excused for thinking that information is crossing the universe faster than light - this could also help in explaining Dark Matter and Dark Energy. When brought, in postprandial conversation, to the attention of assorted university professors, PhDs and others trapped within the mind-binding constraints of Academia, and the Standard Model, this thought experiment is described as full of shit and that an elegant solution to the meaning of everything is at hand - without anything going faster than light.

If so "Where the fuck is Gravity then?"

Events, Dear boy, Events

It is indeed a sad indictment of the English underclass that they lack sufficient cultural sophistication to loot anything worthwhile. A stark indication of how badly the education system and prevailing economic model have failed to influence them - not least in explaining the risk/reward paradigm. This particular missing ingredient could well be instilled into the great unwashed by opening up a "Herman Goering School of Looting" in each of the more deprived metropolitan areas where a better understanding of proper English cultural values can be ingrained - leading to a, culturally attuned, economically sound, better class of looter This would be balanced by opening the "Mrs. Beeton School of Riot Control" in Chipping Norton to train police officers to inflict etiquette at the end of a baton round or water cannon. All done in the best possible taste.

Doing 6 months as a guest of Her Majesty for a bottle of water from Lidl as opposed to a Rembrandt or a Constable from the Tate illustrates a distinct absence of grasp of simple capitalist theory and belies the national cultural traditions so enshrined in being English. Rather than torching a Bangladeshi corner store for a packet of cigarettes a rampage through the National Gallery, the Victoria and Albert Museum, the Opera House, Eton, Harrow, Barbour or Berry Bros & Rudd would demonstrate a better understanding of the true cultural priorities pervading the nation and possibly avoid the accusations of being simply dishonest, violent, unscrupulous and lawless, criminal, feral louts.  How about a bulldozer through the All England Lawn Tennis and Croquet Club as a demonstration of ennui?

The Iraqis successfully looted their Museums and Art Galleries - why not the English? If this example is to be met what is missing is the presence of US troops on the streets of London. Fortunately the Prime Minister is looking to the USA for help in dealing with the illegal redistribution of athletic apparel and electrical appliances - it seems unlikely that US advice would protect museums and galleries. Colonel Blimps are already demanding troops on the streets, vigilante justice, public nakedness for anyone who isn't white and the death penalty for those socially inferior. All good Victorian values suited to an unequal society in which a bottle of wine or a waxed coat can cost more than a week's wages - if you get a weekly wage that is.

I find it confusing that the Prime Minister wants to take the streets back - which streets? Does he mean the streets where the untermenschen live or the ones where they like to go free-shopping. Seeing as nobody even wants to visit the streets where they live it seems unlikely that anybody actually wants them back. Putting them there was the whole point in the first place. Which makes a policy of tossing them out of their homes for rioting somewhat problematic. Where do they go? In the good old days they were sent to Australia. As that option is no longer available then under a railway bridge looks like the best location for hundreds of newly homeless convicts. They'll also have no money. Good plan, eh! Ringed by armed police teaching them the proper etiquette by pulling their hoody off while standing on their neck - a law enforcement technique taught at the Mrs Beeton School of Riot Control.

These police may have more hoodies to pull than they bargained for - as the whole country appears to be running out of money and could do so rather quickly given the present economic malaise. At which time the recent disturbances will seem somewhat low-keyed. By then Herman Goering's other unpleasant proclivities will be more like the government's chosen policy than his example to looters.

Pip, Pip.

And whose fault is this mess?

When I said hide I actually meant dig.

It appears I was out several trillion dollars on global stock markets' losses in the past week and a bit. And the only way out according to those tasked with our salvation, but abjectly failing to provide it, is more of the same. The fiction of Perpetual Financial Motion - I borrow from you to buy what you sell me - or in the case of countries, borrow from you to pay you back. Wasn't this something like what Global Crossing went to prison for?

I wish to reiterate yet again - it is the Banks. As their stock prices collapse (diminishing their capital reserves below required limits) we find that the financial origins of the GFC never went away - the chasm of debt remains. This inter-bank debt far surpasses the inter-country one which in itself is no small number - European Nations have lent huge amounts of money to each other – Italy has lent Spain $31bn, Germany has lent $238bn to Spain and Italy has borrowed $511bn from France. The UK has loaned Europe $200 billion. Now while countries can print money (leading to devaluation and inflation) the private banks can't. So unless countries do a Bank bail-out round two with fictional money - as in quantitive easing - they'll have to nationalise their failing banks - and that includes the USA. So the greater worry here is not that the odd country defaults but that in doing so the world's banks go crashing down carrying an estimated 100 trillion of assorted toxic financial instruments (CDO, CDS) with them. Quantitatively Ease yourself out of that one.

Anyway, the existing plan - austerity - isn't looking too sharp. The underclasses of London, Birmingham and Liverpool are showing the way. Not only are we seeing a fundamental financial meltdown but also a catastrophic social one. In an ever more unequal society once government threatens to, or actually does, remove the medical, unemployment, education and the rest of the social safety net then the peasants will revolt. So the present circumstances on the streets should come as no great surprise. Spouting tax breaks for business as the route to salvation in a jobless recovery isn't advisable when those presently helping themselves to free sneakers and TV sets - and the odd McDonald's - aren't included in the scope of the plan. Explaining this away as simple criminality is missing the plot. Even the Israelis are on the streets protesting the result of decades of stagnant wages and low taxes for the rich.

So it would seem that the message - "what is good for the rich is good for you" - hasn't caught on quite as well as Conservatives would have wished. When you operate a system that guarantees inequality then it behoves you to toss sufficient scraps to the dispossessed to keep them calm and allow you to keep making money without much inconvenient interference from them. Not doing so is enough to give Capitalism a bad name.

Now, while the British unwashed have turned to riot and robbery the great American unwashed have chosen the path of stupidity. In their ardour for small government they've dismissed the fact that government is the only thing with deep enough pockets that might, possibly, get them out of this mess. According to the Republicans, whose adhesion to Dogma rather than reality is seriously alarming, the solution is to remove government, slash spending, reduce taxes and the system will cure itself. This based on an laissez-faire economic theory that has recently proven unable to run itself never mind fix itself.  Also missing from this Cloud Cuckoo Land is the reaction of the people to perceived economic injustice - unfortunately in the USA this may mean arming yourself to the teeth and heading for the hills with a year's supply of Twinkies.

So we can either pretend that it'll all be right in the end if we just have "confidence" or we can do something about it before we're all living under the Chinese model - for as long as that lasts - and I wouldn't buy any shares in that either. There are none so blind as those that will not to see

A possible conversation in Wapping?

T. - "Jim, sorry to barge in on you at such short notice Old Boy - but we appear to have something of a sticky legal problem, a somewhat giant, very sticky problem in fact, with the soccer guy phone-hacking thing. Both Col and I need to talk to you about it tout suite. In a nutshell if we don't settle we're in deep shit. And I mean deep and I mean shit."

J - "Jesus! I thought we'd nailed that one down with the Goodman, Mulcaire result". Whose fault is this? What are we talking here - how much is this going to cost me?"

T. - "That's a good question Jim and it isn't all about the money. There's a good chance that there's proof we were hacking a lot ..... a great number of .... everyone we've ever done a story on ... phone ... right Col."

C. - "Grunt." (Col nods).

J. - "Fuck! You're supposed to have put this one to bed already. How! Why did this happen?"

T. - "There appears to be some, let's say hard to avoid, stuff  that came up in the Goodman trial that leads straight to us hacking the soccer guy's phone - and his lawyers have it. There's other names too. If this one goes to trial who knows where it'll end up. We don't want this in open court. We need to shut it down completely before it takes all of us, and the company, with it."

J. - "How do we make this go away - before Daddy finds out?"

C. - "We don't. He already knows - I spoke with Less last night and he told him - I had to, Less's fingerprints are all over this and he's got to keep your dad safe from infection. The word is we're to carry the can on this one. So either we make it go away or we fall on our swords."

J. - "What the fuck Col you should have brought this to me first. No way I'm falling on any fucking sword. You two on the other hand...."

T. - "It ain't that simple Jim - you're in this too - up to your neck. It's been going on for years under what might be described as your watch and as the present boss it's your problem - your dad has been seriously advised not to get involved so he can't help us here. They're not letting this one cross the Atlantic. The ball is in your court, but let me give you some gentle advice - if we go down then so do you."

C. - "I only did what I was told."

J. & T. - "Shut up Col."

J. - "OK, OK, let's sort this out - what do we do - who do I blame?"

T. - "We have got to look at the bigger picture here Jim. We've got to keep the rest of the company, especially America and your BSkyB deal, out of this. So we make the soccer guy an offer he can't refuse and structure a settlement that buys his silence - tight as a drum."

C. - "Is that legal?"

J. & T. - "Shut up Col."

J. - "Sounds like a plan to me. But never mind all this how do I stay clean? I'm not going down just because a bunch of my company's best hacks are criminals - even if we did encourage them to keep up the good work. Shit, fuck, bollocks, bloody newspapers. If this screws up my plans to get the rest of BSkyB I'll have all your asses in a sling. Keep me out of this - I'll leave the country if I have to." (stomping noises)

T. - "Well so long as we haven't told you directly what stuff came out in the Goodman trial and we don't show you anything the soccer guy's lawyers have sent us you might get away with claiming you know nothing about it. Bit of a stretch though as all this came out in open court and as the head of the company you might reasonably be expected to know a bit about it. So have a look anyway ..... see what I mean. But if we settle we might be able to put an end to the problem. In that case I can't say any more about it and you'll just have to do what I tell you. Trust me - I've no intention of doing time over this. And that is where it could end up if we're not careful" (sniff)

J. - "I can have another dinner with the PM - that'll keep me out of the Clink - you guys on the other hand...here, take this back. I haven't seen it. Is there another way? One where we can get out of this permanently with my and the company's reputation intact ... without paying a fortune."

C. - "Don't think so. When I spoke with our outside counsel he said that this is one of the biggest smoking guns he'd ever seen."

J. & T. - "Shut up Col."

T. - "I'm sure the soccer guy's lawyers are open to ... will recommend ...a settlement ... but at a price - in this case a very - eye-watering - high price if we are going to get his silence on the matter - permanent silence that is. The good news is nobody outside this room needs to know the details - you can sign-off on a million quid without telling anyone - apart from lawyers who can't tell anyone anyway - oh and the non-disclosure terms are tighter than a fish's asshole. We're good at that - tie 'em up in legal knots."

J. - "How much - a million quid?" (choking sounds)

T. - "Well he could, at best, expect a couple of hundred thousand all up if he wins - if we sweeten it by half a million he should go for it and put an end to any possible fall-out later if it went to trial. All in all I'd say that was a bargain given where this could lead if the amount of our phone hacking, which Col has unfortunately turned up, were to come out - never mind the rest of the skeletons we know are buried around this company- you could even end up appearing before Parliament. Let's be frank Jim - it's a disaster and we need some disaster management right now. Pay the man as much as it takes. I'll go back with an offer and you sign the cheque - no questions."

C. - "Tell him again about the others ... more ...probably a lot more ...as well"

J.- "Others... lot more"( high pitched scream).

T. - "Yup - calm down Jim - we'll have to pay them all out ... every last one of them. It'll amount to quite a lot of money by the end of it - we may also want to short circuit, or at least limit, the bad publicity by devising a way of paying them without them ever getting close to a court. Of course there will be those that will want their day in court and they'll be even more expensive to silence - perish the thought. It is my considered opinion and that of everyone else I have consulted that we are in for a painful and public legal colostomy if we don't sort this out now. If you are familiar with the phrase - tear a new asshole - you might get a picture of where this is heading. But, let's face it while we might not have right on our side we do have the money."

J. - " Fuck me and the horse I rode in on. Will that do the trick?"

T. - "Worked before. I'm running the old confusion trick and shot stuff off to lawyers with specific instructions to limit their scope of enquiry. And we're busy pretending to investigate ourselves - except fucking Col here didn't realise it was only pretend. That'll create a smoke screen and maybe buy us enough time for this to go away. We'll announce victory and it could be all over in a year - with luck and without anyone paying too much attention that is. We have enough people inside the Met to know the police have packed in their investigation - the plastic bags are stuck in a stairwell - and we'll make sure it stays that way. We have more than enough influence in Number 10 to keep the politicians off our back. And we'll hack the phones of any politician... anyone ... that might get close to exposing this. All those expensive meals and slumber parties haven't gone to waste Jim - by the way, given the circumstances, you might want to have a few more of them. We live in hope".

C. - "I don't think we can just eat, drink and sleep our way out of this even if we do buy the soccer guy's permanent silence."

J. & T. - "Shut up Col."

J. - "Hope, what do you mean hope! (shrill) Just do what it takes so long as it doesn't spoil my BSkyB deal - drop a few of the usual threats around - let them know they're in for a very, very ugly fight. We'll show them who's in charge here. We can take the whole ungrateful pack of them down and they know it - we're owed plenty by enough of them to make it go away - at least I think we are - they'll come grovelling back. Anyway, let me think about this ..... I couldn't give a rat's ass about the newspapers. If we have to we'll close them all down. They're not worth the paper they're printed on. I'll pay the money and If that doesn't do the trick and we need a sacrifice I'll give them one. I've wanted to get rid of those bloody things for years except Dad......."

T. - "In that case we'd better make up a list of those we're prepared to shoot to extricate ourselves from this mess. We need a sacrifice game plan."

J. - "Start at the bottom and work up - stop just before it gets to me. Leave Becky off the list - dad likes her - but, be sure to put both your names on it. Now fuck-off while I arrange a trip to Chequers."

"Don't tell me - I don't want to know" school of management.

Your recent justification of the moral status quo ante begs the question as to how and why we're surrounded by illegality that is accepted as usual and that everyone involved claims to know nothing about it. What's worse is that they think we believe they knew nothing.

After the recent Gilbert & Sullivan theatre at the Palace of Westminster, leaving aside any examination of the veracity of the answers given to the questions at issue, the striking feature is that all these folk, to a man and woman, are guilty of mind-boggling, credulity-straining, if not criminal lack of knowledge of the goings on within the organisations they ran. It appears that Ignorance is so widespread that the only conclusion is that it isn't coincidental but that it is deliberate. What we witnessed was wall-to-wall denial based upon a claimed total lack of knowledge around a series of major events, occurring over a number of years, within their senior managerial remit. How does this happen? Enter the "Don't tell me - I don't want to know" school of management. While this school of management is widespread in it's influence and adherence it is of particular importance when it comes to the application of editorial standards in the media.

The fundamental tenet of the "don't tell me - I don't want to know" school of management is Deniability. This permits senior management to avoid the repercussions of actions taken by employees under their control by claiming that they didn't know what they were up to if that action were to later come back to bite them on the ass. While I haven't heard the "don't tell me - I don't want to know" refrain often I've heard it more than once. Let's take a simple example - the bribing of government officials. On occasion, in pursuit of a news story, it is necessary to get into a country that actively doesn't desire your presence. This leads to the need to by-pass the usual immigration and customs formalities by "inducing" the local government employees, officially tasked with keeping you out, to assist your entry into the country. Unfortunately once in a country in this manner the exercise must be repeated to get out of it. When filling in an expense report for this variety of assignment it is advisable to describe these payments as "Immigration Fee" or "Customs Clearance" rather than "Bribes". All News organisations have rules about bribing people and illegal behaviour but also recognise that exigent circumstances prevent strict adherence to them if the story justifies them. Management knows you can't pop-in unnoticed on a tourist visa with 20 boxes of camera equipment - but nobody asks "How'd you do it".  There'd be a lot of stories you'd never get if this wasn't the case. It is reasonably clear that "liberating" a motor vehicle, as is sometimes required in a war zone, to allow movement to and around the story won't influence the content of the story but simply enable it's coverage. After this it gets a bit more subtle. When does it become payment for the content of the story itself? 

What we see with the News Of The World/News International denial of any knowledge of wrongdoing is a good example of the "don't tell me - I don't want to know" school of management in practice where blindingly obvious illegal behaviour is ignored in pursuit of a news story. Usually this is on a case by case basis justified by "In the Public Interest" circumstances but what happens if this becomes enshrined in the ethos of the news company as a common means to get stories. It is a trickle-down phenomenon. If it is clear the boss doesn't want to, or legally can't, know what is actually going on so as to maintain deniability then you act out a charade where the boss knows that you know that he knows but can not actually be told. This rapidly becomes you telling the Boss "you don't want to know". If the Boss is happy about this then so are you and your need to know diminishes creating the tacit company wide belief that nobody important will do anything about it even if you told them - so its all OK. In such an environment illegality spreads and becomes standard operating practice - condoned by senior management's complicity in "Don't tell me  - I don't want to know".

There is of course the paper trail-blocking device of inserting an intermediary between the invoice presented to and approved by the manager and the final recipient of the payment - via a third party, usually a "stringer" - allowing the manager to deny that they paid for anything illegal. So the "I have never paid for illegally gained information" claim can be maintained by keeping payments at "arms length".

Now, while Journalism is presently on the receiving end of justifiable outrage, we need not look far afield for examples of similar illegal behaviour in a wide variety of Corporate and Financial activities where bribery and corruption are not unheard of. Again the "don't tell me - I don't want to know" school of management enables senior management to avoid guilt, job expulsion and possible criminal prosecution by claiming their total ignorance of any malfeasance while sacrificing a few implicated, but usually well compensated, staff in penance along with paying, without prejudice, a small fine. This even though it is common knowledge that bribery and corruption - in all its many guises - are the only way to achieve a satisfactory business outcome.

This culture has created an inchoate, trust free, seemingly all-pervading version of management that permits those in a position of ultimate accountability and responsibility to assume neither.

Corruption

You appear to be floating around on the top of this ocean of corruption holding the conviction that if your head is above it then you're not a part of the problem - a sort of reverse Ostrich. We all play a part either by accepting that's the way it is or ignoring it and thereby participating in and endorsing it. Pragmatism is no excuse for moral turpitude here.

Corruption and Trust are inextricable from one another so the belief that trust can be re-established without first removing systemic corruption is fallacious - although, rather than this being the corruption of a system it may well be a system of corruption - and when the whole system is corrupt then the the whole system has to go.

Your observation that "honesty in its undiluted form is not necessarily a characteristic which is good for business" would lead one to conclude that under the present "House Rules" honesty is of limited importance so long as an awareness of these "rules" works "perfectly adequately" in your favour. Here we have a conundrum - you can trust corruption. These self-serving "rules" have been the Modi Operandi of Corporations, Financiers and Politicians, abetted by the Media, until it all started to unravel at the onset of it's greatest achievement; the Global Financial Crisis. There have been a few years of "hide the pea" games by the primary beneficiary "elites" - those that see themselves as somehow above the common human rut - but the problem is too big for sleight of hand. This has led to the undignified spectacle of the former participating rats leaving the sinking ship in feigned surprise and indignation to join a recently established Glee Club of the Innocent. Leaving behind those carrying too much baggage to drown.

Given that the whole system appears endemically corrupt it isn't Equitable (I realise this is not one of the "House Rules") to apportion different levels of corruption among participating countries - such as Germany is more corrupt than the UK and both are less corrupt than Italy - once established as corrupt to any degree this is simple hypocrisy (which is one of the "House Rules"). Although what appears to be happening now is that an expensive prostitute has turned on her cheaper colleagues. Understandably there is some resistance to transfer her "top-end" money to one that has caught the Clap and is in danger going out of business. It is not that they want to get out of the game but that they want those that spoil it for them out. Unfortunately this can not be achieved in comfort while in the same profession.

So we're left with the question of whether to weed or plough. Given the damage done to the instruments of democratic government by the present systemic corruption, and the resulting broad loss of public trust this has engendered, that the existing system should remain mostly intact doesn't look like a very positive outcome. While we're focused on the corruption within the media, police and politics we are ignoring - as best we can given the approaching Global Debt Crisis - that other fundamental causative agent that constitutes this corrupt system - Finance. It can be deduced from our present predicament that this agency, having blackmailed sovereign nations into near bankruptcy to provide for their survival, are deserving of the same opprobrium, legal investigation, oversight, regulation and penalties.

If we continue to labour under the conviction that the system is fine, because those that work it to their advantage are able to thrive, and it is only those that are caught with overtly dirty-hands that need punished then we are destined to repeat history. The problems are structural not operational. Honesty, transparency, accountability and responsibility within a system based upon an acceptable level of corruption will not make an iota of difference to the underlying absence of trust.

What will have been resolved if all we do, as a result of systemic scandal, is put Humpty Dumpty back together again?

Rupert made me do it.

The Irish, Portuguese and Greeks are now officially Junk. They shouldn't take it too badly though as this has been announced by the exact same rating agencies that greatly assisted in the creation of the Global Financial Crisis in the first place - and they didn't say the same thing about themselves. I advise immediate default and a good scandal to divert the public attention away from all-pervading poverty.

The Brits certainly have managed to dig one up that blames more or less everyone in a position of, obviously exceedingly misplaced, "trust" for more or less everything that has gone wrong over the last 40 years. A national "Mea Culpa" with all fingers pointed at Rupert - "he made me do it" - Murdoch. Without much doubt, even leaving Murdoch and kiddie-fiddling priests out of it, there are assuredly grounds for, at least, one of these scandals in Ireland too - the sooner the better.

Rupert has an ocean of misery ahead - protecting his US empire from a disgruntled, Fox News despising, Democratic Party majority in the Senate now clamouring for an investigation into the behaviour of his news outlets in the USA. All they'll need is for one of Murdoch's Aussie or Brit implanted editors to have engaged in, the now apparently usual, illegal tabloid behaviour and he's toast. As will be anyone called Murdoch in News Corp or indeed the whole of News Corpse itself. It can be assumed, under the US legislation, that if one of Murdoch's UK titles - beneficially owned by the US based News Corp - hacked a single US phone then there is no escaping a public execution. Let the timbrels roll.... Cue the FBI.

In reality it is actually bigger than Ben Hur with Politicians, Media and Police all in cahoots with Finance and Corporations to protect one another from scrutiny by avoiding the law. In the same way that Tax avoidance is legal while Tax evasion isn't this distinction was also applied to the business activities of the, so-called, Elites who could avoid adherence to the law through influence providing the assurance that the law wouldn't be applied in the first place or, if necessary, would be changed if it got in the way - before an attempt to evade the consequences of illegal behaviour might arise. Resulting in the belief that they were "above the law". 

Sadly, for the Elites, some of the less well-benefited politicians, media and police got fed-up paying the price of this cosy arrangement and, when the great unwashed populous showed signs of being fed-up with the same consequences - austerity, unemployment, eviscerated public services - saw an opportunity to kick the shit out of it in revenge. This has led to an unseemly rush straight to the back of the Queue of the Innocent by those, previously energetic participants, now fearing collateral damage from a scandal of their own making. If this means selling out a few erstwhile mates who happen to be amoral media proprietors, bent plods, sleazy journos or overly-ambitious pollies then so be it - anything to survive. They'll be eating their young next.

Which brings us to: What did they know? When did they know it? The two Watergate questions, that led to the convictions, soon to be asked of the British PM, the Metropolitan Police, Murdoch and his senior management. Once they can get past Murdoch's lawyers that is and put their hands on him - I assume that his corporate "domestiques" (to use a cycling term of art) will be fed into the grinder first. Not to leave out the shenanigans of assorted other newspapers and broadcasters - follow the money.

What is missing here is - where are the Bankers in this reinvigorated quest to punish illegality?

Since Journalism went from measuring news value to counting monetary value (or the lack of it) most other, especially moral and ethical, values went out of it too. This isn't limited solely to journalism - banking and corporate (including legal and accounting) practice and governance also abandoned morals and ethics in the pursuit of money. No surprise then that journalism reflected these, amoral, immoral, if not actually illegal, tendencies. Owned by participating oligopolies self-regulating journalism supported them - in fact celebrated and dispensed them - in pursuit of influence and wealth.

A very cosy and long-lived, self-serving, inter-relationship - Politics, Money, Media -  is now exposed and broken apart in Britain by the News International phone-hacking imbroglio.  Politicians can no longer be seen to approve of or accept support from a disgraced media, that peddles illegally gained influence, allowing some politicians to break free or, alternatively, into energetic denial - this is a bigger pivotal moment than we yet understand. 

Now how about applying the same extrapolation exercise to the influence that the financial industries flex to avoid the rule of law.

What we need is a continuing backlash that will see the same attention and outrage being shown to Finance and Banking. A closer look and possibly some charges, arrests and convictions might then stem from the behaviour of the financial institutions that, so far, have bought their way out of criminal charges with, tax-payer funded, bail-out money.

If politicians, the media and police are going to drop their shorts for an anal inspection of their machinations then so should the banks, hedge funds, traders, wheelers and dealers and their supposed regulators.

I'd also like to see the PR industry suitably reamed in this process - given that there are more of them dispensing information than journalists.

Jobs to China

Good to see that you're in China perpetuating the very problem that will eventually destroy your GDP along with your Balance of Payments and eviscerate your nation's tax base. More or less guaranteeing insufficient domestic employment (or income for those still in a job) achieved through international Arbitrage of wages and leading to loss of domestic demand from an impoverished market and reduced services and infrastructure due to falling domestic tax revenues. You may enjoy the short term increase in profits by adding a few percent of value to finished products while adding nothing to the domestic manufacturing base - basically you're financialising (latest economic buzz word) - that is creating nothing but "soft" money. The problem with that is it doesn't create any local domestic wealth outside the transaction - so no "trickle-down. Leading to such anomalies as fictional increased GDP as total cost is included in the sales number while most of the money resides overseas along with the jobs. While this makes corporate profits look better it does, evidently, lead to poverty, strikes and riots.

The Chicago School is the major originator, ideological prothletiser and defender of Neoconservative Economic Theory and Free-Market Capitalism in general. It dabbles in manifold mathematical models which will provide any answer you want in order to prove itself correct. It has been the most influential economic model (monetarist, monetarism) of the past 40 years. Largely the product of the University of Chicago Economics Department this school of economic fundamentalist thought gained influence during the 1970s particularly through the scribbling of a professor Milton Friedman (Nobel Prize in economics for the theory of the "Natural Rate of Unemployment" and advisor to General Pinochet shortly after Pinochet had the elected guy in power painfully terminated). The gist of it is that - government regulation of an economy creates monopolies thus - markets are more efficient at allocating resources than government so -  government has no business managing aggregate demand leaving - government's only job is to maintain a constant, low, rate of money supply growth.  This school's greatest influence has been relatively short  - since Maggie and Ronnie - but dominant since the fall of the Soviet Union and capitalism declared unconditional victory. Sadly it hinges on total transparency in the market provided by self-regulation. So, even more sadly, as a result it doesn't work.

Your Enterprise minister guy has just complained that not enough businessmen care sufficiently about achieving a reduction in Corporation tax - even though no company with a decent tax accountant pays much of it anyway. He should consider that, just possibly, the electorate don't want companies to pay any less tax than at present - frightening thought it is for a corporatist to grasp that the majority of voters don't support higher corporate profits bereft of an accompanying and demonstrative benefit to them.

If investment in R&D doesn't provide the tax-payer that funded it with any benefit why should they spend the money on something that translates into overseas jobs and untaxed corporate profits? I'd like to know your justification for using public money to enhance jobless corporate expansion.   The present correlation between corporate profit and employment is one of higher unemployment and lower or stagnant wages - what are the chances of reversing this by lowering corporate taxes?

Where are the jobs?

Since we've been keeping records all economic recoveries, according to the economists, have been led by indicators of rising employment and a buoyant property market in a hand-in-glove type manner - on this occasion these ingredients appear to be totally missing. If we are to perpetuate the present Chicago School economic model surely this would include actually employing those who provide the market for goods and services and paying them enough to afford both them and a house. Sadly this is not the case. Meanwhile many stock-market listed corporations are announcing record profits. How is this possible one may ask. Globalisation is the answer. Around half of the income of a large part of the S&P 500 companies, for example, comes from overseas. Obviously employment and the attached personal income - along with the associated tax base - are not growing in line with corporate profits.

In reality this is not about to change any too soon. Union bashing and the reduction of workers rights are rampant. Wisconsin's anti-union legislation is only one example of retentive corporatist-infused political thinking removing the ability of workers to bargain for improved wages and conditions. Has anybody thought beyond the dogma as to who is going to support a recovery based upon the usual measurements? Isn't "Demand" part of the mix? "Supply" seems to have escaped the formula. Not only has Supply escaped but Globalized supply-chains confused government's statistical agencies to overstate the size and growth of domestic economies — most importantly the growth in productivity, especially in manufacturing. This misinformation has led to a malignant combination of political and corporate wills to hold down wages while blindly hosting the means of their own eventual economic destruction. 

If we continue to allow increasing corporate profits with no accompanying increase in employment or wages then the tax-base cannot support the public services expected from a government collecting taxes - the answer, so far, has been to demand an evisceration of public services and to continue to punish the workers - or middle class as they are now known. What economic model is this based upon? There are countries with strong unions - Germany for example. Funnily enough they appear to be in much better economic shape than the UK or US. Their unemployment is closer to 6% than 10%. Their wages have kept closer pace with corporate profits. Their wealth has, in fact, trickled down despite all the economic ingredients philosophically anathema to the True Believers of the World Bank, IMF, WTO variety.

Seems that a lot of the money given to the Banks to bail them out and "save" the world's economy hasn't made it's way back into it but instead has headed off into Commodities, Food etc. with the undesirable effect of making everything more expensive for the ever-growing number of, increasingly irate, low-wage-earners. Thereby exacerbating the problem. Everything that can be has been "financialised". Are we tackling this problem from the wrong end? It would appear, according to just not me, that the "Global Factory" models for finance, energy, manufacturing and production have run their course and are now counter-productive. Burdening "customers" with huge debt loads in exchange for dubious value - while "finance" maximises it's profit. Without some equitable redistribution of wealth it will only end in tears - the Arab street offers an informative example.

Tackling these weaknesses will require breaking finance's stranglehold over the economy by allowing governments to regulate and limit their more speculative and avaricious activities. I'd have never bailed the asshole out.

Sports News

The cost of attending the upcoming Rugby World Cup in New Zealand has resurrected the aura of venality surrounding the professional sports world. FIFA seems to be having a spot of bother too - as did the IOC.

There is something much more wholesome about folk running about a field and hurting each other simply because they enjoy it rather than the money driven spectacle of professional sports. The odd bit of amateur partisan violence not withstanding. Story here this weekend about the coach of a local professional Rugby team being kicked unconscious and into hospital during an on-field altercation between his and the opposing team - missed by the cameras and somewhat of a mystery as it appears he wasn't on the pitch at the time - although the prevailing rumour is that one of the opposing team's (presumably soon to be banned for life) players left the on-field fracas and kicked the shit out of him for good measure as they were behind on points. Standing or sitting around in an inclement climate seems unjustified by any form of sporting event especially if an errant player could leave the game at any moment and beat an unsuspecting adjacent onlooker senseless.

I concluded long ago that any sport played outdoors, or indoors for that matter, is best watched on television and if attendance is unavoidable, for political, economic or employment reasons, then watched from the confines of a corporate box - where the game is also viewed on TV - while eating Smoked Salmon and Prawns washed down with someone else's money. Given the choice between one pair of eyes and the elements or 16 cameras covering the game and warmth its not hard to work out the sensible choice. On the topic of Sports reporting - I have always marvelled at the ability of Sports reporters to cover such a broad range of activities with such a limited vocabulary. Never have so many read so much out of so few words. Unfortunately this skill has now spread to news coverage in general.

It is understandable that Sports, being a limited arena of professional hitting, kicking, throwing, running and jumping in assorted combinations, requires and limits the usable quantity of apposite words - not so the rest of world events - you'd think. While I've endured close proximity to grown men interviewing 12 year old athletes about their life experience and listened to 19 year-old sporting millionaires explain what they've discovered from 16 years of intensive natural ability enhancement coaching I'm yet to hear a three syllable word. This affliction also applies widely to the overall Celebrity market - many of whom need professional writing assistance to compose a Twitter message. Not surprisingly then that the reporters assigned to cover these activities need to reduce their choice of words to those with a chance of being understood by their stock-in-trade. This would include the sports-fan.

Many of the ingredients of modern News reportage can be traced back to Sports coverage - Videotape, slow-motion, instant-replay, animated graphics, banal commentary and, not forgetting, excessive hype leading to a high degree of self-importance if not self-worship. And it was all a roaring broadcasting success. So much so that one day an American TV Network made their Sports boss their head of News. Not so many years later we're watching the result. News is a sporting event with Winners and Losers - bereft of subtlety, insight or any real information we watch not only the superficial observations of those paid to provide them but also those provided by the participants themselves. Like any sporting event we want to see all the competitors and support just one. Where is the entertainment if only one side shows up? Like an Iso-cam following a kick on goal we follow a cruise missile or smart-bomb into a building and expect, shortly thereafter, a close-up of the damage on the ground. Why is an irrelevancy. Why do Arsenal play Man. United or the Cowboys play the Redskins.

We're now limited to "Rooftop" and "Embedded" Journalism or the Press Bus interspersed by material and (dis)information provided by those with a vested interest in "spinning" the story. There are now more people employed in PR than there are Journalists. While assorted military forces are fighting their wars they are also in combat in the "Information Battle-Space" - as they call it.  In an attempt to provide some credence to this we have the News equivalent of the Half-time Show. Self-professed experts, commentators and former players (Political, Economic, Military and Academic) expound the virtues of the game and the skills of the participants. They might even touch on the rules of the game every so often but why the game is being played at all is never brought-up.

In the days before a 24 hour News channel - a 24 hour Sports channel came first - somebody had to decide what went into a 30 minute daily news program agenda. So the amount of time given to a particular news story was, usually, based upon it's importance ranking within the time available - not so when there is relatively unlimited space to fill. Gone is the time for your reporter and camera crew to wander off to learn and practice their craft when "updates" are required every 30 minutes or so. The time when a crew could return to base saying "there is no story" have vanished. Whatever else it is it is a story. This is simply the result of financial pressure to fill airtime as cheaply as possible. It also leads to the need to confect news value when there is nothing else available or when you have committed your news gathering resources to a story that has no legs but needs to keep running. Whatever the explanation for the ADHD news coverage we get we are not being well served.

In a similar way to Einstein's theory of the inseparable intertwining of space and time into Spacetime the media have their own version - Moneytime. It is not what it is worth but what it costs and who pays that decides the information we get - pick any definition for any of those words.

Old Etonians

My dudgeon for Elites is far from restricted to Old Etonians.  I'm an equal opportunity dudgeonite. I surmise that the recent reappearance within UK politics of, free-market extolling, public school boys has more to do with the rest of the the Elites adopting an extremely low and chagrined profile due to the disastrous outcome of their prolonged ascendancy - and thereby avoid accepting the blame. Given the political variegations of the assorted national polities, now financially bereft and increasingly austere, during the time our present problems were being built - Republicans in the USA, Fine Fail in Ireland, Labour in the UK - it'd be unfair to apportion blame, within the whole mess, to a particular political party. A time when all politics were in substance economics.

But let’s not wallow in Political and Economic Theory, Dogma or Mantra and take a look at reality. Assorted Finance Ministers, Secretaries of Treasury and Chancellors of Exchequer were not so much guilty of wilfully ignoring the Economic entrails, as read by Chicago School economists, but believing in them. That an infallible vein for laying-off risk and accumulating profit had been mined by the brilliance of the same folk that brought us Game Theory, infinite extra universes and a couple of dozen additional dimensions. Not surprisingly these "Mathturbations" led to the same belief as a soldier going into combat “It’ll be some other guy”. As a result cosmic quantities of leveraged debt were created based on financial instruments so exotic that not even those people that created them understood their ramifications. We call these people bankers.

Now, the argument goes, if the “invisible hand”, of Adam Smith fame, is perfectly manicured then regulation isn’t required. Chief manicurist Milton Friedman told us this. Unfortunately, and obviously, he didn’t have a plan if the hand were to display only one erect finger. The finger now brandished at the tax-payer. From the tax-payer’s point of view maybe it is time for them to make use of a good crisis themselves and default, instead of paying- off light years worth of somebody else’s debt. Either that or continue to fire 18,000 pound a year public sector apparatchiks - about 1,000 of whom equal one banker's bonus. Permitting the market to regulate itself while inflicting austerity on everything else has resulted in Retail sales in the UK plunging 3.5 percent in March, the sharpest monthly downturn in Britain in 15 years. The Centre for Economic and Business Research, an independent research group, forecasts that real household income will fall by 2 percent this year. That would make Britain’s income squeeze the worst over two consecutive years since the 1930s. The bank's incomes meanwhile..... 

Since the day the US invaded a sovereign country to protect a corrupt fruit company we've been fed the fiction that democracy is the bride of capitalism. The Chileans, Argentineans and Brazilians might have a different view. A view that will likely be reflected in the result of the next UK General Election. While the great unwashed are reeling from the impact of exaggerated financial ruin they are distracted from challenging present policies tailored to advance the very system that ruined them. To effect these policies it is mandatory to defile the efficacy of all state owned or run enterprises, services, facilities and extol the benefits of corporatist free-market competition in their future provision. Which is why the unwashed are paying more for their electricity, water, transport and soon healthcare, education and the requisite increase in the cost of imposing law and order while implementing "liberalisation".

My advice would be to have Meteorologists and Cosmologists do all future economic planning and forecasting, they use the same mathematical models, and appear to be randomly more accurate at predictions than Economists. The Economists, meanwhile, can look around manifold universes and dimensions for the missing 75% of the Universe's matter - they also might find where all the money went.

Sadly, thanks to Globalisation, one cannot escape the vagaries of our present economic malaise by transferring continents. Especially while a diarrhea of money squirts into a failed global banking toilet. While I have absolutely no philosophical objection to capitalism I do have many concerning it's present practitioners.

At our time in life having invested decades of increasing deductions and payments towards the provision of a comfortable and cared-for retirement it appears that we now won't get it. I'm more than just a little irked by this. What I won't now stand for is for some politico-economic fundamentalist (public school or otherwise) to give what remains of it to a corporation that'll turn my contributions into their profit. The fallacy that Baby-boomers (11 years from 1946 to 1957) will bankrupt the system is used as an economic shibboleth to reduce entitlement. Even if we all live 10 more years than predicted the populations will dramatically decrease below threat levels before financial oblivion results. I was talking to a Tax theorist the other day who explained that the main problem is the asymmetric tax-burden between personal and corporate tax levels. The main burden for the provision of entitlements falling upon the personal rather than the corporate purse. While the average corporate tax is falling towards 20% the personal remains around twice that. A further reduction in corporate taxation, as not surprisingly is recommended by the corporatists themselves, would only exacerbate this imbalance.

The trickle down is going up.

Middle East

Brian,

The illusion was that the regional political structure was fundamentally stable in the first place. Had it been there would be no need for repressive regimes. When we talk of stable what we mean is one that suits us. Our fantasy team of terrorists will expand exponentially as we see the results of this "democracy' and we manoeuvre to reverse it. Even as I write, I surmise that, our highly trained teams of think-tank strategists, spooks and assorted uniforms (given their inability to predict any of this they are actually just ill-informed pragmatists) are discussing the requisite actions, military coups and suitable despots that'll be required to protect and preserve our strategic and economic interests. We're probably going to hear a lot about Sovereignty while the Saudis, Emiratis and Kuwaitis kick the shit out of their democrats and lock them up. What we do if the Saudis open fire on their population or roll tanks down the causeway into Bahrain will be interesting - probably nothing. The theoretical threat from Iran will no doubt reach screaming pitch.

It is always important not to believe anything that comes out of these events - babies ripped from incubators or bombing your own civilians. From what I can extrapolate the Kaddafi regime has so far bombed their own military stores to prevent them falling into the other side's hands - understandable, the odd collateral civilian death not withstanding. What we're seeing is tribal warfare. Fortunately for us and unfortunately for Kaddafi his tribal bit doesn't have the oil. Which is why we appear to be a bit schizo about the goings on there - the outcome in his bit doesn't matter. The Brits et al will all be heading to Bengasi. BP is particularly vulnerable to the outcome in Libya - especially since the Russians changed the rules and messed up their return on investment there. And we're expected to believe that the Blair government rapprochement with Kaddafi wasn't a cynical oil driven deal. Can anyone explain to me how Blair is now supposed to bring peace to the middle-east?

While we thought bailing out the banks would solve the global problems and return us to the status quo - boy were we wrong. We're now broke, ineffectual and confused and everyone else is unhappy and on the streets - which is possibly where we should be too.

Best,

Egypt

Brian,

This is yet another example of blowback from 65 years of the wrong, primarily US, foreign policy (abetted by the former colonial powers) - support for (and installation of) totalitarian rulers in the post-colonial world that can be bought off to stay on our side of the cold war and protect our economic interests. As part of this policy any form of Nationalism was conflated with Communism as an excuse to suppress any form of democracy that might lead to the "wrong" folk getting elected and doing harm to our economic and strategic interests. When the wrong guys did get into power we orchestrated or perpetrated their removal. This is a self-defeating mechanism as after enough political repression the only ones left standing are the extremists - all other forms of more democratic opposition are driven out of the country. As a result of continuing this policy, after Communism went away, any sign of Nationalism from the remaining "opposition" became rapidly branded as "terrorism". So it behoves the supporters of this policy to find exaggerated threats from militant Islam under every bed. The new McCarthyism.

This is nothing new - Churchill was saying the same things a long time ago for more or less the same reasons that the Crusaders said them even longer ago - as shown below

 "How dreadful are the curses which Mohammedanism lays on its votaries! Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia in a dog, there is this fearful fatalistic apathy. The effects are apparent in many countries, improvident habits, slovenly systems of agriculture, sluggish methods of commerce, and insecurity of property exist wherever the followers of the Prophet rule or live.
 
A degraded sensualism deprives this life of its grace and refinement, the next of its dignity and sanctity. The fact that in Mohammedan law every woman must belong to some man as his absolute property, either as a child, a wife, or a concubine, must delay the final extinction of slavery until the faith of Islam has ceased to be a great power among men.
 
Individual Muslims may show splendid qualities, but the influence of the religion paralyses the social development of those who follow it.
 
No stronger retrograde force exists in the world. Far from being moribund, Mohammedanism is a militant and proselytizing faith. It has already spread throughout Central Africa, raising fearless warriors at every step; and were it not that Christianity is sheltered in the strong arms of science, the science against which it had vainly struggled, the civilization of modern Europe might fall, as fell the civilization of ancient Rome."
 
Sir Winston Churchill; (Source: The River War, first edition, Vol. II, pages 248-50 London) 
 
In the case of Egypt - after the failed (stifled by the USA for its own strategic benefit) attempt to re-occupy it militarily by the Brits and French when an ultra-Nationalist Nasser nationalised the Suez Canal - it headed into the arms of the USSR - and not because it wanted to become Communist. Everything from that point on has been to ensure that no leader with unfavourable to the West leanings held power. Threats to that power were repressed violently by one hand while the other hand accepted enormous payments that enriched the military, commercial and political elites. This encouraged them to toe the line with our foreign policy objectives - peace with Israel being just one of them. The West saw this as a benign regime. In reality Egyptians lived in a dictatorial Police State - albeit a handy one where we could send terrorist suspects to be tortured. Repression was justified by the threat of militant Islam in the form of the Muslim Brotherhood - however small that threat, in reality, might be. What the population wanted was neither here nor there - until we announced that our Foreign Policy was to export Democracy to those that didn't yet have it - we justified our invasions of Iraq and Afghanistan as bringing democracy to them. Unfortunately Democracy elected Hamas in Gaza. You reap what you sow. The vast majority of Egyptians spend their time thinking about survival not politics - they are too poor - Religion is the politics of survival. As yet Egyptian politics is the realm of a few million (at most) of the upper and middle (educated) classes - the elites and those that want to be elites - so the first move will be dominated by secular thought and economic self-interest. The religiously represented poor will garner a minority of the vote. We will do everything we can to ensure that the outcome suits us and when, eventually, the poor democratically elect too many religiously inclined representatives we'll attempt to orchestrate an acceptable take-over of power from them - and if that fails we'll consider invading the Suez Canal Zone - ably assisted by the Israelis. Although the Canal is not as important as it is made out in the general fear mongering of the moment - it was closed for years while the Israelis occupied the Sinai and nobody came to ruin - we invented super-tankers. Nobody asked the Israelis to withdraw to reduce the price of oil raised by the Arabs in response to the occupation of Arab land. Today the real unknown is how many Middle-East, North African countries may go for a popularly demanded regime change all at once. We might be able to have some influence in a few but not all at the same time - as I've said before Globalisation contains the seeds of its own demise. There is the possibility that a wrong move by us will encourage a widespread and unstoppable independent nationalistic response in the face of overt or covert outside interference. Sticking US forces into the oil states could well backfire. A sort of "we saved the village by destroying it" moment.

So don't speak too soon about what the Egyptians as a whole will eventually do under Democracy - when you're fed-up being poor and you're only refuge is Religion and you are the majority in a democracy there are only two ways it can go - Theocracy or Socialism - both heavily flavoured with Nationalism and Nationalisation. How long it takes for this to come about is the period that permits real reform to modify the popular intent. The post-revolutionary Iranian Govt. had secular elements for about the first 3 years. The West's policy towards Iran did away with that.

We're not howling about Democracy in the major oil exporting countries - heaven forbid that real Democracy there elects those that would nationalise their oil companies. What we would like is for the rulers there to set up a few Democratic looking institutions and adjust their attitude to women. (I could go into my glib theory here about feminism being the root cause of Al Qaeda - but I won't). They'll probably do a bit of tinkering with Democracy under our direction. Meanwhile we'll supply them with enough arms to get some of the money back. The threat from Iran will be used widely here. Unfortunately we don't have enough military force to invade everywhere at once so we'll need to keep a few repressive regimes in power - fuck democracy when oil is at stake! Outside of the oil exporters the other Arab countries don't have any over-riding strategic importance - although the military-industrial complex and some export businesses might argue otherwise.

Which brings me to the question of who actually sets the West's foreign policy? Since the end of WW2 the US policy (recently embraced by others) has been militaristic and is now even more so since the check of the USSR vanished. After the World Trade centre fell down the world's biggest office building remains the Pentagon. Where commanders sit and approve drone launched attacks on wedding parties. The money spewed out by the Pentagon has militarised American society. By Eisenhower's time the Pentagon's national influence extended to things economic, political, martial, academic, scientific, technological and cultural - hence his military-industrial complex warning. It continues to this day but should be extended to include the military/security, industrial, academic and political complex. Illustrated by the unquestioning increase in defence spending as the US wallows in debt. A reliance on the long term efficacy of the Neocon strategy relies on this continued haemorrhaging of money into the military's coffers - but it only works if there is a military solution. There might be a touch too much "democracy" around for that.

Best,