Sunday, June 29, 2008

This above all else...

What has happened in Zimbabwe is hateful... the regime that swore it would fight for freedom ended up being the enemy of freedom.

The price has been, instead of the country being a benchmark for freedom, it has ended up being a benchmark for tyranny. President Mbeki, has revealed himself as indecisive at best- and a man in deep denial about the nature of the regime in Harare. He does not think that the "winners" need account for themselves. However, the agenda remains how to eliminate the political crime, rather than acknowledge "what happened" - and those gathering at Sharm-El-Sheik need only decide how to ostracise the tyrant.

In the end the AU -and South Africa in particular- will need to commit troops to police the ruined country. The question now is whether they have the political courage to prevent the final lurch into collapse. After the bitter words from the Gabonese President, the answer is clearly that they do not. It is not the duty of the West to intervene in Africa- it is up to the Africans, but if they fail to rise to the challenge then it certainly will be the duty of the West to hold those leaders to account.

Thursday, June 26, 2008

Celtic Kitten

Much has been made of why the Irish voted No to the Lisbon treaty. However few have pointed out some of the fundamental changes in the Irish economy over the past five years.

Ireland was historically a country where land ownership bestowed particular power, and it was on that root that the economic dominance of the Protestant ascendancy rested. Despite the gradual reduction in the power of the agricultural lobby which was the mainstay of the Republic until the 1980's, land and property has retained a talismanic role in the Irish psyche. It is one reason why property ownership in Ireland has assumed a far greater role than virtually any other place in Europe. More to the point, Irish property investment has straddled borders. The Irish property millionaires have invested heavily across Europe, ans especially in the markets of Central and Eastern Europe.

Yet investing for rent, rather than to create added value carries with it particular risks, and sure enough, many Irish investors have over paid for property and over extended themselves with credit. The Irish, now the landlords of much of Europe, are paying a heavy price for the credit crunch.

Perhaps it is the insecurity that the weakness of the property market has created, as much as concerns about immigration or the rather misleading claims about conscription, abortion and the rest that has created the atmosphere of fear amongst the Irish voters. However, there is no doubt that Ireland will still need to confront the problems that its obsession with property has created. Of course, so will the United Kingdom too.

Friday, June 20, 2008

Outvoting Democracy

The institutional inertia of the EU is strong, but there is no doubt that there are better solutions to the Irish NO vote to the Lisbon treaty than hoping it will go away or trying to ignore it.

If there had been a referendum in every member state and only Ireland had rejected the treaty, then there might be some ground to suggest that some way round the situation might be sought. In fact, of course Ireland was the only state to submit the treaty to a vote. It is pretty clear that several other states, if a vote had been called, might well have rejected the treaty too.

Some reforms are needed: democratic oversight in the EU needs to be increased, and more powers returned to the national Parliaments. The internal voting system should be made fairer and the confusion over the legal personality of the Union and the way it handles its external relations needs to be improved.

However it does not automatically need the Lisbon treaty to undertake these reforms. For the time being the systems are working to a degree, and the organisation is not facing a serious structural crisis. However the prolonged navel-gazing is distracting attention form areas where the EU clearly has an important role. The challenges of cross border environmental degradation are being ducked and the security challenge of an aggressive Russia is not being addressed.

Some of the goals of the Laeken Process , including the reforms I mention above, can be enacted through the accession treaty with Croatia which will need to be put in process this autumn in order to allow for entry in 2010. Beyond that, any fundamental changes to the EU should be put aside for the time being.

As a Liberal commentary this blog believes that setting the limits to state power is a fundamental basis of freedom. The EU has been trying to change tack from "ever closer union" towards more limited policy goals for some time. However the compromises embedded in the Constitutional treaty and the Lisbon treaty are simply too many and too complicated. The idea of comprehensive reform must be shelved- we can not bring either the majority of the states or the majority of the population to agreement at this point- and it is dangerous to try.

The EU can only reconnect with the citizen if it can demonstrate that it serves a valuable purpose. Instead of the high-falutin' words of Giscard d'Estaing's Federalism, we should return to the practical usefulness of Functionalism. To refuse to accept the implications of the Irish vote can only alienate more countries from the organisation.

Much has been achieved in Europe by the European Union- but in the final analysis forcing through significant change against the democratic will of the citizen would simply undermine the whole system. The only people likely to laugh at that are the genuinely scary anti-democrats in the Kremlin and the Forbidden City.

Monday, June 16, 2008

Wish fulfillment?

Ambrose Evans Pritchard, the business columnist of the Daily Telegraph has an agenda: he does not support the Euro.

Fair enough.

He writes a lot about the problems he sees with the currency

Also, fair enough.

His latest story on the subject is that Germans are now no longer accepting Euro notes with serial numbers that show that they are printed in Latin countries like Spain (prefix letter V) or Italy (prefix letter S), and are swapping these for notes with the German prefix X.

If true, then this is extremely serious, since it implies that German consumers might refuse to accept non-German notes and that would effectively end the currency union.

The trouble is, I can find no other reference to this behaviour anywhere. Wherever I have looked, the single reference for the story is the story itself and nothing else.

Has Evans Pritchard just printed a story that he would like to be true? If so he has committed the cardinal crime of any journalist.

He must give a source for this story, because the consequences are critical and I am not sure I believe him.

Evans Pritchard's credibility is on the line.

UPDATE: I have continued to look, and the only evidence has been anecdotal and can find no corroberation beyond what has been posted below for Ambrose Evans Pritchard's story.

If not total fiction, to print the story as Pritchard has done is highly misleading. It may be actionable under the false rumours section of the FSA.

I will not accept abusive posts- especially from Anonymous posters.

The Irish Question for David Cameron

David Cameron is reported to be "delighted" at the result of the Irish referendum.

In which case, he has now added Sinn Fein to the list of rather unsavoury European parties that the Conservatives are prepared to form expedient alliances with. SF joins Putin's United Russia (already allied with the Tories in the Council of Europe) and the Italian Fascist Party (potential allies in the European Parliament, after the Conservatives leave the EPP) in the Blue corner.

The problem, it seems to me, is that the Conservative party remains very unclear about what it wants from the European Union. It makes angry denunciations of the organisation, addressing its many shortcomings in almost apocalyptic language, but when you ask Conservatives whether they actually want to leave the EU, they usually pause and then say "No".

In that sense, the scorn that UKIP and others on the right pour on the Tories is justified- the only logical stance that one can take if you agree with the Tory analysis is to withdraw from the EU, and yet the Conservatives refuse to put forward withdrawal as their preferred policy. So the question remains open. What vision do the Conservatives have for Europe?

The Liberal Democrat vision is one that accepts the need for a pooling of sovereignty in certain areas, but which wishes to set limits to the areas of competence that the EU holds and at the same time to increase democratic control and accountability at all levels of government. In that sense we welcomed the Lisbon treaty, because it does actually do a lot of these things.

Presumably the Conservatives agree that the European union needs some substantial reform and some drastic pruning in many areas. So since they oppose the Lisbon treaty, then can we please hear from them about what they would actually propose in office and how they intend to persuade the other 26, soon to be 27, member states to back this point of view. The suspicion remains that Cameron can not do more than be "anti" because he can not unite his party around any agenda that recognises the EU as a fact of life. There is no positive agenda, and there can not be because of the Conservatives' own internal divisions.

Yet, unless Cameron can show leadership and speak out in favour of a positive agenda for the EU, the suspicion remains that he is still in thrall to the "Better Off Out" crowd, and that the Tories' expedient and unworthy alliances with Europe's least appealing parties will continue.

This is pretty immature politics- and could be very dangerous.

Friday, June 13, 2008

Liberty & Safety

"Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety" Ben Franklin

That a citizen should not be held unjustly is a fundamental principle of democratic freedom. It is the root of our entire system of law and justice. It is why a suspect must face charges quickly after being taken into custody. From the Magna Carta of 1215, we derive the law of Habeas Corpus - the fundamental principle that the state may not imprison the individual unlawfully.

The United Kingdom is a country rooted on these democratic principles, and in its history it has faced many extreme challenges: external ones like war and internal challenges, like the IRA terror campaign. Sometimes under the pressure of these challenges the country has abandoned elements of due process- internment in Northern Ireland in the 1970s, for example- but when it has done so, it has always been counter-productive.

When Gordon Brown proposed arrest without charges for a period of six weeks he could never gain the support of Liberals- such a prolonged period contradicts the whole ethos of Habeas Corpus. The disgraceful way in which the Brown government bribed and cajoled MPs to vote against their principles was a wholly unedifying spectacle of politics as usual.

Yet even more dishonourable has been the hint that, once the legislation was enacted, any future Conservative-led government despite opposing the legislation today- would not repeal six week detention without trial should they gain office. Thus David Davis, by resigning his seat is not only making a point about the erosion of liberty under Labour, but also making a point to his own party leadership. His comment that "more people care about this than conventional politics realises" is undoubtedly true, but is also making a point to other Conservatives, like George Osbourne, that any compromise on this issue is a betrayal of principle.

I have often thought in the past that David Davis, despite his right-wing reputation and notably his views on capital punishment, was much closer to being a classical liberal than David Cameron is. His determination to speak out on the issues of civil liberties that lie at the core of the Liberal Democrat agenda reflects the fact that it is Davis who is the true "Liberal Conservative". I suspect that many Conservatives will regard this gesture as a quixotic and potentially dangerous gesture- and that he may never recover his place on the Conservative front bench. However, were the Conservative leadership to take that view it would mark them out as no better than Brown.

As for Kelvin Mackenzie- at least his support for six weeks detention shows us what Rupert Murdoch actually believes and why his pernicious influence on British media should be challenged. The fact that Mackenzie is prepared to trade liberty for a spurious sense of security marks him out as a deluded coward.

The majority of the country will take David Davis' decision as a gesture of determined defiance- and a wholly principled one.

Is there for honest Poverty
That hings his head, an' a' that;
The coward slave-we pass him by,
We dare be poor for a' that!
For a' that, an' a' that.
Our toils obscure an' a' that,
The rank is but the guinea's stamp,
The Man's the gowd for a' that.

Robert Burns

Wednesday, June 11, 2008

Oil Shock

For those of us that (just about) remember the early 1970s, the headlines over the past few months are acquiring a dismally familiar look.

Although much has changed in nearly forty years, the fact is that despite the two oil shocks of the 1970s, the industrialised world did not take the opportunity to wean itself from unsustainable dependence on oil. All through the 1970s there was much discussion concerning energy efficiency and conservation. In the end though, as the oil price began to fall, not only were conservation measures blunted, there was even a return to extravagance and profligacy- how else to explain the advent of the Hummer?

Oil prices have been rising steadily for some years now, as the market began to factor in the dramatic increase in demand from newly emergent economies of China and India. In a sense, the transfer of manufacturing production from America and Europe to Asia has brought a slightly unforeseen consequence- these economies are dramatically less energy efficient per unit of production than the Western factories that they replaced- the result has been a much faster increase in CO2 emissions and of course a faster growth in demand for energy.

Now the knock-on effects of higher energy costs is causing serious problems across the world. In an attempt to reduce dependence on fossil fuels, the United States, especially, has shifted corn production towards bio-fuels. The consequences of that move has increased the squeeze on supply of cereals, at a time when prices were already moving up as the result of increasing energy costs. Food prices across the world have thus run sharply ahead of the general increase in prices- hitting the World's poorest disproportionately .

Meanwhile the Oil market itself has also been squeezed by bottlenecks in capacity. Both Venezuela and Russia have seen drops in production, as their decision to exclude international E & P firms has resulted in a drop in investment in new production. Russia, despite discovering significant provable reserves has not actually opened a single new oil field since the fall of the USSR. The debate continues to rage about whether we have reached the plateau of "peak oil" or whether such a concept even has meaning; however there is a fear that overall supply can no longer keep pace with demand. The result has been a dramatic increase in speculative trading of oil derivatives. The tension in the Middle east- the continuing war in Iraq and the growing sense that Iran is set to defy the world and develop nuclear weapons- is meat and drink to the speculators.

Now we have a debate about whether oil could rise to $200/bbl or could it even double to $260/bbl.

Frankly, the height of the spike is a rather academic debate, because with oil at anything like that level much new production will be brought on stream, including the difficult to access fields west of the Shetland Isles and more tar sands in Australia and Canada- notwithstanding their higher CO2 content. Furthermore, it is clear that the unfinished work of the 1970s- creating sustainable power generation and transport- may now finally be completed.

However, the increase in supply and the changes in technology will take time to come through. In the short term, the oil price will fall based on a more simple and brutal equation: the stagflation that the oil spike is causing will choke off demand efficiently and quickly. The oil price of $140/bbl is already causing a dramatic fall in economic activity- $200/bbl will be an even sterner test.

Those of us who remember the first two oil shocks know what to expect from this one: A dramatic fall in global economic activity. The great boom that has lasted since 1991 is over. All we can do is wait fearfully to see how the credit crunch and the oil shock conspire to do their worst.

The coming decade could be every bit as bad as the 1970s.

Tuesday, June 10, 2008

Where does the EU go from here?

Europe is a poisonous issue in British politics. The debate touches some of the most visceral points in the British body politic. In the end the debate about British membership of the European Union is, at its most basic level, a debate about identity. Those who are most opposed to the EU regard it as a threat to the very idea of Britain and to British identity. Those most in favour sometimes support the EU for precisely the same reasons. The debate is conducted through megaphones, with both sides predicting apocalypse should the other side prevail.

The debate has been growing more urgent since the collapse of communism and the reunification of Germany. Up until that time, the key relationship was between West Germany and France. After the reunification of Germany the balance of power changed substantially. Haunted by the fear that a united Germany would be more assertive, France hoped to create a European Union that would align the interests of the members more closely. The result was a series of reforms that created a genuine common market for the first time. The single market was actually a British proposal initiated by Lord Cockfield, and it has proven to be both the most enduring and least controversial aspect of the organisation that from 1994 was newly re minted as the European Union. Even those most opposed to European political cohesion may grudgingly suggest that the EU should be "the common market, which is all we were supposed to have joined in 1973".

However in order to agree and control the terms of the single market, greater political cohesion is unavoidable. A market is only as strong as the rules that can be enforced to control it. Thus, entering into a common market, by definition, involves a reduction in the freedom of action of a member state. Therefore the argument about political sovereignty is a red herring- if a market can not take sanctions to enforce its rules, then it is not a real market. The fact is that the debate is not about whether an individual state can maintain political sovereignty, but how much of its sovereignty it chooses to pool in the system. However, the European Union does not have the same political legitimacy that any one of the nation states has, and neither is it accountable directly to a democratic mandate. It is this crisis of legitimacy that lies at the heart of the debates in the last decade, at least as much as the need for more streamlined administration in a Europe of 27 or even more member states.

For those who regard the EU as an unaccountable bureaucracy it is slightly ironic that both the failed Constitutional Treaty and the Treaty of Lisbon, currently passing through the process of ratification, were intended to improve the position of the European Parliament and thus increase democratic oversight of the EU. Many of the reforms in both treaties seem long overdue: for example, giving the organisation a legal personality, so that it can sign international agreements in its own right; or formally linking the administration of different bodies, such as the European Central Bank or the European Court of Justice with the administration of the EU itself; or creating formal rules for the accession process for new member states or indeed for states to leave the Union. Much of the Treaty contains practical and important changes, aside from the more controversial issues such as a Presidency and the creation of a new EU foreign ministry.

Yet the fact is that the Constitution failed, and even if Ireland still ratifies the Treaty of Lisbon there is still significant and entrenched opposition to the changes that the Treaty proposes, and this opposition is strident and angry.

To my mind, the problem remains one of identity and legitimacy. The European Union has failed to justify, or even explain, its purpose, and there is the strong sense that the organisation is seeking to subvert or even replace the states that are its members. While, there are undoubtedly federalists who truly believe that this would be a positive outcome, the vast majority of Europeans do not want to see a United States of Europe. In my view the only way for the organisation to restore its popularity is to define itself more clearly. In particular it should make clear the limits to its activities. The EU used to define its purpose as creating "an ever closer union"- in other words it had an open-ended commitment to increasing its role and the scope of its activities. The time has come for the EU to do the reverse and set the limits of its activities.

The supporters of the European Union must now explain what the EU is for and what the limits should be. As for those of us who believe in the Liberal idea of setting limits to state power, it is time we contributed to the argument too. In general the European Union serves a significant positive purpose and I see a clear net benefit, but it is still suffering from a lack of democracy and an excess of ambition. Unless the Union can reform itself to change this, it will suffer from an ever growing crisis of legitimacy, irrespective of the result from Ireland this week.

Monday, June 09, 2008

In for a penny...

The continuing travails of the financial markets, and the developing problems in the real economy is confusing political thinkers across the spectrum.

In particular, there is a real sense of concern in Britain over the financial politics of the Euro.

Many economists argue that the creation of the currency union has already brought about substantial convergence, and there is certainly substantial evidence that many countries using the single currency are moving their cycles into alignment. However, it is also true to say that within the bloc there are also several significant divergences, and the single interest rate has proven very problematic- too high at times for the core economies, but so low that it has created a credit boom in Ireland, Spain and other so-called Club-Med states. The key question is whether the economies in the Euro-Zone are sufficiently convergent to avoid a breakdown in the system. Many, such as Liam Halligan, in this article for the Daily Telegraph, argue that the currency can not survive in its current form. A paper from the University of Hamburg is much less certain, though the balance remains on the negative side. The fact is that, as the Euro-Zone celebrates its first ten years, there is still substantial scepticism about its future.

For the UK, much of this discussion is heated and often crafted in emotive and aggressive language. The decision not to join the Euro-Zone at inception, and then to impose conditions so vague as to be highly unlikely that they could ever be fulfilled has parked the issue for at least another decade. British politicians know what to do in the event of a failure of the single currency, but they have no answers were that currency to be successful, and in fact the currency, for all that is should not work in principle, does in fact work very well in practice. Despite the divergence in government bond yields between the different European states, despite too the fundamental questions of unit labour costs and productivity, the currency has become recognised as a trusted store of value. Indeed the European Central Bank has been praised for its handling of the credit crisis, so far, while the US Federal Reserve and the Bank of England have been rightly criticised for serious policy mistakes.

The high taxes and increasingly over-regulated business environment in the UK has caused a sharp fall-off in confidence, with the result that Sterling is now trading at 1.24 Euros, down from about 1.48 in a matter of a few months. The unit labour costs in the UK also no longer compare well to those of Germany, where great effort has been made to reform the micro economy of the country. In short, the UK has made exactly the same mistakes as the Club Med states. Of course, since the UK has retained Sterling as an independent currency, there is the option of devaluing the currency to retain competitiveness, and that is precisely what has been happening in the markets.

However there is a cost in this: British living standards will also fall, and our economy is weaker compared to our competitors.

This is why I can not share Nick Clegg's professed views in his speech to the Liberal Democrat City Forum. The price of devaluation is not insignificant, and devaluation can only buy time in order to restructure the economy more efficiently. Arguably, this breathing room reduces the pressure for necessary reform- and that reform is already overdue. The price also includes maintaining interests several points higher than those in the Euro-Zone, a brake on competitiveness which is only partially off-set by a weaker currency. The decline of the Pound over decades has not given Britain a more successful nor a richer economy, and it won't this time either. The lesson of the Thatcher years must surely be that governments must not duck the issue of reform, rather than try to devalue their way out of trouble.

Furthermore, the failure to enter the Euro-zone has meant that the British cycle remains out of line with the core economies of the European Union, and thus we are not picking up the benefits that we could have achieved by joining.

It now seems as though the voters of the Republic of Ireland are set to reject the Treaty of Lisbon, and this could prove to be a crisis that shakes up the whole European system. However, if at the end of that crisis the Euro has continued, then sooner or later the confused politics of the UK will need to recognise that the Euro is a permanent feature, and that the costs of being outside it will continue to be significant.

Devaluation of the Pound is a failed policy, but when will we recognise this?

Thursday, June 05, 2008

Dear Prudence...

The OECD - the club of relatively rich states has spoken unusually forthrightly about British government finances. In particular it highlight "unique risks' that the government now faces: unable to cut taxes in the face of the gathering downturn.

After the early years of Brown-Blairism, most of us got pretty sick of the endless mantra of "prudence", "prudence with a purpose", and "an end to boom-bust". We saw it for the flannel that it was, and understood that much of the so-called prudent margins for error were simply accounting tricks. Meanwhile, by dint of such "off balance sheet" tricks as the PFI and the PPP, the overall level of government obligations (as opposed to recorded government debt) has grown explosively. Debt is up, but guarantees and other obligations are now truly enormous- just the contracts related to defence are now rather larger than the annual defence budget. It is also difficult to see how contracts are being policed when we see such appalling screw-ups as the UK Chinook helicopter contract seem to be repeated on a regular basis.

Well after hubris, comes nemesis- and now Brown has precisely no room for manoeuvre. Yet what is particularly galling is just how much of this overall increase in the size of the state has been wasted. It is not just defence where we can see "gold standard cock ups". Agriculture, education, health care have all seen gigantic sums of money wasted in cancelled contracts, unnecessary procurement or poor contract execution.

The state is probably too unwieldy as it is, but the elephant trap that Brown fell into was to trust the system too much -and of course to believe his own rhetoric. After all Prudence was never as popular as she was proclaimed to be.

In the words of Lennon and McCartney:

"Dear Prudence, let me see you smile
Dear Prudence, like a little child
The clouds will be a daisy chain
So let me see you smile again
Dear Prudence, won't you let me see you smile?"

The answer, seems to be... No, not any more.

Wednesday, June 04, 2008

Polish Ebb tide

A few years ago there was a great deal of alarmist nonsense talked and written about the influx of Labour from the countries that joined the European Union in 2004. In particular, there was considerable concern that thousands of Poles would swamp the UK.

In fact, as we now know, it did not happen like that. These "economic migrants" were precisely that. Since they had an easy travel regime, they came to the UK freely, but they also left, equally freely. In fact several economists have suggested that the advantage that Britain has had over the past few years in economic performance against France was solely because Britain adopted a more liberal attitude to workers coming from Eastern Europe.

For sometime now, the tide has been in the other direction, and Poles and others are returning home. We now notice that the restrictions that the government put up against workers from Romania and Bulgaria when they joined the European Union were, as Liberal Democrats argued at the time, damaging and counterproductive.

However, easing the restrictions on Bulgarians and Romanians, as we are supposed to do in time anyway, will not really help the UK labour force too much. Most of those who wanted to move overseas have already done so, and the UK would not necessarily be a priority anyway, given the linguistic links that Romania, for example, has with Italy and France.

There is, however another country where the UK might think of looking for a pool of well educated and hard working labour.

It is Ukraine.

Ukraine is a slightly larger country than Poland, but would also like to follow in the footsteps of its neighbours into the European Union. Furthermore, because the UK has not joined the Schengen accord, it is perfectly free to create a more relaxed visa regime that encourages the kinds of workers that the UK needs to move here, in the same way that the abolition of restrictions opened up Britain to Poland.

This is of course a mutual economic benefit for both the UK and Ukraine, but it also carries the real possibility of significant political benefits too. Ukraine needs to benefit from new skills and would certainly gain from the remittances that their workers are likely to send home. Like the Poles too, there is also a long standing social infrastructure as anyone who has spent time in the Ukrainian Houses in London or Bradford can tell you. Creating stronger personal links between the two countries could lead to significantly increased investment and ultimately to a more Westernised Ukraine. For as long as Russia maintains its hostile stance to the West, we should do all we can to encourage Ukraine as an example of a freer and more prosperous society to shame the Putinistas in the Kremlin.

Freedom of movement of the Poles has benefited the UK enormously, as they return home, I can see the same benefits being repeated through allowing freer movement for Ukrainians.

So farewell then...

While quite a few people are doubtless going to get demi EJ Thribb about the demise of the candidature of Hilary Rodham Clinton, I must admit to laughing a lot at this Adam Smith Institute reaction....

Tuesday, June 03, 2008

Taleb triumphant

As regular readers here will know, I am a big fan of the philosopher Nassim Nicholas Taleb. So I was pleased to see the considerable attention that he has been gaining since the emergence of the credit crisis- the latest is a profile in the Times.

He follows in the sceptical traditions of Sextus Empiricus although possibly his determination to avoid prediction makes him reluctant even to describe the systems that he observes in Human behaviour. Perhaps this is part of the intrinsic problem of uncertainty- to describe certain conditions is also to change them. Perhaps more interestingly, he has also demonstrated the practical results of the sceptical mindset- not least in understanding risk within financial markets and in the wider world of economics. His view is clear: human beings are over confident in handling uncertainty- and the world is more uncertain than our brains expect. Humans try to determine patterns, and as a result they tend to see them, even when no pattern actually exists.

Thus in the financial markets Taleb, over several books such as Fooled By Randomness and The Black Swan, has pointed out the fallacies that lie behind most of the architecture of financial risk taking and which consistently leave investors underestimating their risk exposure.

As such, Taleb has become the prophet of the credit crunch. Yet his message is not automatically a pessimistic one. The point is to see the systems for what they are. Approaching the world in a sceptical way is a healthy response to a planet of infinite variables and open systems (rather than the planet our brains would prefer, one of fixed variables and closed systems).

Monday, June 02, 2008

A Principled Stand?

I see in the Times this morning, Gordon Brown says that he will stick to his principles and insist on detention without trial for 42 days as part of a package of "anti terrorist" measures.

So, let me get this right. He intends to ram through a totally unnecessary piece of legislation that rides rough shod over much of habeus corpus- one of the most fundamental freedoms in our country. He intends to do this despite the fact that the majority of the population is opposed to the measure, and so is most of the House of Commons.

He is acting, despite the concerns of the Council of Europe, the major human rights body in our region.

So his "principles" involve ignoring democracy and reducing British freedom.

And all of this is somehow supposed to make him more popular?

There really is no hope for the man, I just hope he is out of office as soon as is practical, and before any more of his "principles" can actually be enacted.

Sunday, June 01, 2008


I know, I know... it went too far.

17 people were arrested, stations were closed, the already ho-hum weekend service on the tube was disrupted.

On the other hand, what a party!

Tens of thousands of people came out to drink on the London tube. The occasion being the first act of the new mayor, Boris, which was to ban drinking on the tube. I got caught up on my way home. The first or the last coaches were filled with people. Some were in Black tie. Some were in Rugby shirts, some (after a couple of circuits on the Circle Line) has lost their shirts. Almost all were raucous, loud and cheerful. To a man- or more rarely,woman- it was **** Boris! Even though, I suspect, that a large number of them had voted for him.

So Why, then?

Not because it was about alcohol- though lets face it, the Brits have love/love relationship with the demon drink. Yet I'll wager that very few out last night had ever drunk on the tube before.

The issue is about freedom.

People are sick of being treated as though politicians are teachers and the rest of us are naughty schoolkids. So people smoke- as long as it harms no one else, so what? So people drink? We already have sufficient laws to deal with the drunk and disorderly, as the Police discovered several times last night.

Last night was a cheerful act of rebellion, and if a very small number took it too far, well that is unfortunate. On the other hand, the fact that people are prepared to give a cheerful two fingers to authority makes me feel quite optimistic about the future of this country.

If Boris has any sense, he will repeal this silly law, and then come out on the Circle Line with the rest of us to celebrate - oh, and a bar at Edgware Road station could be a real money spinner.