ECB deposit
The graph shows usage of the European Central Bank (ECB) overnight deposit facility. This is where banks have been stashing their cash because they are scared of putting it anywhere else. The amount has now increased to €446 billion, just shy of the all time record of €452 billion. The implication, according to BBC2 Newsnight, is that a credit crunch is weeks away.
Yachts
Club Euro
It’s amazing the way the narrative of the European Union has changed over the last few days. For months economists have correctly predicted each successive domino which will fall if the leaders do not take decisive action and each time European leaders have failed. Greece, then Italy an now catastrophe is knocking at the door of France.
Yet, since the EU meeting where David Cameron vetoed changes to the EU treaty, the media is reporting that Britain is now locked out of EU decisions making as if the leaders of the EU have shown themselves capable of making decisions. As if the Euro area problems had been solved and the Euro become a beacon of stability.
The agreement by the leaders of the Euro areas last week intends to limit budget deficits by imposing penalties on governments which break the rules. Yet, to quote the Financial Times on the 6th December 2011:
“..which two countries first broke the rule that deficits should not go above 3 per cent of GDP? It was France and Germany, back in 2003. What’s more, the two then united to make sure that they wouldn’t face sanctions for doing so – effectively destroying the rules (known as the “growth and stability pact”) altogether.”
It is not surprising that sanctions were not imposed and will not be imposed in future when you consider the circumstances in which a country runs an excessive deficit. When a country is short of money they are unlikely to cough up more money in fines to the EU.
Last week the Euro area stood on a precipice waiting to drag the world into oblivion. This week the UK has supposedly been snubbed by the best club in the world and the Euro crisis has evaporated into thin air.
The reality is that the press love hyperbole. It is unlikely that the Euro crisis will be the end of civilisation. Probably the saga will just drag on and on for a few years until something else becomes more important. Equally it is unlikely that Europe will power ahead leaving the British behind.
It may not make such great headlines but gloomy mundanity is a more likely prediction for the immediate future.
Artwork of Nigel Chaloner at Fine Art America
Stewart Fraser - bothered about hippies
On the 15th November I was watching Channel 4 News and saw Stewart Fraser, the Chairman of the Policy & Resources Committee of the City Of London Corporation, say that the Occupy protesters at St Paul’s cathedral should be moved. He made the usual excuse of our whinging elite when he said that the protesters had no solution, only criticism.
Of course! They are not professional economists or bankers. They represent the people who have suffered from the policies of people like Mr. Fraser. This is like the captain of the Titanic blaming the passengers for complaining. Mr. Fraser would do well to focus more on the incompetent bankers who got The UK into the current mess rather than trying to suppress the people who are protesting.
Anyway, I wrote the bloke an Email which, so far, he has ignored. I suggets anyone else who is interested in this write him an Email too. You could try this address: COL-EB-TC@cityoflondon.gov.uk
Attention: Stewart Fraser,
I just saw your appearance on Channel 4 news in which you were completely dismissive of the protesters at St. Paul’s cathedral and seemed to be making up reasons for their eviction on the fly.
I have worked in the City before but not at any great seniority. I also realise that there will necessarily be conflict between authorities and the protesters in such a situation.
However, you arrogant dismissiveness is extraordinary. You have a bee on your bonnet about a handful of protesters in the street yet where were you during the credit crunch? Where were you as the banks and politicians ruined the economy? Not a squeak. Not a squeak.
As Evan Davis has pointed out, just prior to the credit crunch, at the end of a boom which had run on for ten years (and was therefore due to bust), a major bank (I forget which) had lent £40 for every £1 it had in deposits. This meant that if the value of its investments were to fall by just 2% the bank would be insolvent. This is incompetence and complacency on a massive scale.
Further, at the same time, while the economy was booming, the Chancellor, Gordon Brown, was running a deficit. (If you can’t repay debt in the good times then when can you?)
And where was Stewart Fraser? Nowhere to be seen. Yet when a bunch of hippies pitch tents in the street there you are swaggering around on TV.
Further, while I understand that bonuses can be a useful tool most investors are in it for the long term. It is therefore idiotic to pay traders massive bonuses because they made good profits in a single year.
As a man approaching retirement I require long term growth not erratic variations in my investments. As it is my investments have plummeted.
Your arrogant dismissive attitude emphasises that you guys still don’t realise that a lot of people are suffering because of your actions.
Your profile on The City Of London web site states that you enjoy walking, I suggest you walk. Step down from your role as Chairman of the Policy & Resources Committee.
Fantastic Art Photography
Nice work if you can get it
I picked up a copy of the Financial Times (FT) on Monday 21st November 2011 and on the front page was an article about citizens of the Cayman Islands collecting fund directorships. It seems that the scam out there is for multinational companies to appoint Cayman Islanders as directors in order for the companies to claim to be based in The Cayman Islands and thereby gain tax exempt status in the UK and elsewhere.
The FT reported that “leading firms” “staunchly defend their practices” and claim that “their employees are skilled full time professionals backed by large teams of logistical and support staff”. They’d need to be as “at least four individuals hold more than 100 non-executive directorships each, and 14 have more than 70 – each worth as much as $30,000”. The article didn’t state where these support staff were based. Canary Wharf perhaps?
So it seems that bankers and mega-corporations are lecturing the working people on the sacrifices that must be made while corporations are operating fraudulent practices to “avoid” paying tax.
Another article reported that David Cameron is planning a scheme to boost the housing market by providing £400 million to underwrite mortgages for new homes.
The idea of a scheme to encourage house building is tempting but subsidies will lure people into buying who cannot really afford today’s over inflated prices. It will merely delay the inevitable crash and leave new buyers in negative equity.
After the credit crunch the British tax payer was called upon to bale out the banking industry. Now the taxpayer is to be tapped to try to delay a crash of the housing market. The taxpayer’s money will be used to maintain house prices at unrealistic levels while the house builders grow reliant on a subsidy. As with all such schemes there will be pressure for it to be carried on indefinitely.
An article on page 7 of the FT discussed China’s fears of lasting worldwide recession and stated that China’s premier Wen Jiabao, had prompted speculation that China will loosen it’s monetary policy immanently by saying that China intended to “fine tune it’s tight monetary policy”. The article went on to say that “because almost all of China’s banks are owned by the state and top banking executives are all senior Communist Party officials, Beijing can adjust monetary policy without having to adjust interest rates or make any public policy shift at all”.
Well that’s a neat trick! On the face of it, one might think that state capitalism, as practiced by China, is superior to (supposedly) democratic capitalism as practiced in the West. If only the majority of UK banks were state owned. If only the majority of their top executives were members of the Tory Party……..but wait…..Doh!
St Malo Beach
Occupy Brighton
An Occupy protest has sprung up in Victoria Gardens Brighton oposite the King & Queen pub. A bunch of tents and some friendly people open for a chat. They had some good slogans. “Chose love over fear” and “All money is a matter of belief”.
I guess the latter has been true since governments came off the gold standard. Since then it is possible that, if the politicians and bankers screw up enough, people will lose all faith in money. They will see it for what it is: mere paper and numbers in computers. The problems is that millions of us, necessarily, have stakes in money in the form of investments, savings and pensions. However, these being hit by the current crisis the danger is that people do lose belief in the system. Like God, money requires faith. Without faith, it is nothing.
Occupy Brighton
Occupy Brighton
hove station
pete king - Automysophobe
I have watched the protest outside St. Paul’s with interest and am disappointed with the reaction of the establishment. If the protesters have done nothing else, they have drawn attention to The City of London and it’s questionable regulations which appear to give large corporations excessive power over The Square Mile. (More on this later with luck).
However, thus far, no British politician has revealed themselves to be quite as moronic as Peter King, the U.S. Representative for New York’s 3rd congressional district. On Bloomberg TV Mr. King stated that the Occupy Wall Street protesters are “living in dirt” and ”involved with drugs” and then went on to say that “there was violence”, “there was rape” and accused the protesters of being “losers”. Of course Mr. King is partly right. Certainly many of the potesters have lost their jobs, their homes or their pensions.
Mr. King’s words are astonishing. Americans should be shocked that this contemptible man can dismiss fellow Americans who suffer from the policies instigated by politicians, such as himself, as losers. By his words he betrays the people who voted for him.
As usual with the anti-protest lobby he accused the protesters of not having a plan for what should be done. This is a red herring. The protesters are not the people who destroyed the economies of the western world. Mainly, they are not economists or bankers and therefore do not even understand what happened. No, the protesters are the people who suffered the consequences of the actions of economists and bankers.
Let me state something which should be obvious to anyone who claims to believe in democracy and, incidentally, The American way.
PROTEST IS LEGITIMATE.
To protest you do not have to set up a complete set of alternative policies. The point of protest is a cry for help and Mr. King is ignoring these cries.
In the Bloomberg TV excerpt Mr. King appeared obsessed with cleanliness and repeated the phrase “living in dirt” numerous times. Let me suggest to this simplistic and monumentally arrogant man that, when push comes to shove, people ARE proud to live in dirt. I have absolutely no doubt that when this charlatan speaks of World War 2 or Vietnam he will eulogized the G.I.’s who lived in dirt while on active service.
We, the people who have been ripped off by our leadership, should acclaim the people who “live in dirt” in the Occupy protests because they make physical the utter repugnance and outrage that ordinary people feel for the scum who ruined our economies and then claimed that they had to be well paid or they would leave. The short answer to this is to tell them straight. Just Go. Go. And take Peter King with you.
A bit of an oldy but fairly appropriate right now.
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Photography
Mainstream News vs The Blogosphere
Tags: News, specialisation, newspaper, journalism, advertising, Paul Morley, The Guardian, Facebook, blog, Twitter, The Internet, press, blogger, Mainstream Press, Newsnight Review, proof read, fact check, editor, amateurs, standard truth, Reuters, News Of The World, news feed, news agenda, information bottleneck, ordinary people, news wire, blogosphere, vested interest, The Huffington Post, Comment Is Free, journalist, industrialisation, articles, cheap writing, content, filler, entrenched opinion, Sean Parker, disruptive technology
Blog On
Earlier this month I watched Newsnight Review on BBC2 and saw Kirsty Wark and Paul Morley discussing the recent death of Christopher Hitchens. One comment of Mr. Morley’s rankled with me. He said “5000 bloggers are not worth one Christopher Hitchens”. “Hmph!”, I grunted and tweeted “…True, neither are 5000 TV critics in black polo neck sweaters”.
It is commonplace for the mainstream media to denigrate bloggers and attention is usually drawn to the mediums very real failings: Blogs can be abusive, poorly thought through, dreadfully worded, awfully spelt and the facts are rarely checked. Many blogs have all these failings and more but professional journalists whining about bloggers are a little like aristocrats sneering at working class speech.
If we invert the failings attributed to blogs we get the strengths of the mainstream media. Like all large organisations, newspapers divide work into specialisations. They have specialist proof readers, specialists fact checkers and specialist editors. Given this production line approach it is not surprising that the BBC scores higher than most amateurs when it comes to “production values”.
Should we, then, ignore blogs? Should we limit our reading to the mainstream press? We may as well ask if we should ignore Rock and Roll. Like Hollywood the mainstream news media are very adept at the techniques of their profession but the industrial approach can produced results which seem contrived and predictable. If blogging has any advantage it is authenticity.
Prior to the printing press most people would have been unable to read and public discourse would have been dependent on numerous personal interactions. A discerning individual would have given less credence to the boor and more to the wit but the onus on differentiating would be down to the individual.
With the arrival of newspapers in the 17th century the news began to coalesce around a standard version of the truth. In the 19th century wire services such as Reuters further accelerated standardisation by providing identical information to its customers. The style or opinions became what differentiated one publication from another.
For as long as I can remember The News Of The World had been full of gossip to be taken with a pinch of salt while broadsheets cultivated a reputation for more accurate reporting. As readers we learned the difference but though the style varied the agenda remained broadly the same.
As with much of our corporate 21st Century, the mainstream news media has come to resemble a cartel. If we visit the web sites of the Daily Telegraph, the Guardian, BBC News we see that the agenda is very similar. While they report different viewpoints, they still represent a bottleneck for ideas and information and are effectively setting a standard news agenda at least at a national level.
The Internet is challenging this status quo as was shown dramatically with The Arab Spring and the Occupy Protests. Ordinary people are setting their own agenda and even have their own news wire in the form of twitter. As events unfold in real time the mainstream media are forced to play catch up. It’s messy and difficult but there are as many opinions as there are individuals and the blogosphere merely reflects this reality.
An article in The Economist (December 31st 2011) stated “..it is hard to argue that the internet has cheapened the global conversation about economics. On the contrary, it has improved it.” and went on to say “…blogs have brought experts … out of the shadows.”
The mainstream news media have become a vested interest and, as with lawyers or gas fitters, they scorn the idea that anybody else could do their job. They do this by raising themselves up as gurus and denigrating those who threaten to replace them as incompetent. The mainstream media still provide better standards of quality control but, if all they do is package news and disseminate it through web sites and apps then they are not much different from a blog. The difference is further burred by sites such as The Huffington Post or the Guardian’s Comment Is Free which feed articles written by bloggers into a more professional looking framework.
Certainly the writings of Christpher Hitchens were superior to most amateur blogs but then Mr. Hitchens did not have the encumbrance of earning a living in a different field. One reason that mainstream journalists are competent is that they have spent their professional lives honing their competence. Some, like Mr. Hitchens, may rise further by dint of personal attributes such as individualism, iconoclasm and determination. Others cling to the technical paraphernalia of their profession to distinguish themselves from the amateur. As the mediocre artist relies on dressing in black and a well groomed 5 O’clock shadow so the mediocre journalist relies on grammatical pedantry.
Like any other profession the real threat to journalists lies, not with amateurs, but with industrialisation. Companies are now emerging such as Wordsofworth and Vivatic which outsource article writing and proof reading to individuals via The Internet. Their business model is to source articles from competent but cheap writers and flog them on to multiple sites which use them to pad out advertising. These sites are not looking for inspiration or controversy, they are looking for “content” and they effectively reduce the value of articles to that of filler.
The hope is that new media will provide greater access to public debate and challenge entrenched opinions though this is by no means certain. As some bloggers gain credibility, some journalists will find themselves paid peanuts to write 500 words on cup cakes. Sean Parker, founder of Napster and Facebook’s founding president has said “What we don’t have are good organising tools so that institutions, which have hierarchy which have management, can actually leverage the power of social media to get things done in a consistent and sustainable way”. Presumably Mr. Parker is now developing tools to enable power to be leveraged by consistent and hierarchical management.
We may be living through an interregnum. The Internet is a disruptive technology but its long term effect on public discourse may be to just shake out the chaff. If the mainstream media want to remain relevant they need to focus on nurturing thoughtful journalists who produce pungent and insightful articles. In this respect the blogosphere may be a much needed kick up the arse.