Mark Blyth does a marvelous job of dismantling the notions that Austerity is Good For Us and It's What We All Deserve for Being Spendthrift in Austerity – The History of a Dangerous Idea:

[Via Memex 1.1]

Agent Gideon Goes Rogue:

Nikolai strolled into the stuffy office where the older man stood waiting behind a desk which had stood in the same spot back in Stalin's day. The older man – Colonel Rakhmetov – gestured him brusquely to a seat in front of him, sat down himself, looked up and said "Sit".

The Colonel glared at him. "The plan for Agent Gideon began under Brezhnev. Do you have any idea of the resources required to place a mole at the heart of the British establishment, trained from birth to further the cause of Communism? So can you tell me what, precisely, is happening in that miserable backwater right now?" [...]

[Via The Browser]

It turns out that former chairman of the US Federal Reserve Alan Greenspan was laughing all the way to the (run on the) banks:

[Following the release of the minutes of the meetings of the Federal Open Market Committee's meetings for 2001-2006...]

It makes for quite a fun read if you get past all the boring economic analysis parts. In fact, if the stenographer was accurate, the Committee broke into laughter 45 times in just the January meeting! That's at least 45 jokes (some didn't get laughs – if only we knew the quality of each laughter!). I would have guessed that would be a lot relative to other meetings, right? I mean how funny would it be if the top of the housing market was also when the FOMC was telling the most jokes in their meetings?

Well, being a data nerd with nothing better to do on a Thursday night, I looked into it. To be precise, I went back for just the last six years (2001-06) and searched for how many times the stenographer's notation for laughter appeared in the released transcripts of each FOMC meeting.

Suffice it to say the data is funny…

Sadly, the minutes of meetings of the Bank of England's Monetary Policy Committee are written in a rather dry, formal style, so there doesn't seem to be much scope for a similar analysis of economic policymakers' behaviour over here.

[Via The Morning News]

Chris Sims gathers the views of The (Fictional) 1% on #OccupyWallStreet:

Instead of paying taxes to support a corrupt system, I put my money where it does the most good: A utility belt full of sharp pieces of metal that I throw at the mentally ill. I am the 1%.

Bruce Wayne
(Alias) Batman

[Via Crooked Timber]

Economist Hernando de Soto lays the blame for the global financial crisis squarely on The Destruction of Economic Facts:

Over the past 20 years, Americans and Europeans have quietly gone about destroying [the systems of public records that made it possible for market participants to know who owned what and who owed what, and thus to make an informed judgement about how risky a proposed investment might be.] The very systems that could have provided markets and governments with the means to understand the global financial crisis – and to prevent another one – are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don't know and can't prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

[Via Qwghlm Delicious feed]

Ian Cowie, the Daily Telegraph's personal finance editor, suggests a real alternative vote:

Why don't we restrict votes to people who actually pay something into the system? No, I am not suggesting a return to property-based eligibility; although that system worked quite well when Parliament administered not just Britain but most of the world. Today, income would be a much better test, setting the bar as low as possible; perhaps including everyone who pays at least £100 of income tax each year.

That minimal requirement would include everyone who gets out of bed in the morning to go to work and could easily be extended to include, on grounds of fairness, several other groups. For example, all pensioners – because of the fiscal contributions to society they are likely to have paid earlier – and mothers – because of their contribution to defusing the 'demographic time-bomb' of an ageing population.

This modest proposal would, however, exclude large numbers of people who have no 'skin in the game' and who may even comprise the majority of voters in some metropolitan areas today. Their contribution is not just negative in financial terms – they take out more than they put in – but likely to be damaging to the decisions taken by democracies.

Cowie then trots out the old saw about democracies being doomed once their electorates realise that they can vote themselves ever-increasing benefits and the credit crunch proves this point. At the end of the article, he suggests at the end that this is all "a joke, on the basis that you don't need to be solemn to make a serious point".¹ The trouble is, the assumptions that underpin his "serious point" are neither amusing nor accurate.

1. It wasn't unemployed people having the vote that caused the banking sector to engage in gambling on an epic scale.
2. For a lot of people right now, being unemployed is a consequence of the bankers' behaviour, and has nothing to do with whether they had 'skin in the game' the last time they were in a voting booth.
3. The unemployed pay taxes too: VAT on their purchases.
4. Those who have had jobs in the past have made contributions to society in the form of taxes they paid on their income while in work. Why should someone who had worked and paid taxes for twenty years and was made redundant as at 31 March 2011 have been denied a vote in last week's local elections just because they hadn't found a new job yet?

The ones who don't have 'skin in the game' are the extremely rich, the ones who have accumulated sufficient wealth that they don't have to use the NHS or state schools or public transport.

[Via Blood & Treasure]

1. I suspect that he would also point to his echo of Swift's title in the last paragraph of the excerpt as evidence of his satirical intent. I'm not convinced. ↩

Paul Krugman, commenting on the latest pronouncements of former US Federal Reserve chairman Alan Greenspan:

Greenspan writes in characteristic form: other people may have their models, but he's the wise oracle who knows the deep mysteries of human behavior, who can discern patterns based on his ineffable knowledge of economic psychology and history.

Sorry, but he doesn't get to do that any more. 2011 is not 2006. Greenspan is an ex-Maestro; his reputation is pushing up the daisies, it's gone to meet its maker, it's joined the choir invisible.

[Via Memex 1.1]

Phil Gyford has posted some excerpts from John Lanchester's account of the banking crisis in Whoops! Why Everyone Owes Everyone and No One Can Pay:¹

An even stronger counter-example [to banking's culture of risk] is aviation. I am terrified of flying, but I have to admit that airlines have been extraordinarily effective at generating a culture of safety, in which that value is unquestionedly paramount. This is allied to an impressive degree of transparency … That is partly because the industry has learnt, in the words of Easyjet's founder Stelios Haji-Ioannou (who learnt this lesson in the oil-tanker business): "If you think safety is expensive, try having an accident." But the culture of modern banking is not like that; in fact it's close to the opposite of that. The bankers' slogan is something closer to "We're not that fussed about safety, because if we have an accident, it's you who pays."

Just what I need: another book on my to-read list!

1. See also previous posts about Lanchester's work on the banking crisis here and here. ↩

Dan Hill has posted an epic tale of life in Brisbane as the floodwater started to rise:

We spot a large advert for chocolate milk adorning a building. "Dive into chocolately fun" it says. It seems newly relevant as we see the river, looking exactly like a vast, smooth soup of milk chocolate. The Brisbane River is famously brown at the best of times, being an extremely silty bit of river, but is now browner than ever.

The landscape round here is distinctly suburban. Not quite the manicured suburban of rich Los Angeles suburbs, or even 'Erinsborough', but the slightly more raggedy Australian version, with cars parked on lawns, rampant foliage growing in and around the low, angled roofs, set against straggly gum trees and paperbarks, a most unruly genus. But it's distinctly suburban nonetheless, which adds to the surreal aspect of views like Witton Road, where that chocolately fun engulfs a training shoe, some wheelie bins, and a box of breakfast cereal, and most of the street.

The most striking observation, for me, came as he recounted a trip to stock up on sandbags:

We've run out of sandbags [...] so we have to drive out to Kedron to pick up as many as we can load in the boot of the car. Plotting routes in and around the city is relatively complex, as you're listening for road closures on the radio, looking for the blue wriggle of creeks and rivers on the map, and trying to remember the topography of the city, all those swoops of valleys.

When was the last time you had to stop and think about whether your route took you uphill or downhill as you drove around a city?

Diss capital: Karl Marx, in London for a book signing, stumbles off the Eurostar and straight into an interview with Paul Mason at a café in King's Cross.

I've prepared this whole historical decompression briefing for him: the match girls' strike, the petrol engine, cinema, Lenin, the Warsaw Pact, the John Betjeman statue. But he stops me short: "I know, I know all about it. You think we don't have Wikipedia up there?"

"You see everything?"

"Better than you! We see it without sensuous historical experience. It's like watching a slow-motion car crash. Just wait till you get there: it will restore your faith in the objective forces of history."

An Irishman abroad tells it like it is !! :-).

It started out as a pretty straightforward (if somewhat sweary) crowd-pleaser of a man-on-the-street interview about Ireland's financial troubles, with the interviewee blasting the bankers, property developers, regulators and the government for thirty years of mismanagement and greed.

Then we got to the last five seconds or so. The interview went in an entirely unexpected direction, and I spent a good minute after the video ended laughing so hard I forgot to breathe.

Strongly recommended.

Edited 12 Dec 2010, 22:50 GMT to add: As it turns out, the interviewer wasn't a reporter: he was a Canadian comedian by the name of Tony Quinn. For what it's worth, the interviewee, Denis Ryan, grew up in Ireland and stands by the views he expressed in the interview. [Via MeFi user maudlin, posting here.]

[Via GromBlog]

Bruce Sterling on the implications of the Flash Crash:

* Why should there be a faith in a market of this kind – given its demonstrable behavior? What happens when it becomes blazingly obvious that the world just can't afford itself? And that the mechanisms of "affordance" are fictional, that the bottom-line don't moor to objective reality any more than the Olympic Pantheon does? The Planetary Enron. What happens then?

* If I can trade in a microsecond, what good does it do if someone can trade in a picosecond? If I can trade in an attosecond, in what way does this allow us to make rational investment decisions, pay for retirement, house widows and orphans, support a civil society, educate the children, to live? Sure, it saves us from the agonizing horror of designing stable systems and making regulations – but now we're living in a Gothic High-Tech ghost world where we can lose ten percent of everything in picoseconds, and we can't even describe the thing that has us by the throat. We've created a financial world where utter panic makes sense.

[Via Phil Gyford]

James Fallows, writing almost two decades ago about the appeal of The Economist in the American market:

The other ugly English trait promoting The Economist's success in America is the Oxford Union argumentative style. At its epitome, it involves a stance so cocksure of its rightness and superiority that it would be a shame to freight it with mere fact.

American debate contests involve grinding, yearlong concentration on one doughy issue, like arms control. The forte of Oxford-style debate is to be able to sound certain and convincing about a topic pulled out of the air a few minutes before, such as "Resolved: That women are not the fairer sex." (The BBC radio shows "My Word" and "My Music," carried on National Public Radio, give a sample of the desired impromptu glibness.)

Economist leaders and the covers that trumpet their message offer Americans a blast of this style. Michael Kinsley, who once worked at The Economist, wrote that the standard Economist leader gives you the feeling that the writer started out knowing that three steps must be taken immediately — and then tried to think what the steps should be.

A certain modesty would seem appropriate in The Economist's leaders these days, considering that after 10 years in which the Thatcher government essentially did what the magazine said, Britain has the weakest economy in Europe. (Remind me, again, why we're looking to the British for economic advice.) But the implied message of the leaders often seems to be, "I took a First at Oxford. I'm right."

[Via PinkPundit, commenting at The Awl]

Feeling lucky?

Kevin Kelly looks to the film industries of India, Nigeria and China to discover how to thrive among pirates. His conclusion:

Producing movies in a copyright free environment is theoretically impossible. The economics don't make sense. But in the digital era, there are many things that are impossible in theory but possible in practice – such as Wikipedia, Flickr, and PatientsLikeMe. Add to this list: filmmaking to an audience of pirates. Contrary to expectations and lamentations, widespread piracy does not kill commercial filmmaking. Existence proof: the largest movie industries on the planet. What they are doing today, we'll be doing tomorrow. Those far-away lands that ignore copy-right laws are rehearsing our future.

I think it's fair to say that the evidence Kelly gathered in coming to this conclusion paints a picture that won't much appeal to the average Hollywood studio executive. There'll be a lot more Digital Economy Bills and DMCAs before we get to Kelly's vision of 'our future.'

John Lanchester has written another lucid account¹ of the current state of The Great British Economy Disaster:

So why all the posturing about the deficit? 'I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter,' James Carville said in the early years of the Clinton administration. 'But now I want to come back as the bond market. You can intimidate everybody.' It is the bond market, more than anything else, which is currently forcing the government to pretend to take the deficit seriously. This is one of the reasons for the tensions between Gordon Brown and his chancellor. Brown is allergic to the word 'cuts'. He clearly experiences actual physical difficulty with the term, for good reason, since it does a lot to invalidate most of what he's done in office over the last 13 years. Darling, on the other hand, has to placate the markets, and they demand a higher degree of fiscal rectitude from the UK, which means lower spending and higher taxes. If Darling doesn't look convincing, there will be a 'buyer's strike' and nobody will want to buy the many tens of billions of pounds of debt which the British government is going to have to issue over the next years. If that happens, the government will have a very serious problem. You can lie to the electorate, but you can't lie to the bond market, which is why there will certainly be cuts, severe ones – just not quite as severe as the Texas Chainsaw Massacre scenario implied in the budget. These constraints on action are going to be in place whoever wins the election.

1. Previously. ↩

Geoff Manaugh proposes an alternative use for the Burj Dubai, just in case that whole hotels/offices/apartments business plan fails to work out.

Where Does My Money Go? presents an overview of government expenditure in the UK with a limited amount of freedom to drill down by region, time period and type of expenditure. It's pretty and it works well as far as it goes, but I'm not sure how useful it is given that it's providing such high-level data without much in the way of context.

I suppose my fundamental question is this: who would be able to accomplish anything useful with this data presented in this format, without pulling down the data that underpins these charts and doing some number-crunching of their own?

That being said, I'll be fascinated to see where they go with this. The simple act of pulling together all this data in one place is a useful service in itself; perhaps in the long run it'll be the data they collate, not the graphs they draw, that make Where Does My Money Go?¹ worthwhile.

[Via Qwghlm]

1. I really wish they'd called it Where Does Our Money Go? ↩

Malcolm Gladwell is sceptical about the case made by Chris Anderson in Free: The Future of a Radical Price:

Anderson begins the second part of his book by quoting Lewis Strauss, the former head of the Atomic Energy Commission, who famously predicted in the mid-nineteen-fifties that "our children will enjoy in their homes electrical energy too cheap to meter." "What if Strauss had been right?" Anderson wonders, and then diligently sorts through the implications: as much fresh water as you could want, no reliance on fossil fuels, no global warming, abundant agricultural production. Anderson wants to take "too cheap to meter" seriously, because he believes that we are on the cusp of our own "too cheap to meter" revolution with computer processing, storage, and bandwidth. But here is the second and broader problem with Anderson's argument: he is asking the wrong question. It is pointless to wonder what would have happened if Strauss's prediction had come true while rushing past the reasons that it could not have come true.

In the midst of a lengthy description of the roots of the current financial crisis, John Lanchester just couldn't help but lapse into sarcasm:

All of this [i.e. Lanchester's account of the history of the Royal Bank of Scotland and the series of takeovers and mergers that made them Too Big To Fail.] makes RBS's corporate report for 2007, published just weeks before the bank had to go back to the markets for more capital, a document of unusual interest. Northrop Frye somewhere defines 'irony' as involving a state of affairs in which words have a different meaning from their apparent sense. This can be achieved by the audience's knowing something the speaker doesn't: so the speaker is saying one thing but we are understanding another. The RBS corporate report is like that. (So are their slogans: 'Make it happen.' Make what happen? A £100 billion tab for the taxpayer?) The section on corporate citizenship at the beginning is particularly good value. The firm is involved in plans to increase general levels of financial education. 'When people have been educated about money and how to work with financial services firms they are more likely to make the right decisions and to avoid difficulties.' That's true, but you can also just rob post offices. 'RBS is a responsible company. We carry out rigorous research so that we can be confident we know the issues that are most important to our stakeholders and we take practical steps to respond to what they tell us. Then occasionally, we blow all that shit off, fire up some crystal meth, and throw money around with such crazed abandon that it helps destroy the public finances of the world's fifth biggest economy.' See if you can guess which of those sentences is not in the report.