For most of last year a common refrain was the line about the difference between Ireland and Iceland being one letter and six months. I was in a minority, a very small minority, in suggesting that although Iceland looked to be in terrible state that they chosen the wiser path of short term pain for long term gain.
The ‘solution’ being tried in Ireland is mainly one of throwing good money after bad in the hope that the global economy recovers before FF/GP have to face the electorate and that, by then, a ‘rising tide’ will have the appearance of being able to lift all boats.
The shine is rapidly coming off that ‘solution’ as the varying stimuli run their courses into the buffers of debt overhang and artificially high prices for everything from stocks to wages and including houses. The only thing that is not overpriced is the oil we are still consuming at an unsustainable rate.
Meanwhile, Iceland is already suffering less pain than the Irish and the have managed to do so by sticking it to the ‘entrepreneurs’ who took most of the profits and are now taking the losses.
“How different from the home lives of our precious bankers”.
For a snapshot of these remarkable events see the estimable PKrugman’s article here.
“Life happens in parallel but is experienced serially”
People and their constructs (politicians, markets, organisations, etc) can only concentrate on, react to, and cope with one thing at a time. Sadly, the planet, and physics in general, is oblivious of this constraint, which may explain much of the misery attendant on the human condition. The phrasing I have chosen is a reflective of my exposure to the world of computing. I would appreciate a more general formulation, if anyone is troubled by my draft and can suggest one.
Thanks for visiting.
Greetings dear reader.
The signal to noise ratio on the Internet and other mass communication media has decreased recently, sometimes in direct proportion the rapidity of the change in our economic circumstances. Amid the welter of quick fire “opinion-ation” and simplistic reasoning the voices of considered and consistent analysis are often drowned out.
One of the few people to have been prescient, consistent and prescriptive has been Nouriel Roubini. In this article for the FT he sums up the recent evolution of the crisis in context with the long term prognosis. He does this so well and with such clarity and simplicity that there is nothing more your humble scribe can add, other than a heartfelt recommendation that you should read it – twice (as I did).
We are still in the middle of this unfolding crisis and despite what our own leadership might say, there is no guarantee that the worst is over.
Once again another ‘firm commitment’ by the Government has been allowed to slide away, this time in the form of a re-statement of objectives for NAMA by its chairman.
In a speech at the end of last week he said that , instead of making a return on the taxpayers money and on pursuing the lenders for every last penny of what was owed,the
“core objective will be to recover for the taxpayers whatever it has paid for the loans in addition to whatever it has invested to enhance property assets underlying those loans. It is expected that Nama will have a lifespan of seven to ten years and when it has achieved its core objective, it will be wound up”.
Frankly, even this seems ambitious at this stage. NAMA has been allowed to pay 11% over the odds for these assets by the EU. The time scale for NAMA is now envisaged as 7 to 10 years rather than the 10 plus originally stated. The residential property market is in the doldrums and being constantly, if more slowly now, marked down. The commercial property market has imploded and is dominated by the stock taken into NAMA’s care where it will be subject to decision by committee and political manipulation. Dominating these two domestic travails are the continuing concerns about the prospects for the sovereign debt markets of the appropriately monikered ‘PIIGS’.
Where anyone can reliably forecast 11% growth in large scale commercial property prices when we have contracting demand, serious oversupply, medium term macro economic uncertainty and disruptive technological developments to cope with is beyond optimism and bordering on fantasy.
It is interesting to note that the chairman’s restatement was descriptive rather than assertive; in other words he gave no undertakings and made no promises, he just described what the job was.
We could do with a few more honest men like that.
At last the German government has started behaving like a grown up govt. should.
Taking decisions, tough ones, on its own privately, thoroughly and announcing them firmly to the markets on a ‘like it or lump it’ basis.
A good summary is to be found here.
The Germans (militarily, anyway) used to be the masters of strategic retreat. They will be in the frontlines, fighting their cause, tooth and nail, striving to go forward right up until the minute they decide that the game is no longer worth the candle. After that they will be gone, completely entirely and cleanly, having moved back to the next well prepared line of defense.
Europeans with an overdeveloped sense of entitlement and ‘market forces’ types should tread carefully around this rediscovered German talent for ‘strategic retreat’.
I would like to remind the reader of the British Army aphorism
“He who has not fought the Germans does not know war”
This will be the last post on this subject (I hope….)
This is a very clear, cogent article on this subject written by someone much better qualified than I to speak on this subject, which is why I will now shut up about F’book.
Sleep tight, y’all….
“Slut” is a culturally interesting word. How you use it and when you use it says as much, if not more, about oneself as it does about the described person.
Personally, I use it to describe people (men and women) who have little self-regard, need lots of attention to bolster their sense of self-worth, act without awareness of or concern for the consequences and, finally, are unaware or unexamining of the motives of persons interacting with, or observant of, them.
Given that the users of Facebook have happily surrendered all of their privacy rights in exchange for some limited access to vehicles of self-promotion and a few unchallenging ‘games’, despite public disclosure of the risks of such behavior in theory and, sadly, in a few individual instances, in practice then it is accurate to say that such continued behavior may fairly be called ‘sluttish’.
Also, see Diaspora for a project that will try to do social networking in a manner that is both respectful of people’s privacy and professional and elegant in its engineering.
Lastly, having a look at some of the links collated in this article , will widen your awareness of the breadth of the revolt against the Suckerburg succubus.
That is all.
Greetings Reader.
I must admit I haven’t a clue where we are. We could be on the cusp of the second dip and some global deflation. We could be on the brink of a heavy dose of inflation courtesy of the ECB joining in the QE process. My prejudices still lean towards the former.
I do not believe that the ‘authorities’ know where we are either. We are in the teeth of a crisis and in a crisis ‘something must be done’. Not so much as to solve the crisis as to justify the continued remuneration and adulation of the ‘authorities’. All too often the response to ‘something must be done’ is “Here! This is something. Let us do this”. In other words, “Look busy and pray this works….”.
It is still my belief that the answer to ‘too much debt’ should not be, and cannot be, ‘more debt’. In all cases (US, UK & EU) that is what is being tried. The most it has managed so far is to mitigate the severity of the eruptions of the symptoms. But the eruptions keep happening. Last Thursday was just another example of the fragility of the system. As usual, ‘trader error’ was the culprit wheeled out to take the blame much as aviation authorities rush to finger ‘pilot error’ in the event of one of their catastrophes.
There is a fine piece of analysis over here that does not rush to any easy judgment while giving a detailed account of the events. Clearly, the ‘system’ is astoundingly complex and beyond the ‘ken’ of anyone person. Clearly, also, there are diminishing returns to complexity which can turn negative.
We have a ‘HeathRobinson’-esque financial markets system that is massively removed from the needs of capital formation for industry and safe investment vehicles for our pensions and savings. It is clear to all that this grotesquerie has now become a vampire, feeding off that which it was supposed to serve. It has become bloated at the expense of a healthy economy, infrastructure and society.
What we need right now is less finance, not more, and less debt, not more.
There is a ‘green’ angle to all of the above ‘blather’. Everywhere you look on the planet right now humanity is banging up hard against the diminishing returns to complexity. Take the Large Hadron Collider and compare it to what sort of laboratory James Clerk Maxwell needed to resolve the complexities of electromagnetism. Examine the differences between the illfated ‘Deepwater Horizon’ rig and what was required in the age of Standard Oil to harvest fossil fuels. Contrast the ‘Green Revolution’ of Norman Borlaug with the manipulations of Monsanto. In all cases we are adding enormous complexity for less and less return.
This has been analysed and forecast by Joseph Tainter in his book ‘The Collapse of Complex Societies’. You should read it.
Where we are is exhausted at the top of a ridge, with steep, near-vertical, falls on either side and folks just want to rest but the air is thin and cold and we cannot lie down….
UPDATE
Tyler Durden over at ZeroHedge.com says this…..
The race to the currency devaluation bottom is now in its final lap. And gold is the only alternative to the now imminent collapse of the fiat system: the world had a chance to take writedowns on losses, punish those who took risk and failed, and refused to do so. There is now no risk left, but it only means that eventually all the risk will come back and lead all capital markets to zero. The result will be the end of Keynesian economics as we know it. Do not trade in this broken market, do not hold your money in a bank as they are all now one hour away from a terminal bank run – buy and hold real, FASB mark-to-myth independent assets.
I think I agree, though whether the run will be deflationary or inflationary I still don’t know. But, for sure, hold real assets only….
For years I have listened to British commentators excuse their unfair and unrepresentative electoral system on the grounds of the ‘strong government’ that it facilitated. That argument has always been most loudly promulgated from the ‘Right’.
This time it has delivered a result that is anything but strong.
The Lab/LibDem combination is not sufficient on its own and would be beholden to either the DUP or a Celtic ‘combo’ of SDLP/Plaid Cymru/ SNP. I presume both principals would rather not do business with SinnFein.
The Cons/LibDem combination is a marriage of advantage with little in common between the parties and Mr. Cameron’s party, historically, the most wedded to the existing electoral system.
All of which would be academic were they sailing in sunnier climes but everyone knows that some seriously hard decisions must be taken and cutbacks imposed on the British public as soon as the next Cabinet is formed.
The LibDem’s will not be thanked by the electorate if they bring down a Government in a fit of pique. Whatever deal they strike they must stick at it long enough to bring a referendum before that electorate who are resistant to change for changes sake and who will not be disposed to reward a party they see as imposing cuts and bringing hard times. But they will be punished by their supporters if they do get a referendum on electoral reform.
A poisoned chalice of decisions awaits the beneficiaries of the great British publics taste for indecision.
Following on from my abandonment of Facebook and the Legions of the Enslaved, as of March9, I came across this fine article in Gizmodo which gives a much more coherent description of the problem than I was able to manage at that time.
The narrative is purely a ‘technical’ one and does not touch on the ‘societal’ and ‘pyschological’ aspects of F’book.
We already live in a highly artificial society where ‘marketing’ and ‘consumerism’ tries to make slaves of us all. Most of the artefacts of the market deliver far less than they promise, thereby generating discontent and anxiety for whomever they are ‘consumed’ by.
F’book exacerbates this trend by giving an illusory and superficial rendering of community, society and amity delivered via the ‘Web’. At the same time, as documented in the article, they are abusing your data so as to further manipulate you and your ‘friends’.
I trust that I am not alone in seeing in F’book the first elements of the cyber-enslavement of our minds that was so brilliantly exaggerated in the film ‘The Matrix’. ‘Hyperbole’, I hear you say. If you take a minute to reflect on it you might think differently. How many of the people in some of your F’book circle of friends have met recently? How many of them have you ever actually met? If you are in some campaign, how do you know that the majority of these are not just ‘avatars’ rendered to you by F’book in the same manner as the androids in ‘Blade Runner’ were given ‘lives’ and ‘back-stories’ by their creators.
You don’t know. And the more you rely on F’book the less and less you will know.
Until you find some program or interface that repects yours and everyone elses’ privacy and data, until you start refusing to allow yourself to be treated merely as a consumer and not as a citizen you are part of the problem rather than the solution. As with all of these things, by the time the majority wake up to the problem it will most likely be too late to bring about meaningful change.
Yes, I know it is ‘convenient’. So is buying green beans flown in from Kenya. We all know where that is leading to.
I know that I am not the only ‘blue-pill’ guy on the planet and I am sorry that my computer skills are not up to building a better Web but no one is forcing you to enslave yourself.
UPDATE
Wired magazine have joined in on the subject in this article.
UPDATE 2
These guys have a good plan for doing ‘social networking’ properly and it seems that they have some backing as well. Go for it, guys…..
