Monday, 28 March 2011
Ever since I read George Woodcock’s history of Anarchism years back, I’ve always had a soft spot for the Angry Brigade, the closest Britain ever had to an anarcho-terrorist organisation.
To be honest it's the name that gets me. Like there's no jutting German sounds as with the Baader Meinhof lot or superficial references to theory as with the Red Army Brigade, rather, our anarchists were angry, GRRRRR! The name was even more ace because it was as redolent of the Monty Python shows then appearing on the telly for the first time as you could hope for or at least it was until Monty Python went and destroyed any hint of credibility any hard left/anarchist group, party or faction then or now might ever aspire to might with their satire of the People's Front of Judea and the splitters that made up the Judean People’s Front, etc., in Life of Brian.
What minded me of all this was two things. One was listening to some no-mark academic witter on terribly seriously about the competing ideological positions of the however many dozen anarchists that took part in the violence seen in London over the weekend. Now calling some bod from Swansea a no-mark might seem a tad harsh (hang on he’s fae Swansea, that shit stain of a clinging to the arsehole of Britain place, so no it probably isn’t really), but seriously, why does less violence than a gaggle of boozed up fuck nuggets inflict on most North East English urban conurbations of Friday and Saturday night warrant in-depth theoretical analysis? Could he no have just said “splitters” and be done with it? (Sides his reference to “Class War” also struck me as being more a claim than a piece of substantiated insight).
Anyhoo, my take is that the police, who outnumbered the anarchists gawd knows how many to one, were feart of getting caught on camera walloping perfect innocents in the face for the umpteenth time so let them get on with things in a “this will generate a dod of politically convenient negative publicity just in case we get caught clubbing people in wheel chairs” type style. Plus, I reckon some radio 4 editor had a flashback to their undergraduate politics degree and reckoned briefly taking the anarchists seriously would generate 5 minutes of air time in line with the usual BBC line of obsessing over things gone wrong, which here meant public spending cuts prompting politicised social unrest.
All that’s just a pile of shite but. The other, much more meaningful prompt was given by a fabulous person querying the nature of wealth creation, which gets straight to the point i.e. the fundamentals of how shit is. If we go by Adam Smith, wealth creation derives from successfully combining the factors of production, which would be materials, labour, land, and technology in such a way as to manufacture a thingymajig that can be sold for a profit or at least more than was paid out to buy the various bits and bobs involved in the first place. Personally, as someone who thinks Schumpeter’s model of economic change and the business cycle is the dog’s, I’d also include entrepreneurship, no not Dragon's Den rather the gathering together of the aforementioned factors and their coordination into a productive process, as an additional and vital factor of production.
A simple summary of this would be wealth creation involves taking 2 and 2 and making 5 and in the process generating more jobs, demand and tax revenues than would otherwise have been the case. However, it’s the opportunity to make a profit that’s key because it presents an ongoing incentive to get entrepreneurial on everybody’s ass. Now am sure an anarchist would challenge this view with idealistic shite about other incentives and methods for creating things, except to do so would be to miss the fucking point, which is making profit is only ever one incentive, not the only incentive, and one that shit like history proves happens to work quite well a lot of the time on an ongoing basis.
Rather, the only debate worth having in my view, is identifying when wealth creation stops and economically destructive activity takes over. Like the biggie here for me is economic rent and rentier institutions. By contrast with wealth creation, which is about adding to the sum total of shit i.e. co-ordinating the making of something that would not otherwise have existed, rent is about shit like having to bribe/pay a tax to get something that’s already been made through a checkpoint. Or, it could be the externalities and transaction costs associated with financial products we all have to pay as a result of pointless speculation in oil, credit default swaps, currencies and so on e.g. shit that does fuck all other than generate volatility (that in turn incurs costs to hedge against) and/or costs.
So yeah, rather than some wank about how profits are derived from exploitation in a wankfully stupid moralising notion that ignores how Marxist theory doesn’t even begin to approach the reality of the modern service sector let along the economy as a whole, I reckon where wealth creation ends and rent begins(and merits being taxing like an utter muthafucka) and developing a view as to at what point the concentration of wealth in a minority of hands becomes a bad thing, is the only debate that matters.
P.S. This bloke here was a real anarchist. It's up to the reader to decide whether that means fuck all.
Wednesday, 23 March 2011
Again with the stats function. But, was way cool today cos it turned out someone was daft enough today to page impression my 2 and a bit year old post about how to anticipate a financial crisis. That focussed largely on language/spin and organisational dynamics, however, thanks to the deep, deep insight of Harriet Harman I reckon it can be expanded to include penis extensions.
Back in the day Harriet queried whether there would have been a financial crisis if more women had been in charge, like what if it had been Lehman Sisters rather than Lehman Brothers. Oh how witty. And how fucking stupid for the most part given I mind I had a spell working in a largely female environment and even setting aside the Robbie Williams calendars, the start the day bitching about how such and such was a bit old for that outfit and being quietly advised to be gentle to such and such because they’ve got some women’s things on the go (honestly, the reality was as fucking clichéd as a Bernard Manning routine), there was just as many aggressive women as men in the largely male environments I’ve also worked in. But, what even the most aggressive woman didn’t have was that much interest in penis extensions.
This is actually a bad thing because more women would make financial crises harder to spot. My original post focused on how doing some finance that was patently stupid was a sign something was amiss. However, deciding what is and isn’t stupid is open to debate and debates take time and are ultimately only ever resolved with the benefit of hindsight. Thankfully penis extensions provide a more reliable and straightforward guide.
What we also saw in the run up to the credit crunch was a number of what I discovered tonight Top Gear presenters call a “Concorde moment”. For them that possibly means pinnacles of engineering genius that enrich our very lives by showing what it’s possible for man to achieve. For everyone else it means throwing money without question at the construction of a super-duper penis extension. And on reflection in the run up to the credit crunch we had plenty. Sticking with Top Gear for a moment longer there was the Bugatti Veyron, the fastest ever thingy. Elsewhere there were those towers in Dubai, the most erect thingies ever while across the globe huge ships were also being ordered . The point is, as Canary Wharf highlighted the last time there was a financial crisis in the UK, I reckon that whenever 2 or more biggest, fastest, tallest, most expensive, girthiest things start getting built, its time to get a bit nervous.
Monday, 21 March 2011
Earlier in the year we learned Barclays UK corporation tax bill in its 2011 annual accounts was £113m or 2.4% of its annual profits (the corporation tax rate in the UK for businesses with a turnover greater than £1.5m p.a. is actually 28% for 2010-11). This followed on from all the reports about Vodafone that indicates Her Majesty’s Customs and Revenue tended to reach "pragmatic" agreements with major PLCs about how much corporation tax they should pay.
Since then there’s been all this gossip about how Barclays might relocate its headquarters elsewhere if the Vickers enquiry into banking recommended any major restructuring of British banks i.e. the banks are saying leave us the fuck alone or we’ll go and you’ll lose out on all the corporation tax gravy.
Except, as the Barclays examples makes very, VERY clear the gravy ain’t that much to the point where its perfectly reasonable to ask if its UK operations were simply the subsidiary of some Cayman Island based outfit would the corporation tax it pays (on profits earned here) actually fall that much? In fact, could they actually increase given Barclays already pays tax on profits earned overseas to overseas governments and there would be less incentive for the UK taxman to go easy on its ass given its no as if Barclays is going to shut down all its UK branches in a big hissy fit?
Ahhhh, but relocating a head office overseas would see all the income tax all they head office bods pay fucking off also wouldn't it? Except, given as much of that as possible is already off-shored so fucking what? Plus, any future crisis would presumably be the Cayman Island’s responsibility and not Britain’s i.e. any cost benefit analysis would need to take into account the fact that British taxpayers would no longer be providing what’s essentially a free insurance policy that means they (we) are on the hook for what could be hundreds of billions of pounds to bail these kind of institutions out the next time things go phut, which as every historical study of financial crises makes clear will happen in due course?
It’s funny when you think about it. With all sorts of encouragement from politicians and what not all these megacorp PLCs have worked on a heads I win, tails you go and can fuck yourself ya stupid wee cunt basis for so long when shit actually goes down they don't have a clue to the point where they're left flailing about like beached fish. There again the fact that the ex-CEO of Barclays is now its chief advisor on regulatory matters, following on from all the networking opportunities with the Treasury Project Merlin created, and bank lobbyists are nagging HM Treasury on a daily basis, suggests awkward questions aren't on the agenda and that yer average punter is getting set up to get blithely fucked rough into a cocked hat all over again.
The notion that Britain could ever be another Greece was always utter bollocks and a clear sign whoever was stupid enough to say shite like that was a fucktard of the highest order given the fundamentally different nature of the British economy. Another difference I mind coming across was the insanely wasteful public spending the Greek indulged (indulge?) in. What I didn’t realise though was the extent to which this was matched by tax evasion on an industrial scale with doctors for some reason being singled out as particularly mad for it. Like according to this article more than half the doctors in one part of Athens declared an annual income of under EUR 30k, a wee bitty of a problem when that’s less than many pay just to rent their offices i.e. they’re lying big time.
To get some fiscal rules of thumb, say yer average Greek failed vet actually earns oh, Eur 80k p.a.. Converting 30k and 80k into Sterling at EUR 1.15 to the pound works out at £26k p.a. and £70k p.a. respectively, which in terms of UK tax and national insurance is the difference between an employee paying £6 grand a year in tax and NI and £22 grand a year. Crikey
Anyhoo, lets park all that for a mo because in this terribly serious article called “Can Greece pull it off?" , (Fnarr) the terribly esteemed Professors Giancarlo Corsetti, Michael P. Devereux, John Hassler, Gilles Saint-Paul, Hans-Werner Sinn, Jan-Egbert Sturm & Xavier Vives argue that for Greece “consequences can be mitigated only by the seriousness with which the Greek government tackles tax evasion”. Fair play to them except this article highlights the counter-productive reality, which is Greek governments have been tinkering with this for years without success.
Its kinda confusing when you think about it really – pull out someone’s bank account, take a note of how much cash has actually gone thru their account in this age of debit card payments for everything (i.e. cash in hand is dying out as an option for paying for anything), compare and contrast that with what they claim their earnings are on their tax return and bobs yer uncle and fanny’s yer aunt.
The reality though is that “Greeks could appeal tax levies — and that when they did, it routinely took 8 to 10 years before a case was settled..….. there were more than 300,000 cases backed up in the system” i.e. going after tax dodgers won’t generate much cash up front, but will piss a lot of money away on the legal system.
This is where a mate’s utterly brilliant, simple, straightforward and easy to apply idea comes into play and it’s this – don’t bother chasing tax dodgers, instead, introduce or raise annual licence fees. You’re a doctor? Brilliant, physician heal thyself, but in the meantime you need a license to operate that costs the £16 grand per annum difference in tax take between what you claim you earn and what we’ve a good idea you actually stick in your back pocket.
This principle could in turn be rolled out across every other profession and small business known to be a tad economical when it came to filling out a tax return. It could also be made subject to annual review depending on how honest people were considered to be. The other point of course is that without this license all professionals and businesses would be liable to all sorts of legal actions by their clients, insurance companies, the state and what not, making it clearly in their interest to cough up. I also like the fact the 7 terribly esteemed professors didn’t think of any practical ways of putting their exhortation into practice. Fannies.
Wednesday, 16 March 2011
The stats function on here is mental. The clear lesson remains stick a pic of J0.hnny R0.tten's arse on your blog, except then I discovered today googling "Germ@n gr@nny fuck" also generated a page view.
Obviously, I tried it myself only to be disappointed by the results; this thing didn't even register on the first two pages. Except, then I realised whoever it was really had it bad for Germ@n gr@nny sex, like he must have been looking thru oodles of pages, clicking and choosing the perfect examples of sweet, m@ture Bavarian lovin' for his pleasure.
I feel a bit soiled now I know somewhere some Germanic bloke is giving this site the big thumbs up for somewhat dubious reasons.
Tuesday, 15 March 2011
One minute investment banks are the scourge of society, the next they’re a panacea for all an economy’s ills. Pile of utter fucking shite either way if you ask me.
Starting with the scourge and the barbarians at the gate thang, investment bankers receive far too much money for doing deals that deliver no added value over the medium to long term both to the shareholders involved and the actual economy as a whole, is how the argument usually goes. And all that strikes me – enviously if honest, given the wages and bonuses they get – as containing a large chunk of truth, which prompts the question well how da fuck have they been getting away with it for decades then?
State initiated investment banks on the other hand are apparently the panacea for all an economy’s ills according to yer average career politician regardless of whichever party they happen to be in. Hence, all the current shite about establishing a green investment bank. Now the rhetoric here is fantastic – a green investment bank is an economic imperative that will build a hi-tech, future-proofed economy, it’ll ensure Britain maintains its global lead in renewable technologies, generate ‘000s of new jobs by capitalising on established, cutting edge technical competencies, leverage existing engineering and innovation infrastructures and act as a transformative capital provider that will underpin the transformation of I don’t know, things that presumably need transformed. All utter fucking bollocks really, like pure rhetorical shite and fuck all else for the most part.
Like I mind hearing some politicians spout off about it and what became utterly fucking clear was that they didn’t have a fucking clue about any of it. Like knowing an investment bank provides equity not debt would have been a good starting point (that and knowing the difference between equity and debt, obviously). Then following on from that there was the question of at what stage should the investment bank start investing e.g. should it focus on the venturing side and finance blue sky thinking in the first instance? Or what about financing taking an already proven technology to market, or marketing an already established products or is it all simply providing the equity needed to go along with the debt for proven technologies in project finance type situations such as a new windmill farm as opposed to a wave based thingy? And how should these decisions be taken, like are we looking to establish however many committees chock full of ignorant place men and all the vested interests and expenses claims that entails or instead is it actual private equity/investment bods that would decide when and how much to invest given all that entails in terms of them getting wages that are however many times the Prime Minister’s? All of the above boring, practical stuff just seems to be flim-flam getting in the way of a politician telling us how the government is INVESTING in a sustainable future or some other such fucking shite.
The other thing of course is that the actual sums being talked up are fucking pitiful. The £1 billion capitalisation Nick Clegg wanked on about is fuck all when you compare it to say the 75 billion Euros in bonds raised by an existing German state investment bank. Rather, the reality is £1 billion is an arbitrary figure that lets politicians say billion a lot with a bilious emphasis on the “BILL” as if them coming across as if they have a speech impediment fucking counts for something.
I was going to wank on a bit at this point about the Macmillan gap identified in the 1930s, the subsequent creation, then eventual reorganisation of 3i and the associated positive role government funded capital investment can play in an economy where the provision of equity finance definitely was subject to market failure on a sustained, systematic basis. But, I’ve some beers on the go so feck it.
What all this does provide though is a lovely context for the 2011 budget when it arrives on March 23rd and all the sound bite shite about growth that’ll contain.
Like so far my impression is the ConDem government is really and I mean really gunning for libraries and disabled people, cos you know those are exactly the kind of nasty fuckers that are asking for it. At the same time it’s already hacking back on public sector investment to an extent that hugely outweighs all this green investment bank shite (1). Rather, the latter will simply be an exercise in political sleight of hand. Like if you were to point out however many libraries are going to close, the response will be, ahh, but we’re establishing a green investment bank. Or if you pointed out however many home helps are being made redundant, the response would again be ahh, tough choices and we’re establishing a green investment bank, and so on and so on.
Personally, the only debate the above prompts is what type of cunts politicians are. On the one hand you’ve the ConDems simply setting themselves up to prove once again that they are indeed snidey cunts. On the other you’ve got the Scottish parliament voting to build a new Forth Road bridge last December (that it’s currently forecast to cost £2.3bn provides yet another benchmark for the fuck all capital base of the Green Investment Bank). The overwhelming sense I had when the MSPs voted for the new bridge was of a shiteload of mediocre shifters desperately wanting to do and to be seen to be doing something in a half-arsed, unthinking Keynesian multiplier kind of way. I reckon on balance they were well-intentioned when they voted the way they did. I also reckon they did sowhile applying fuck-off selective memories when it comes to the deep inability of government to deliver major capital projects in Scotland (e.g. the parliament and the Edinburgh trams) and what that means in terms of the general public having to eventually cough up fucking shed loads more and lose out on public services to cover their asses. So yeah, what’s worse – snidey cunts or fucking useless cunts, you decide.
(1) To quote the Institute for Fiscal Studies’ latest public sector spending note - “Public sector net investment over the first ten months of this financial year has been £28.1bn, which is 20.8% lower than in the same months of 2009−10” i.e. the year to date figure for January was almost £6bn down on the previous year. Compare that with a £1bn fucking green investment bank, then wonder how fucking stupid do politicians think we are (the answer is very and they’ve got a point).
Wednesday, 9 March 2011
I mind once being at this academic thingy where there was an American academic running a course who was hoping to get tenure at an American University. Fortunately, one of the other bods, a Professor, running a different course was in a position to influence the bods who would decide whether the original blerk got tenure. It was the kind of situation I’m sure a social anthropologist could have got a thesis out of. For the rest of us all we saw was some poor bloke humiliating and degrading himself as he licked this Professor’s arse. Thankfully, the Professor was too up herself to realise what was going on.
The broader lesson of all this is that senior academics have a significant influence on who gets to be an academic and as a result what ideas, approaches and subject matter make it into the academic canon and/or undergraduate and postgraduate prospectuses. Bearing that in mind I’ve added some edited stuff from the generally good Inside Job documentary cos it shows the terribly senior academic economist Professor Frederic Mishkin being stitched up like an utter kipper (and I’ve added a video to a blog post, woo hoo!). Setting aside the various forum comments now appearing across the globe describing Mishkin as a “douche” and a “wanker” (just google his name fer fuck sake), what this hapless (but wealthy!) joke figure makes abso-fucking-lutely clear is that economists were never, ever just passive observers of the credit crunch. Rather it seems whenever they could they grasped the opportunity to become active, fiver grasping participants in it all, whoring themselves, their institutions and their discipline.
This is the real context for the various navel gazing things subsequently written by economists about the credit crunch and economics. Before getting in to that though it’s probably worth highlighting a quick fact of life – Mishkin was paid loads to do research except while economists may be paid to do so, they aren't actually trained to conduct research. Instead, for economists data is primarily a given (or to quote Mishkin "you go with the information you have")to be squeezed into wanky formulae whereas for most other social scientists data gathering and source criticism - i.e. who created this data, how, why and what does that mean in terms of what it says and how I can use it - is all basic stuff they’re trained to address. Anyhoo that was a digression to highlight how paying any economist to do any research is a fucking joke for the most part from the outset; you're essentially paying them to attach their name and credibility to whatever it is your trying to sell. But, aye back to Mishkin as illustrating a broader phenomenon that provides a useful context for the relatively recent spate of economist navel gazing.
To be fair there’s a quaint aspect to some of the shite economists have come out with since the credit crunch crunched. Like when the Queen asked why economists had failed to see it coming, a hastily convened seminar at the British Academy chock full of the great and the good discussed the matter to the point where the terribly august Professor Tim Besley, formerly a member of the Bank of England’s wise and powerful monetary policy committee, was able to write a response to the queen’s admirably straightforward question; it was, he wrote in July 2009, "a failure of the collective imagination of many bright people both in this country and internationally, to understand the risks to the system as a whole".
More recently, the not quite as eminent Professor Nick Crafts felt confident enough to claim “Two cheers for economists are in order. They were complacent before the financial crisis, but they did know enough to limit its impact so that the outcome was the Great Recession and not a Great Depression”.
Yeah right. In my book Prof Crafts and Besley are talking self-serving shite. Like lets get academic and pedantic on Prof Crafts ass fer a second – there is no agreed definition of a depression and its only happened once the past 100 plus years so how the fuck does fuckferbrains know we’re no in another one? Eh? That aside Professor Crafts seems to be following the following ceteris paribus formulae – economists failed to anticipate the credit crunch, but having learned the lessons of the past, made sure an even worse outcome was avoided. Hence, for Professor Crafts Ben Bernanke, Chairmen of the US Federal Reserve, is a key example because he was and is “a scholar who has made seminal contributions to research on” the Great depression” and blessed with this knowledge saw to it that the following happened; “Aggressive policy responses prevented a collapse of the banking system and injected fiscal and monetary stimulus, which limited the downturn”.
The problem for poor Professor Crafts and Besley though is the following; as the examples of Ben Bernanke and "Douche" Mishkin make utterly fucking clear leading economists were well paid, active, influential participants who helped generate the conditions, mindset and regulations that led to the credit crunch, which is damaging the economic lives of millions of people. They were NEVER, EVER just passive observers who happened to be looking the wrong way. Rather, they were consultants, advisors, boosters, expert witnesses, regulators, cheer leaders, op-ed spewers, ideologues, mascots, ornaments, warm up acts and so on and so on for all the shite that led up to the credit crunch we're still living with. And yeah, yeah you can cite someone like Nouriel Roubini as an example of an economist that warned against it all, except his star only rose because he was an exception to this rule. Plus, none of this is even taking into account the fact that however many of the bankers and financiers who fucked shit up were taught by these fuckers and influenced by their prejudices in the first place.
You could of course argue that this simply reflects how terribly “gauche” our American cousins are and thank god for good Queen Bess and so on, except that would be to ignore the fact douches like Frederic Mishkin decide who gets tenure from pools of international candidates and sit on the editorial boards of international journals i.e. they influence the content and practice of economics here, there and everywhere. It would also be to ignore people like say Professor David Miles, former Professor at Imperial college London, former Morgan Stanley UK Chief economist, former producer of government reports and current member of the Bank of England’s monetary policy committee and all his CV says about how Britain and the USA aren’t necessarily as different as we’d like to assume (to be honest in the meantime Professor Miles actually produces some interesting shit).
So yeah it would be nice to join Prof Crafts in his cheering given his article is essentially making a claim for more economic history, a discipline he is a justifiably acknowledged expert in and which has helped out in policy-setting terms. But, without a greater degree of self-awareness, modesty and awareness of the actual context he can go and fuck himself, that or do the eminent economic historian's usual shit of writing some piss company history that pays enough to buy a new conservatory.
As for "Douche" Mishkin, the Iceland booster, the Serious Fraud Office decision today to arrest however many bods in relation to some Icelandic bank is a fucking joke. Oooh, oh like the worst case scenario here is some billionaires might get fined a couple hundred grand in 7 years time after millions of taxpayer fivers get pissed away on lawyers. Christ shit is totally fucked up.
Tuesday, 8 March 2011
A blerk who also worked in banking got given the opportunity to pursue his career elsewhere a while back after a blog post he wrote was brought to the attention of the great and the good. I reckon, given how employment contracts and codes of conduct are written and work, this was completely above board. Besides, the chat I heard at the time was that he was an arrogant arsehole, no much use and also dumb/arrogant enough to include his personal details beside a post that lambasted in detail something his named employing organisation had just done. Clearly, all bloggers can learn a salutary from that especially given the current labour market. And yet ……….
The “and yet” for me is predicated on having recently discovered the stats functionality for this thing, like so far today 2 page views on here originated in Latvia. Wow!
Going back to the here and why I started this the primary reason was - after days spent working in banking at a time when you were sat staring at Bloomberg screens that had turned completely red and didn’t have a fucking clue what was going to happen tomorrow - to let off steam by howling at the moon, that and swearing a lot. Except, there was also a vanity aspect to it as well, an admittedly pathetic sense of I’ll show them mixed up with the arrogant notion that I had something, however self-censored, to say that added to the sum total of human knowledge of shit that mattered.
Looking through my actual page view stats provides an excellent perspective on all of this. If I’m perfectly fucking honest I reckon my commentary on university funding, PFIs/PPPs, economic prospects and what no has been pretty fucking spot on and mightily fucking prescient; ahead of the curve even. I also take huge amounts of personal pleasure from the fact dozens and dozens of people have at least glanced at my post about how fucking shite Halfords truly are.
But, the biggest single lesson I take from looking at my stats is how useful it is to include a picture of J0.hnny R0tten’s arse and an explicit reference to J0.hnny R0tten in every blog post. The temptation now of course is to try and optimise my page views by making explicit references to Br!tney Spe@rs, P@mela @nderson and someone a fabulous person tells me is called Meg@.n F0x all the time, that and German Granny Fisting (Deutsch Großmutter Fisting) of course. And oh, oh I should try and get/add links to here basically everywhere really.
Except, all of the above is disgustingly self-referential, self-absorbed and basically a pile of wank. Plus I earn a good wage with my current job so why fucking bother i.e risk it? Instead, I’ll reflect on the fact that since June last year I’ve generated shit like 43 page views from Russia and how freaky that is given its passed without comment and is for a deeply Anglo-centric webpage. So in the spirit of that I’ll say Большое спасибо, that and Halfords is fucking shite.
Monday, 7 March 2011
"When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less." "The question is," said Alice, "whether you can make words mean so many different things." "The question is," said Humpty Dumpty, "which is to be master— that's all."*
The White Queen; ""The rule is, jam to-morrow and jam yesterday — but never jam to-day."
Somewhere in the, lets not beat about the bush, UK class structure, there is a magical dividing line. Beneath is “us”, above it “them”. The pay us receive is a potential threat to the economy, it is something the Bank of England is forever vigilant about in case us start getting above inflation pay rises that might lead onto a dangerous wage/price spiral. In simple terms us can’t get chunky pay rises and if us do well lets not kid ourselves the great and the good that set monetary policy would have to take action!
Above the line things appear very different. To run with the Alice in Wonderland motif a bitty longer, above the line the common sense that underpins UK economic policy is viewed through a looking glass. This is where the wealth creators and financial wizards that should never be taxed too much in case they run away to Zurich or else just pay an accountant to get all creative on Her Majesty’s Customs and Revenue’s ass live. Above the line sit private equity bods who pay proportionately less tax than their cleaners, Cayman Island registered hedge funders and the Monaco or Jersey domiciled, but make all their money here tax exiles, all of them clinging on to their multi-million pension pots that are thankfully at a remove from the RPI to CPI, final salary to life time average (or defined contribution), non-contributory to ramped up contributions us have to contend with. Them getting more money is actually a good thing it transpires as opposed to a danger; above inflation pay rises? Brilliant! That'll guarantees Britain retains high calibre execs and besides just think of all the extra goods and services they’ll buy and all the demand that creates for, err, well what really, fancy shoes?
Now you could say there’s no that many so why bother, except the actual magnitude of fivers the super-rich get their meaty fists around is fucking staggering. To take just one example, the £6.5m bonus paid to the Barclay’s CEO equates to 5,711 people on the average wage (as at Dec 10 and including bonuses) getting a pay rise in line with RPI inflation (also as at Dec 10) i.e. just one fucker giving up his bonus equates to all the wage earners in a fair sized town getting a pay rise decent enough to keep up with the cost of living. I would also guess yer bod on the average wage is paid in such a way that the tax man gets a good sniff of their earnings whereas a top whack investment banker is presumably paid thru a long enough chain of off shore, non-dom accounts and companies to put off all but the most forensic of forensic accountants.
Besides, in their own words these above the line feckers simply aren’t worth it. On the one hand you’ve got Sir Fred Goodwin sitting before the Treasury Select Committee saying it wisnae just me and on the other you’ve got Chuck Prince famously going on about how despite him being the CEO he had to keep dancing at the behest of shareholders, execs and what not i.e. the individual cunts getting all this dosh don’t necessarily make that much of a difference (unless they lied thru their teeth of course and they actually truly were completely omnipotent and as such completely liable).
More practical still are the Income Data Services numbers quoted in the latest Prviate Eye about how last year the total earnings of FTSE company directors went up 55% whereas actual FTSE share prices, the only real benchmark of a director's performance and worth only rose 9% (by contrast average weekly earnings in December 2010 grew a fuck all 1.1% according to this). Clearly, the rhetoric we have to live by is that some costs (i.e. "us") have to be contained whereas "talent" has to be retained, whatever the cost.
Translating the above rant into actual policy strikes me as easy enough. To be fair, there’s all this moaning right now about banker bonuses and not incentivising risk taking, yad-di-ya-di-yada and so on, except that’s kinda finite. Rather we should move from the current situation whereby average pay is the be all and end all when it comes to watching out for potential wage/price spirals to one where besides average pay, the pay rises received by different bands of earners should also be taken into account and responded to accordingly by monetary policy setters. There’s a clear “economic” rationale (I fucking hate using rhetorical flourishes like that, I’ll be saying “scientific” next) for doing so given people on different incomes tend to spend their earnings in systematically different ways that impact on inflation differently, so all good in my book. That it would also expose the different economic experience of different categories of wage earners over the medium to long term is of course beside the point. Obviously. You never know, exposing all of the above shite might result in more people getting jam today.
* This strikes me as a useful enough starting point when thinking about the bullshit rhetoric used to legitimise the unequal distribution of economic resources i.e. it emphasises economics is actually about the political economy as opposed to a psuedo science.
As an 8th March P.S. its a fucking laugh the police getting the big public sector spending cut shafteroo. Mebbe next time they'll no be so quick to tip protestors out of wheelchairs. Saying that the initial proposals suggest our lords and masters really are utter fuckwits given Thatcher's miners strike example of making sure the cops are on side before kicking the shit out of protestors.
A 9th March PS this time. So according to Hermann Gartner and Christian Merklthe "The roots of the German miracle" lie in its “wage moderation” that was the result of labour-market policies in the years preceding the global crisis. Really? Lets politely ignore realities like its export based economy and shit like the CD Rom some former private banker handed over to German authorities that showed how all these German bigwigs had been avoiding tax at the same time as most people were having their wages "moderated". Cunts squared. Utter cunts squared.
Saturday, 5 March 2011
The full title should be “How shit actually works in ways that leave us all getting the bad hurt”, but that was a tad long and so is what follows so I’ll try and keep it short. To begin with there’s loads of different examples and points to be made to substantiate a title like that, here though I’ll stick to 2 and a half.
The first one and a half concerns the Financial Services Authority (FSA). This august institution fucked up so bad with the credit crunch it's absolutely fucking amazing; during the initial liquidity crisis all these schmucks focused on was capital, capital and more capital, except, it was a liquidity fucking crisis i.e. people stopped lending to banks full stop. See the difference? Capital is well capital whereas liquidity is a completely different thing altogether.
That aside, the reality is as follows; some punter goes to work for the FSA, they get on, takes up a supervisory role, meets with bank bods, ya di ya di yada. The bank being supervised or another, similar one then recruits or poaches the self-same supervisor on the basis that they know the personalities, the culture, the rules etc., that actually make the FSA work. But, they're not the only one, rather there’s a revolving door between the regulator and the regulated and so a hermitically sealed bubble evolves, one lubricated by pay rises and promotions. In it the primary focus is on playing the game (between the regulator and the regulated), not the wider economy or even the possible (and as it turns out actual) consequences decisions reached within this bubble have upon the UK economy and society in general.
The half-point concerns building the models banks use to assess risk and identify how much of the all (FSA) important capital needs to be held. Here you see much the same as with the FSA more generally, but in an attenuated form. Like say Bank A wants to build a model to assess the risk lending to say toilet makers poses. To do so it decides to hire a consultancy; some consultants do some lovely presentations to bored Bank A senior bods to win the contract, then do some shit design until hey presto there’s a toilet maker risk assessment model to submit to the FSA for approval that can genuinely claim to have been independently built i.e. it has the imprimatur of Superduper & Co the famous global consultants.
Does the FSA actually understand this shit given the serious maths involved? Too right they do because they've also hired consultants or an actual former Superduper & Co senior bod to run their risk model assessment division. This bod in turn OKs the toilet maker risk model, something Bank A takes note of when it next goes recruiting a head of its risk model making department. And so the merry go round continues.
Except even more fucking obvious vested interests come into play here to an extent that shit gets even more fucked up. The former Superduper & Co bod has a clear and vested interest in saying “yup this model is fucking A”; he could say no cos these guys do badly documented botch jobs and make whopping great assumptions that barely hold water. But, he won’t because that would undermine the claims to credibility and technical competency that justified them getting an FSA job in the first place (and neither actual nor former consultants are that naïve). So instead the model gets approved leaving Superduper & Co to make an even more impressive sales pitch to Bank B, C, D and so on to a point where big chunks of an entire industry end up with much the same risk assessment tools regardless of whether they’re actually any good or not.
Of course any FSA or banking bod confronted in public by the above reality will vomit shite to order about how regulators need to understand their key stakeholders, ensure commercial experience is in place and brought to bear, the benefits of a “breadth” of experience and so on and so on, but really what you’ve got is a magic roundabout wherein the magic derives for the most part from the complete failure to acknowledge the vested interests such processes create, how that impacts on actual decision-making and what impact those decisions have on the rest of us e.g. if some wee FSA cunt is wanting more dosh, they have a clear incentive to not be too harsh on their potential future employers regardless of whether they're a fucking basket case that the taxpayer is going to have to bale out or no.
The second or final point relates to Merv the Swerve King wanking on about banks focusing more on ripping off customers than providing a good (financial) service. The cool thing about people as smart and as Oxbridge as Merv is how what they say usually warrants close scrutiny because its frequently ambiguous, and self-consciously open to interpretation. In this instance, I reckon, the close reading applies more to the tone than the actual words given they were straightforward enough. The context here would be it following on from Adair Turner doing another wankfest speech about socially harmful, useful or whateverul financial innovation. Ignoring the “invisible hand” argument that could be used to rebut Merv’s claims with ease, my guess is that both are sabre rattling because despite their apparently influential positions (Governor of the Bank of England and Chairman of the FSA respectively), both have been sidelined by ConDem politicians currently in the process of stitching them (and us) up by agreeing to let banking go back to business as usual as much as possible as soon as possible to an extent that's left Merv arguing for what should be as opposed to what will. I mean it’s no like it’s the first time he's been kept out the loop except now if Project Merlin did anything it established clear, direct and influential lines of communication between banks and politicians regardless of the feckers actually in charge of regulating the financial system. Cunts.