Tuesday, October 28, 2008

Needless to say..

I strongly disagree with the idea of increased government borrowing to try to stave off a recession. The risks are too high. What if it doesn't work? I want to know exactly what happens, please, if our country goes bankrupt? And I hope the IMF will set proper limits on its lending according to each country's ability to repay, though I doubt very much that it will.

In my opinion, this is the kind of initiative we need to get us out of this mess, not forcing more people out to work, selling the jobless to private contractors and taking out more and more debt on our behalf.

We don't want to live that way. Is anybody listening?

What happened to Prudence, Mr Brown? You should not have abandoned her. She was your best friend and your strongest ally. Without her, we're lost.

As usual, Capitalists @ Work say it better than I can.

Monday, October 20, 2008

It's not lack of *money* that's the problem..

- it's lack of trust! As the venerable Anna Schwartz succinctly pointed out in Saturday's Wall Street Journal, "The Fed has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."

Karl Denninger and many others have been calling for full disclosure of banks' balance sheets for over a year now, and still it hasn't happened! They're obviously never going to start lending again until they know whether the other party can repay the loan, no matter how much money we throw at them. Whatever it takes, Darling? That's what it takes, surely.

Radio 4's File on 4 this week [opens media player] was illuminating, not to say shocking. Well worth a listen, if you're feeling brave. In a nutshell, there are multi-billion pound lawsuits in the offing, against the banks, the regulators and the valuers as a result of recent events which, coupled with the imminent CDSs, spells major trouble for those institutions and the governments who back them.

I've also been reading George Soros's latest book: The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means in which he expounds similar views to the maverick economist Nassim Taleb ("My major hobby is teasing people who take themselves & the quality of their knowledge too seriously & those who don’t have the courage to sometimes say: I don’t know.... You may not be able to change the world but can at least get some entertainment & make a living out of the epistemic arrogance of the human race.") - reflexivity, which is "an act of self-reference where examination or action 'bends back on', refers to, and affects the entity instigating the action or examination." Soros blames the oversight of this on the part of politicians, regulators and financiers for the problems and he firmly does not believe markets to be always self-correcting. Indeed, he cites historic bail-outs as compelling evidence that they certainly are not.

Finally I want to mention this open farewell letter from self-made hedge fund manager Andrew Lahde to his associates in which he suggested that George Soros "start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man’s interest", amongst other ideas. It brought a smile to my face, anyway. Thanks to Tim for pointing me at it.

Tuesday, October 14, 2008

It's ok, folks...

They're just playing Tiddlywinks.


Thursday, October 9, 2008

Do you ever wonder....

why every government in the developed world is pulling out so many stops to protect the banks?

Surely what matters to the people is having enough food, fuel and shelter. We like to trade things with each other too - to swap things that other people need for things that we need. Really, the banks should have nothing to do with that.

But our government is using anti-terror laws to freeze assets belonging to companies from other countries? (Surely when you deposit funds in a bank, your interest gains are offset against the risk of that bank going bust?)

And why have our councils got £millions of spare money to invest in Icelandic banks anyway?

The funniest thing I heard today was a goverment minister - didn't catch his name - on PM this evening casually asserting that the councils might not be compensated by the government for their losses, because: "council investors are different from private investors in that they're intelligent." !!

Anyone with any intelligence wouldn't have their money in any bank ATM - they'd be investing it in agricultural land.