Archive for the ‘Britain’ Category

He shot us, no he didn’t

November 20, 2011

The latest from the investigation into the death of  Mark Duggan, whose death sparked the UK riots this summer, is worth taking on board.

Recall that when police shot him dead, Duggan was initially said to have fired on police. And a shot Duggan supposedly fired almost killed a policeman, except it lodged in his radio.

The point we are at now is that a) Duggan did not fire a shot b) Duggan did not have a weapon in his hands.

Instead there was a weapon inside a sock inside a box in the back of his car that police had information he had acquired.

It is not quite as bad as shooting an unarmed electrician in the head multiple times at point blank range. But the Duggan killing points to a London police force parts of which have lost touch with what policing means as a profession.

 

Meanwhile:

Two of three members of a community liaison group set up to create trust in the official investigation into Duggan’s death have resigned. And the Met is running to the Press Complaints Commission with what looks like a very lame complaint against The Guardian‘s reporting (same link); it isn’t quite Giuliano Mignini firing off allegations of criminal libel against any journalist who gainsays him, but it is a little chip hewn from the same moral block.

The fork in the road

November 17, 2011

It isn’t easy to see amid all the goings on, but there is a fork in the economic road. A third week of improving jobless claims in the US signals the very slow recovery of the world’s biggest economy. Meanwhile the spreading of the stress in European debt markets signals that the worst in that region is yet to come.

The world is suffering two different macro crises. A private debt disaster hit countries running the Anglo-Saxon model. As Hyman Minsky would have expected, the US is beginning to escape from this because its government carried sufficiently low debt that it could step in and bail the problem out with monstrous sums of public money. The US is also assisted by having a diversified economy that contains the planet’s best manufacturing firms in addition to its biggest banks (something not considered in Minsky’s ‘financial instability hypothesis’, but then he never claimed it was a complete theory). The UK, and Ireland, and Spain, are more one-dimensional and hence more stuffed. As this article makes clear in Britain’s case.

The second macro crisis is the public debt one of the Eurozone. Here the state cannot step in because its debts are the problem. Instead the state has to negotiate its way out. Which involves politics. Which is why the problem is more intractable than the private debt disaster where the solution is automatic (deleveraging, falling asset prices, misery for anyone who failed to ‘play the market’).

The major ‘negotiation’ of the public debt crisis in Europe is Italy’s, which is now in its ‘Chin Up, Let’s All Stand Together Phase’, under Mr Monti. The press today is being terribly positive. But I cannot see where a good outcome could come from. Italians are all in favour of Mr Monti because he has not yet set out clear policies. Once he does, the political parties will attack him, and allege that dark, conspiratorial forces are behind him. Without a clear roster of policies that have to be approved by a referendum, there is no practicable way forward. And no party is urging a referendum because it would involve making policy choices clear. The parties were not even willing to offer up ministers for the government. The preference is to let the ‘technocrat’ dig his own grave.

 

The gentle breeze of British hypocrisy

November 12, 2011

The Economist has published its sixth, and presumably final, cover story on Silvio Berlusconi. The headline – ‘That’s all folks’ – is supposed to evoke the cartoon quality of his premiership. But coupled with a backdrop of Sil set in a painting of end-of-Empire Roman lassitude, it is too busy. Far more visually effective was the June 2011 cover with a simple photo of Sil and the line ‘The man who screwed an entire country’.

I haven’t been the biggest fan of The Economist’s coverage of Italy because it has focused so overwhelmingly on Sil — rather than on a the malaise of an entire professional class which he symbolises. What sets Italy apart is that, relative to its level of economic development, it has the most backward, self-serving professional class and professional institutions of any state in the world. This includes, but is far from limited to, its political and legal and fiscal institutions.

There is also a very English undercurrent of hypocrisy in the manner in which the British elite discusses the Italian crisis with a told-you-so attitude. The Economist is particularly guilty of this, putting the boot in to the German response to the crisis on a weekly basis.

What is forgotten is how the Germans are left to do the political heavy lifting in Europe almost single-handedly. They have a French ‘assistant’, but he is barely worthy of the name.

If Britain had joined the Euro, things would have been different. There would be two big political grown-ups in the Euro-zone instead of one, and that would have made the job of dealing with Italy so much easier.

You cannot argue with Britain’s decision to stay out of the Euro from a selfish, pragmatic perspective, but anyone who supported that decision should limit themselves when yelling from the sidelines about what to do now. How would you like to be Merkel, put in a team with Sarko, and expected to sort out Greece and Italy?

If Britons are honest, they must concede that post-war Germany has done the bulk of the work in creating a stable, prosperous and progressive Europe while the British — famed as people of action — stood around bitching. And when Britain realised it desperately needed to be inside the Common Market in the early 1970s, it needed German support — against French opposition — to get in.

Germany, not Britain, is the moral leader of Europe in the past half century.

Liberal parenting II: blending seamlessly into Cambridge

October 31, 2011

I have gotten into the habit of taking the kids on a very beautiful walk in Cambridge. We cycle five minutes down to the west gate of Kings, lock up the bikes, and enter the college via its back door. We walk down to the college’s internal bridge over the river Cam, survey passing punts and geese, take a loop around the gardens, and exit the front gate to a tiny cake shop down an alley opposite. This is the pay-off for the children. Caked-up, the three of them gambol merrily around the corner to Clare College — to me the most beautiful — via whose courtyards, bridge and fellows’ garden we return to the other side of the river and our bikes.

It is hard not to feel pleased with yourself in such august surroundings with three attractive children behaving with reasonable decorum. I am normally too nervous of them to enter any of the college buildings. But today, seeing there is a service in Clare chapel I accept the request of the eldest to take a look. Arriving early, we mill around with devout, serious-looking old people in the narthex. After a couple of minutes, I am summoned animatedly by the eldest child, eight, to view a large book displayed in the middle of the room in which people are writing names.

‘What is this?’

[I ponder.] ‘It is an ‘In Memoriam’ — in memory — book where people are invited to write the names of those who have died in the last year so that they can be remembered in prayers.’

‘Grandpa died three years ago. Who can we write in the book?’

[Pause.] ‘I don’t know anyone who died in the past year.’

‘I do — Gaddafi.’

‘You are not writing Gaddafi’s name in that book.’

‘Why not? He died this year and someone should remember him.’

‘Because, because…’

‘He died a few days ago… How do you write his name?’

Luckily, at this point the eight-year-old’s younger male sibling butts in with a very loud ‘I don’t like churches’. Before the four-year-old — who originated this refrain and caused a major scene in St Peter’s in Rome last year — can join in, I herd them out.

 

School’s in

October 3, 2011

It works quite well for us in Cambridge that I can go for a run while the kids ride their bikes. I get some exercise and they get to win. On Sunday I went with the eldest on a circuit through town, where we agreed to poke around a college. We picked Trinity Hall, which is small, rich and riparian.

Upon entering, it was clear that undergraduates were arriving. At the Porter’s lodge a group of keen helpers in pink T-shirts was ready to nab a newby.

Further on through a couple of courtyards, parents were being allowed to drive in to the college to deposit their children. The cars weren’t flash. There was one Mercedes, but otherwise these were the vehicles of people who had spent a jolly lot of money educating their kids.

Confident young people ignored signs instructing them not to walk on the grass. It was, I suddenly saw, a perfect replica of an English public school at the beginning of term.

We went and sat on the wall down by the river and watched the punts. Next to us, three girls with squeaky boarding school accents chatted. Someone had hung a pirate flag from the window of their room. One of the girls, noticing this, observed in deadpan tones: ‘They should take that down. I think it cheapens the place.’

For some reason, the scene made me think of the signs in Italian courtrooms that say ‘Everyone is equal before the law’.

Just look at the state of…

September 11, 2011

The British middle class

A great story by Zoe Williams about the national education system, national education versus private education, and middle-class selfishness. For me, the ghettoised education system remains the thing to like least in Britain.

Premiership football

The tale of how footballer Wayne Bridge decided to stay at Manchester City on his £4.7 million salary even though the team is unlikely to give him first team football and he has been left out of the Champions League squad. Somehow the price mechanism doesn’t seem to be extracting peak performance from Wayne.

Continental Europe

Still, being here in the UK you get to look at certain other places in Europe and reflect that things could be so much worse.

English honeymoon

September 6, 2011

Last week I loaded a child into the car and headed north, through Switzerland, France, Luxembourg and Belgium to the UK. The wife and other kids joined us this week. We will spend at least a year in Cambridge. I cannot say that I am sad to have moved my base away from Italy at this point, although we will be back regularly and there are friends we miss.

It is the first time we have lived properly in England for 20 years and there are forgotten marvels to remember, as well as new ones to behold.  I have been enough of a regular visitor over the years to know how much chocolate is sold in petrol stations. But on family visits to Marks & Spencer and Tesco we are dumbfounded by the number of refrigerated aisles containing those processed foods that Brits eat so much of. (At least six in a row just in M&S, versus two in our Italian supermarket. Many, many more in a hangar-size Tesco.) On a hot September day we are suddenly desperate to wrap up warm while inspecting the rows of chilled curry dishes, mezze, pasta favourites, pre-cooked joints of meat and the rest. The stuff is staggeringly expensive when you think how much veg you can buy for 10 quid. And yet for people not habituated to daily fresh food preparation, these offerings are compelling.

Tesco now has self-checkout counters which allow your children to experience at an early age the type of employment they can expect if they do not pay attention at school. First time round they find the work invigorating, especially when an item fails to scan and they have to call for assistance. But I reckon that by Christmas they will have figured out that it is worth up-skilling somewhat.

On Sunday morning we rise early for a ‘car boot’ sale — and it does not disappoint. About 100 people have their car boots open by 9am, offering up the most indescribably useless tat in return for money. A pair of low quality circa-1970 skis catch my eye. Imagine actually turning up to a ski resort with them. To be fair, the stuff is not that much worse than some of the junk displayed at the monthly ‘Retro’ Citta di Castello antiques fair — but whereas the Italians display their crap with a little finesse on tables in a beautiful piazza, here it is simply dumped on the Tarmac of a car-park. The children find the car boot sale as perversely interesting as I do, and when we leave I realise that we have acquired two serviceable children’s bikes for just £35. This could become a habit.

Part of the reason I came to England ahead of the rest of the family was to do appeals for school places. Our two eldest kids were offered places at their second choice primary school — 20 minutes by bike instead of five for the closest one — while the council wanted the youngest child to be shipped across town every day in a taxi to a new school several miles away. Cambridgeshire has the fastest-growing population in England and school places are failing to keep up. The appeal process was everything that Italy is not: immediate, decided by fairly sensible rules, and binding on the participants. The council puts its case, I put ours. The notion of sending the youngest child miles away by taxi was shot down and the council representative instructed to create a place at her first choice school. The other two kids were left with their second choices. We will have to cope with two different schools for now, but the situation is far from dire.

What else is immediately pleasing? Apart from the fact that Cambridge is very cosmopolitan and people are dedicated to getting stuff done in an unfussy way, I would say fast internet access. It really is another world after Italy. With connection speeds like these you could spend all day messing around on the InterWeb…

If you did, here are some examples of what you might find:

Bob Marley plays acoustic Redemption Song.

Brian Ferry covers Dylan’s A Simple Twist of Fate rather well.

A 12-year-old child plays You Shook Me All Night Long in his bedroom rather well.

ACDC’s Angus Young and Brian Johnson are interviewed by German TV while Angus nurses a tea mug.

Bob Dylan proves he is capable of smiling and having fun at Farm Aid in 1985.

Moreover Dylan keeps enjoying himself.

And Dylan really likes playing this song.

Bob Dylan is portrayed on the Simpsons.

Bob Dylan is portrayed on Family Guy with Tom Waits, Popeye and Ali.

Various interviews with people believed in some religions to sit on the left hand side of God the Father Almighty

Mr Dylan.

Mr Young.

Mr Waits.

Mr Cale.

Meanwhile back in Italy:

If this crisis were a movie, half the audience would be asleep. The government changes its mind every day about austerity budgets, there is no traction on structural reforms, the unions strike without offering any policy agenda of their own, Italian bank stocks are back in free-fall, and Italian bond yields are rising again despite the ECB having swallowed over Euro40 billion of government debt — much of which must be Italian — in the past three weeks. We all know the ending, so why not just cut to the IMF?

Stuck in the middle with you

August 14, 2011

The English riots story runs and runs. There have now been something like 1,700 arrests — which is equivalent to about 2 percent of the entire United Kingdom prison population. The courts are meting out quick justice, which is a good thing (magistrates have been sitting through the night in special sessions), but they are also meting out retributive justice, which is not good. One man who walked into a shop that had been broken into and took £3.50 of bottled water has been given six months in jail. That is nothing more than a magistrate responding to the calls of Brave Dave Cameron and the moronic right that everyone involved be given a good caning.

England is stuck in the middle with its underclass problem. On the one hand it could go the American route, have a bigger underclass, but use much higher levels of state violence to keep it in place. That means more ghettoisation and more police with guns. In essence, it would mean that every time you arrived in an English city (like an American one) the taxi driver would tell you which part of town you can’t go to ‘cos they might kill you’. It doesn’t matter that this isn’t necessarily true (Among others, I have survived the south side of Chicago, south-east DC and some bad bits of NYC), the taxi driver’s advice is a short-hand for the political choices that have been made.

The other route is the continental European one. We should clarify at the outset that we are not talking here about the continental European immigrant underclass, which definitely exists and is nicely down-trodden. The immigrant underclass has rioted in France, but for the most part immigrants live on sufferance and their very low expectations keep them from going over the civil unrest brink. What we need to talk about in continental Europe is the treatment of the least fortunate part of the indigenous population, including (usually second generation) naturalised immigrants.

This latter group has never, to my knowledge, rioted because of what can be called ‘inclusion’. Since the Second World War, continental Europe has implemented policies designed to maintain society as a single unit. The most important of these, I believe, is nationalised education. There is no educational ghettoisation in continental Europe that can act as a stepping stone to social ghettoisation. In towns throughout the European mainland, the children of the wealthiest entrepreneurs grow up going to school with the children of mechanics and barbers. This is overwhelmingly the case, and it is absolutely overwhelmingly the case at a primary level of education. Largely as a result, people growing up in continental Europe in the past 50 years have largely been denied the sense of exclusion and jealousy that pervades the Anglo-American underclass.

It is interesting that Ed Milliband, the Labour leader, is talking at every opportunity — in the wake of the riots — about the need to give people a stake in society. He even plans his own ‘enquiry’. But the Labour Party (the true party of bullshit in British politics) won’t go near the socially cancerous education issue. Boarding-school educated Tony Blair would not touch it and the new ‘lefty’ Labour leader will not do so either.

In consequence, Britain is destined to remain stuck in the middle. We have a sub American-scale underclass but we don’t have the guns to keep it in the ghetto. Once in a generation the underclass rampages down English high streets nicking whatever consumer durables its miserable existence has led it to crave. This generation is worse than the 80s one in that it is utterly bereft of any political consciousness. It appears to have been neutered by a combination of television, the moral cesspool of Premiership football, and the apparently limitless selfishness of reproductive underclass males.

Joe Strummer used to sing that anger can be power. But these days the only thing that anger can be is a flat-screen tv and a pair of new trainers — which most of the looters probably had anyway.

 

Latest:

Bob the Builder must be fuming. After Obama already stole his ‘Can we fix it? Yes, we can!’ refrain for the US election, Brave Dave Cameron is making another raid on Bob’s core IP with his new ‘Can we fix Broken Britain? You jolly well bet we can, matey’, campaign.

To be fair, Brave Dave has some reasonable points, but in the end I reckon he’s a fiddler not a fixer — a Polyfilla Blagger as Bob might say.

On the US copper — Bratton — to run the Met saga I am instinctively on Brave Dave’s side. But then he appointed Theresa May Home Secretary, so whaddya do? Remember that he also cut the political legs off Fatty Clarke, having first promised to be sensible about punishment issues. Brave Dave just can’t decide whether to hug a hoodie or lash one to a post and thrash him. It is so very hard being a modern Tory.

 

Unrelated, but quite funny: 

I had not realised that Giulio Tremonti, Italy’s finance minister who used to work as a tax law expert and this week imposed a ‘solidarity tax‘ on high earners, also worked in the past as a university lecturer in ethics. He currently stands accused of paying a fast-living political aide who is under investigation for serial corruption €1,000 a week in cash to live in his apartment in Rome. It would be fun to publish Mr Tremonti’s course notes, if someone has them.

Noise (and not)

August 9, 2011

The equity markets threw quite a tantrum on Monday and on Tuesday morning, but Mr Market appears to have found his valium.

Wednesday evening insert: 

Strike that! Mr Market picked the wrong bottle and actually took some acid. He’s freakin’ out again.

 

What is the American equities terror all about? Not much as far as I can see. Noise.

I am no Bernanke groupie, but the message from the Federal Open Markets Committee Tuesday looked about right. No immediate promise of QE3. It isn’t needed yet and given the epicentre of crisis at this point is in Europe (see next par) it is hard to see how US government debt yields are going to be pushed significantly up. There was an FOMC promise of long-term cheap money, but everyone expected that anyway. The US may just (unlike the UK) continue to crawl towards recovery. If not, there’s time.

The real story is on two different fronts. The first is the European sovereign debt crisis, where the ECB is applying to Italy and Spain the medicine that did not work for Greece, Ireland or Portugal — buying the bonds of a country that cannot otherwise afford to service them. For Spain, at least this may be a useful subsidy while the country makes further adjustments to ensure its independent fiscal survival. But for Italy, it is simply a matter of how much time elapses before the market remembers that Italy cannot get its act together. I can’t see how this can take very long at all. The trigger for renewed panic in the debt market, however, could be one of many: German politicians decide unilaterally that they have had enough of Italy; Italian blue collar unions affirm their intransigence; Berlusconi opens his mouth; some new scandal breaks; the ‘professional’ classes go on strike; or the sheer scale of what is entailed in buying Italian (and Spanish) debt sinks in — the total the ECB spent on Greek, Irish and Portuguese debt last year and this was Euro74 billion; it will likely be asked by delighted sellers to buy that much Italian (and Spanish) debt within a month.  Waiting for one of these things to go bang is a bit like watching old episodes of Dallas: predictable.

More interesting perhaps is what is happening on the China front, another key to the rebalancing of economic and political relationships that must happen before this crisis is over. Here we see what can be construed as the method in American madness. The S&P downgrades of US debt and the hoo-ha about a possible QE3 is backing the Chinese leadership further into a corner it hardly even realised it was in. There was old China, all tough and proud with a couple of trillion dollars of US dollar-denominated foreign exchange reserves (out of a total of more than three trillion USD-equivalent). Everyone was all afraid of the big panda that was buying up all the forex. But suddenly the Chinese government doesn’t feel so clever buying USD in order to depress the Renminbi exchange rate. So what else do they buy? Euros? Ho, ho, ho. Japanese Yen? Hee, hee, hee. Sterling? Ha, ha, ha, ha. There aren’t enough Swiss Francs or Swedish Krona to last China a week. And if it buys gold, what happens when the crisis is over and the price falls off a cliff?

It is no fun at all being the Chinese government right now and the path of least resistance is to let the Renminbi appreciate. The central bank allowed it to shift a quarter of a percent in a day when the S&P downgrade was announced, to 6.43 to the USD. (This would be nothing in a free market, but it is a big jump for China.) The official news agency, Xinhua, has taken to running political commentaries demanding the US guarantee the value of Chinese investments, which must have the China people in Washington rolling on the floor and slapping the carpet. At least someone is having fun. The more the Renminbi appreciates, the  better the US net trade position becomes. The process also imports some inflation into the US, which is good. And the rising Rmb becomes a self-fulfilling prophecy as speculative capital moves into China in search of higher interest rates and a rising currency. Basically, China either lends America cheap money to fund the deficit, or it takes the (upward) currency hit. They ain’t feeling so forex macho any more.

More…

Sloppy graph of USD-Rmb exchange rate:  USD Rmb Sep10 to Aug11

And in the news:

Appreciation does not prevent a monster Chinese July trade surplus (FT sub needed). But imports, year-on-year, continued to rise faster than exports and the growth gap widened a little versus June. Going forward, it is worth bearing in mind that China could still see increasing trade surpluses as the Rmb exchange rate rises and exports slow, by virtue of falling domestic investment and hence lower capex imports. This would be consistent with the huge trade surpluses of the mid-1980s in east Asia which caused the US to put its revaluation gun to the head of Taiwan and Korea in 1987. However the trend to narrowing surpluses and a positive impact for the US economy is my base China case.

The Renminbi kicks on following yesterday’s FOMC statement.

 

Latest from not-so-gay Paris and not-so-dolce-vita Roma: (FT sub needed)

Zoot alors! King Sarko summons his ministers as selling fever turns on Italian bond-laden French banks. Pas bon: this FT story focuses on the sell-off of French bank stocks today, but notes further down that the Italian big 3 banks also got a caning. What is really telling, I suspect, is that French and Italian banks that own Italian (and other toxic) debt fell by double digits today, even as Italy was able to sell new bonds at lower interest than a few days ago (figures in the freakin’ out again link if you need them). Would that be because a few days ago the ECB wasn’t buying Italian bonds?

Is Obama an idiot?

July 31, 2011

There is a very powerful leader out in The FT about the likely US debt deal this week, which you should read if you have a subscription. Clive Crook has a knife in either hand for Obama, accusing him of leading ‘from behind’ and landing the US with fiscal cuts just when the country needs fiscal stimulus to offset a stuttering recovery. In essence, the argument is that Obama has caved to the moronic right, known officially as the Tea Party.

I suspect Crook underestimates Obama, as almost everyone in the US seems to do. It looks like the cuts that Obama is promising the Prozac Party are very heavily backloaded over a ten-year period. In other words, almost no impact over the next, critical 12-18 months. Meanwhile the Adderall Party have agreed there will not be another debt ceiling negotiation before the presidential election, next November. That, for me, is the key thing. In another 18 months, when Americans go to the polls, unemployment will be very high but signs of recovery will be such that people can draw sufficient breath to remember that it was actually not Obama, but a combination of Bill ‘Grinning Idiot’ Clinton and George ‘Not As Smart As Bill’ Bush who landed them in this mess. Either that, or the masses really do tend to the right every time, and we should all give up on democracy.

My disaster-waiting-to-happen politics bet remains on the UK chancellor of the exchequer George Osborne. Fiscal stimulus-wise, I reckon he needs to do more than Obama, and will do less. I am also completely flummoxed by his Liberal running dog Treasury minister Danny Alexander, who is the subject of a fawning profile in today’s Observer. The weekend papers tell me that Obama’s a flake and Danny Alexander has got his hands round the British problem. I’m not so sure.