Monthly Archives: June 2017

The next banking crisis

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British banks have lendings of £7bn which is about 5 times the British GDP; and that is far worse than the ratio that precipitated the banking crisis that is devastating the Irish economy.

The risk is that at some time in the next few months or years there will be another British Banking crisis, probably precipitated by the market deciding that British asset values are about to collapse and that the Bank balance sheets are vulnerable to attack – after all nothing has changed since the last banking crisis.  The difference this time round will be that the government will not be able to bail out the banks.

So then it will be up to an EU and IMF to devise a $ and € support package, and they will insist that we do not use competitive devaluations to export our way out of trouble.

Are the banks and government doing enough to avoid this outcome? I really doubt it!

If the world had only 100 people:

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57 Asians
21 Europeans
14 from the Western Hemisphere
8 Africans
52 females
30 whites
70 non-Christians
11 homosexuals
6 Americans possessing over half of all the wealth
80 living in substandard housing
70 who wouldn’t know how to read
50 suffering from malnutrition
1 near death
1 near birth
1 with a college education
1 with a computer

Chaos theory and economics

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This was an article I wrote in 2001, but it seems appropriate to repeat it…

I have been following your articles on the various arguments between those (American) economists who demand greater transparency in financial markets as a solution to recent instability, and those who believe in a supra-national regulator.  (Gordon Brown, yourself, me).

It reminded me of the description of Physics at the beginning of James Gleick’s book on Chaos theory.  “Physics”, he said, “has been going down a reductionist cul de sac in which more and more is known about less and less.”  The insight of chaos theory is that in the ‘natural’ world, there are things that are inherently unknowable because small changes have large effects in conditions of instability.

It therefore follows that during periods of economic instability one will never be able to disclose sufficient information to overcome the danger of the system running out of control.  Only regulatory institutions with the power to manage periodic crises can give us the security we all crave.

The high speed rail link

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All three major political parties have endorsed the plan to invest £60bn in a high speed rail link that will shave minutes off the journey time of a few very rich people travelling between London and Scotland.

The alternative would be to invest that same amount amount of money to enable the UK to implement Optic fibre Internet to about 96% of all homes and businesses.

Now at the moment, a typical ADSL internet connection will deliver about 5Mbps downloads and a measly 0.8 Mbps.  With an optic fibre network we would be able to get something around 50Mbps upload and download speeds.  What impact would that have?

  • Suddenly we can have high quality video conferencing to a large HD screens without any lagging on the sound.
  • Cloud computing becomes a reality and that will create yet another technology revolution.
  • VPN and all sorts of desk top sharing applications that currently have to compromise quality because of bandwidth, would alter the way we manage our businesses and undertake learning.
  • Interconnected appliances
  • and of course, instant downloadable TV
  • Plus many other advantages that we cannot even imagine yet

There are countries that are already well advanced in creating an Optic Fibre infrastructure, like South Korea and Scandinavia.  But in these times of austerity the British government has decided to invest heavily in the infrastructure that made that made us great at the time of the Victorian Empire.

This is being done in our name, but it should be stopped.

My favourite Quotes

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I learned that it is the weak who are cruel, and that gentleness is to be expected only from the strong.
Leo Rosten (1908 – )

It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult.
Seneca (5 BC – 65 AD)

Always behave like a duck – keep calm and unruffled on the surface but paddle like the devil underneath.
Jacob Braude
It’s so much easier to suggest solutions when you don’t know too much about the problem.
Malcolm Forbes (1919 – 1990)
Success covers a multitude of blunders.
George Bernard Shaw (1856 – 1950)
I have never met a man so ignorant that I couldn’t learn something from him.
Galileo Galilei (1564 – 1642)
One must somehow find a way of loving the world without trusting it; somehow one must love the world without being worldly.
G.K. Chesterton
Forgive many things in others; nothing in yourself.
Ausonius
Genius may have its limitations, but stupidity is not thus handicapped.
Elbert Hubbard (1856 – 1915)
It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time.
Sir Winston Churchill (1874 – 1965)
No one can make you feel inferior without your consent.
Eleanor Roosevelt (1884 – 1962), ‘This Is My Story,’ 1937
The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.
F. Scott Fitzgerald (1896 – 1940), “The Crack-Up” (1936)
The universe is made of stories, not atoms.
Muriel Rukeyser
Successful people in this world are those who get up and look for circumstances they want. If they can’t find them, they make them.
George Bernard Shaw (1856 – 1950)
Having once decided to achieve a certain task, achieve it at all costs of tedium and distaste. The gain in self-confidence of having accomplished a tiresome labor is immense.
Dr. Thomas Arnold Bennett
Virtue is its own punishment.
Aneurin Bevan
That which has always been accepted by everyone, everywhere, is almost certain to be false.
Paul Valery (1871 – 1945)
Good teaching is one-fourth preparation and three-fourths theatre.
Gail Godwin
Growth for the sake of growth is the ideology of the cancer cell.
Edward Abbey (1927 – 1989)
Living apart and at peace with myself, I came to realize more vividly the meaning of the doctrine of acceptance. To refrain from giving advice, to refrain from meddling in the affairs of others, to refrain, even though the motives be the highest, from tampering with another’s way of life – so simple, yet so difficult for an active spirit. Hands off!
Henry Miller (1891 – 1980)
Get your facts first, and then you can distort them as much as you please.
Mark Twain (1835 – 1910)
If you can’t appreciate what you’ve got, then you had better get what you can appreciate.
George Bernard Shaw (1856 – 1950), Pygmalion
Who are we? We find that we live on an insignificant planet of a humdrum star lost in a galaxy tucked away in some forgotten corner of a universe in which there are far more galaxies than people.
Carl Sagan (1934 – 1996)
It turns out that an eerie type of chaos can lurk just behind a facade of order — and yet, deep inside the chaos lurks an even eerier type of order.
Douglas Hostadter
It is not the greatness of a man’s means that makes him independent, so much as the smallness of his wants.
William Cobbett (1763 – 1835)
When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.
Henry Ford (1863 – 1947)
You will find that the State is the kind of organization which, though it does big things badly, does small things badly, too.
John Kenneth Galbraith (1908 – )
In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before. But in poetry, it’s the exact opposite.

Vote yes for AV on the 5th May

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At the last election I was fairly ambivalent as to which party I supported, which is unusual for me.  But I was pretty certain that I did not want the Conservatives to win!

  • I was sure that the Osborne form of sado-masochistic economic policy in which we bow to the rich and famous in the naive belief that what is good for them will also be good for the rest of us, was straight wrong.
  • I was sure that the extreme right wing hiding in the bushes under the Cameron PR veneer of a rehabilitated ‘Conservative brand’, were a real and present danger.
  • In fact almost every  one of their policies from schools to immigration, and from banks to Europe rang alarm bells…

The trouble was that I didn’t know how to vote against the Conservatives in my own constituency because the anti conservative vote was evenly split, and the inevitable then happened.  The Conservatives won with a minority of the vote because the anti-conservative vote was split.  Clearly AV would have solved my dilemma…….. but it becomes even more interesting if you follow through the logic.

Under an AV system all parties would understand that choosing policies that alienate large numbers of voters would not be a successful strategy, so it is very likely that extremists within all parties will loose strength. And I would maintain that anything that strengthens the middle ground of politics against the extremist fringes, is very likely to be good for he country.