'snow excuse

The "can-do" spirit in the United States can be a mixed blessing, especially when it gets the country into wars that turn out to be unwinnable. At other times, though, it can be amazing to behold. Last night I watched New York Mayor Michael Bloomberg calmly reciting how the city was coping with a snowfall of about half-a-metre. There were two crews of 2400 municipal workers, each putting in 14-hour shifts and using 1700 pieces of equipment to shift the snow. Main routes had already been cleared twice and even before the storm had moved on, they were in a position to turn their attention to secondary and tertiary routes. Airports had been forced to close briefly, but were set to reopen as soon as the storm moved away. (At the time of writing, about 24 hours after the worst of the storm, La Guardia is the only NY airport still closed).

It's a complete contrast with what we've seen in the UK over the past couple of weeks, in response to about a quarter as much snow. The main response of politicians has been to point fingers of blame, mostly in the direction of businesses that they saw fit to privatise -- airports, railways -- in the not too distant past. In truth, the country coped reasonably well with the most recent snowfall, though that owes more to the resilience of the public than to any effort on the part of the authorities. (The main road at the end of my street was "cleared" entirely by the action of car tyres moving over it; the same is true in most urban areas, though up north and in the country they do things a bit better).

The one exception is, of course, Heathrow Airport. It's now emerged that Heathrow's snow emergency plan all along was....to close the airport if more than THREE CENTIMETRES of snow fell! So when they got 15 centimetres a week or so before Christmas, they (or rather their customers) were stuffed. The CEO of the airport operator, BAA, has done the modern equivalent of falling on his sword, by giving up his bonus for this year, and there have been the usual promises to "learn from our mistakes". However, I'm not at all sure that even with a Mike Bloomberg in charge, Heathrow will ever be able to cope much better if the same conditions recur.

I've written here before about Heathrow being in the wrong place. It's also much too small in terms of ground area, and it's entirely hemmed in by highways and housing. At most airports, as you taxi to and from the runways you see expanses of grass to the sides. At Heathrow it's all been paved over and put to use. Terminal 5 was built on just about the last space between the two main runways, and the perimeter is fully taken up with parking. BAA estimated that there were 30 tons of snow surrounding each aircraft parked at the terminals -- and as the storm began early in the morning, just about every stand was occupied. The cramped dimensions of the airport meant that there was very little space to put all this snow, and no way to use ploughs on the aprons, even if the airport had possessed such things. Instead they were forced to use earth moving equipment to shift the snow onto trucks. It's no wonder it took the better part of a week to get the place moving normally again. (La Guardia is on a similarly cramped site, which may explain why it is the last NY airport left closed after yesterday's dump -- though I suppose they have the option of pushing the snow into Long Island Sound).

There you have it, then. Heathrow, the world's busiest international airport, gateway to the UK: badly located, too cramped, and incompetently run by a bunch of carpetbaggers. What could possibly go wrong?

Now that's what I call journalism

The British media's reaction to Julian Assange and Wikileaks has veered between anger and contempt. (Partial exception: Ian Hislop, editor of Private Eye, who admitted on television that if he'd come into possession of the treasure trove of US files, he'd have published them). Assange doesn't seem to be a very nice man, but what really gets the media's collective goat is that he dares to describe himself as a "journalist". Apparently getting people to divulge all sorts of information to you and then publishing it falls short of the exalted standards expected of that profession.

Courtesy of the Daily Telegraph, we've seen a good example this week of the highly-principled activities of "real" journalists, namely, adopting bogus identities in an effort to entrap a minister of the Crown, in this particular case Vince Cable, the Business Minister.

This sort of thing is not new, of course, though it's generally the preserve of rather less self-important newspapers than the Telegraph. The News of the World has entrapped numerous personalities, including Sven-Goran Eriksson, using one of its staffers posing as a "fake Sheikh". However, the Telegraph has taken the whole tawdry process to new lows. Cable made some wildly inappropriate and negative comments to the undercover journalists about the Murdoch media empire, over which he has (or rather, had) regulatory oversight. Cable is (or rather, was) soon to make a decision on a takeover bid by Murdoch's News Corp. for its partly-owned subsidiary, BSkyB. Since the Telegraph opposes this takeover, it chose not to publish these comments in its initial reports on the interview with Cable.

This so shocked one Telegraph insider that he/she passed a full tape of the Cable interview on to Robert Peston at the BBC. Relations between the Beeb and the Murdoch empire are cordially poisonous, but Peston immediately broke the full story. Cue full-scale panic on Downing Street, with Cable hauled onto the carpet at No 10 and stripped of his powers of oversight over the media sector, including the still-pending BSkyB decision. The Telegraph, which seems never to have intended the full story to come out, has nevertheless seen fit today to allow one of its attack dogs, Simon Heffer, to write an opinion piece demanding to know why Cable has not been sacked from the Government!

Who are the winners and losers in all of this nonsense? The Telegraph is a loser on all counts, resorting to shady gutter-press tactics, attempting to hide the resulting story and then playing into the hands of its commercial rivals. The BBC has kept its integrity but must have reported the full story through gritted teeth, knowing that the chances of the BSkyB deal going through have just soared. Cable is a big loser, with his tenure in the government under question from all sides. And the Government as a whole is a loser, because no decision it now makes on the BSkyB deal will ever be seen as clean.

Sadly, the only real winner is Rupert Murdoch, who has gleefully watched his enemies circling their wagons and firing inwards. And I suppose we have to count Julian Assange as a winner too: compared to the "real" journalists on Fleet Street, he suddenly seems like a paragon of respectability and sound judgment.

Infra dig

Media pundits to the left and right of the political spectrum are having a joyful time putting the boot into the airports operator BAA, as Heathrow airport remains largely locked down three days after the last measurable snowfall. For the first couple of days of the crisis, BAA was sending out a poor curly-haired intern called Andrew Teacher to face the media throngs, but in the last day or so its CEO has finally manned up and ventured out to offer his apologies to the stranded thousands. He has promised that BAA will learn the lessons from the debacle, a promise not made since the last time Heathrow was caught short by the arrival of snow in winter, about ten months ago.

It's not just BAA that needs to learn lessons. People are starting to wake up to the fact that flogging off vital national infrastructure to companies whose sole strategy is "sweat the asset" might not be the smartest way forward. Here's a (long) extract from a piece in the Toronto Globe and Mail, written by Carl Mortished, a Canadian freelancer living in London:

Consider the airports: long privatized, they are now foreign-owned. BAA, the Heathrow operator, is controlled by Ferrovial, a debt-burdened Spanish building company. Ferrovial was forced to sell three airports to satisfy competition concerns and last year Gatwick was snapped up by Global Infrastructure Partners, a private equity firm backed by Credit Suisse and GE.

Britain’s airports, its power companies and its water companies are controlled by foreign enterprises. E.ON and RWE of Germany and Electricité de France have the lion’s share of the power grid while Canadian pension funds have partially filled the vacuum in domestic transport. Ontario Teachers' Pension Plan controls the airports of Bristol and Birmingham, while Borealis and Teachers together have agreed to buy High Speed 1, the Channel Tunnel Rail Link.

You might wonder why the British are not keen to invest in their infrastructure when the business case for power and transport is clear. It could be a profound loss of collective will. These are strategic investments which require not only commercial but also political and national vision, and that has been dwindling for many years. When BAA was privatized, its new owners rapidly turned the airports into a highly profitable series of shopping malls. It was to be a short-term property play rather than long-term infrastructure game, and an attempt was made to do the same with the railroads until the privatized network began to collapse in confusion and terrible accidents.

The reference to the Channel Tunnel Rail Link (now known as High Speed 1, though passengers travelling at 20 kph on the line during the current snowfall may wish to dispute that) is a reminder that the policy of selling off the nation's furniture to buy gin has continued under the present government. The Canadian buyers have snapped up this asset for a fraction of its capital cost from an apparently desperate vendor. In current circumstances some may take comfort from the fact that Canadians surely know a lot about snow, but sadly they don't know very much at all about railways*. Like Heathrow and so many other privatised assets, HS1 will be sweated to produce the greatest possible short-term returns, with little concern for passengers and none whatsoever for the national interest.

In the meantime, the government is still struggling to find a regulatory regime that will encourage private investors to rebuild the country's electrical grid before the lights go out, and is pushing forward with a plan to build a high speed line from London to Birmingham at a per-mile cost many times higher than France's (state-owned) SNCF routinely manages. As I said, it's not just BAA that needs to learn lessons.

* Anyone who needs proof that there are worse ways to travel than Virgin Cross Country would be well advised to take a ride between Toronto and Montreal. Each city has a population of about 3 million and they are about 500 km apart -- and there are about six short trains between them each day. On one occasion I boarded a train in Toronto and ordered a cup of coffee. The steward moved to take the coffee away from me as soon as the train began to move, so that I wouldn't get scalded as we pitched and rolled down the tracks. "Believe me" he said, "you won't want that coffee anywhere near you once we start moving".

For once, it's nice to be wrong

Back in March 2009, I had this to say about the Madoff mega-fraud:

It would be nice if the media, as well as employing someone who can spell the words "Ponzi scheme", would also give a job to someone who knows what a Ponzi scheme is. No doubt a lot of the cash was creamed off by Madoff himself, but the bulk of it went to....the investors! Or to be more precise, the early ones. Yes, it's true. In a Ponzi scheme, since there are no underlying investments (the bank account where Madoff apparently parked the cash doesn't count), returns to existing investors are mainly funded from cash injected by new investors.

Since Madoff was paying dividends of the order of 12% year-in and year-out, he needed to grow the fund by 12% each year, by attracting new victims, just to stand still. The bigger the fund gets, the harder that becomes. Once the inflows slow, the Ponzi artist starts paying investors back with their own money (i.e. the capital provided by the early investors) and starts to pray. When people ask for the return of their capital, the whole thing starts to unravel very fast. As the credit crunch began to bite, that seems to be what happened to Madoff.

In short, most of the missing £50 billion is hiding in plain sight, in the bank accounts of many of the people who are screaming for Madoff to be lynched. The early investors have got their money back, in the shape of the outsize returns that Madoff was paying in order to rope a new set of marks -- though I doubt if many of the investors (or their lawyers) see it that way. Barring some very messy litigation to wrestle that money back, those who signed up late in the day are going to be out of luck.

Most of that still holds up, but it's good to see that the final sentence has proved too pessimistic. When the Madoff fund imploded, every investor claimed to have lost all their money, but as I pointed out at the time, those who hitched up with Madoff early had done just fine. Those improbably outsized dividends were in fact a return of capital, funded by the latecomers. Amazingly, lawyers have managed to explain this successfully to some of the biggest winners from the scheme, and have so far secured the return of $10 billion, including an unbelievable $7 billion returned by the estate of just one investor this past week. It's probably better not to enquire too closely as to just what methods of persuasion the lawyers may have resorted to, but the end result is the right one. And who knows, some of the journalists who covered the original story may now have a better understanding of how a Ponzi scheme works.

Baa1 humbug!

Those prescient intellectual giants at Moody's Investor Service have today lowered Ireland's sovereign debt rating by five notches, to Baa1.

Now some uncharitable folk might think that cutting the rating so drastically, AFTER Ireland has been forced into accepting a massive international bailout, must mean that Moody's analysts haven't been paying attention. That's not the case at all. The much simpler truth is that Moody's, together with all the other rating agencies, is completely useless. The fact that they are able to continue charging people for their "services" after their sub-abysmal performance during the financial crisis is one of the mysteries of the age.

And since I'm in an unseasonably mean mood, how about a little pearl of wisdom from the UK government-sponsored "watchdog", Consumer Focus (CF)? Power prices in the UK are to be boosted* in order to finance replacement of outdated generating capacity, prompting CF to opine thusly:

Consumer Focus, the energy watchdog, said: “Consumers can’t be expected to write a blank cheque to fund this. A balance must be found on how this is funded between government, energy customers and the industry.”

I can only assume that CF has been taking economics lessons from its granny, because it's hard to think of anyone else who might believe that government and the industry have sources of financing that are in some way independent of the consumer. Unless, of course, CF is expecting Ben Bernanke to pass by with his helicopter.

* Supposedly electricity prices will double by 2030, which sounds scary but is in fact a compound rate of only 3.5% a year. If any electricity supplier is prepared to offer me that deal right now, I'll sign up for it immediately.

Christmas and New Year greetings

I'd like to wish all readers of the blog an enjoyable Christmas season.

I'm very happy to say that readership of the blog has increased sharply in the last few months. The largest audiences are in the UK and the United States, but there are regular readers in Russia, China, Singapore and most of Western Europe, as well as the occasional visitor from places as varied as Iraq, Brazil and Guadeloupe. Thanks to you all, whoever and wherever you may be!

Next year promises to be every bit as "interesting" as 2010 has been, so I'll have plenty to write about. I hope you'll continue to visit -- and feel free to bring a friend!

Jim

Don't need a weatherman

Scientists trying to convince the public that human activity is causing irreparable damage to the world's climate often seem to be their own worst enemies.

It's not that long ago that we learned that the main UK academic centre of climate change research had seen fit to destroy all of the original data it had collected in support of its climate change research, thus making it impossible for anyone to review (or more pertinently, challenge) the results. It transpired that this was pretty much par for the course within the climate change community, with dissenters routinely denied access to academic publications and subject to ad hominem attacks. None of this seemed to square with the supposed "scientific method" of doing things, but remarkably, it was all forgotten soon enough.

Cut now to the current winter in the UK, which is turning out to be colder than average, as was last winter. (I've seen this month described as the coldest December since 1981, since 1890 and even since 1659, which makes you wonder what kind of records these people keep). Evidence against global warming, perhaps? Not according to the experts, who are rather patronisingly telling us that we mustn't confuse "weather" with "climate".

Strangely, when we had warmer than usual winters and summers a few years ago, these same people had no hesitation in telling us that the benign weather was a sure-fire indicator of climate change. I can't be the only person who's questioning my previous willingness to believe the climate change story, and it's not just because I'm dreading my gas bill.

Last exit to Threadneedle Street

Ever since the financial crisis, there's been a debate bubbling away over whether policymakers need to be more concerned about inflation or deflation as a longer-term problem. The perceived need to avoid an outright depression has been the major driver of policy decisions up to this point. Inasmuch as the worst case has been avoided, this looks to have been the right choice. Of course, we can never test the counter-factual of what would have happened if Keynesian fiscal stimulus and quantitative easing had not been adopted, but I suspect there are few outside the Tea Party who would have wanted to take the chance of finding out.

The policy choices are not about to get any easier. The recovery in the developed world is still far from self-sustaining, but signs of inflationary pressures are steadily mounting. Global commodity prices have been on a tear; commodity-based currencies such as the Aussie and Canadian dollars are strong; and some domestic inflation rates are starting to look uncomfortable. In the UK, for example, CPI in November stood 3.3% above its year-earlier level. With VAT set to rise in January, prospects for CPI to fall back to the Bank of England's 2% target by the end of 2011 appear to be slim-to-none -- and Slim, as the saying goes, just left town. Deflation is nowhere to be seen.

Can we really be surprised? As Milton Friedman famously said, "inflation is always and everywhere a monetary phenomenon". The world has now had the dubious benefit of extraordinarily lax monetary policy for a decade. The blind refusal of the Greenspan Fed to recognise the dangers posed by the asset-price inflation triggered by its monetary incontinence was a major contributor to the financial crisis. The need to forestall a rerun of the Great Depression meant that the taps have since been opened even further. It would be a major surprise if inflation had not surfaced by now.

If the link between monetary expansion and inflation is well established, the causal connection between monetary policy and growth is much less clear -- yet policymakers around the world are pinning most of their hopes on the existence of such a connection. As Keynes and others long ago recognised, there comes a point when easing monetary conditions is like pushing on a string. Central banks can't force individuals and businesses to borrow -- indeed, as we are seeing at the moment in the UK and elsewhere, they can't even force banks to offer loans. As long as businesses' appetite for risk (animal spirits, in Keynes's terminology) remains depressed, the path to economic recovery will be slow and difficult.

For many countries, including the US and the UK, the task for policymakers as we look into 2011 is made yet more complicated by the persistent hangover from the pre-crisis lending binge. In countries such as Ireland and Spain, irresponsible bank lending led to rampant overconstruction of new housing -- which has, of course, led to its own set of problems, By contrast, in the UK the banks primarily shovelled money into the existing housing stock, inflating its value to an extraordinary extent. Much of the UK press applauds every upward tick on house prices and warns that the sky is falling every time there is a setback. The truth is, however, that the credit-fuelled rise in house prices, largely unaccompanied by any increase in the supply of housing, was almost entirely a bad thing from a social standpoint: a transfer of wealth from the poorer and younger (renters and would-be homeowners) to richer and older (existing homeowners and buy-to-let landowners).

The rise in home values allowed the better-off to borrow still more and to increase consumption. This may have helped to keep the economy growing, but it poses a real problem for the Bank of England now. With fiscal policy set to turn more restrictive, the Bank cannot easily start to tighten monetary settings as well. Indeed, it's under pressure from the media (and of course from the housing industry itself) to keep the monetary taps open so as to ensure that house prices don't fall any further. Yet the Bank must know that the UK can't forever depend on home equity withdrawal as its primary source of growth -- and it must also keep a nervous eye on those nasty inflation figures percolating away in the background.

It appears that the Bank wants to wean the commercial banks off their dependence on its special funding mechanisms during the course of 2011, but it will be difficult for it to do so unless other sources of funding start returning to normal. That may require higher interest rates, in order to start to address the current severe disincentive to savers (0% returns and 3.3% inflation). Raise rates too quickly, though, and the housing bubble may deflate with a damaging bang, rather than a gentle whoosh. No easy choices then, but 'twas ever thus.

Shades of Brown

Hot on the heels of Tony Blair and Peter Mandelson, former PM Gordon Brown has released a book: "Beyond the Crash". No chance to read it just yet, but there are two fascinating reviews of it that are well worth a peek: one by Anatole Kaletsky in The Times (behind the paywall; sorry!) and the other by Joseph Stiglitz in the FT, reproduced on Slate.

The reviewers agree that there's almost no gossip or settling of scores (and probably, therefore, no sales either). They agree that Brown's initiative to recapitalise the UK's banks in October 2008 really did stop the world from falling into a severe economic depression. What's more interesting, though, is the way that each reviewer seems to have found support within the book for his own views of the future of finance.

Earlier this year Kaletsky published an agonizingly dull tome called "Capitalism 4.0", so it's no surprise that he thinks Brown supports his (Kaletsky's) "let the banks be" line:

He (Brown) argues, in my view correctly, that curbing financial innovation is no panacea, even with hindsight. While Tories and Liberals indulge in a populist witch-hunt against greedy bankers, Brown courageously acknowledges the vital importance of finance: “Even now there can be no return to high levels of employment and growth without harnessing finance’s creative energies to allocate resources and risk so effectively that it spurs and speeds economic growth. We must never forget that credit and the need for securitisation, too, are at the heart of a modern financial system. It should not just be tolerated as a necessary evil, but nurtured as one of the keys that unlocks opportunity.”

Stiglitz doesn't read Brown that way, to put it mildly. Here are two brief quotes from his review:

He (Brown) grasped immediately that the problem was not just one of liquidity but of a weakness in the financial sector built on years of mismanagement, lax regulation and reckless speculation. He also saw early on that unless a government recapitalisation was accompanied by requirements that banks continue lending to businesses, the crisis in the financial sector would spread to the broader economy.

"We needed to overturn 30 years of policymaking," Brown writes. No cash without government involvement became his mantra and he tried to persuade the Americans and the Europeans to his way of thinking.

And later:

Brown is outraged by the bankers' excessive risk-taking, their pursuit of greed. I can only surmise that had he looked more carefully at America's banks' predatory lending practices and the abuses in the credit card systems, how the financial system preyed on the least educated and financially unsophisticated, he would be even more outraged.

This last comment goes beyond a review or even editorialising on Stiglitz's part: it's more like "what Brown would have written if he was as smart as me". Still, that's a useful reminder that every worthwhile review tells us at least as much about the reviewer as it does about the book in question. I may just have to read the book for myself to decide whether Kaletsky or Stiglitz is interpreting Brown's views accurately. To my surprise, I'm almost looking forward to it.

The sound of breaking glass

Those were deplorable scenes in London yesterday, as students staged their latest protest against the rise in tuition fees, on the day this was voted on and approved by the House of Commons. It was, of course, manna from heaven for the television networks, who gave it wall-to-wall coverage. Once darkness fell it became increasingly difficult to see who was who, but it was hard to avoid the impression that the protesters were outnumbered not only by the police, but also by the journalists and cameramen.

Both the police and the media seem to be playing up the idea that these protests have been hijacked by people who have no interest in the underlying issues: anarchists, of course, and even London street gangs just turning up to take a pop at the police. No doubt there's an element of this, but it would be dangerous to assume that's the whole story.

There was an interesting little incident in mid-evening at Oxford Circus, well away from the main demo, as a group of protesters smashed windows in a large department store. The SKY-tv commentator on the scene was bemused, noting that the protesters had left nearby stores such as Liberty's unscathed; her view was that the incident was unconnected with the protest as such, and was simply a stunt to keep the police off-balance (I'm paraphrasing here).

Let's think about that for a second. Arriving at Oxford Circus, the protesters could indeed have smashed up Liberty's, or broken the windows on some of the many number 73 bendy buses that were trapped in the melee. Instead they targeted Topshop, owned by the serial tax avoider Sir Philip Green, a man who, in the coalition government's crassest move so far, was asked to look at ways to reduce wasteful public sector spending. It's hard to believe that "London street gangs" would have been so selective, or that, having broken in the windows, they would have neglected to liberate some of the merchandise while they were at it.

It's no justification for wanton damage, of course. Still, if students believe, rightly or wrongly, that post-secondary education is being priced out of their reach, it's not hard to imagine that they might feel angry at the thought of a prodigiously wealthy man routinely avoiding paying what might be deemed to be his fair share of taxes. In fact, it might not just be students who would think like that.

Musica gratia artis

I know we're supposed to accept that art is whatever artists choose to do, but every time I seem to be getting my head around that concept, the Turner Prize comes along and I'm back to square one.

This year's Prize has been awarded to the improbably-spelt Susan Philipsz for her work Lowlands. This chef d'oeuvre consists of three loudspeakers in a room, through which is played a recording of Philipsz singing a Scottish folk song. Philipsz calls it a "sound sculpture", but most of us would call it "music". Or maybe not: Philipsz herself admits that she can't actually sing , and anyway she didn't write the song herself. Calling her work art may be the only way she can get people to listen to it.

Needless to say the arts community has rallied around. Check out this fabulously pretentious piece from the Guardian, for example -- and be sure not to miss the readers' comments at the end. As for me, I'm wondering what comes next. Maybe the Grammies will give one of Ronnie Wood's paintings their award for Rock Album of the Year.

Putin on a show

Unlike the tabloid media (sample headline: FIFA bungs* the Cup to Russia) I really can't get worked up about the fact that England will not be hosting the World Cup in 2018. As a fan, I'd have been happy to see the tournament here, but as a taxpayer I'm happy to be spared any possibility of a rerun of the scandalous cost overruns afflicting the 2012 Olympic Games.

For those not familiar with this, London won the Olympics on the basis of an entirely mendacious cost estimate of £2-3 billion. The Government only supported the bid because it never seriously believed that London would win; Paris was the strong favourite. Immediately after the Games were awarded to London, the costs soared to £9 billion, and the real number may be even higher than this. Needless to say, taxpayers would never have allowed the bid to go forward if they had had even the faintest inkling of the real costs that the bid committee was about to stick them with. And as the Games near, it's becoming ever clearer that the "legacy" of sports participation that was promised is unlikely ever to be realised.

In a parallel universe the head of the Olympic bid, Lord Coe, would be behind bars for his role in this fraud. Instead he was co-opted to help out with the World Cup bid. It's impossible to know whether the FIFA committee took the Olympic saga into account when it made its decision this week, but if they were fully informed about it, it certainly couldn't have helped.

The foreign media were reportedly amazed by the sense in the London media and among the public that England was in some way "entitled" to the World Cup. Sure, it's coming up for fifty years since the one and only time it was held here, but that can't be enough. Exactly what credentials does England have to offer? It can't be the national team, about which the less said the better. It can't be the development of the game at the grass roots: the UK has far fewer trained coaches than any other major football-playing nation, and school playing fields are being sold off for housing development at a depressing pace.

No, the defining characteristic of the English game is money, pure and simple. TV and sponsorship money has made the Premiership the world's richest league. However, because of the dearth of home-grown talent (see previous paragraph), it grabs more and more of its players from less wealthy leagues overseas -- which might not, you would have to think, count very positively with those countries when they cast their votes for who gets to host the World Cup. What's more, the money in English football is very unevenly shared. The Premiership controls the purse strings. For professional clubs at lower levels, it's a hand-to-mouth existence.

Even worse, the Premiership has no interest whatever in international football: witness the constant club vs. country battles every time a player gets injured while away on international duty. So, bizarrely enough, England's World Cup bid was in a sense mounted on the cheap. There was a lot of emphasis on the fact that most of the stadia are already in place, which certainly reduces the riskiness of the bid, but makes it hard to argue that it will produce the kind of "legacy" that FIFA is always so keen on (and which was such a large part of the Olympics bid).

If your football is mainly defined by how rich it is, you can't really complain too much if you lose out to someone with more money. For sure, in choosing Russia for 2018 and Qatar for 2022, FIFA has followed the money. Russia's oligarchs and the Qatari royal family were prepared to risk much more of it than England's bid could possibly match, mainly because the bid team, led by the Football Association, has no call on the big money in English football, which is controlled by the Premiership. (Long-time readers of this blog will asume that I'm about to blame the whole mess on Rupert Murdoch, the Premiership's paymaster. You might think that; I couldn't possibly comment).

Anyway, good luck to Russia as it prepares to stage the Cup. There's a prodigious amount of work to be done, especially in centres other than Moscow and St. Petersburg. Properly handled, the Cup could be a catalyst for the same sort of transformation in Russia that the Barcelona Olympics produced in that once rather dowdy city. That would be a real legacy.

* For non-UK readers: the word "bung" is often used in the media to refer to bribery, especially in relation to football. There's zero evidence of any bribery here, but of course that never stops the tabloid press.

Mama told me to come

The row over higher education funding in England rumbles on, but everyone seems to be very coy about their true motivations.

Take the students, for instance. Their placards seem to show a strong belief in education as a public good that should be paid for out of general taxation (or at least by someone other than the students themselves). But at least one of the protesters admitted to the media that he was protesting on behalf of his parents, because "if the goverment gets its way, they'll have to pay for my education". Well, that would certainly help to explain why so many mummies have been ferrying their kids to the demonstrations.

Then there's the government. It claims to be motivated by the need to save money, and by a desire to see that higher education is mainly paid for by those that directly benefit from it, that is, the graduates. However, many of the things that Education Secretary Michael Gove is implementing at a lower level point to a different agenda. The replacement of "modules" with formal exams for GCSEs and steps to encourage the return of Latin in schools are indicative of a traditionalist agenda. At the university level that "traditionalist" view very likely means that Gove et al think that altogether too many people are going on to higher education, and that the whole sector needs to be scaled back.

We haven't yet reached the New Labour target of 50% of school leavers going to University, but at 40% we're already way beyond, say, Germany, where about 25% go on. It's not hard to make the case that too many underprepared (if not semi-literate) school leavers are moving on to take courses of dubious value at universities of (ahem) limited academic merit, winding up with degrees that employers don't respect. Even if you think that education is worthwhile in its own right, it's hard to see who benefits from that. The Tories doubtless hope that a cutback in funding will both shrink the sector and lead to higher standards, as students shy away from going deep into debt for the sake of a Mickey Mouse diploma. But they can't come right out and say that.

Lastly there's dear old Vince Cable, who played a major role in putting the funding policy together. He now plans to abstain when it comes to a vote in Parliament, in order to preserve unity in the LibDem ranks, even tough he still believes in the policy! Ask not what your country can do for you; ask what you can do for your party: that's real leadership.

Risk aversion

Financial markets are having kittens at the possibility that the Ireland bailout package may require some of the country's creditors to take a "haircut" -- that is, to get back less than 100 cents on each dollar they have loaned. Here's Robert Peston's view, from the BBC website:

There is, as I've written here many times, a powerful moral case for imposing some of the costs of rescuing Ireland on those banks and financial institutions which fuelled Irish banks' reckless lending binge by lending to them.

It's not just a moral case. The case for bankers to take a haircut is firmly founded in the very financial theories that market participants always like to use to baffle outsiders.

Financiers pride themselves on their supposed ability to price risk, and Ireland (or Greece or Spain, or for that matter France) has always been a riskier credit than Germany, which is the benchmark for the Eurozone. Because of that, Irish (or Greek or Spanish...) bonds have always offered a higher yield than their German equivalents. The difference in yields is known as the "credit spread" and it's intended primarily to compensate investors for the fact that in buying Irish bonds, they're taking on a greater risk of default than they would if they bought Bunds. (I say "primarily" because the spread may also in part reflect a lower degree of liquidity in the market for Irish debt as compared to Bunds). Even the rating agencies, about whom I will not normally allow any positive comments on these pages, have figured this out, and rate Irish and other bonds below those of Germany.

So the very simple question is this: if investors have willingly accepted a higher yield on Irish bonds as the price of taking on the greater credit risk, what right do they have to refuse to take a "haircut" now that Ireland is in trouble? The wailing and veiled threats from banks look like an attempt to change the rules while the game is underway; or, to be less delicate about it, they look like blackmail.

This is not to suggest that imposing these costs on the banks now would be easy or pain-free. The banks themselves still have a way to go to restore their balance sheets, and another hit to their capital bases now would not be helpful. At the same time, if there can be no losses on higher risk assets, then the whole credit and risk system has arguably broken free of its moorings, whether moral (Peston) or logical (me). For the long-term health of the system, the IMF, EU and their bailout partners need to ensure that banks and investors no longer asume they can always lay off their bad decisions on the taxpayer.

Ah, bless!

I love this, from a report (from The Times website) on Wednesday's round of student protests:

Sarah Tomlinson, who was waiting behind the police line for her daughter Katie, 16, to be released, said that she was angry that her child had been kept in freezing temperatures without food or water for more than seven hours. She added that she had been chased down the street by police.

Margo Turner, whose 17-year-old son Sam was also trapped, said: “I think it’s appalling. I was really scared when the police horses charged. It’s their democratic right to protest. They are going to university in 2012 and they won’t be able to afford it.”

Quite right too. What kind of country do we live in when mummies take their kids to a demonstration, and the police can't even provide a risk-free riot scene?

Biffonomics

Judging from some of the media comments on the Irish debt crisis, the Taoiseach is not the only Big Ignorant Fecker involved in this shambles.

The UK's anti-Europeans are, of course, out in force. The crux of their argument is that if Ireland had not joined the euro, it wouldn't have got into this mess in the first place, and if it had still managed to get into a mess, it would be able to restore its fortunes simply by devaluing, an option that membership of the euro precludes.

Chris Dillow has very effectively refuted the first of these. He cites the Greenspan/Bernanke Fed as evidence that the ability to make policy independently is no guarantee of avoiding asset bubbles.

What about the devaluation argument? At the simplest level this can be exposed through a reductio ad absurdam: since the eurozone countries are each other's main trading partners, it would be logically impossible for them all to devalue against each other. More practically, how likely is it that the stronger members of the eurozone, notably Germany, would allow Ireland to continue to enjoy the other benefits of the eurozone if it resorted to a blatant beggar-my-neighbour devaluation? (One commentator today has even suggested that Ireland, perhaps along with the other PIGS, might leave the euro, devalue and then rejoin, which would surely never be acceptable to Berlin or Paris).

More broadly, the whole devaluation argument founders on the fact that it is all but impossible to identify any country that has ever devalued its way to wealth. And no, China doesn't count: refusing to allow your currency to appreciate is not the same as devaluing it, though the Chinese are starting to see at least one of the normal consequences of devaluation: rising inflationary pressures. (As an aside, it would be interesting to see if those calling for Ireland to devalue are the same people who have been castigating China for its cheap currency policy. But I digress).

Devaluation is a sign of policy failure. Leaving aside fuddy-duddy technical stuff like the elasticity of import and export demand, it only works if it's used to provide a breathing space for policy adjustments: restraint of domestic demand, fiscal correction and so on -- exactly the kind of changes, in fact, that the Irish government is looking to implement now in return for the bailout funds. The notion that the bailout is an unnecessarily painful choice, and that things would be just fine if Ireland could just devalue its currency and go its own way, is simply nonsense.

Ireland's problems stem from a toxic combination of unprecedentedly low interest rates (which, given the antics of the Greenspan Fed, might well have been the case even if the euro had never been invented), unsustainable fiscal policy (the fate of the 12.5% corporate tax rate remains uncertain at the time of writing), aggressive banks and weak regulation. Even at the time, the government's decision at the height of the financial crisis to guarantee all deposits in Irish bank looked like a huge misjudgment. As we are now seeing, Ireland could never have made good on the guarantee, and its sole effect was to excuse the banks from taking a hard look at the value of the assets on their balance sheets. Those problems were only deferred, not solved. Even with the bailout, it remains to be seen whether they can be solved without Ireland's creditors taking a nasty haircut.

The race to the bottom

Negotiations over the inevitable bailout of Ireland have apparently been held up because Brian "Biffo"* Cowen's government is insisting that it wants to retain its rock-bottom 12.5% corporate tax rate. Well, you can't really blame them, can you? I mean, it's obviously worked brilliantly so far, hasn't it?

These days, footloose corporations are entirely shameless about blackmailing and threatening countries that won't do exactly what they want. Already a gang of US multinationals is warning Ireland that they will reconsider their position in Ireland if the government has the temerity to hike the corporate tax rate. Nothing like fair-weather friends, is there?

The aggressiveness of the multinationals and the spinelessness of national governments has created a sort of fiscal race to the bottom. Ireland appears to have won the race, and it's not a pretty sight. But it's probably too much to hope that bigger and less indebted countries might take the hint and start standing up to the bullies.

* BIFFO = BIg Ignorant er, Fellow From Offaly. Best political nickname ever??

Problem is, he's not entirely wrong

Back from a few delightful days in la France profonde, and time to catch up with the UK news. A royal wedding on the horizon -- oh joy! Another lamentable England showing at football -- yawn. And so on.

The story that's most caught my eye, however, is the resignation of Lord Young, an unpaid advisor to the coalition government, after comments he made on the impact of the recession led to a political uproar. This account is from The Guardian:

Lord Young.....told the Daily Telegraph that low interest rates meant home-owners were actually better off. "For the vast majority of people in the country today they have never had it so good ever since this recession – this so-called recession - started."

He dismissed the 100,000 job cuts expected each year in the public sector as being "within the margin of error" in the context of a 30 million-strong workforce, and said complaints about spending cuts came from "people who think they have a right for the state to support them".

The former trade and industry secretary also said people would look back on the recession and "wonder what all the fuss was about".

A lot of this is nasty, old-fashioned Toryism, which is not surprising when you consider that Lord Young was a favourite of Margaret Thatcher (and is a close friend of David Mellor). But is he altogether wrong about the way "the vast majority" has experienced the recession? It's true that the upscale papers are again full of vaguely distastetful hints on how the comfortably off can tighten their belts (Smaller cupcakes? A week instead of 10 days at Verbier this winter?) Yet his lordship is surely right to suggest that the collapse in tracker mortgage rates has been an unmitigated boon for indebted home- (and second home-) owners, many of whom are dyed-in-the-wool Tory voters.

That's why it's the not the lazy Tory cant that Lord Young spouted that's the real embarrassment for the government. It's the parts that are true. Despite what David Cameron professes to believe, we're not "all in this together". If you're a welfare recipient or receive social housing assistance you're certainly going to be "in it", right up to your neck. If you're waiting on important but non-critical surgery, you may be out of luck. If you're a low-paid public servant, you could well be lining up at the Job Centre before too long. But if you borrowed up to the hilt during the recession and you've held on to your job -- and that describes millions of people in the UK, even if it's not the "vast majority" that Lord Young claims -- the worst thing you have to worry about is VAT going up in January, and maybe the loss of the child tax credits that you were just paying into a college fund anyway.

Ed Miliband has condemned Young's comments in a predictably lame way:

"....I think his remarks are frankly disgraceful and many of the people who are struggling up and down this country with the consequences of the recession that we had, the consequences of the spending cuts that we are seeing, will be insulted by his comments."

If young Ed had his wits about him, he'd have demanded that his lordship be kept around to continue providing his inadvertent insights into what the government is really up to.

When the levy breaks *

This can't possibly be true, can it? I mean, so far I've only seen it on the Guardian website. It appears that the Treasury is worried that the Government's much-vaunted levy on bank balance sheets may raise more money than expected....so they may reduce the size of the levy.

It would be hard to overstate what a dumb move this would be from a PR standpoint -- and if you don't believe me, just scroll through the article to read the comments from Guardian readers.

The levy's not much more than a gesture anyway: nobody could seriously argue that an annual charge of 0.04% of a bank's balance sheet comes anywhere close to the value that the banks derive from the implicit backstop provided by the government. But when the Government is banging on about "fairness" and how we're "all in this together", it's an important gesture. Reducing it in response to the supposed threat that banks might relocate to more friendly jurisdictions would only feed suspicions, and not just among Guardianistas, that the spending cuts aren't really about cutting the deficit at all: they're about a Thatcher-style shrinking of the state.

Already this week Nick Clegg (or "Clegglet" as I heard him described on Radio 5 this morning) has had to eat his words on student fees. Can't wait to hear what that old bank basher Vince Cable has to say about the levy.

* Yeah, I know it should be "levee".

He depicts a riot

The Metropolitan Police are taking flak for underestimating the risk that this week's student protests in London might turn violent, as of course they did. The media, however, took no such chances, turning up mob-handed to provide lurid coverage of the mayhem. I was going to write a piece suggesting that the media overkill may have had something to do with the outbreak of violence, but I could never have done so as brilliantly as Peter Brookes in The Times.

Meanwhile, an academic -- well, a lecturer in cultural and communications studies, whatever that is, at Goldsmiths College, whatever that is -- anyway, an "academic" has published an open letter commending the violence. Here's part of his argument:

“The real violence in this situation relates not to a smashed window but to the destructive impact of the cuts and privatisation that will follow if tuition fees are increased and massive reductions in higher education funding are implemented.”

Dear God! As a veteran of student unrest in the 1960s, I well remember exactly the same logic being deployed to justify mayhem and destruction. Some mediaeval gate or other would get damaged by a mob, and someone would pop up to say that the real violence was had been perpetrated by the long-dead soul who put the gate up in the first place.

By coincidence, this very week I read a newly-written piece on the infamous Garden House riot of 1970 in Cambridge. Only one senior member of the university was charged with any crime in connection with those events, and he was later released without coming to trial. I'll spare him the embarrassment of publishing his name here, because he now denies any malicious intent in the whole affair, in terms that are little short of craven. That's not altogether how I recall his role at the time, but then again, it's a long time ago. Still, the perpetrators of this week's violence, or those planning any such events for the future, might want to keep in mind that the "academics" who are egging them on are unlikely to be the people who wind up in front of the judge.

Honour among chefs

The media are having fine sport with chef Gordon Ramsay this week. Both his culinary empire and his private life have been under the microscope for a couple of years, as a result of the financial crisis and rumours that Ramsay had been involved in a lengthy affair.

Not long ago, Ramsay "parted company" with his long-time business manager, who also happened to be his father-in-law. Unsurprisingly, this did little for relations within the family, which would have been nobody's concern but for the fact that this week Ramsay took the thoroughly bizarre step of hauling the dirty linen out into the open, by sending an open letter to the London Evening Standard. (The Standard, Gordon??? Things really are slipping). The letter, ostensibly addressed to his mother-in-law, was a heartfelt (if not entirely literate) plea for her not to let the whole nasty business estrange her from her daughter, Gordon's wife Tana.

Over the past year, Ramsay's company Gordon Ramsay Holdings (GRH) has had to close some of its restaurants outside the UK. The group has parted company with a number of distinguished chefs who have gone out on their own, amid rumours of fallings-out with Ramsay. Ramsay's latest TV series has achieved abysmal ratings. The media are now gleefully speculating that the whole Ramsay empire may be about to crash and burn.

Maybe so, but here's something to keep in mind. A good number of famous chefs have run into trouble in the last couple of years as customers have thought twice about paying £30 for a plate of seaweed foam. More than one has declared bankruptcy, leaving large and small creditors and suppliers high and dry -- then immediately re-opened for business, scarcely missing a single service, and attracting almost no criticism from the media. When GRH ran into financial trouble, it was rescued by an injection of personal funds from Ramsay himself, and, ironically, from his now estranged father-in-law. Honourable, that, and reason enough to hope that Ramsay will be able to hold on to what remains of his little empire -- and his family.

The rocky road to Seoul

As the G20 summit meeting in Seoul looms, things are looking a bit fraught, even though the recovery from the financial crisis is largely intact. The emerging economies are expanding strongly, Germany is pulling the Eurozone along and the UK is doing much better than expected. Even the US has seen its latest growth data (for Q3) revised upward, and employment rose in October, with the private sector leading the way. No, the reasons to be fearful are provided by the policymakers, who are starting to say, and in some cases to do, dangerous things. In a sense, the timing of the G20 couldn't be worse, because it will give the governments and central banks the opportunity to turn a non-crisis into a catastrophe.

Much (but by no means all) of the pre-summit contumely is directed at the US Federal Reserve's decision last week to proceed with a second round of quantitative easing. You only have to watch CNBC for five minutes, especially if Rick Santelli is on, to realise that the Fed's move is not widely supported even within the US business community. Outside the US, the reaction has been downright vitriolic, led by Brazil (on behalf of the emerging markets) and Germany, which still knows a bit about currency debasement and inflation. When the head of the Bundesbank describes the latest policy moves as "clueless", even a US central banker might be brought up short, though there is no reason to suppose that Bernanke will do anything other than robustly defend his decision as he tucks into the kimchi this weekend.

The unrelenting surge in the price of gold (another all-time high today), palladium and platinum (multi-year highs) and just about every other commodity you can name shows that investors have figured out the Fed's game as clearly as has the Bundesbank. Having sustained its standard of living (and fought a couple of wars) on borrowed money through the past decade and more, the US is now brazenly seeking to inflate away the debt burden. It's hardly surprising that the creditors (i.e. just about everyone else in the world) might be getting a little snippy.

It's one thing getting angry and lecturing the US, of course: not much harm can come of that. The problems will arise if other countries start to retaliate. There are a few worrying signs out there of countries starting to fight their own corner rather than look for co-operative solutions. Brazil is taking the capital controls route, and last week, in a blast from the very distant past, Canada's government blocked a takeover bid (by BHP Billiton for Potash Corp of Saskatchewan) on the grounds that domestic natural resources should remain in Canadian hands. If the free movement of capital and goods falls victim to the caprices of national governments, the prognosis for the next few years will get a whole lot gloomier.

And in a reminder that the last big mess still isn't close to being cleaned up, Ireland is teetering on the brink again, on fears that the Cowen government's austerity budgets will be defeated in the Dail. Ireland's CDS spreads blew out to new highs on Monday, signalling rising fears of default.

As they head for Seoul, not the world's most relaxing town, policymakers need to take a deep breath and remember the Hippocratic oath: "first, do no harm".

She must be joking; except she isn't

Former Immigration Minister Phil Woolas has been expelled from the House of Commons for dirty tricks during this year's general election campaign. Woolas went to great lengths to smear his LibDem opponent as a friend of violent Islamists. None if it was true, but it helped Woolas eke out a narrow victory, which the aggrieved LibDem promptly and successfully challenged in court.

It's clear that Woolas's people recognised the desperate situation their man was in: the smear strategy was known among his campaign team as "sh*t or bust".

That's not the laughable part though. This is.

The Labour Party has disowned Woolas. According to The Daily Telegraph, Harriet Harman, the party’s deputy leader, said his legal challenge would not be supported and added: “It is no part of Labour’s politics to try to win elections by telling lies.”

That statement deserves the same description as poor old Phil's campaign strategy. Except without the "or bust" part.

Put that thing away, Ben!

Before he became Fed Chairman, Ben Bernanke was recognised as an academic expert on the Great Depression. He famously noted that the modern-day Fed would always be able to prevent such a thing from ever happening again, because it could, if need be, drop money from a helicopter to stimulate demand. He thus acquired the sobriquet "Helicopter Ben", though in the rarefied world of the dealing rooms, it was common to hear a more technical expression: "Bernanke's chopper".

Ben may have been as surprised as anyone when the 2007-08 financial crisis gave him the opportunity to put these theoretical musings to the test, in the form of the $2 trillion quantitative easing (QE) programme. This week the Fed announced it would try to give the sluggish US economy a further boost through a second round of asset purchases, referred to as QE2, though this time the scale will be a lot smaller: about $600 billion between now and mid-2011, or about $75 billion a month.

The Fed's decision had been widely anticipated and had polarised opinion, among politicians and pundits as well as economists, even before it was announced. Bernanke took the unusual step of securing the front page of The Washington Post for an article explaining his rationale.

This may not have been the best idea, though Bernanke is certainly on solid ground when he describes the uninspiring state of the US economy:

"....we could hardly be satisfied. The Federal Reserve's objectives - its dual mandate, set by Congress - are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills".

However, he is far from convincing when he tries to make the case that more QE is the answer; and this claim, made just a day after the Fed made its announcement, is surely a huge mistake:

"This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action".

Yeah, well, that's what used to happen with the old "Greenspan put", Ben, and look how well that turned out. Also according to Ben,

"Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion".

Can anyone any longer seriously believe that the reason the US economy isn't growing is that there isn't enough money swilling around? There was no shortage of money in 2007, but that didn't prevent the financial crisis. Thanks to the first round of QE, there's a whole lot more money now, but it doesn't seem to be producing much traction, mainly because banks are still much too uncertain about asset values to step up lending to any meaningful degree. (The same, by the way, can be said of the UK, the other major economy to resort to QE since the financial crisis).

It's becoming clearer by the day that the main reason the first round of QE "worked" (the US economy has been growing again for more than a year) was not so much that it led to healthier financial markets as that it boosted confidence. In 2008 markets were pleading for something to be done, and QE was the right move; but with so many experts and market participants sceptical about what can be achieved this time, it's unlikely that QE2 will generate a lasting surge in confidence.

In the meantime, observers outside the US are becoming increasingly critical. In Toronto, the Globe and Mail bluntly observed last week that QE is "just another name for devaluation". Central banks in emerging economies are warning that the first round of QE has already produced a bubble in their markets (care to explain how that helped the US economy, Ben?) and are angry that the Fed is pressing ahead with more of the same.

Today Bank of England Governor Mervyn King announced that he will be keeping his own chopper sheathed for the time being. It may not be long before we are all wishing that Ben Bernanke had kept his under wraps too.

The float and the bubble

Way back when, US companies had a neat trick to boost profits, known as "playing the float". Here's an example. If you were a Maine resident waiting for a settlement from your insurance company, you would receive a cheque drawn on a bank account in Hawaii or the Pacific Northwest. Even after you'd presented the cheque to your local bank, you wouldn't actually see the money in your account until the cheque had wended its way all the way back across the continent (by train) to be cleared. If you lived in LA, your cheque would be drawn on somewhere like Manchester, New Hampshire.

The jet age, and now the internet age, have put the crimp on such shenanigans, though I believe that relatively remote spots like the Dakotas still see a disproportionate amount of clearing activity. After all, even an extra day's use of the funds is worth something to a large company.

I can report that the game of "playing the float" is also alive and well in the UK. I'm one of several hundred thousand domestic gas customers entitled to a refund from our former gas supplier -- no names, but its initials are npower. (For those lucky enough to be unfamiliar with the story, npower overcharged its customers for gas back in 2007 and was careless enough to get caught out). About a month ago, I got a letter from the company advising me that my refund would be £28 or so. I had to return the letter with certain added details so that they could verify that I really was entitled to the refund, which is fair enough.

So then they credit my account, the same one they enthusiastically debited each month back in 2007, with the refund, right? Wrong! OK, so they send me a cheque, then? Wrong! This week I received a letter with a couple of barcodes on it. I had to present this to my local Post Office, together with two pieces of ID, in order to receive the refund in cash.

So this morning that's what I did, spending a pleasant 25 minutes lining up behind people sending Christmas parcels and such before getting up to the counter. There the hapless clerk had to type the 18 digits of my driving licence number into her terminal, verify my other piece of ID, scan the barcodes, stamp the letter from npower and count me out my cash.

The clerk said she thought the reason npower was using this astoundingly primitive method of providing the refunds was that some of the older customers might not have bank accounts. That might be true, but I'd bet that even more of them live in places where the local Post Office has closed. And in any case, non-possession of a bank account never seemed to stop npower from getting its scruffy mitts on the money in the first place.

It's all blatantly a float play. How many people will walk into a Post Office clutching their npower letter, see the pre-Christmas queues and walk right back out, then forget to try again until its too late? (You have six months, according to the letter). How many will be unable to get to a Post Office at all because their local branch has closed? It all serves as a reminder of why I switched from npower in the first place.

Not that I'm spoiled for decent choices in the UK's "competitive" domestic gas market. One of the suppliers has just announced a 9.4% increase in its gas prices, and the rest are certain to follow very soon. This comes against the background of a global gas supply "bubble", which is expected to last anything from three years (according to Qatar, the world's largest LNG exporter) to a decade (according to respected independent analysts). In the very short term the UK is awash with gas because LNG cargoes destined for France were diverted here because of the recent strikes.

The company raising its prices, Scottish and Southern, claims to have lost £58 million supplying domestic customers in the past year, yet mysteriously it managed to eke out a profit of £1.25 billion in its overall business, virtually all of which is gas-related. I smell another refund in the offing -- maybe I should get in the queue at the Post Office right away.

Further evidence of parallel universes

News story: Anatole Kaletsky was named Financial Commentator of the Year 2010 by the Editorial Intelligence Comment Awards . (Who dat?)

In related developments:

JLS named best rock band ever by NME.

Richard Dawkins consecrated as Cardinal by the Pope.

Wayne Rooney lauded as Husband of the Year by Mumsnet.

The risks are next year's story, peeps

UK GDP data for the third quarter came in much stronger than the market consensus of 0.4%. The actual increase was 0.8%, after a 1.2% gain in Q2. (Kudos to RBS, whose forecasters called it exactly right). So far this year, the economy has been growing at an annual rate of over 3%, above its long term trend.

There's been a small amount of "yes, but" commentary from the media, mostly focusing on the fact that "it's all about construction, which is still recovering from the tough winter". It isn't, though: construction accounted for only one-rhird of the quarterly rise in GDP. Manufacturing and services also performed very respectably.

The more common reaction, however, has been to suggest that the data mean that the economy will avoid the feared "double dip" recession -- a view that's almost as ludicrous as the media's usual doom-and-gloom. Look, children, I'll spell it out for you one more time. Growth will remain positive through the end of the year -- in fact, Q4 could be surprisingly strong, as people try to make big-ticket purchases before VAT goes up in early January. The risk of a double-dip will be strongest in the first couple of quarters of 2011, as the VAT hike takes its toll and spending cuts really start to be felt (as opposed to just being talked about, as they are at the moment).

I'd be a bit surprised if we meet the technical definition of a recession -- two declining quarters in a row -- but early 2011 is when it could happen. All the rhetoric of recent months about an imminent double dip, with The Times at its forefront, has been based on very poor analysis indeed.

QE 2 far?

It looks as if any day now, Fed Chairman Ben "Helicopter" Bernanke will announce another round of quantitative easing for the United States. If third quarter GDP data for the UK, due out this week, show a significant slowdown (consensus is 0.4%, after 1.2% growth in Q2), the Bank of England may well follow suit. For both countries, it's a risky choice.

The initial resort to QE (or printing money, as we'd call it if we were talking about the Bank of Zimbabwe) made a lot of sense. Economies around the world were teetering on the brink of depression. There was a compelling need to ensure that the whole world didn't tip into the same kind of stagnation that has bedevilled Japan since the 1990s.

Both the US and UK economies have been growing for the past several quarters, so something seems to have worked. It's just not clear that the "something" that got things moving again was QE. It may have boosted confidence by providing reassurance that governments and central banks still had a few tricks up their sleeves to head off a depression. However, it has done very little to restore the flow of credit to the private sector, which was the supposed object of the exercise.

The combination of near-zero interest rates and QE seems to have gifted banks with history's biggest ever example of the much-loved "carry trade". Banks are taking in money almost free from their depositors and investing it in riskless government debt, a nice little earner. As a result, bond yields in both the US and UK are heading ever lower, despite record levels of issuance as both countries run up massive fiscal deficits.

You can't really blame the banks, who have been getting mixed messages from governments. They have been sternly warned to strengthen their balance sheets (which forces them to earn a secure and steady income, and hence leads them to tighten credit criteria) at the same time as they have been urged to maintain and enhance lending in support of the economic recovery (which, even in the best of times, means taking risks). Given the continuing overhang from the borrowing binges of the past decade and the prevailing uncertainty over the duration of the economic recovery, it's no surprise that balance sheet rebuilding has been a greater priority than lending growth.

There can be no guarantee that QE2, in either the US or the UK, can break this cycle. (People are using the old Keynesian term "liquidity trap" to describe the situation. That's not strictly accurate: what we have here is a sort of evil postmodern version, with both fiscal and monetary policies looking tapped-out). It seems only too likely that the main (if not the only) consequence of further printing of money will be to drive government bonds even further into overbought territory. Ben Bernanke watched Alan Greenspan inflate three asset bubbles, eventually producing the dire consequences we are all too familiar with. He may well be about to trigger a first bubble of his very own.

It won't be like that

As media types solemnly scrutinise every detail of today's UK spending review, the main thing to remember is this: one way or another, the future will not unfold the way George Osborne is predicting. If opponents of the cuts are correct, the impact on the economy will be so severe that the government will have no choice but to slow the austerity programme, or else risk tipping the economy back into a recession that will make its fiscal targets unachievable anyway. If, on the other hand, the economy responds well to the dose of austerity, spending will start to creep up again as the government ponders the approach of the general election due in 2014.

A few months ago there were suggestions everywhere that the coalition would take its cue from the fiscal austerity programme supposedly implemented with great success in Canada in the 1990s. We even saw superannuated Canadian politicians pitching up in London to brag about what a good job they had done. As I have written here many times, there are almost no lessons for the UK to take from Canada's experience. Although the Canadian federal government indeed announced a series of spending cuts around the mid-1990s, well before the end of that decade all categories of public spending were rising again. How come? Well, rapid economic growth, largely triggered by a recovery in the US economy, boosted revenues so strongly that the spending cuts became unnecessary. Whether the Canadian government would have been able to push the cuts through if they had truly been needed is unknowable.

The UK is most unlikely to benefit from a surge in growth among its major trading partners, so the Canadian experience will not be repeated here. Where Osborne could have learnt from Canada is in setting achievable short-term goals (no more than two years at a time) and building credibility by ensuring that those goals are always met. Osborne has ignored that completely, spreading the pain over a four year period and back-loading changes that could surely have been implemented more quickly if the fiscal need was really as severe as the Government keeps claiming. The earlier announcement of changes in child tax credits to become effective only in 2013is a typical example of this, and there are many others buried in today's spending review.

For now, the incompetent but all-important ratings agencies and the dreaded bond vigilantes may profess themselves satisfied with the existence of a four-year programme. However, when unforeseeable events push the new fiscal plans of course, as they inevitably will one way or the other, it will be interesting to see how the government seeks to maintain its credibility.

Indefensible

Is it still an aircraft carrier if it doesn't carry aircraft? The British government evidently thinks so, because it's pressing ahead with plans to build two new carriers (at a total cost of £5-6 billion) even though, when they come into service (2016-2019) there won't be any aircraft available to fly from them, unless you count helicopters. What's more, the first one will be mothballed or sold as soon as the second one comes into service. And if a military man I heard on the radio this morning is right, the new carriers will never be able to handle fully-laden aircraft anyway, as they will be only two-thirds the size of US carriers.

Before either ship is ready, the Navy's existing carrier, HMS Ark Royal, will be decommissioned as a cost-cutting measure. Ark Royal does carry aircraft, the venerable Sea Harrier jump jets, and they're being retired too. So for five years or so, the navy of Nelson and Hood, Rodney and Collingwood will have no aircraft carriers. Then it will have one, but with no aircraft.

Welcome to the Looking Glass world of British defence, now being revealed in the Strategic Defence Spending Review. The story with the carriers is shaping up as the biggest scandal, in that it's clear that the government would dearly love to cancel them but is saddled with contracts that make it cheaper to proceed, even though the finished product will not be "fit for purpose". But there's plenty more where that came from. Example: the planned army training centre at St Athan in Wales is to be cancelled. It was going to cost £14 billion (!), under a "private finance initiative" scheme that has been under regular attack from Private Eye over the past couple of years. My usual questions over PFI schemes apply here in spades: what reason is there to think that there are people in the private sector who can carry out the task of army training better than the Army's own trainers can? If there are such people out there, who are they working for at the moment?

And let's not leave the RAF out of it. RAF Kinloss, on the Moray Firth, is to close as a result of the cancellation of the Nimrod reconnaissance aircraft. Bad news for the area, to be sure. Nearby, RAF Lossiemouth will apparently have to "compete" with a base in Norfolk to be the home of most of the RAF's Tornado fighter squadrons. There are currently four squadrons of Tornados at Lossiemouth, which is hundreds of miles from the UK's main population centres. Now of course, planes regularly have to be scrambled to intercept Russian aircraft cruising along the edges of UK airspace. Has it occurred to the RAF brass that if the Tornados weren't there, the Russians wouldn't bother with their reconnaissance flights? The whole thing is at best a wildly expensive training exercise for the two sides, at worst a total charade.

One more example: the Army will pull 20,000 troops out of Germany by mid-decade to save money. Good news, one supposes, except what have they been doing there for the last twenty years anyway? Are we worried about German revanchism or Russian (it would be more appropriate to say Soviet!) aggression -- or are we just fulfilling some NATO obligation that's way past its time?

In a way you have to feel sorry for the coalition government as it tries to sort through this fantastically expensive mess. It's an extreme case of "producer capture": politicians are caught between the pleadings of the armed forces themselves, always fighting the last war, and the graspings of the defence industry, always keen to provide fancy kit for the next one. The net result is that, largely as a result of past incompetence, the defence sector faces spending cuts of only about 8%, while if news reports are to be believed, tomorrow the social housing budget in England will be cut by almost 50%. It's indefensible.

Mullering the Maestro

The US investigative journalist Bob Woodward has written or co-written sixteen books of "instant history", going all the way back to the Watergate expose of the mid-1970s. If he could have one of those books back, I'm guessing it might be "Maestro", his hagiography of the former Fed Chairman Alan Greenspan. The halo Woodward slapped on Greenspan's head a mere decade ago has slipped so far in the last few years that the poor man must now be using it as a truss.

Surprisingly, in the welter of books about the financial crisis, there hadn't been one that attempted to pin the blame squarely on Greenspan. But one recently turned up on the shelves of the good old Hertfordshire county library: "Panderer to Power", by Frederick J. Sheehan, a Boston-based financial consultant. Published by McGraw Hill (though in many respects it feels more like a vanity publication), it's an extraordinary piece of work.

Let's get the bad parts out of the way first. Sheehan is, to put it as politely as possible, no prose stylist. He makes words up ("trancate"), misuses others ("Greenspan spoke in vagaries") and exhibits a jarringly baroque turn of phrase ("the most famous civil servant since Caligula's horse"). More seriously, he doesn't always understand what he's writing about. For example, his description of the workings of the simplest of financial derivatives, a plain-vanilla interest rate swap, is just plain wrong, and as a result he has an exaggerated view of bank counterparty risk.

You gotta say this for the guy, though: he really, REALLY disrespects Alan Greenspan. So much so, in fact, that it threatens to get in the way of the story. Take the first chapter of the book, innocuously titled "Introduction to Part 1: Prelude to Power". A few paragraphs about Greenspan's formative years, right? No way! Sheehan can't restrain himself from hurling the big bombs right from the outset. As early as page 2 we learn that "from the time Greenspan was named Federal Reserve Chairman until he left office, the nation's debt rose from $10.8 trillion to $41.0 trillion". On page 3: "(Greenspan) may not even have understood what (Ayn) Rand was talking about". and on page 6, "His record as an economic forecaster was unimpressive".

The insults and accusations go on for a further 370 pages, with a degree of repetition that can be a seriously wearing. Still, it can't be denied that Sheehan has done a lot of research, which shows up in the form of multitudes of footnotes on almost every page. He has read Fed minutes, FOMC transcripts, speeches by Greenspan and others, Congressional papers and media reports. Longstanding Greenspanophobes such as Jim Grant and Bloomberg's Caroline Baum have clearly influenced Sheehan's thinking, but the anger seems to be all his own.

The case Sheehan seeks to build is that Greenspan was never much of an economist but was always a superb self-promoter. His supposed mentor, Ayn Rand, reportedly asked a mutual acquaintance, "do you think Alan might basically be a social climber?". Sheehan cites evidence that Greenspan's doctorate from NYU was granted in unusual circumstances (he never wrote a dissertation, and the papers he submitted instead have never been published) and argues that his Wall Street consultancy (Townsend Greenspan) had an undistinguished history. This might seem like little more than mudslinging, but for the fact that the target is a man who became the most powerful figure in the global economy.

Sheehan's analysis of Greenspan's record as Fed chairman homes in on something that puzzled many people at the time. Greenspan hardly ever spoke about inflation or the money supply, two of the Fed's key raisons d'etre. In many of his key speeches, those things hardly figured at all. Instead, he was obsessed with technological progress, productivity and share prices. Over time he managed to convince himself, and more importantly almost everyone else, that low US inflation was not the result of cheap imports from China and elsewhere (which was almost certainly the case), but of rapidly rising productivity within the US itself.

Sheehan argues that this rise in productivity was almost entirely an illusion created by "hedonic" adjustments to GDP statistics. Simply put, a $1000 computer bought in 1990 could do much more than a $1000 computer bought in 1980, so the statisticians would make a "hedonic" adjustment to GDP data to reflect the quality improvement. This is not invalid in itself, but it's not hard to accept Sheehan's case that basing monetary policy on such adjustments is an extraordinary stretch.

Sheehan's reading of FOMC transcripts also shows that there was rather more scepticism within the committee than most observers (OK, me) would recall. Greenspan seems to have turned up at each FOMC meeting with the post-meeting press release already written. His usual response to any hint of dissent was to call for a coffee break, leading Sheehan to label him "Mr Coffee".

Sheehan doesn't just dislike Greenspan. He doesn't like his successor Ben Bernanke very much either; or Larry Summers and Robert Rubin; or stock analysts, or economists. While he is unclear as to what remedies he would propose -- he wants to abolish the Fed, but suggests no alternative -- he is very obviously a man for small government. You don't have to agree with that viewpoint to agree that this intemperate and in some ways deeply flawed book has performed a valuable service.

There are surely much better books about the Greenspan years to come, but Sheehan has done a lot of the spadework. And it will be hard for anyone to top some of his insights, for example: "most Americans who listened to Greenspan took him at his word -- even though they did not know what he was saying". Won't get fooled again? Not if Sheehan can help it.

Overdue pension change

There's so much stuff coming out of Whitehall these days that you almost wonder what they can possibly be saving up for next week's spending review. Today the government announced a series of reforms in personal pension rules which will, when they come into effect in April next year, save the Treasury an estimated £4 billion per year, or more than 20% of the annual cost of pension tax relief.

There's a lot to the reforms, but the most eye-catching and welcome change is a drastic reduction in the maximum annual pension contribution for which an individual can claim tax relief. Currently an eye-watering £255,000, this limit will be cut to £50,000. About time, too. The provision of tax incentives to encourage individuals to provide for their later years is all well and good, but allowing them tax relief on the accumulation of huge pension pots is nonsensical. The tax relief should allow the accumulation of a fund big enough to provide a "living pension"; beyond that, it makes no sense at all for ordinary taxpayers to be subsidising the better-off in building huge pension funds. If people want to save more, that's fine, but there's no reason for the taxpayer to subsidise it.

A related change will see the lifetime maximum for pension contributions lowered to £1.5 million from the current £1.8 billion, starting in 2012. This may be where things get interesting in the spending review next week. These limits apply to private sector pensions, but there is no similar limit in the public sector. Many senior public servants -- step forward, Bank of England Governor Mervyn King among many others -- have notional pension funds fare larger than these limits. Dollars to doughnuts, today's change will be used by the government to justify the imposition of a limit on public sector pensions as well.

University funding challenge

The UK seems incapable of coming up with a system of funding for universities that can command a wide range of support. (I should say England and Wales rather than the UK, as you don't hear many complaints about Scotland's abolition of tuition fees, at least from the students).

When I went to university over four decades ago, tuition fees and a portion of living expenses were paid by one's local authority. In one respect this made no sense at all: once I'd graduated, the London Borough of Waltham Forest was going to be among the last places I'd choose to live, so it wasn't much of a deal for the local ratepayers. But at least that system achieved one of the key goals everyone claims to be seeking: it allowed a kid from a working class background to go to one of the world's best universities, without taking on a crippling debt burden.

The latest attempt to sort out the system is a report by Lord Browne, the former head of BP. His plan calls for allowing universities to charge students what the traffic will bear, though fees above a certain level will have to be shared with the government. So Oxbridge degrees will cost more than those at some newly-minted ex-polytechnic. This is probably the only way to allow the Oxbridges, Imperials and others to compete with the immensely wealthy Ivy League schools in the US.

Repayment of student loans will only start when a graduate achieves a certain income level: the initial proposal is £21,000 a year, which is just above the average wage. In an odd twist, however, higher-earning graduates will pay a higher rate of interest on their loans than the lower paid. This obviously opens up all kinds of perverse possibilities: someone who works hard to get a medical degree from a top school and then gets a job as a consultant will pay the full freight, while someone who goes to a less esteemed school and gets a degree in golf course management, then winds up on the dole, never pays back the loan.

Unfortunately, Business Secretary Vince Cable, whose portfolio includes universities, seems very taken with this idea -- so much so that he is talking of levying a fee against any graduate with the temerity to pay off their loan early, and even taking steps to prevent wealthy parents from avoiding the interest charges altogether by paying their offspring's fees in advance. Is it possible that Vince is not aware of the time value of money? People paying back their loans early, or getting a sub from mater and pater, are reducing the burden on the public purse, which is normally seen as a virtue these days. Then again, making the higher rate impossible to avoid would effectively move Lord Browne's proposed scheme back in the direction of a graduate tax, which may have been Vince's preferred route all along. Either way, it doesn't have much to do with fairness.

There's a surprise!

When you hire a plumber, there's one thing you know for sure. As soon as he's given your problem the once-over, he'll solemnly state that "the last bloke you had here made a right mess of this". And you know perfectly well that the next plumber to cross your threshold will say exactly the same about today's guy.

I see Sir Philip Green's report on waste in government spending in very much the same light. After a few weeks spent studying the workings of government, the retailing billionaire has concluded that there's scope for massive savings -- £700 million for telecommunications services alone.

I've no doubt Sir Philip is right about a lot of this stuff, but does anyone doubt that the next outside consultant called on by some future government to look at the same issue will conclude that Sir Philip didn't fix anything, and that waste remains at intolerable/shocking/unconscionable/your adjective here levels? Public servants don't go out of their way to waste money, but they lack strong incentives not to waste it inadvertently. Moreover, "good" procurement in government is rarely just a matter of getting the cheapest deal: there are often political issues to be weighed up: national preference, regional development, that sort of thing.

One of Sir Philip's particular recommendations points up very clearly the difference between the public and private sector ethos. Sir Philip thinks the government should start to demand 45-day financing terms from its suppliers, as his own businesses do. The government, bless its little heart, strives to pay all its suppliers within five days. This started out as a Gordon Brown initiative to help out small businesses when the economy slowed down, but now it's a general practice. Given the continuing scarcity of bank credit, how many companies supplying the government would struggle if Sir Philip's suggestion was put into practice?

Back in mid-August, when Sir Philip was appointed to look at government waste, I wrote that as a tax exile/avoider, he perhaps wasn't the best choice for the job. After all, the estimated scale of tax avoided in the UK greatly exceeds welfare fraud, yet which one is the government turning its guns on? Sir Philip told Robert Peston (see his blog on the BBC website) that if his companies were run like the government, they'd go broke. Well, if everyone ran their businesses and their tax affairs the way Sir Philip does, the government would go broke, however much it tried to curb spending. A point not lost on one of the commentators on Pesto's blog:

You forgot recommendation 12: transfer half the Government's assets into Samantha Cameron's name and get her to move to Monaco. I'm sure Sir Phillip could provide lots of advice on how to do that.

Keynes and the coalition

The Telegraph website has a video'd interview with John Maynard Keynes's latest (and possibly most sycophantic) biographer, Lord Skidelsky. His Lordship believes that Keynes would have been astounded and horrified at the economic illiteracy of the coalition government.

Very likely he would, but I'd venture to suggest that he would also have spoken out strongly against the Brown-inspired, drunken sailor spending of the period from 2000-2007, when the economy was growing strongly and was clearly in no need of fiscal stimulus. I don't recall hearing much from Skidelsky, or from any of the politicians and others who are now so happy to declare themselves to be reborn Keynesians, when that nonsense was going on.

It's a bit of a sad fate for Keynes that, for so many of the public (I exclude Lord Skidelsky from this), the only part of his massive written output that's ever remembered is his belief that governments should resort to fiscal stimulus at times of recession. If you need any insight into how well Keynes is understood, just read the barely literate comments posted by Telegraph readers in response to the Skidelsky interview. Herewith a sample or four:

Keynes was plainly a dolt, for only a dolt would have come with the plain stupid things that Keynes did; pay people to dig holes and fill them in again, my aunt fanny!yeah we need holes like we need another labour government. i.e. like an hole in the head.

and...

Keynes is dead. Unfortunately a considerable number of "Keynesians" don't seem to appreciate the fact. Various Universities have force fed them his past deliberations and like zombies they go around prosletising these second hand ideas as if they were a holy edict.

and...

Keynes and Keynesians are for economics what a witch doctor is for medicine. They approach Economics the same way a scientist approaches Physics or Chemistry.

None of the keynesians are known for running a business, but Academia is under their control. No wonder it's the case, it gives governments (which finance the Academia) the moral ground to steal more from the people (tax).

and...

Time and time again it has been shown that fiscal restraint results in economic growth. The mechanism isn't clear, but I'd suggest that fewer free lunches make people work harder.

The comment made by the Lord is completely in line with some socialist economic models but completly out of touch with the reality - which is, the more you give to people today, the less they produce, the les they have tomorrow. Very Labour indeed.

and my favourite...

haha another blow for the moronic telegraph economics desk, committed to trying their best to convince the readership that Keynes and our progressive leaders know best, but wait, look at all these wonderful comments!

THE SHEEP ARE WAKING UP!!!

We are not buying your propaganda Telegraph, your constant attempts to shove a pro Keynes bias is rejected ever more vehemently. Well done to all the posters below who have voiced their objections.

The Telegraph as a bastion of Keynesian economic thought! We must have flipped into one of Stephen Hawking's parallel universes.

Mr Osborne, meet Prof. Galbraith

Chancellor George "it's not his real name" Osborne has announced that the government will reduce the cost of welfare programmes, by replacing the current mish-mash of benefits with a single social credit and taking benefits away from higher-rate taxpayers. Going forward, no household is to make more from benefits than the average household makes from working; the idea being, of course, to encourage the benefits-dependent to join the workforce.

For the longer term, Osborne remains committed to reducing income taxes on the higher paid, in order to reduce disincentives to work that higher taxes supposedly create.

It's all very Reaganomics, and calls to mind the comment of the late John Kenneth Galbraith about the underlying fallacy of that mindset: that the poor don't work harder because they have too much money, and the rich don't work harder because they have too little. Maybe George doesn't think that's a fallacy.

By the way, if the need to reduce the deficit is so all-fired urgent, how come the withdrawal of benefits from the better-off won't start until 2013? You'd almost think these changes were ideologically driven, rather than being forced on the government by financial necessity. Surely not.

Yankee stay home!

Don't you love all the great things that happen when American money gets involved in global sports? To wit...

* the Ryder Cup has almost been washed out this weekend because the NBC television network, brandishing its chequebook (sorry, checkbook), insisted it should be played in October, instead of September as is usually the case. Sky Sports just ran a graphic showing that October is the wettest month of the year in South Wales, with 50% more precipitation than September. Maybe NBC thought it was the same place as New South Wales.

* the America's Cup has been landlocked for several years amid litigation. Now the holders, BMW Oracle (Larry Ellison, Prop.) have unveiled a new set of rules so outrageously rigged that a mooted UK challenge has already foundered. It may well be that no challenger is prepared to risk the $100 million it would take to get whupped by Larry, which would put an end to a sporting tradition stretching back well over a century.

* cricket narrowly dodged a bullet when the carpetbagger Allen Stanford's efforts to take over the game were stumped by his sudden incarceration on fraud charges.

* and here at home, two of the Premiership teams owned by US asset strippers (sorry, investors) -- Liverpool and Manchester United, are facing increasing financial pressure, with the situation at Anfield particularly ominous.

The amazing thing is that the major US team sports -- football, baseball and basketball -- are beacons of co-operative organisation in the land of red-blooded capitalism. Bad teams get first pick of young players, salary limits are enforced, there's even revenue sharing between teams in the major markets and those in smaller cities. It's a model the Premiership, in particular, would be wise to follow. Of course, it's much too restrictive for American entrepreneurs looking to get rich through sport. Which is why, with usually disastrous results, some of the more aggressive have taken their love of sport and their personal charm to foreign shores.