As of yesterday, there was exactly one year to go until the opening ceremonies for the 2012 London Olympiad. Apparently that's not too soon to declare the whole thing a splendid success, because that's what a host of politicians, Olympic organisers, IOC bigwigs and even a few sportspersons did at a series of well-publicised events across the UK. It's certainly a great achievement to have got the facilities so close to readiness so far ahead of the Games; it would have been nice if space had been found at yesterday's bunfights for some of the builders and other trades who have done the actual work -- not to mention the taxpayers who are stumping up for the whole thing.
If you need an antidote to all the self-congratulation, you need look no further than Hackney's most famous living Welshman, the writer Iain Sinclair, currently flogging his latest book, "Ghost Milk". Sinclair took a few potshots at the Games in his previous work, "Hackney, that rose-red empire"; "Ghost Milk" is an anti-Olympic tirade running to more than 400 pages. Much of Sinclair's oeuvre deals with the loss of traditional ways of life at the hands of progress -- see the aforementioned "Hackney...", or the earlier "Lights out for the territory" or "London Orbital" for more of the same. With the Olympics destroying parks and wetlands, uprooting neighbourhoods and pushing long-established businesses out of its way, the Games are an obvious target for Sinclair's fulminations.
If you can handle his quirky style, Sinclair is always fun to read and provides insights you won't find anywhere else. At the same time, it would be wrong to deny that the Stratford area of East London, home of the Olympic Park, was seriously blighted before the Games works began. Improved transport links, affordable housing (the eventual use of the Olympic Village) and ancillary developments, including a spiffy new shopping centre, could ensure that the area will be a much more desirable location once the Games are over.
One writer who seeks to take Sinclair to task for his miserablism is David Aaronovich, in a column in today's Times (paywall protected). Aaronovich decries what he sees as Sinclair's inability to accept that his beloved East End was less than a paradise before Lord Coe and his Olympic pals showed up.
Fair enough; but it's a bit breathtaking to find Aaronovich also praising the fact that the Games are coming in "below budget". Which budget is that, David? The estimate presented to the Government and the British people before the bid was submitted to the IOC was in the range of £2.0-2.5 billion. The actual cost is going to be somewhere close to £9 billion. Once the Games were safely won, the organisers promptly and shamelessly kitchen-sinked the costs to even more than £9 billion, an amount so huge that it has proved beyond the wiles even of a gaggle of architects to blow through.
There's every reason to hope and expect that the Games will be a success from a sporting standpoint, but how can they ever represent value for that kind of money? That will depend on the much-vaunted "legacy". Sprucing up Stratford is all well and good, but it could have been accomplished far more cheaply without the Olympics, and quite possibly without getting Iain Sinclair all lathered up.
Other aspects of the legacy look downright shaky. The hugely expensive media centre will almost certainly be shuttered for good the instant the Games end. The main Olympic Stadium is already caught up in litigation between two football clubs over its post-Games use; one of the bidders (Tottenham Hotspur) wants to rip it down and start again, while the other (West Ham) wants to remodel and keep it, a decision it may well come to regret sooner rather than later. And as for the promise of a boost for grass-roots sport across the UK, best keep shtum. Although Lottery profits have been diverted wholesale into the Olympic pot, there are absolutely no Olympics-related legacy projects outside England. Yesterday the Games organisers were pleading with the Government to inject yet more money to shore up the legacy programme.
One further criticism of the Games has been the thoroughly bizarre ticket allocation process. There has been particular annoyance at the fact that locals, who have had to put up with all the disruption (with another year of the same to come) have not been given first dibs on some of the tickets. One lucky local who has received tickets, according to David Aaronovich today, is Mrs Anna Sinclair of Hackney. No word on whether she will be taking her husband along with her.
Thursday, 28 July 2011
Monday, 25 July 2011
The Three Cs -- a memo to the US Congress
Old-fashioned bankers, the type who thought it was a good idea to lend money, rather than find ways to say "no", liked to talk of the "Three Cs of Credit": cashflow, collateral and character.
Cashflow -- does the borrower have sufficient income to meet existing needs and pay this loan back?
Collateral -- if it comes to the worst, does the borrower have other assets that can be liquidated to repay the loan?
Character -- most important of all, is the borrower telling the truth, and can he be expected to do everything possible to repay the loan on the agreed terms?
If we apply the Three Cs to the current US debt ceiling debate, what do we find?
Cashflow -- not an issue. The United States remains the world's richest economy.
Collateral -- again, not an issue. The US is rich in resources.
So if there's a default, it will be a result of a failure of character. The US can well afford to repay its creditors, but for whatever reason will have decided not to do so. You can only destroy your own reputation: nobody else can do it without your co-operation. Once you've done that, good luck trying to get it back.
Cashflow -- does the borrower have sufficient income to meet existing needs and pay this loan back?
Collateral -- if it comes to the worst, does the borrower have other assets that can be liquidated to repay the loan?
Character -- most important of all, is the borrower telling the truth, and can he be expected to do everything possible to repay the loan on the agreed terms?
If we apply the Three Cs to the current US debt ceiling debate, what do we find?
Cashflow -- not an issue. The United States remains the world's richest economy.
Collateral -- again, not an issue. The US is rich in resources.
So if there's a default, it will be a result of a failure of character. The US can well afford to repay its creditors, but for whatever reason will have decided not to do so. You can only destroy your own reputation: nobody else can do it without your co-operation. Once you've done that, good luck trying to get it back.
Sunday, 24 July 2011
Get Shorty!
It looks as if the initial positive reaction to the Greek bailout package agreed by the EU on Thursday evening could run out of steam by the time markets reopen on Monday. After a spot of prudent short-covering, traders and analysts seem to be coming to the view that the deal is no more than a stopgap, leaving the fundamental problems untouched. Rising bond yields in Spain and Italy late on Friday suggest that traders will not immediately try to test the EU's resolve regarding Greece itself, but will instead turn their attentions to trying to identify and undermine the next weak sister.
The key weapon in doing this will, as usual, be short selling, especially by hedge funds. Financial institutions always defend this practice, arguing that it provides a mechanism for identifying underlying problems quickly and bringing them to a head. As I've suggested in these pages in the past, this is akin to claiming that the school sneak, the kid who rats out his schoolmates for smoking behind the bike sheds, is a major contributor to school discipline. It's not as if the hedgies can claim any special expertise that has allowed them to figure out there is too much sovereign debt in some Eurozone countries. Everybody knows that. The bizarre part is that nobody seems seriously inclined to curb the short sellers, even though the costs, if they succeed in bringing down another debtor, will be borne by the same taxpayers that picked up the tab last time.
Michael Lewis's "The Big Short" (see last month's "Summer reading list 2011" post) painted a knockabout picture of a bunch of geeky oddballs making money by shorting asset backed bonds. However, the role of short selling in the runup to the financial crisis was pernicious. The most egregious example was provided by Goldman Sachs, who reportedly allowed a known short-seller to select ropey assets as collateral for one of their ABS deals, ensuring profits for the short seller as soon as the deal came to market. There may be no scope for that sort of skulduggery with Spanish or Italian bonds, but there's no reason to suppose that the short sellers will be any more scrupulous in their dealings.
The irony is that the hedge funds doing the short selling generally carry far more leverage than Italy or Spain do. Neither of those countries is in anything like as much trouble as Greece. The hedgies are unapologetic about trying to bring the sovereign debtors to their knees. It's long past time for regulators to return the favour.
The key weapon in doing this will, as usual, be short selling, especially by hedge funds. Financial institutions always defend this practice, arguing that it provides a mechanism for identifying underlying problems quickly and bringing them to a head. As I've suggested in these pages in the past, this is akin to claiming that the school sneak, the kid who rats out his schoolmates for smoking behind the bike sheds, is a major contributor to school discipline. It's not as if the hedgies can claim any special expertise that has allowed them to figure out there is too much sovereign debt in some Eurozone countries. Everybody knows that. The bizarre part is that nobody seems seriously inclined to curb the short sellers, even though the costs, if they succeed in bringing down another debtor, will be borne by the same taxpayers that picked up the tab last time.
Michael Lewis's "The Big Short" (see last month's "Summer reading list 2011" post) painted a knockabout picture of a bunch of geeky oddballs making money by shorting asset backed bonds. However, the role of short selling in the runup to the financial crisis was pernicious. The most egregious example was provided by Goldman Sachs, who reportedly allowed a known short-seller to select ropey assets as collateral for one of their ABS deals, ensuring profits for the short seller as soon as the deal came to market. There may be no scope for that sort of skulduggery with Spanish or Italian bonds, but there's no reason to suppose that the short sellers will be any more scrupulous in their dealings.
The irony is that the hedge funds doing the short selling generally carry far more leverage than Italy or Spain do. Neither of those countries is in anything like as much trouble as Greece. The hedgies are unapologetic about trying to bring the sovereign debtors to their knees. It's long past time for regulators to return the favour.
Thursday, 21 July 2011
Cuts? What cuts?
The world's attention is focused on the debt problems in the US and the Eurozone, and the British media and public are still transfixed by the Murdoch hacking scandal. As a result, UK fiscal data for June, released this morning, have received short shrift -- a pity, since they show that the fiscal situation bears little resemblance to what most people seem to assume.
Recall that June is the third month of the current fiscal year, which is (or was) supposed to mark the point at which all of the harsh/brutal/regressive/(your adjective here) measures proposed by the coalition government really began to bite. So what was the outcome? Well, the current budget deficit for June was £11.8 billion, slightly higher than the £11.4 billion deficit seen in the corresponding month last year. Public sector borrowing was also up slightly, at £14.0 billion, compared to £13.6 billion last year.
As yes, well that must be because the slowdown on the economy is cutting revenues, right? No, wrong: revenues were £39.6 billion in June 2011, up from £37.5 billion in June last year. Problem is, that £2.1 billion increase in revenues was outpaced by a £2.5 billion increase in government spending, to £52.0 billion from £49.5 billion.
And (I'm anticipating your probable response here) that spending increase had nothing to do with higher interest costs. General current expenditures rose to £33.2 billion in June 2011 from £31.5 billion in June 2010, and social benefit spending, supposedly right in the government's firing line, rose to £14.7 billion from £14.2 billion.
The remarkable thing about these numbers is that they provide absolutely no support for the preconceptions of either side in the deficit debate. There's no clear evidence that a slowing economy is harming revenues, and no sign that spending is falling quickly enough to harm the economy. On the other hand, there's also no sign that the Government's deficit reduction plan is actually working, either.
One final observation: preliminary Q2 GDP data are due for release next week. These numbers suggest that government spending may prove to have been one of the main sources of growth in the economy during the quarter. That would make it harder for Labour to make a big deal about the data, which are likely to be weak(ish). However, it would also imply that the "rebalancing" of growth that the coalition is counting on is still nowhere in sight.
Recall that June is the third month of the current fiscal year, which is (or was) supposed to mark the point at which all of the harsh/brutal/regressive/(your adjective here) measures proposed by the coalition government really began to bite. So what was the outcome? Well, the current budget deficit for June was £11.8 billion, slightly higher than the £11.4 billion deficit seen in the corresponding month last year. Public sector borrowing was also up slightly, at £14.0 billion, compared to £13.6 billion last year.
As yes, well that must be because the slowdown on the economy is cutting revenues, right? No, wrong: revenues were £39.6 billion in June 2011, up from £37.5 billion in June last year. Problem is, that £2.1 billion increase in revenues was outpaced by a £2.5 billion increase in government spending, to £52.0 billion from £49.5 billion.
And (I'm anticipating your probable response here) that spending increase had nothing to do with higher interest costs. General current expenditures rose to £33.2 billion in June 2011 from £31.5 billion in June 2010, and social benefit spending, supposedly right in the government's firing line, rose to £14.7 billion from £14.2 billion.
The remarkable thing about these numbers is that they provide absolutely no support for the preconceptions of either side in the deficit debate. There's no clear evidence that a slowing economy is harming revenues, and no sign that spending is falling quickly enough to harm the economy. On the other hand, there's also no sign that the Government's deficit reduction plan is actually working, either.
One final observation: preliminary Q2 GDP data are due for release next week. These numbers suggest that government spending may prove to have been one of the main sources of growth in the economy during the quarter. That would make it harder for Labour to make a big deal about the data, which are likely to be weak(ish). However, it would also imply that the "rebalancing" of growth that the coalition is counting on is still nowhere in sight.
Monday, 18 July 2011
Suborning the nation
suborn vt (MF suborner, fr L subornare) 1: to induce secretly to do an unlawful thing: INSTIGATE 2: to induce to commit perjury; also: to obtain perjured testimony from a witness. (Webster's Seventh New Collegiate Dictionary).
Well, that about covers it. After the events of the past two weeks, it feels as if just about the entire UK has been suborned. The pile of victims is starting to mount: Rebekah Brooks is out of a job at News International, and both she and former News of the World editor Andy Coulson have been arrested; sadly, a former journalist from the NotW was found dead yesterday in his apartment, almost certainly as a result of suicide; and Metropolitan Police Commissioner Sir Paul Stephenson has resigned, as has one of his deputies, John Yates, with at least three other senior officers under investigation.
It's nowhere near over yet. Revelations of a you-couldn't-make-this-up variety are still occurring on a daily basis. There are reports today that police are examining a computer found dumped near Rebekah Brooks's home. More unbelievably still, Rupert Murdoch just uttered the word "humble" at the start of his appearance before a parliamentary committee.
So who's next for the firing squad? There's a general consensus that James Murdoch will not survive the week as CEO of News International, though given his father's performance today (one Twittered description, not the cruellest: "addled"), that might be a risky move. Even if James does go, it's unlikely that the possible arrival of his older brother Lachlan and hatchet-faced sister Elizabeth would signal much of a change of course.
Then there are the politicians, none of whom has so far been irretrievably damaged, unless you count Gordon Brown, whose spittle-flecked rant in Parliament last week did no end of harm to what remained of his reputation. That may change. Sky News reported last night that the odds on David Cameron having to resign over the scandal have tumbled to 8 - 1. One man working hard to shorten those odds even further is former London mayor Ken Livingstone, who came very close to suggesting to the same station last night that Cameron had attempted to exert improper influence over the decision of whether to allow News Corp. to buy all of BSkyB (a takeover bid that has been abandoned by News Corp. since the scandal began). Cameron and Rebekah Brooks are, of course, personal friends as well as being part of the "Chipping Norton set", both being residents of that fantastically self-regarding Cotswolds town. (Another member of the "set": Jeremy Clarkson. Be very afraid).
Livingstone, planning another tilt at the London mayor's job next year, is also trying to besmirch the current incumbent, Boris Johnson. Over the weekend Ken idly suggested that BoJo has held many meetings over the past year with individuals who are now neck deep in the mire, and wondered aloud how voters would feel if the Mayor had been consorting with known armed criminals! As with the insinuations about Cameron, Livingstone made no attempt to offer any evidence, but in the current fraught atmosphere, that seems unlikely to make any difference. A more troublesome fact for Johnson may be that the soon-to-depart Met police chief, Paul Stephenson, was his personal choice for the job; indeed, BoJo turfed out his predecessor in order to give Stephenson the job only a couple of years ago.
So there we are. The world is teetering on the brink of another financial crisis, and the UK government is having to spend all its time on a tawdry scandal. And with a year to go before the Olympics, the biggest security challenge in peacetime British history, the Metropolitan Police is leaderless. A fine mess.
Well, that about covers it. After the events of the past two weeks, it feels as if just about the entire UK has been suborned. The pile of victims is starting to mount: Rebekah Brooks is out of a job at News International, and both she and former News of the World editor Andy Coulson have been arrested; sadly, a former journalist from the NotW was found dead yesterday in his apartment, almost certainly as a result of suicide; and Metropolitan Police Commissioner Sir Paul Stephenson has resigned, as has one of his deputies, John Yates, with at least three other senior officers under investigation.
It's nowhere near over yet. Revelations of a you-couldn't-make-this-up variety are still occurring on a daily basis. There are reports today that police are examining a computer found dumped near Rebekah Brooks's home. More unbelievably still, Rupert Murdoch just uttered the word "humble" at the start of his appearance before a parliamentary committee.
So who's next for the firing squad? There's a general consensus that James Murdoch will not survive the week as CEO of News International, though given his father's performance today (one Twittered description, not the cruellest: "addled"), that might be a risky move. Even if James does go, it's unlikely that the possible arrival of his older brother Lachlan and hatchet-faced sister Elizabeth would signal much of a change of course.
Then there are the politicians, none of whom has so far been irretrievably damaged, unless you count Gordon Brown, whose spittle-flecked rant in Parliament last week did no end of harm to what remained of his reputation. That may change. Sky News reported last night that the odds on David Cameron having to resign over the scandal have tumbled to 8 - 1. One man working hard to shorten those odds even further is former London mayor Ken Livingstone, who came very close to suggesting to the same station last night that Cameron had attempted to exert improper influence over the decision of whether to allow News Corp. to buy all of BSkyB (a takeover bid that has been abandoned by News Corp. since the scandal began). Cameron and Rebekah Brooks are, of course, personal friends as well as being part of the "Chipping Norton set", both being residents of that fantastically self-regarding Cotswolds town. (Another member of the "set": Jeremy Clarkson. Be very afraid).
Livingstone, planning another tilt at the London mayor's job next year, is also trying to besmirch the current incumbent, Boris Johnson. Over the weekend Ken idly suggested that BoJo has held many meetings over the past year with individuals who are now neck deep in the mire, and wondered aloud how voters would feel if the Mayor had been consorting with known armed criminals! As with the insinuations about Cameron, Livingstone made no attempt to offer any evidence, but in the current fraught atmosphere, that seems unlikely to make any difference. A more troublesome fact for Johnson may be that the soon-to-depart Met police chief, Paul Stephenson, was his personal choice for the job; indeed, BoJo turfed out his predecessor in order to give Stephenson the job only a couple of years ago.
So there we are. The world is teetering on the brink of another financial crisis, and the UK government is having to spend all its time on a tawdry scandal. And with a year to go before the Olympics, the biggest security challenge in peacetime British history, the Metropolitan Police is leaderless. A fine mess.
Summers of discontent
As the dysfunctional US political system continues to brawl its way forward in the debt ceiling debate, an imposing and familiar figure has returned to the forefront. Larry Summers, former Treasury Secretary (under Bill Clinton) and one-time Winklevoss-baiter, was all over the business networks this past weekend, throwing in his two cents' worth.
On CNBC's oddly-named "Fareed Zakaria GPS", big Larry took the opportunity to set out some historical facts. He pointed out that when President Clinton left office at the start of 2001, the US was running budget surpluses and paying down its debts. Then along came Bush 43 with his tax cuts, wars and uncosted prescription drug wheeze, and hey presto, surplus turned to deficit in the blink of an eye. The die was already cast by the time the financial crisis hit: even without the extra spending and fall in revenues resulting from that, the US fiscal and debt position would still be lurching towards unsustainability.
This may all be true, but if Larry thinks that the Tea Party can be brought to heel by deploying a few facts, he can't have been paying attention. A couple of months ago, Sarah Palin made a fool of herself by revealing her total misunderstanding of the significance of Paul Revere's famous ride in 1776. No problems; the Tea Party faithful simply went into Wikipedia and altered the story there to match Sarah's version. More recently, Michelle Bachmann bragged about how proud she was to hail from the same town as John Wayne, when in fact she shares a birthplace with John Wayne Gacy, the notorious murderer. Again, no problem: a few keystrokes on Wikipedia by a Tea Partier, and the Duke's birthplace was duly relocated.
Wikipedia has, of course, set the record straight on these matters, but it all serves to show how unlikely it is that the Tea Party will allow itself to be confused by the facts. And anyway, how hard could it be to turn a few plus signs on a website into minuses?
On CNBC's oddly-named "Fareed Zakaria GPS", big Larry took the opportunity to set out some historical facts. He pointed out that when President Clinton left office at the start of 2001, the US was running budget surpluses and paying down its debts. Then along came Bush 43 with his tax cuts, wars and uncosted prescription drug wheeze, and hey presto, surplus turned to deficit in the blink of an eye. The die was already cast by the time the financial crisis hit: even without the extra spending and fall in revenues resulting from that, the US fiscal and debt position would still be lurching towards unsustainability.
This may all be true, but if Larry thinks that the Tea Party can be brought to heel by deploying a few facts, he can't have been paying attention. A couple of months ago, Sarah Palin made a fool of herself by revealing her total misunderstanding of the significance of Paul Revere's famous ride in 1776. No problems; the Tea Party faithful simply went into Wikipedia and altered the story there to match Sarah's version. More recently, Michelle Bachmann bragged about how proud she was to hail from the same town as John Wayne, when in fact she shares a birthplace with John Wayne Gacy, the notorious murderer. Again, no problem: a few keystrokes on Wikipedia by a Tea Partier, and the Duke's birthplace was duly relocated.
Wikipedia has, of course, set the record straight on these matters, but it all serves to show how unlikely it is that the Tea Party will allow itself to be confused by the facts. And anyway, how hard could it be to turn a few plus signs on a website into minuses?
Saturday, 16 July 2011
The Killing flaw
Not so long ago, the British believed their home-grown TV was the best in the world, a view that was apparently impervious to the regular presence of the likes of Mr Blobby or Jeremy Beadle or Terry and June on the nation's screens. These days, it must be said, a lot of the more watchable stuff comes from abroad. From Europe, we get crime dramas (Wallander, from Sweden; Spiral, from France; Forbrydelsen, from Denmark, of which more later) and even quirky comedies (Night Shift, from Iceland). From the US, there's a whole range of well-written and immaculately produced series, from The Sopranos and The Wire via Mad Men to Larry David's cringefest, Curb your Enthusiasm.
By comparison, the UK seems stuck in the past: still churning out the increasingly preposterous Doctor Who, shamelessly reaching back into the past with the flaccid Downton Abbey, or producing excruciatingly old-fashioned sitcoms like the unwatchable Miranda. (For non-UK viewers -- and aren't you the lucky ones? -- this features a very tall and, shall we say, homely-looking woman who falls over a lot). Oh sure, there are exceptions -- Sherlock was pretty good -- but aside from news and sports, the discriminating viewer could very easily meet his or her home entertainment needs without once watching anything produced on these shores.
The revival of US television is arguably the major entertainment story of the past decade. Driven by HBO and a gaggle of ambitious competitors, the small screen has largely usurped the cinema as the major medium for creativity and storytelling. To a greater and greater extent, it's where all the money and talent -- writers, directors, actors -- want to strut their stuff.
So here's the question. With all of this creativity bubbling away, with the reputation of US television growing around the world, why did anyone think it was a good idea to remake Denmark's remarkable Forbrydelsen* (The Killing) for US audiences? The reason usually given is that US audiences won't watch anything with subtitles, but hasn't anyone ever heard of dubbing? And anyway, the subtitles thing isn't even true. When The Wire boxset became available in the UK, newbies were advised to switch on the subtitles in order to pick up on the Baltimore gangspeak -- and were assured that Americam viewers had done exactly the same thing.
The remake, sad to relate, is feeble and dull. It's a shame that US viewers, growing increasingly used to seeing high-quality output from their own country after so many years of dreck, have been deprived of seeing a product of equal merit from an unexpected source. Forbrydelsen 2 arrives in the UK later this year; it would be nice if US viewers could get to see it too, rather than some pointless and half-baked remake, but alas, a second series of The Killing is already in the works.
* For those of you who have let your once-fluent Danish lapse, the title actually means "crime", but it was shown in the UK, and has been remade in the US, as The Killing.
By comparison, the UK seems stuck in the past: still churning out the increasingly preposterous Doctor Who, shamelessly reaching back into the past with the flaccid Downton Abbey, or producing excruciatingly old-fashioned sitcoms like the unwatchable Miranda. (For non-UK viewers -- and aren't you the lucky ones? -- this features a very tall and, shall we say, homely-looking woman who falls over a lot). Oh sure, there are exceptions -- Sherlock was pretty good -- but aside from news and sports, the discriminating viewer could very easily meet his or her home entertainment needs without once watching anything produced on these shores.
The revival of US television is arguably the major entertainment story of the past decade. Driven by HBO and a gaggle of ambitious competitors, the small screen has largely usurped the cinema as the major medium for creativity and storytelling. To a greater and greater extent, it's where all the money and talent -- writers, directors, actors -- want to strut their stuff.
So here's the question. With all of this creativity bubbling away, with the reputation of US television growing around the world, why did anyone think it was a good idea to remake Denmark's remarkable Forbrydelsen* (The Killing) for US audiences? The reason usually given is that US audiences won't watch anything with subtitles, but hasn't anyone ever heard of dubbing? And anyway, the subtitles thing isn't even true. When The Wire boxset became available in the UK, newbies were advised to switch on the subtitles in order to pick up on the Baltimore gangspeak -- and were assured that Americam viewers had done exactly the same thing.
The remake, sad to relate, is feeble and dull. It's a shame that US viewers, growing increasingly used to seeing high-quality output from their own country after so many years of dreck, have been deprived of seeing a product of equal merit from an unexpected source. Forbrydelsen 2 arrives in the UK later this year; it would be nice if US viewers could get to see it too, rather than some pointless and half-baked remake, but alas, a second series of The Killing is already in the works.
* For those of you who have let your once-fluent Danish lapse, the title actually means "crime", but it was shown in the UK, and has been remade in the US, as The Killing.
Wednesday, 13 July 2011
Economy domine*
Several interesting stories on the UK economics front today. Here's a sampler.
The latest employment numbers from the ONS are tricky to interpret, given some of the gloomier data we've seen on other fronts lately. Here are some extracts from the report on the BBC website:
UK unemployment fell 26,000 in the three months to May to 2.45 million, official figures show.
The unemployment rate was 7.7%, according to the Office for National Statistics (ONS), down from 7.8% in the previous quarter.
The employment report said that the number of long-term unemployed fell by 37,000, although there was also an 11,000 increase in the number of people out of work for less than a year.
The number of 16 to 24-year-olds out of work fell by 42,000.
The public sector workforce shed 24,000 during the three months to May, far less than the 104,000 new positions created by the private sector.
It's true that the separate benefits claimant count increased, but that series is hard to interpret right now for technical reasons. The sharp increase in private sector employment is a welcome development, one that's more than a little tricky to square with signs that the economic expansion is running out of puff. Employment is usually seen as a lagging indicator, but it's still surprising to see so many jobs being added when the outlook is so uncertain, especially given that the number of jobs lost during the recession was so much smaller than expected. If employers collectively are wrong about where the economy is going next, the employment market could hit the buffers very hard in the next few months, but it's worth at least considering the possibility that the overall outlook is not quite as bad as some of the recent data have suggested.
Moving on, the Office for Budget Responsibility has published new data designed to reveal the true extent of the Government's financial liabilities. Here are some extracts from the executive summary (be warned, the full report runs to 126 pages):
- the net present value of future public sector pension payments arising from
past employment was £1,133 billion or 78.7 percent of GDP at the end of
March 2010.
- the total capital liabilities arising from Private Finance Initiative contracts
were around £40 billion or 2.9 per cent of GDP in March 2010. (Only £5.1
billion of these were on the public sector balance sheet in the National
Accounts and therefore included in PSND and PSNW);
- there were a further £105 billion (7 per cent of GDP) in provisions for future
costs that are expected (but not certain) to arise, most significantly the hard
to predict costs of nuclear decommissioning; and
- there were also £207 billion (14.4 per cent of GDP) of quantifiable
contingent liabilities – costs that could arise in the future, but where the
probability of them doing so was seen as less than 50 percent. These
included £175 billion of guarantees and similar undertakings arising from
interventions to stabilise the financial sector.
The overall public sector net liability .... was £1,216 billion
or 84.5 per cent of GDP at end-March 2010, compared to a PSND (public sector net debt)of £760 billion or 52.8 per cent of GDP at the same date.
Keep all of this in mind the next time Ed Balls or Ed Miliband denies being a deficit denier. A large chunk of this debt mountain was run up by the last government at a time when the economy was expanding rapidly, meaning that such borrowing was not only unnecessary but economically illiterate. The fact that they (well, specifically Gordon Brown) went to such lengths to conceal it (see especially the £40 billion in PFI liabilities) just makes it worse.
Lastly, we haven't had a pop here at Anatole Kaletsky in ages. In today's Times (behind the paywall) he has a mostly reasonable piece about the Eurozone crisis, but I was brought up short by this remarkable little statement:
Italian bonds, trading a week ago at 100 per cent of their face value...
Say what? I spent more years than I care to remember looking at more bond markets than you can shake a stick at, and I can never recall a single day in any of those markets when more than one or two bonds were trading "at 100 per cent of their face value". Mathematically, it's all but impossible for it to happen. Whatever Kaletsky's merits as an economist (discuss among yourselves), he's once again shown that his grasp of how financial markets work is more than a little shaky.
* By far the most-read post on this blog over the past year has been "Shine on you crazy Barclays", on 7 September 2010. I figure a dip even further back into the Pink Floyd catalogue can't hurt.
The latest employment numbers from the ONS are tricky to interpret, given some of the gloomier data we've seen on other fronts lately. Here are some extracts from the report on the BBC website:
UK unemployment fell 26,000 in the three months to May to 2.45 million, official figures show.
The unemployment rate was 7.7%, according to the Office for National Statistics (ONS), down from 7.8% in the previous quarter.
The employment report said that the number of long-term unemployed fell by 37,000, although there was also an 11,000 increase in the number of people out of work for less than a year.
The number of 16 to 24-year-olds out of work fell by 42,000.
The public sector workforce shed 24,000 during the three months to May, far less than the 104,000 new positions created by the private sector.
It's true that the separate benefits claimant count increased, but that series is hard to interpret right now for technical reasons. The sharp increase in private sector employment is a welcome development, one that's more than a little tricky to square with signs that the economic expansion is running out of puff. Employment is usually seen as a lagging indicator, but it's still surprising to see so many jobs being added when the outlook is so uncertain, especially given that the number of jobs lost during the recession was so much smaller than expected. If employers collectively are wrong about where the economy is going next, the employment market could hit the buffers very hard in the next few months, but it's worth at least considering the possibility that the overall outlook is not quite as bad as some of the recent data have suggested.
Moving on, the Office for Budget Responsibility has published new data designed to reveal the true extent of the Government's financial liabilities. Here are some extracts from the executive summary (be warned, the full report runs to 126 pages):
- the net present value of future public sector pension payments arising from
past employment was £1,133 billion or 78.7 percent of GDP at the end of
March 2010.
- the total capital liabilities arising from Private Finance Initiative contracts
were around £40 billion or 2.9 per cent of GDP in March 2010. (Only £5.1
billion of these were on the public sector balance sheet in the National
Accounts and therefore included in PSND and PSNW);
- there were a further £105 billion (7 per cent of GDP) in provisions for future
costs that are expected (but not certain) to arise, most significantly the hard
to predict costs of nuclear decommissioning; and
- there were also £207 billion (14.4 per cent of GDP) of quantifiable
contingent liabilities – costs that could arise in the future, but where the
probability of them doing so was seen as less than 50 percent. These
included £175 billion of guarantees and similar undertakings arising from
interventions to stabilise the financial sector.
The overall public sector net liability .... was £1,216 billion
or 84.5 per cent of GDP at end-March 2010, compared to a PSND (public sector net debt)of £760 billion or 52.8 per cent of GDP at the same date.
Keep all of this in mind the next time Ed Balls or Ed Miliband denies being a deficit denier. A large chunk of this debt mountain was run up by the last government at a time when the economy was expanding rapidly, meaning that such borrowing was not only unnecessary but economically illiterate. The fact that they (well, specifically Gordon Brown) went to such lengths to conceal it (see especially the £40 billion in PFI liabilities) just makes it worse.
Lastly, we haven't had a pop here at Anatole Kaletsky in ages. In today's Times (behind the paywall) he has a mostly reasonable piece about the Eurozone crisis, but I was brought up short by this remarkable little statement:
Italian bonds, trading a week ago at 100 per cent of their face value...
Say what? I spent more years than I care to remember looking at more bond markets than you can shake a stick at, and I can never recall a single day in any of those markets when more than one or two bonds were trading "at 100 per cent of their face value". Mathematically, it's all but impossible for it to happen. Whatever Kaletsky's merits as an economist (discuss among yourselves), he's once again shown that his grasp of how financial markets work is more than a little shaky.
* By far the most-read post on this blog over the past year has been "Shine on you crazy Barclays", on 7 September 2010. I figure a dip even further back into the Pink Floyd catalogue can't hurt.
Tuesday, 12 July 2011
Rats and sinking ships
The phone hacking scandal is telling us as much about British politicians as it is about the Murdoch Empire -- and neither side is coming out of it well.
Last night, who should pitch up on Wolf Blitzer's CNBC snorefest, "The Situation Room", but our old friend Tony Blair. Tony told Wolf that intrusive and obtrusive media attention had blighted his life, and that of his equally shy and retiring wife Cherie, throughout his fifteen years in front-line politics.
It must have been hard on you, Tony. What a shame you were never in a position to do anything about it at the time.
Little known fact: Rupert Murdoch holds a papal knighthood (Order of St Gregory), granted over a decade ago for his financial help to the Los Angeles Cathedral project. Now there are some suggestions that the Pope should de-knight him. Rupert's past 80, so he might need to take God's disapproval a bit more seriously than Tony Blair's.
Last night, who should pitch up on Wolf Blitzer's CNBC snorefest, "The Situation Room", but our old friend Tony Blair. Tony told Wolf that intrusive and obtrusive media attention had blighted his life, and that of his equally shy and retiring wife Cherie, throughout his fifteen years in front-line politics.
It must have been hard on you, Tony. What a shame you were never in a position to do anything about it at the time.
Little known fact: Rupert Murdoch holds a papal knighthood (Order of St Gregory), granted over a decade ago for his financial help to the Los Angeles Cathedral project. Now there are some suggestions that the Pope should de-knight him. Rupert's past 80, so he might need to take God's disapproval a bit more seriously than Tony Blair's.
Monday, 11 July 2011
Rupert Murdoch, master of surprise
A few months ago I ventured the opinion that it didn't really matter whether Rupert Murdoch's News International was allowed to take over the 60% of UK broadcaster BSkyB that didn't already own. (See posting of 3 March -- "BSkyB: who cares?"). Begging the Zeitgeist's pardon, I still think that way, for the most part. Most people probably thought Murdoch owned the whole shebang anyway, until they learned of his bid to take out the other shareholders. A takeover would mean that all the nice juicy cashflow from Sky would be available to Murdoch, but would it really make any difference to the degree of competition in UK media? Despite the arrival of the Murdoch empire over forty years ago, the UK retains one of the most viciously competitive media markets in the world, and that's not about to change.
Still, the Zeitgeist has turned virulently against Murdoch in the past week (though we haven't heard much from the 7 million or so people who actually read the News of the World before its demise). Ed Miliband is stridently against allowing the BSkyB deal to proceed, and Nick Clegg, sensing an opportunity to put a bit of distance between the LibDems and the Tories, wants Murdoch to do the "decent and sensible thing" by withdrawing the bid. (Word up, Nick: appeals to Murdoch's decency are likely to be met only with blank stares). David Cameron has suggested that his personal friend, Rebekah Brooks, should have been allowed to resign from her post as head of Murdoch's UK press operations.
With all this hot air blowing around, this week's Parliamentary debate and (non-binding) vote on the deal was set to be a corker, but now it's becoming clear that Murdoch has every intention of carrying the fight to his opponents. Last week's announcement of the closure of the News of the World was a shock to just about everyone, and was generally seen as a desperate sacrifice aimed at keeping the BSkyB deal alive.
However, that turns out not to be Murdoch's only surprise. Today it's been announced that his News Corp is amending the BSkyB bid. As a concession to those fearful of media concentration, News Corp had offered to sell the Sky News operation if it received the go-ahead for the takeover. That concession has now been withdrawn: if the deal proceeds, News Corp will keep Sky News.
This can only mean that there's another doozy of a surprise to come, because those competition considerations haven't gone away. Best guess: Murdoch must be on the point of selling The Times and Sunday Times. There have been rumours in the past about the money-losing titles being sold to the Daily Mail group. It may be that Murdoch now sees the future of the group in the UK in terms of broadcasting rather than the print media (though he would presumably retain The Sun). This would address the competition concerns, though it's debatable whether it would really reduce Murdoch's influence in the UK -- and it's even more debatable whether the public is well-served by seeing the venerable Times come under the control of the misanthropes who own the Daily Mail.
Still, the Zeitgeist has turned virulently against Murdoch in the past week (though we haven't heard much from the 7 million or so people who actually read the News of the World before its demise). Ed Miliband is stridently against allowing the BSkyB deal to proceed, and Nick Clegg, sensing an opportunity to put a bit of distance between the LibDems and the Tories, wants Murdoch to do the "decent and sensible thing" by withdrawing the bid. (Word up, Nick: appeals to Murdoch's decency are likely to be met only with blank stares). David Cameron has suggested that his personal friend, Rebekah Brooks, should have been allowed to resign from her post as head of Murdoch's UK press operations.
With all this hot air blowing around, this week's Parliamentary debate and (non-binding) vote on the deal was set to be a corker, but now it's becoming clear that Murdoch has every intention of carrying the fight to his opponents. Last week's announcement of the closure of the News of the World was a shock to just about everyone, and was generally seen as a desperate sacrifice aimed at keeping the BSkyB deal alive.
However, that turns out not to be Murdoch's only surprise. Today it's been announced that his News Corp is amending the BSkyB bid. As a concession to those fearful of media concentration, News Corp had offered to sell the Sky News operation if it received the go-ahead for the takeover. That concession has now been withdrawn: if the deal proceeds, News Corp will keep Sky News.
This can only mean that there's another doozy of a surprise to come, because those competition considerations haven't gone away. Best guess: Murdoch must be on the point of selling The Times and Sunday Times. There have been rumours in the past about the money-losing titles being sold to the Daily Mail group. It may be that Murdoch now sees the future of the group in the UK in terms of broadcasting rather than the print media (though he would presumably retain The Sun). This would address the competition concerns, though it's debatable whether it would really reduce Murdoch's influence in the UK -- and it's even more debatable whether the public is well-served by seeing the venerable Times come under the control of the misanthropes who own the Daily Mail.
Thursday, 7 July 2011
Standards'R'Poor.....
....or, if you prefer, "Bad Moody's", or "Son of a Fitch".
The credit rating agencies, always quick to downgrade a company's debt the day after it had defaulted, used to be the harmless laughing stock of the financial markets. However, their incompetence took on a darker edge during the recent financial crisis. Although the major cause of the crisis was the toxic combination of irresponsible monetary policy and financial market deregulation, the willingness of these agencies to grant the supposed imprimatur of a AAA rating to all kinds of incomprehensible securities did much to deepen and prolong it.
Now, perhaps even more damagingly, they seem to be engaged in a contest to prove which of them is the toughest. S&P got the ball rolling by announcing that it would regard a voluntary rollover by banks of their holdings of Greek debt as a form of default, and Fitch has hinted it would take the same view. It's hard to fathom the logic here: investors voluntarily roll over their holdings of all kinds of instruments every day of the week without anybody suggesting that this means the borrowers are in default. S&P's threat risks torpedoing the best remaining chance of preventing Greece's debt problems from triggering a genuine default and possibly setting off a severe financial crisis.
Not to be outdone in the idiotic machismo stakes, Moody's promptly followed S&P's outburst by downgrading Portugal's debt to junk status, citing the possibility that the country could well need a further official bailout. Well, if that wasn't the likeliest outcome before -- and arguably it wasn't: Portugal's financial position is far less dire than that of Greece -- it's certainly become a whole lot more probable now.
A year or two ago there was widespread agreement on changes that needed to be made to avoid an early repeat. A return to tighter financial regulation: a start has been made. Strengthening bank balance sheets: good progress in most countries. Curbing the influence of the ratings agencies? Nothing has happened, and now the markets are being jerked around again.
Dealing with the agencies isn't just a matter of cracking down on a bunch of irresponsible incompetents, satisfying though that might be in its own right. There is, in fact, a strong case to be made that the ratings agencies, as they currently operate, directly add to the level of risk in the system.
Many investment funds are governed by mandates that require them to purchase only investments that meet defined ratings criteria. This makes life easy for fund managers (and explains why so many of them have single-figure golf handicaps), but it obviously has disastrous consequences for the proper assessment of risk. How much of the toxic junk that was peddled in the middle of the last decade would have been bought if fund managers had been forced to take responsibility for the quality of what they were buying, rather than just sheltering behind a rating awarded by some unqualified and inexperienced analyst?
Ratings-based mandates also risk creating needless market disruption in times of financial stress. A lot of investors who may have been quite happy to sit tight on their Portuguese debt holdings will be forced by their mandates to offload them immediately, now that the great oracle at Moody's has spoken. This is the key mechanism through which Moody's ratings action may well become a self-fulfilling prophecy. It's not that the fund managers have any great faith in Moody's analysis -- nobody's that stupid -- rather, it's that their investment rules leave them no choice in the matter.
The EU and ECB are reportedly looking at ways of sidelining the agencies or somehow neutralising their impact during times of crisis. It's a pity the opportunity wasn't taken to deal with the issue during the past couple of years, before this latest, potentially disastrous attempt by the agencies to flex their muscles.
The credit rating agencies, always quick to downgrade a company's debt the day after it had defaulted, used to be the harmless laughing stock of the financial markets. However, their incompetence took on a darker edge during the recent financial crisis. Although the major cause of the crisis was the toxic combination of irresponsible monetary policy and financial market deregulation, the willingness of these agencies to grant the supposed imprimatur of a AAA rating to all kinds of incomprehensible securities did much to deepen and prolong it.
Now, perhaps even more damagingly, they seem to be engaged in a contest to prove which of them is the toughest. S&P got the ball rolling by announcing that it would regard a voluntary rollover by banks of their holdings of Greek debt as a form of default, and Fitch has hinted it would take the same view. It's hard to fathom the logic here: investors voluntarily roll over their holdings of all kinds of instruments every day of the week without anybody suggesting that this means the borrowers are in default. S&P's threat risks torpedoing the best remaining chance of preventing Greece's debt problems from triggering a genuine default and possibly setting off a severe financial crisis.
Not to be outdone in the idiotic machismo stakes, Moody's promptly followed S&P's outburst by downgrading Portugal's debt to junk status, citing the possibility that the country could well need a further official bailout. Well, if that wasn't the likeliest outcome before -- and arguably it wasn't: Portugal's financial position is far less dire than that of Greece -- it's certainly become a whole lot more probable now.
A year or two ago there was widespread agreement on changes that needed to be made to avoid an early repeat. A return to tighter financial regulation: a start has been made. Strengthening bank balance sheets: good progress in most countries. Curbing the influence of the ratings agencies? Nothing has happened, and now the markets are being jerked around again.
Dealing with the agencies isn't just a matter of cracking down on a bunch of irresponsible incompetents, satisfying though that might be in its own right. There is, in fact, a strong case to be made that the ratings agencies, as they currently operate, directly add to the level of risk in the system.
Many investment funds are governed by mandates that require them to purchase only investments that meet defined ratings criteria. This makes life easy for fund managers (and explains why so many of them have single-figure golf handicaps), but it obviously has disastrous consequences for the proper assessment of risk. How much of the toxic junk that was peddled in the middle of the last decade would have been bought if fund managers had been forced to take responsibility for the quality of what they were buying, rather than just sheltering behind a rating awarded by some unqualified and inexperienced analyst?
Ratings-based mandates also risk creating needless market disruption in times of financial stress. A lot of investors who may have been quite happy to sit tight on their Portuguese debt holdings will be forced by their mandates to offload them immediately, now that the great oracle at Moody's has spoken. This is the key mechanism through which Moody's ratings action may well become a self-fulfilling prophecy. It's not that the fund managers have any great faith in Moody's analysis -- nobody's that stupid -- rather, it's that their investment rules leave them no choice in the matter.
The EU and ECB are reportedly looking at ways of sidelining the agencies or somehow neutralising their impact during times of crisis. It's a pity the opportunity wasn't taken to deal with the issue during the past couple of years, before this latest, potentially disastrous attempt by the agencies to flex their muscles.
Tuesday, 5 July 2011
Elder care -- Dilnot's bright idea
Until now it's always seemed as if the British obsession with home ownership would scupper any attempts at setting up a decent system for elder care. For many people, the family home is their only form of saving, but damned if they are willing to draw down on those savings to pay for their own care in their dotage. No, no -- it must all be passed on, preferably inheritance tax free, to their heirs.
Just this past week, as we awaited yet another report into the problem, by the economist Andrew Dilnot, one newspaper columnist published a piece under the headline "She's your granny; why should she have to sell up?". To which it's tempting to respond, "actually, she's YOUR granny; why should I have to pay for her care?"
Well, you can knock me (and my granny) down with a feather, because it seems as if the redoubtable Mr Dilnot may have come up with a basis for solving this highly vexed issue. No doubt the politicians will find a way to mess it up, but his report points the way to a lasting solution.
There's a good summary of the proposals here, but the essence is that anyone with assets exceeding £100,000 will be expected to pay up to £35,000 towards their own care when they reach old age. Anything beyond that would be met out of the public purse. It's worth stressing -- because some of the initial responses seem to have missed this aspect -- that the £35,000 refers specifically to care costs. People would also be expected to pay for their own "hotel" costs (i.e room and board) out of their pensions. Dilnot sees this costing each person a further £7,000-10,000 a year.
The £35,000 could be paid in cash, or out of the eventual sale of the family home, but the big hope is that the establishment of a firm maximum will induce the insurance industry to design appropriate policies to provide cover. The government's role could then be seen as providing "catastrophic risk" cover for the uninsurable financial liabilities faced by the relatively small minority whose care costs spiral out of control.
The proposals have been welcomed by care charities and by politicians of all stripes. So why might it all get messed up? The answer, not surprisingly, is cost. Dilnot estimates that his proposals would cost £1.7 billion a year in 2014, the suggested start date, with the figure rising slowly after that. There's an argument to be made that the plans will pay for themselves, if they result in more people being cared for at home rather than in hospital, but the government will not want to bank on that. There are suggestions that cuts in other areas of social spending will have to be found if the Dilnot plan is to go ahead.
Dilnot seems to have made a tactical error here. His cost estimates are based on the £100,000 and £35,000 figures for the means test and the maximum contribution respectively. But of course, those figures are both moveable. There must be several combinations of a stricter means test and higher contribution limit that would allow the scheme to proceed with no initial cost to the public purse. By explicitly suggesting figures that result in higher public spending, Dilnot has made it harder for the government to propose a slightly less generous but self-funding scheme. This may reduce the chances of anything being done.
The £7,000-10,000 "hotel costs" estimate also seems low, based on my own fairly recent experience with two elderly relatives in care homes. There would be nothing to stop people from spending more of their own money, of course, but if a figure like this were seen as a norm for publicly-operated care homes, standards would inevitably suffer. (It equates to less than £30 a night -- you can't even stay in a Travelodge for that).
Care charities are saying that Dilnot has given the UK a "once in a generation" chance to fix a serious problem in the social safety net. That's probably an exaggeration, but there's no doubt that his is the best idea anyone has come up with so far. Will the politicians be able to rise to the occasion? Stay tuned.
Just this past week, as we awaited yet another report into the problem, by the economist Andrew Dilnot, one newspaper columnist published a piece under the headline "She's your granny; why should she have to sell up?". To which it's tempting to respond, "actually, she's YOUR granny; why should I have to pay for her care?"
Well, you can knock me (and my granny) down with a feather, because it seems as if the redoubtable Mr Dilnot may have come up with a basis for solving this highly vexed issue. No doubt the politicians will find a way to mess it up, but his report points the way to a lasting solution.
There's a good summary of the proposals here, but the essence is that anyone with assets exceeding £100,000 will be expected to pay up to £35,000 towards their own care when they reach old age. Anything beyond that would be met out of the public purse. It's worth stressing -- because some of the initial responses seem to have missed this aspect -- that the £35,000 refers specifically to care costs. People would also be expected to pay for their own "hotel" costs (i.e room and board) out of their pensions. Dilnot sees this costing each person a further £7,000-10,000 a year.
The £35,000 could be paid in cash, or out of the eventual sale of the family home, but the big hope is that the establishment of a firm maximum will induce the insurance industry to design appropriate policies to provide cover. The government's role could then be seen as providing "catastrophic risk" cover for the uninsurable financial liabilities faced by the relatively small minority whose care costs spiral out of control.
The proposals have been welcomed by care charities and by politicians of all stripes. So why might it all get messed up? The answer, not surprisingly, is cost. Dilnot estimates that his proposals would cost £1.7 billion a year in 2014, the suggested start date, with the figure rising slowly after that. There's an argument to be made that the plans will pay for themselves, if they result in more people being cared for at home rather than in hospital, but the government will not want to bank on that. There are suggestions that cuts in other areas of social spending will have to be found if the Dilnot plan is to go ahead.
Dilnot seems to have made a tactical error here. His cost estimates are based on the £100,000 and £35,000 figures for the means test and the maximum contribution respectively. But of course, those figures are both moveable. There must be several combinations of a stricter means test and higher contribution limit that would allow the scheme to proceed with no initial cost to the public purse. By explicitly suggesting figures that result in higher public spending, Dilnot has made it harder for the government to propose a slightly less generous but self-funding scheme. This may reduce the chances of anything being done.
The £7,000-10,000 "hotel costs" estimate also seems low, based on my own fairly recent experience with two elderly relatives in care homes. There would be nothing to stop people from spending more of their own money, of course, but if a figure like this were seen as a norm for publicly-operated care homes, standards would inevitably suffer. (It equates to less than £30 a night -- you can't even stay in a Travelodge for that).
Care charities are saying that Dilnot has given the UK a "once in a generation" chance to fix a serious problem in the social safety net. That's probably an exaggeration, but there's no doubt that his is the best idea anyone has come up with so far. Will the politicians be able to rise to the occasion? Stay tuned.
Lower than a snake's belly in a wagon rut
Just this week Slate published a piece suggesting that the departure of Glenn Beck from Fox News showed that there were depths beyond which even the Murdoch empire would not stoop.
Evidently the standards are a bit looser on this side of the Atlantic, as we are now hearing allegations that the News of the World (R.Murdoch, prop.) may have paid a private investigator to tap the phone of a teenage murder victim, Milly Dowler. It's even suggested that the investigator deleted messages from Milly's phone, which may have both given her parents false hope that she was still alive, and hampered the police investigation.
The editor of the NotW at the time (2002) was Rebekah Brooks, now CEO of News International UK. Ms Brooks is, of course, shocked, shocked by the allegations, and says it is "inconceivable" that she knew about the phone tapping at the time. Inconceivable, in this context, appears to mean "impossible for anyone to prove". An even more disingenuous line has come from News International's official spokesman, who has called the whole story a "worrying development". You can hardly use the term "development" to refer to something that happened almost a decade ago, so he can only mean that he's worried about the fact that they've been found out.
A couple of months ago, Rupert Murdoch dropped everything to come to London in an attempt to control the damage from an earlier set of phone tapping allegations. Time for another visit, Rupert.
Evidently the standards are a bit looser on this side of the Atlantic, as we are now hearing allegations that the News of the World (R.Murdoch, prop.) may have paid a private investigator to tap the phone of a teenage murder victim, Milly Dowler. It's even suggested that the investigator deleted messages from Milly's phone, which may have both given her parents false hope that she was still alive, and hampered the police investigation.
The editor of the NotW at the time (2002) was Rebekah Brooks, now CEO of News International UK. Ms Brooks is, of course, shocked, shocked by the allegations, and says it is "inconceivable" that she knew about the phone tapping at the time. Inconceivable, in this context, appears to mean "impossible for anyone to prove". An even more disingenuous line has come from News International's official spokesman, who has called the whole story a "worrying development". You can hardly use the term "development" to refer to something that happened almost a decade ago, so he can only mean that he's worried about the fact that they've been found out.
A couple of months ago, Rupert Murdoch dropped everything to come to London in an attempt to control the damage from an earlier set of phone tapping allegations. Time for another visit, Rupert.
Sunday, 3 July 2011
Freezing in the dark
Scientists are warning that the sun may be about to "go to sleep" for a few decades. The disappearance of sun spots during a so-called "Maunder minimum" will result in a reduction in the amount of solar energy reaching the earth. Will this cause a fall in temperatures? This story, from The Guardian, says no, but a report in the Sunday Times drawing on the same academic study draws a comparison with the last Maunder minimum, from 1645 to 1715, the so-called "Little Ice Age". What a treat that sounds: frost fairs on the Thames, sleighrides on the Baltic, strolls from Manhattan to Staten Island....and crop failures mass starvation in Scotland and Scandinavia, among other places. According to the story in the Sunday Times (behind the paywall), there's a 10 percent chance of a repeat.
Unsurprisingly, climate change lobbyists have been quick to argue that the expected impact of a Maunder minimum (a 0.5 degree temperature drop globally, a scarier 2 degrees in Northern Europe) will do no more than partially offset the confidently-predicted 1.5-4.5 degree temperature rise resulting from man-made climate change. However, we may be about to get some fresh insights into the reliability of those predictions, which are heavily dependent on detailed temperature data collated by the University of East Anglia (UEA).
UEA has steadfastly refused to allow outside experts sight of this data, and there have been reports that some of it has been destroyed, which has been grist to the mill of climate change sceptics (and agnostics such as myself): what are they hiding? Now a court has ruled that an Oxford academic must be granted access to the data. No doubt it will take years for anyone to prove or disprove the UEA's original findings, and in the meantime the Maunder minimum may well get fully cranked up (or down, if you prefer).
Still, if it does start to get colder, we can always fire up the heating, right? Maybe not. Another Sunday Times story today warns that coal plants in the UK supplying up to 15% of the nation's power may have to be decommissioned in 2015 to meet EU anti-pollution rules. Because of the high wholesale cost of gas lately, the plants have been running flat out, which rather perversely means they may have to be shut off sooner than expected, leading to a generation gap (sorry!) as replacement plants will not come onstream in time.
We can't rely on wind power either. A story in the Telegraph this week says the Government has been warned that 17 gas-fired plants will have to be built simply to provide backup for all the times that the big blades stop revolving due to a pesky lack of wind.
It's not just the UK, of course. A large proportion of Japan's nuclear capacity may be mothballed, and Germany has decided to close down all of its nuclear plants by 2022 -- this despite the fact that the number of deaths directly attributable to the meltdown at Fukushima remains remarkably stable, at zero. (Did you know that the Fukushima plant was built to an American design? Thinking back to last year's Gulf of Mexico oil spill, how do you suppose the US would have reacted if there had been an accident at a Japanese-designed nuke on American soil? Just asking.)
It's all enough to make a man glad he has two passports. Where better than Canada to sit out a mini Ice Age?
Unsurprisingly, climate change lobbyists have been quick to argue that the expected impact of a Maunder minimum (a 0.5 degree temperature drop globally, a scarier 2 degrees in Northern Europe) will do no more than partially offset the confidently-predicted 1.5-4.5 degree temperature rise resulting from man-made climate change. However, we may be about to get some fresh insights into the reliability of those predictions, which are heavily dependent on detailed temperature data collated by the University of East Anglia (UEA).
UEA has steadfastly refused to allow outside experts sight of this data, and there have been reports that some of it has been destroyed, which has been grist to the mill of climate change sceptics (and agnostics such as myself): what are they hiding? Now a court has ruled that an Oxford academic must be granted access to the data. No doubt it will take years for anyone to prove or disprove the UEA's original findings, and in the meantime the Maunder minimum may well get fully cranked up (or down, if you prefer).
Still, if it does start to get colder, we can always fire up the heating, right? Maybe not. Another Sunday Times story today warns that coal plants in the UK supplying up to 15% of the nation's power may have to be decommissioned in 2015 to meet EU anti-pollution rules. Because of the high wholesale cost of gas lately, the plants have been running flat out, which rather perversely means they may have to be shut off sooner than expected, leading to a generation gap (sorry!) as replacement plants will not come onstream in time.
We can't rely on wind power either. A story in the Telegraph this week says the Government has been warned that 17 gas-fired plants will have to be built simply to provide backup for all the times that the big blades stop revolving due to a pesky lack of wind.
It's not just the UK, of course. A large proportion of Japan's nuclear capacity may be mothballed, and Germany has decided to close down all of its nuclear plants by 2022 -- this despite the fact that the number of deaths directly attributable to the meltdown at Fukushima remains remarkably stable, at zero. (Did you know that the Fukushima plant was built to an American design? Thinking back to last year's Gulf of Mexico oil spill, how do you suppose the US would have reacted if there had been an accident at a Japanese-designed nuke on American soil? Just asking.)
It's all enough to make a man glad he has two passports. Where better than Canada to sit out a mini Ice Age?
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