Wednesday 26 June 2013

Flapping Wings And Feeding Time

Taking a walk today through the local tourist attraction we had three black swans chasing us hoping for food.  Was this an omen?  Those who follow economic and financial crashes in detail will have heard the phrase "Black Swan Event".  Essentially, it means that something that was not supposed to exist or could not happen would appear.
It came from the certainty at one time in Europe that all swans were white and could not be black.  A visit to Australia proved them wrong, but then if you go there with one notion or another they will be all too happy to put you right in the mistakes you make.  The idea was taken by Nassim Nicholas Taleb for his work on financial crashes.

Today our Chancellor of the Exchequer, Jeffrey according to President Obama, formerly George, formerly Gideon, Osborne has been telling us of what has to be done to put the national finances to rights.  After three years of severe austerity it seems that we have spent more and owe more than ever before.

So the delicate grinding and polishing of the last three years has not done the job and given what the future may hold it is out with the adze and plane to hack and trim away.  Whether the axe may have to be used, or the sledgehammer will have to be seen. 

The basic problem is that for thirty or more years now since North Sea Oil arrived we have made so many promises pledges and political deals that we can no longer pay the bills from our own revenues and have been borrowing large scale.  Not just that but their nature meant that they were mostly compound in effect. 

Our government and governors forgot the difference between simple interest and compound interest with predictable consequences.  In the old Elementary Schools this was one of the "basics" of arithmetic taught by teachers with a moral lesson on the need to avoid debt and to save or spend only what you could be certain you could afford.

We are not alone.  In Zero Hedge today there was an item about the predicament of President O'Blimey, whose Irish Ancestry is distantly connected to that of Osborne above.  They both had very distant relatives who sailed on the "Titanic".  It says that each and every person in the USA is now in hock for over $52,000 and rising because of interest liabilities.

The President is more than anxious to do a trade deal with the EU, another entity in serious money trouble and for the UK to be part of it.  The fond hope seems to be that if we more or less pool our debts and trade with each other then somehow or another all our troubles will vanish.  The most serious and insightful comment on this prospect is possibly the nursery rhyme about the Owl and The Pussycat.

What worries me is why the black swans were hungry.  It may be because all the recent run off from the unexpected wet weather has sluiced so much fertiliser into the stream serving their lake that it is now covered with algae and their natural food has gone missing.

How many hungry black swans are there out there now wanting food?

1 comment:

  1. Everything you write recently is so very true, particularly for people with children and grandchildren, but please stay hopeful. I would recommend re-reading Snodgrass - April Inventory (not appropriate but cheering). Or play Cowards' original Bad Times are Just Around the Corner (in fact they are here).