Banking, Winning And Losing

Again; this is another trawl of the net to evade or avoid the major stories of the day which are commanding attention elsewhere.  The purpose of this is just to remind us all of what else is out there and continuing

Some of it is could be significant if it tells us what others are up to and thinking and what could be in store in the near future.

We know that there are many and various serious problems in the European Banking System which are going to take time and endless trouble to resolve.  It may be that the markets or another complex event series might do if for us, but in ways we do not want or like.

In Brussels however, and among its many supporters, and placemen, the real answer to all these troubles lies with the EU who would embrace and control the European banking network.  One way of persuading those who might not agree is to persuade them that they will be among the winners.

See the article below by Dirk Schoenmaker and Arjen Siegmann in Vox, not a long piece, but again the Conclusion is quoted.

http://www.voxeu.org/article/winners-european-banking-union

Conclusion

A truly integrated European banking system with supervision and resolution at the European level fosters the stability of the Economic and Monetary Union. Our analysis suggests that the non-Eurozone countries can also benefit from the stability of the banking union.

It is interesting to note that the main non-Eurozone countries that do not wish to join the banking union for political reasons (i.e. the UK and Sweden) would be the largest beneficiaries from the banking union.

Not joining is very costly on the budgetary front. It would be very demanding for the Swedish government to bear the full cost of a possible recapitalisation of Nordea outside the banking union, while only 20% of the benefits accrue to Sweden.

Similarly, the recapitalisation of some of the large UK banks during the great financial crisis put a severe strain on the UK government budget. The UK and Sweden thus preserve the expensive right to do potential rescues of their banks on their own. Political calculus dominates economic calculus.

Within the Eurozone, Spain (with two large banks) and the Netherlands (with three large banks) are the winners of the banking union. To reap these benefits, the second stage of resolution needs to be completed as well. So far, heads of state have focused on the first stage of supervision.

Unquote.

They make it sound so easy, all we need is “integration”, haven’t we heard that one before?

Should We Leave It In The Ground?

Leaving aside all the current big stories in the media and looking at the longer term, time is passing by and with it our chances of dealing with what needs to be dealt with.  Phil Mullan in the web site “spiked-online” dot com has a substantial two part piece about “Shale, The IT Bubble of the 21^st Century”.

http://www.spiked-online.com/site/article/13352/

In short he argues that the radical change in the economic situation arising from the exploitation of shale oil and gas in the USA may result in “The great economic evasion”, that is that a wide range of fundamental problems may not be dealt with and the consequences only deferred.

It is a long read but an interesting one.  It could apply to the UK as well in the future and we should be aware, because North Sea Oil did the same to us in the recent past, as we know to our cost. 

His concluding paragraphs are as follows:

Quote:

Given the four-decade track record of the elite in the US in evading addressing the seriousness of its economic challenge, the danger is that the shale energy boom becomes America’s version of the ‘resource curse’.

The belief that things are ‘on the mend’ takes the pressure off addressing the deeper economic challenges. Ironically, the fact that the US is genuinely experiencing an energy renaissance, which could continue for many years, might be a bigger problem than if it were a mirage that soon evaporates.

Just as Britain’s North Sea oil boom in the 1970s and 80s disguised how far the underlying British economy had sunk; so US shale energy could hide from view the pressing need to restructure radically America’s productive base.

Maybe partly influenced by his roots, South African Michael Edwardes, then the chief executive and chairman of Britain’s ailing motor giant, British Leyland, presciently but controversially spoke to the CBI Conference in 1980 about the dangers from Britain’s own resource boom:

‘If the [government] cabinet do not have the wit and imagination to reconcile our industrial needs with the fact of North Sea oil, they would do better to leave the bloody stuff in the ground.’

He was ignored, of course. North Sea oil came and went, and Britain continued its own economic decline.

The American elite could do with remembering that lesson and, instead of hoping for cheap energy to perform miracles on its own, develop the ‘wit and imagination’ to initiate the long overdue restructuring, renewal and revitalisation of the US economy.

Unquote

Looking down the centuries there are more than enough examples of states who became wealthy and then failed to put in place economic and social arrangements that would outlast its supply. 

Once more it could be déjà vu all over again.

The Leaders And The Led

Looking at the stories on the day, all is confusion, error and uncertainty.  One of the features of all the disruptions and stresses around the world are about where are we being led, who should lead and how. 

Our democracies seem to have lost the ability to choose leaders who are honest and know what they are about and the non-democracies, which do not offer choice seem to be no better governed, some are worse and many others rank bad.

The short item below was sent by a member of the family and sets out how easy it is to be saddled with a bad leader in whatever sphere you can think of:

http://www.kakabadse.com/blog/how-to-spot-a-destructive-leader?goback=%2Egde_4672549_member_216871913

By coincidence on the same day Zero Hedge had a long and discursive item on the subject of inequalities of income and wealth in the modern world.  This, it would appear is where our leaders have taken us and continue to do so:

http://www.zerohedge.com/contributed/2013-02-23/economic-leaders-pay-lip-service-decreasing-inequality-while-pushing-policies

Another longish item is from Sunday’s Rowans Blog again on his major theme derived from long personal experience.  In this case the closeness of politicians, bankers and the others has produced an exploitative and determined elite of leaders who are little concerned about the extensive damage they have done and are doing:

http://rowans-blog.blogspot.co.uk/2013/02/the-greedy-crooked-banksters-who-have.html

As an example of all this, today had a short post from The Enlightened Economist on the grip Comcast has on communications in the USA that has had the effect of putting it well down the table of comparisons about the capability and the cost of using the internet and related facilities.

http://www.enlightenmenteconomics.com/blog/index.php/2013/02/the-unknown-robber-barons/

Perhaps the ancient system of choosing the elders or leaders by the simple process of casting lots wasn’t such a bad idea.

The National Lottery could turn the selection of members of the government into an extra feature.  Say, tickets with a premium price of a fiver each?

As things are it could not be much worse.

Back To 1978

The downgrade of UK debt by Moody’s has been on the cards for a while now, so it is not a surprise to many.  How far the markets will twitch we shall see.  If they have been looking at the figures it may already have been priced in.  But we will see some action as the new game plays develop.

The media is saying that the last time such a downgrade happened was 1978 which is a year of many memories.  It was 1978 when Ipswich won the FA Cup at Wembley, beating Arsenal 1-0, the winning goal in a closely contested game of skill being scored by Roger Osborne.

George Osborne, our present Chancellor would have been coming up to his seventh birthday and may not have had a keen interest in the result.  I was there behind the goal but was quiet as it was the Arsenal spectators end.  The ticket had been passed onto me by someone who couldn’t make it. 

The year was one of three Popes, one, John Paul I, dying after only 33 days in the job.  This year will be one of two Popes at least.  The Vatican finances are still open to question.  In the USA Jimmy Carter was President during a time of inflation, recession and an energy crisis, in 1979 he bailed out the Chrysler Corporation.

Princess Margaret decided to have a divorce so the marital arrangements of the Royal Family were hitting the headlines.  Because it was an age before our instant communication facilities quite what was happening on her trip to Mustique was never clear, which perhaps was just as well.

At the BBC the state broadcaster dictated who were to be the celebrities and pop stars of the day, along with ITV.  Jimmy Savile was the Corporations figure head for both popular entertainment and as a guide to modern manners.  His word was almost law.

The Liberal-Labour Coalition of sorts which had lasted since 1974 was under strain.  The former Liberal Party leader, Jeremy Thorpe, was mired in court proceedings over unwise relationships and criminal allegations.  The new Liberal leader, David Steel had given notice that the Coalition would end at the election due in 1979.

The Labour Prime Minister, Jim Callaghan, who had brought in the IMF was trying to tell us that the old days of assuming the money would always be there had gone.  To deal with the effects of inflation, recession and the need to pay off the International Monetary Fund loans stringent measures were necessary.

But the Trade Unions were not having anything to do with an incomes policy nor with restraint in public spending.  A good deal of pain was felt in local government as the expansion and growth in spending that had occurred in the reorganisation of 1973 to 1974 had to be cut back. 

London, whose reorganisation had been earlier during the 1960’s had also become a big spending entity.  The Left Wing Militants in London and the industrial areas were firmly against any retrenchment and demanding more spending from a government that was finding it increasingly difficult to borrow.

Their models for the future were the communist governments in the Soviet Union although East Germany was taken as a shining example of how affairs should be managed for the benefit of all.  The communists did not need to bribe our militants.  If Moscow had created associations such as Patrons and Friends of the Lubyanka and The Gulags, the British left wing militants would have rushed to subscribe.

Amongst some of these were groups for whom extremism was good and terrorism often better.  Along with these hard line elements of one sort were others, strangely often allied whose individualism and belief in personal free for alls were regardless of any traditional ideas of morality or indeed the related risks.

The Conservative Opposition were still carrying a lot of the baggage and many of the people who had messed up with Edward Heath and others.  There were divided in a number of ways and now led by someone, Margaret Thatcher, who was regarded as not very good in terms of media relations or sorting out coherent policies.

Despite being as much to blame as the Coalition for the severe problems of 1978 they were managing to keep their vote and make some progress.  The 1979 election was one to be lost rather than one and The Winter of Discontent of 1978 into 1979 did for the Labour Party because of its divisions and loss of support amongst its traditional voters.

But there was one faint hope for whoever won the next election.  It was that North Sea oil and gas might just help to turn the tide and buy a few decades of prosperity.  The new and local source of energy would enable not a rebuilding but a period of real economic change and a move away from the past.

How different it all seems, 1978 from 2013, or perhaps how much the same.

Eastleigh By Election Working Up Steam

Among the flurry of news today, the business of the Eastleigh By Election to elect a Member of Parliament in place of Chris Huhne next Thursday has been put on the back burner.  If there are other important matters in train for the next few days there is a risk we might forget about it altogether.

Whether the By Election will be a major event, or a minor event, or just something of a shambles is not clear.  The signs are not good.  There are fourteen candidates, none a clear favourite and anything could happen.

If it is similar to other such by elections we could have a reduced turn out of voters, who are unbalanced by age and a candidate elected without either a convincing share of the vote or any coherent policy.  That is if one of the major party candidates succeeds.

Around some of the media and blogosphere there is a hankering for a real upset, in that one of the “other” eleven beyond the Liberal Democrat, Labour or Conservatives will command enough votes to overturn all the assumptions that have been made.

The obvious one is UKIP as either a real shift in patterns or a protest vote.  But there is one that caught the eye, Colin Bex of the Wessex Regionalist Party.  Their web site is below:

http://wessexregionalists.blogspot.co.uk/

If this one could put together enough votes to either disrupt the other parties or to make a strong point it could be interesting.  If they were actually to sneak enough votes to scrape a win where the other votes were scattered it would at least make a change.

Eastleigh once had a major railway works where some of the old Southern Railways, later Region’s finest steam locomotives were constructed.  Perhaps a success for the Regionalists might work up a head of steam for fundamental reforms.

Is it time to blow the whistle on the major parties?

The Jury Is Out

The failure of the jury at Southwark to come to a decision in the case of Vicky Price is causing some comment around the media.  What is interesting is what is not being said.  Also, interesting in terms of the composition of the jury is who wasn’t there or available for service.

For some time now the business of getting a jury together has become more complicated.  One reason is that so many people who might serve manage to avoid the job.  For anyone in a demanding job taking unpredictable time out can be costly in many ways.

The impression is that those who do serve are those unable to get out of it or for whom it is a better way of spending the time.  These are not the best motives for doing anything let alone sitting in judgement on your fellow men or women.

The quirkiness and unpredictability of juries down the ages is well known, as it their proneness to be impressed less by the evidence or the law than the personalities and the drama involved in the whole business.

The question of whether Hawley Harvey Crippen was innocent or not is a case that continues to rumble on.  It was a major media event at the time and the key to his conviction was the evidence of the later Sir, Bernard Spilsbury (see Wikipedia). 

This pathologist and forensic expert came to dominate many cases down the years and he had a formidable reputation.  This is now increasingly questioned.  In the Crippen case for example it is argued that the remains found in the property were not those of his wife, if female and may even have been male.

But if you were up as a defendant and against Spilsbury you were in deep trouble however good your advocates were.  Because of his reputation, certainty of manner and personal charisma, juries were inclined to believe whatever he said.  If defending counsel questioned his methodology it was almost heresy.

There have been many cases down the years where we now seriously doubt the verdicts, some in cases where the accused hanged.  Again, there were times when the defending counsel questioned police or associated expert evidence. 

This again was a form of heresy and too many judges took both expert and police evidence entirely on trust. In more recent decades it is notorious how difficult it has become to secure a conviction against major celebrities who errors of conduct are palpable but seen by a number of jurors to be acceptable despite evidence and the law.

The recent BBC shambles over Savile and the alleged long history of offences is cited as an example of how certain famous people can avoid action or charges because there is serious doubt whether a jury would convict such a prominent personality.

We do not know what happened in the jury room in the Pryce case.  But there is a basic problem and it has been for a long time, in that if there are jurors with fixed beliefs about human conduct then these will take priority over any ideas about what are facts, what is reasonable and what is evidence.

What astonishes me is that modern technology is now so well advanced that if a trial takes place that is inconclusive it is not difficult to have full transcripts of the trial available quickly.  In that case you may not need a second full court trial.

What might be done is to summon a new jury and let them have all the documentation plus basic guidance in terms of the summing up etc.  Also to hand might be independent advice on any questions arising.

An alternative might be to have such a procedure, but with a group of expert assessors to see if they can arrive at a decision consistent with the evidence.  Again this would be quicker and if properly conducted could serve to arrive at a quick answer and at far less cost.

Roaming In The Gloaming

This morning it was assumed that there was a subject on which to post and the link was tucked away ready to be put into text.  The item was to be a complaint that important matters were left out of consideration by the main media whilst other things of parallel importance were flogged to the bitter end.

But petrol was needed for the car first.  At the garage amongst the newspapers it was evident that the media were discussing this same subject.  A near miss, but it can happen.  The scratching about for another subject found that the one preferred had already been well covered as well.

Then it occurred to me that the subject of The Romanian Invasion might be good for a few words, but there was a problem.  The Deputy Prime Minister, Nick Clegg (rhymes with “beg”) announced that the government estimates could not be published because they were essentially “Guesstimates”.

So what’s new, I thought, wondering what that meant.  It may mean another horror story, or something that might just go away or wait for a busy news day.  The other problem with this is that on Saturday we paid money to be in a large room being sung at for two hours by two Romanian opera singers in the principal roles and others. 

They were very good indeed and fully deserved the rapt applause from a full house where not a seat was to spare.  However, on the way to the station it did not stop me side stepping the Romanian sellers of the “Big Issue”, the magazine for the unemployed, and failing to buy a copy.  There may just be a touch of the old double standards at work here.

The matter of the potential for numbers to come to the UK from Romania and Bulgaria is one that is causing debate.  But it would not the first time that Bulgarians were a key political issue.  In the General Election of 1880, William Gladstone in his Midlothian Campaign (see Wikipedia) made them central to his appeals to the electorate.

Then Bulgaria was a province of The Ottoman Empire, ruled over by Turks who did not take kindly to opposition and who took violent action to control them.  The Conservative Government supported the Ottoman’s as a buffer against Russia.  So to appeal for support for fellow Christians was a Liberal vote winner.

Given that at the time there was economic and financial stress, British agriculture was going into steady decline as a result of Liberal Free Trade, impoverishing the countryside and all the Imperial activity, South Africa, Afghanistan, Egypt and a few other places, the Bulgarian Atrocities was something to deflect attention.

In the photograph in the Wikipedia article, Gladstone is shown with members of the high elite of the time, The Rosebery’s, with inevitably one of the leading Rothschild’s in attendance, backing both sides as ever.  Not a lot really changes.

What may happen with the Bulgarians and Romanians is still an open question.  One man who could certainly advise the government is Boris Johnson, Mayor of London and the great grandson of Ali Kemal Bey (see Wikipedia), a Turk prominent in the affairs of the Ottoman Empire a few years later.

This one, like the opera, will run and run.