Seen in the 12th floor men’s room at the New York Fed, right above the urinals, the following sign:

Report All Leaks to

extension 5619

I was sorely tempted to report a recent leak to extension 5619. Somehow I refrained (visions of my mother, my wife and my daughter all shaking their heads). Pity.

This blog is a meditation on the old truth stated by Lord Acton: “All power tends to corrupt; absolute power corrupts absolutely.”

Governments that have been in power for more than about eight years begin to smell - rather more slowly than fish left on the counter, but with equal certainty. Heads of government (or heads of state where this office is not just an empty symbolic box) embody this political putrification process, regardless of how bright and shining the light in their eyes when office was first gained.

In the UK there are many examples, even in recent times, of what goes wrong when an incumbent prime minister or incumbent party holds office/power for the equivalent of two full terms of office or more. Margaret Thatcher went funny - some would say bonkers. She developed delusions of grandeur and displayed an increasingly imperious personal manner - to the point of talking about herself in the third person (”we have become a grandmother”). Her growing paranoia about all things German became a threat to the UK’s standing in Europe and in the world.

Tony Blair ’s fresh-faced idealism and enthusiasm had decayed into the cynical routine use of deceit by the time account had to be given of the reasons for invading Iraq a second time, and during the Hutton Inquiry into the death of Dr. David Kelly in 2003.  The assault on civil liberties, under the fig-leaf of anti-terrorism, that started on his watch continues under the leadership of Prime Minister Brown today. (more…)

Iceland is to resume commercial whaling. Fisheries Minister Einar Kristinn Guðfinnsson has issued an order allowing 40 minke whales to be hunted.

Mr. Gunnar Bergmann Jonsson, head of an Icelandic minke whaling association, sees no problem. He argued that whaling was important to the Icelandic fishing community, which had been hit by quota cuts for cod and capelin. He also said: “There are around 50,000 whales in the waters surrounding Iceland now, and I don’t believe that the fishing of 40 will make any difference for the stock.”

I like that argument. Let’s modulate on this theme: “There are about 300,000 people in Iceland now, and I don’t believe the culling of 40 of them will make any difference for the stock”. (more…)

I attach no intrinsic value to national sovereignty or to any group rights whatsoever. Whatever significance or value is attributed to national rights (and group rights, minority rights, majority rights, gender rights, linguistic group rights, religious rights, ethnic rights or whatever rights) are derived significance or value - significance or value derived from human rights, that is, rights of individuals.

Given that starting point, it will come as no surprise that I support immediate outside intervention in the human tragedy that is unfolding in Myanmar/Burma. The deeply evil military regime that has ruled and destroyed that country for the past 46 years must be overthrown to safeguard the fundamental and inalienable rights of its people to life, liberty and the pursuit of happiness. This wicked junta now intends to prolong its miserable existence by preventing and subverting the efficient distribution of aid to the countless victims of the cyclone that struck the country on May 2. (more…)

Yesterday, Saturday 11th May 2008, a 16-year-old boy, Jimmy Mizen, was murdered in a bakery shop in Lee, Lewisham, south-east London. He had turned 16 the day before, and this was his first day at work. I did not know him or his family, but this killing feels personal, because it took place within a seven minute walk from my home and less than 100 yards from Lee Railway Station, which my wife and I use every day to get into and back from work. I have never been inside that bakery shop, but my seventeen year old son knows it well. His school is just around the corner and according to him the people there are nice and make great sandwiches. (more…)

The Olympic games have become a joke. A bad joke. It is time to put the event out of its misery. There was about a 1500 year gap between the last of the Olympic Games in Ancient Greece, and the first of the Games in the new Olympic era. Let’s have another 1500 years without Olympics. Then we can see again. There are three arguments that support this recommendation. (more…)

The failures of the western financial models

The worst outcome of the current financial crisis would be a return to the status quo ante that produced the pathologies, anomalies and contradictions that are its root causes.

I believe that the Western model of financial capitalism - a convex combination of relationships-based financial capitalism and transactions-based financial capitalism - has, in its most recent manifestations (those developed since the great liberalisations of the 1980s), managed to enhance the worst features of these two ideal-types and to suppress the best. This period has been characterised by a steady increase in the relative dominance of the transactions-based financial capitalism model in the overall financial arrangements of the world, most spectacularly in the US, the UK, and such smaller countries like New Zealand and Iceland, somewhat less in most of continental Europe and elsewhere. (more…)

Mr Greenspan’s apologia pro vita sua in the Financial Times of Monday, April 7 2008 fails to convince.

1. The Greenspan Fed (August 1987 - January 2006) did indeed contribute, through excessively lax monetary policy, to the US housing boom that has now turned to bust.
2. The Greenspan-Bernanke put is real. It is an example of an inappropriate monetary policy response to a stock market decline.
3. The Greenspan Fed focused erroneously on core inflation, rather than using all available brain cells to predict underlying headline inflation in the medium term.
4. The Greenspan Fed failed to appreciate the downside of the rapid securitisation during the first half of this decade and acted exclusively as a cheerleader for its undoubted virtues.
5. The Greenspan Fed displayed a naive faith in the self-regulating and self-policing properties of financial markets and private financial institutions.
6. The Greenspan Fed, by enabling the rescue of Long Term Capital Management in 1998, acted as a moral hazard incubator.
7. The failure of the Greenspan Fed to press, before or after LTCM, for a special insolvency resolution regime with prompt corrective action features for all highly leveraged private financial institutions that were likely to be deemed too big and too systemically important to fail, demonstrates either bad judgement or regulatory capture.
8. During his years as Chairman of the Federal Reserve Board, Mr. Greenspan’s statements reflected a partial (in every sense of the world) understanding of how free competitive markets based on private ownership work. This partial understanding guided his actions as monetary policy maker and financial regulator. Mr Greenspan’s theories have been comprehensively refuted by the financial crises of 1997/98 and 2007/08. (more…)

This blog is a comment on Martin Wolf’s Column in the Financial Times of Friday April 4, 2008, “Four falsehoods on immigration”.

Martin and I have crossed swords before on the issue of immigration. Our disagreement is fundamental and based on different ethical premises. Martin believes that existing residents of a country have a right to control who enters their country. The House of Lords select Committee shares this view, as is clear from their Report, The Economic Impact of Immigration, which asserts that the criterion to be used to assess the costs and benefits of immigration for the UK is the impact on the existing resident population.

I reject that view. The wellbeing of the existing resident population is no more, and no less, relevant than the wellbeing of any potential immigrant to the UK, wherever in the world he or she may be. I recognise private property rights. My home is my castle and I can deny entry into it to anybody at any time. I don’t recognise national property rights. A country is not like a private home. A country is an open club.

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At last a local outbreak of common sense. The Advisory Council on the Misuse of Drugs, an independent expert body established under the Misuse of Drugs Act 1971 that advises government on drug related issues in the UK, has come out against UK government proposals to reverse the 2004 downgrading of cannabis from a class B substance to a class C substance.

I don’t know what irks me more about this government - the puritanical, kill-joy zeal with which it tries to hunt down and eradicate every vice, even those that do not impose material harm on third parties, or its inability/unwillingness to get its brain in gear once its emotions are engaged/the smell of elections is in the air. (more…)