30 January 2009

"British jobs for British workers" - wrong in principle, unenforceable in practice... but we're gonna see a lot more of it

Looks like things are getting ugly at UK oil refineries... wildcat strikes breaking out everywhere.

That's all we need.... a repeat of 2000's fuel protest.

The first strike broke out at Lindsey refinery in Lincolnshire when Total gave a construction contract to an Italian firm, which brought in its own workers to do the job.

This outraged local construction workers suffering from rising unemployment, who have brought up a promise made repeatedly by Gordon Brown & co. in party conference speeches: "British jobs for British workers." Seeing no evidence of such a policy being put into practice, they've downed tools.

But of course, in a single EU labour market, "British jobs for British workers" is pure bullshit anyway, as the government well knows. Total is completely within its rights to employ Italians, Poles, Belgians... anyone in the EU (except Bulgarians and Romanians, who are not allowed free movement of labour within the EU, despite having been members for two years. Many of the other new joiners of 2004 are also still subject to labour movement restrictions in certain EU countries).

So, unless we leave the EU, there's no way of restricting other EU nationals from coming to work here. That's what a "single labour market" means.

I'd also argue that "jobs for Brits" is wrong in principle. The logical extension of that policy is that we should send all foreign workers home (and they should send our boys and girls home as a quid pro quo). There is a party in the UK that supports that policy: it's called the BNP.

Of course, rising unemployment is a bloody disaster for many workers and families. But the nationality of the person that's unemployed doesn't affect how much of a disaster it is. What we need is an economic system that generates enough jobs for all EU citizens (indeed, all global citizens). Not petty small-minded nationalism.

But I guess, if New Labour wants to base its electoral appeal on small-minded nationalism, it shouldn't be surprised when the whole thing turns round and bites it in the ass.

Looking forward to fuel shortages soon...

29 January 2009

"Bipartisan"... ho ho ho.

In the absence of Hunter S Thompson (oh how Hunter would have enjoyed the last US election!) it's up to me to begin posts with "ho ho ho" (although I'm unlikely to start using his other catchphrase, "bubba", anytime soon.) The Obama stimulus plan passed through the US House of Representatives with - get this - ZERO Republican votes. So much for trying to cultivate a "bipartisan approach" to the economic crisis.

This could actually help the Obama administration in the medium term, though. If the plan gets through the Senate (where the Democrat majority is much thinner than the house) it will show that the Democrats don't need any Republican support to get legislation through. And that's great, because it means Obama can drop the "bipartisan" approach and start to kick some ass.

The Senate Republicans could theoretically block legislation by filibuster, but that tactic will only work if the mid-term elections in 2010 deliver some kind of Republican boost, or at least no change to the Senate's composition. That seems unlikely; the seats coming up for re-election in 2010 were last contested in 2004, George W Bush's electoral high-point, and it seems most unlikely that there wouldn't be at least a couple of Democrat gains - which is all they'd need for a 60-seat 'supermajority'.

But it's amusing - and not really unexpected - to see how quickly the "bipartisan" spirit of the post-inauguration euphoria broke down into a bitter political fight.

Which is fine. Because this is one fight the Democrats can win. Obama's spat with Rush Limbaugh is reassuring because it's an early sign he may be The Real Deal and not just another bullshitter. His catchphrase, to quote Wendy Alexander, should be: bring 'em on.

26 January 2009

Another Paul Mason classic... and the schizophrenia of New Labour exposed

Although this blog is in danger of turning into the Paul Mason Appreciation Society, I was so floored by the genius of his latest post that I had to feature him again... for the second time in a week.

I'd completely forgotten Tony Blair's speech to the ippr back in 2005 entitled Risk and the State where he argued that the FSA was "seen as hugely inhibiting of efficient business". This was classic 3rd term Blair moving way beyond the centre-right approach of his first term, and even the mainstream Toryism of his second, into flat-out deregulationist libertarian maniac territory. At the time Blair was seriously suggesting that if the FSA's funding and role had been reduced, UK capitalism would have been healthier.

Pretty much no-one would say that now (although maybe Blair is out there somewhere still believing in free markets and neo-liberalism; thankfully his contributions to the debate in the current crisis have been non-existent. We've had to rely on senile dodderers like Denis Healey to talk bollocks instead.) But Mason is absolutely right that

the whole current episode has the air of that famous moment in Nineteen Eighty Four where the enemy suddenly switches from Eastasia to Eurasia, without anybody daring to comment.

The FSA's new head Adair Turner (probably one of the best economic thinkers in the broad centre of the political spectrum) puts it admirably clearly in a recent lecture on systemic risk. Almost no-one was able to realise that the huge explosion of credit and the asset bubble, the exponential growth in complex financial instruments were all pointing towards a crash.

To be fair, a few people were saying it. Larry Elliot and Dan Atkinson in Fantasy Island made the case that the boom was unsustainable very articulately, but were widely derided as Jeremiahs. UCLA economic historian Robert Brenner predicted systemic collapse in The Economics of Global Turbulence, but again was dismissed as a maverick Marxist.

But nope... most commentators across the political spectrum were in the boat with Tony Blair, rowing towards disaster.

And Gordon Brown was definitely in that boat. Which, I think, helps explain why Labour's poll bounce is evaporating, and he's facing a big defeat in the 2010 election unless he can undergo a convincing ideological reconstruction from first principles - back to something much closer to 'old Labour' than new Labour in many ways - and on top of that, inspire confidence in the electorate that his policies can beat the recession - or at least make it a lot shallower. So far, people are confused, afraid and angry. There's no other real explanation for why the Tories are doing well in the polls - they sure as hell haven't come up with any particularly good ideas. But things are getting so bad out there that people are saying "why not give the other guy a try".

But as Paul Mason says, given that Brown said the UK banking industry was entering a "golden age" in his 2007 Mansion House speech, just weeks before Northern Rock's collapse, one can't blame the electorate for giving up on him unless he makes much clearer noises to the effect that everything he has been saying since 1994 is complete and utter bollocks. Bye bye New Labour, hello kicking some serious ass. The election can still be won - I'm sure of that. But I wonder if the current Labour leadership has the guts to really go for it. At the moment they seem to be simultaneously holding to the old New Labour shibboleths (free markets work best, Britain is an economic success story, etc.) and also kicking all the institutions they were praising during the boom years (the banks, hedge funds, etc.) It's a schizophrenic approach and it looks bloody stupid. More coherence, please - or the voters will kick your ass.

25 January 2009

The BBC is not 'impartial', but inhuman

The furore over the BBC's decision not to screen the Disaster Emergency Committee's appeal for humanitarian aid in Gaza is deepening.

The strangest thing about this one is the argument used by the BBC, which seems to me to be pretty flawed. Director-General Mark Thompson says that the BBC would risk reducing public confidence in its impartial coverage of the conflict.

But surely not broadcasting the appeal is as 'partial' a stance as broadcasting it. Not broadcasting it implies that somehow families of the 1,300 casualties - and the many thousands wounded - in Gaza are somehow not worthy of our help. Which would imply that they brought it on themselves - that they are, somehow, the culprits in this war, rather than the victims. (Remember, one hundred times as many Palestinians were killed than Israelis in the conflict).

If this was an appeal for arms for Hamas, I'd understand the BBC's decision. But it's not. It's an appeal by charities for humanitarian aid. In that context, the cause of the humanitarian disaster is quite irrelevant.

By not broadcasting this appeal, the BBC has shown that it is, not impartial, but inhuman - blind to the suffering of thousands. And that's disgusting, and unacceptable, for a public service organisation.

In the end, I can't help thinking that this whole stance is based on a fear of offending the cheap Nazi Daily Mail and Express reading contigent. The same people who complained about the Ross-Brand broadcast last year, despite not having heard the programme. The same kneejerk maniacs who are never far from pulling the strings of public opinion in this wretched country.

F*** the lot of them.

And big props to Channel 4, who are going to screen the appeal. (If I can work out how to use Channel 4's download service I'll watch Jon Snow's Dispatches documentary on Gaza, broadcast last Thursday, which I sadly missed first time round. Also respect to ITV and Five, who are nowhere near as right-on as C4 but have nonetheless agreed to air the appeal - I suppose this means Mark Thompson thinks that ITV, Five and C4's news coverage is biased rubbish? If so, he should say so.

(Sky, of course, "haven't decided" whether to air the appeal yet - but they'll probably turn it down, as they're owned by a dangerous fascist.)

24 January 2009

Depression (economic and political), lame rhetoric, and the National Government of 2010

I'm enjoying this morning's Telegraph headline: Britain on the brink of an economic depression, say experts.

So in six months we've gone from slowdown to recession to depression. What's next - Zimbabwe UK and the barter economy? Jesus Christ.

Actually Jesus Christ could be next... although it's not normally Gordon's style to wear his religion on his sleeve. An appeal to some cheesy version of Christianity to get us through the slump would be more in the Tony Blair bag of tricks. (Note that Tony, after helping lead the country over a cliff, managed to get out just before this all started, with Northern Rock. Coincidence? Probably).

But even some evangelical waffle would be a damn sight better than the crap that Gordon has been churning out in recent interviews. Again in the Telegraph, Iain Martin's writeup of the Prime Minister's Today interview with Evan Davis is an amusing read, even if a teeny bit biased.

The key paragraph is:

"Because [Gordon] is psychologically incapable of a "hands up moment" he cannot say: look, I have regrets, I made some mistakes, I might have let elements of the boom run too far for too long, but I'm determined to deal with a real national emergency. It's my responsibility."

He's always been like this. I remember Andrew Dilnot, then head of the Institute for Fiscal Studies, trying to get him to admit that the ratio of tax to GDP had increased over Labour's first term, in a Treasury Select Committee session. Dilnot had the ONS figures in his hand, and Brown still wouldn't admit it.

Occasionally, this stubborn refusal to admit the facts can leave you looking like a strong politician - if the facts turn out your way after all. For example, a few years ago the balance of independent economic forecasters consistently understated the UK growth rate, whereas the Treasury's forecasts were much closer to being on the money. Brown held out, and was vindicated.

But more often, this kind of obstinacy just leaves the protagonist looking like an imbecile. And that's the danger with Brown - and Darling - unless they change tack pretty damn soon. They need a complete change in approach - the objective should not be to try to ride these little difficulties with the economic system out so that we can resume business as usual, but to effect a complete change in the UK's economic system. We need nothing less than a revolution in economic policy. Instead, after the bailout in October which was handled reasonably well, Brown and Darling assumed that everything would be OK. And so, of course, the present crisis has engulfed them because they thought they'd already done all they had to do.

"Son of Bailout" announced this week seems to have reassured the markets not at all, because people have finally woken up to the fact that the potential bad debts of the three main UK banks are so large that they could completely overwhelm the public finances. That's why we've got people going round saying that the UK might need to go to the IMF.

At the very least, it would be good if Government ministers could show a bit more fight and nail the opposition, whose response to the crisis is even more incoherent, if anything. Cameron and Osborne have opposed the bailout on the face of it, but have NO ideas of their own other than cutting public spending - which in the short run, would make the slump worse. They are 50% Herbert Hoover and 50% Jeffrey Archer. Complete paper tigers. Only Vince Cable for the Lib Dems has shown any real understanding of the situation.

And that might provide a way forward for Brown... a 1931-style national government, with the Lib Dems, plus anybody he can persuade over from the Tories (Ken Clarke?) He does believe in the 'broad tent' after all. A pro-Euro 'broad centre' coalition, formed later this year, going to the country under some kind of combined banner in summer 2010, fighting a rump Tory and Labour party... with support from the business community. They'd probably win a landslide by labelling anyone who didn't agree with them as an extremist, and Brown would be kept on as a Ramsay McDonald style figurehead, with Cable or Clarke at Number 11.

If the government's poll rating deteriorates through the year (and unless they start changing the rhetoric and hitting the Tories hard, I can't see any reason for it not to), a National Goverment begins to look more and more of a possibility. A state of emergency might be declared just to make it look a bit more exciting. Let's see.

21 January 2009

If we really are broke, avoid the IMF at all costs (literally!)

As promised, I'm picking up on one of the points which Paul Mason raised yesterday: that Ireland may be on the verge of calling in the IMF for emergency loan funding because the economic situation there has got so bad. The exact quote is from a Forbes article - the crucial paragraph reads:

Prime Minister Brian Cowen, while at an investment conference in Tokyo on Wednesday, was reported to have endorsed the view of an Irish union leader that the parlous state of Ireland's public finances could lead to the IMF ordering mass dismissals of public sector workers. Dan Murphy, the general secretary of the Public Service Executive Union, had previously told his branch members that the Fund could intervene if public spending was not curtailed, according to the Irish Times.

In the interests of balance, I should point out that most of the rest of the Forbes article is devoted to making the case that the Irish situation isn't that bad - yet. But the main point is: does the IMF really think that mass dismissals of public sector employees (or alternatively huge wage cuts) is the way forward for economic policy in a slump? That would depress economic activity still further, increasing the risk of a vicious deflationary spiral, with mass unemployment.

Keynesian economic theory suggests precisely the opposite course of action: increase public sector hiring and net wages, funded by borrowing. Ireland can cut back when growth has been restored. To do so now would be economic suicide.

Joe Stiglitz has already done the best possible expose of the right-wing lunatics who run the IMF so I will refer you to his book Globalization and its Discontents if you haven't read it already. Suffice to say that these guys are still living in a 1980s Thatcherite fantasy, which has been responsible for a huge amount of economic hardship for the poorest and most vulnerable people in the world for several decades now.

In the wake of the appalling losses announced by RBS on Monday and the continuing fall in the share prices of the three major UK-based banks, commentators' thoughts are turning increasingly to the thought that the UK may be pushed into a situation where it can't borrow at reasonable rates on the international credit markets any more, and the IMF has to be called in. Ambrose Evans-Pritchard in the Telegraph offers probably the most factual and least hysterical analysis of the current situation that I've seen so far.

What should policymakers do if the UK really is insolvent - if the banking losses are so large, and/or the recession so severe in its impact on the public finances, that the UK's credit risk gets downgraded to the point where it becomes another Iceland - no longer able to raise sufficient borrowings to meet its liabilities? Two obvious options present themselves. One, calling in the IMF for emergency assistance. I think this would be a terrible course to take. The IMF do not understand basic economic theory and would decimate living standards and destroy social cohesion in their bid to 'balance the books'. It would make the 1976 IMF package look like a tea-party. This has to be avoided AT ALL COSTS.

A second option would be to "do an Iceland" - default on the UK banks' debts. This could trigger the collapse of the entire global banking system. Even the most patriotic commentators out there don't recommend that, fortunately.

Which leaves only one course - using 'quantitative easing' ("printing money") as a substitute for borrowing. Essentially the UK government would fund expenditure by expanding the money supply. This is a very, very dangerous course of action - in normal circumstances (i.e. not an economic depression) it would run the risk of triggering runaway inflation (look at Zimbabwe for an extreme case). When the economy is suffering a deep depression that's not necessarily the case because (a) the price level may actually be falling, and (b) there are huge reserves of unemployed people and physical capital which can be brought into play by expanding government spending - without increasing inflation. But this is damn risky business and should only be tried as an absolute last resort. However, despite the risks, it's still LESS risky than getting the IMF idiots in to run things.

As I say, hopefully the situation is not that bad, and we will look back on this talk of defaults and IMF emergencies with some amusement in - say - 12 months' time. But it's beginning to look worryingly real - as the lead singer in Spinal Tap might say, "a bit too much f***in' perspective".

20 January 2009

My new favourite (UK) economics blog...

...is BBC Newsnight Economic Editor Paul Mason's "Idle Scrawl".

Why the hell this is squirrelled away so far inside the BBC website when Robert Peston's blog has a link to it seemingly on every business page is a crazy injustice. That's not to say that Peston's blog is bad; anybody who can get the right-wing blogosphere saying that he's "deliberately trying to destabilise the UK banking sector" (hilarious example here) must be doing something right. But it lacks the wide sweep and excitement of Mason's blog.

I came across Mason's blog by accident when searching for more in-depth analysis of the BBC (British Banking Crisis). Today's post is a classic, raising 4 key issues in a few hundred words:

  1. There is a danger that the UK sovereign debt could be downgraded from triple-A status.
  2. There is some chance (albeit still a minor one at present) that Barclays could be following RBS into the 'lame duck nationalisation' stable.

  3. The Irish economy is looking so bad that the IMF may have to be called in to bail the country out.

  4. the intellectual firepower behind the plans for the UK bailout and Son of Bailout look woefully inadequate compared to the people Obama has assembled to work out the US equivalents.

Absolutely riveting stuff; and by the look of it previous posts are just as good. A classic. I'll try to come back in more depth on all 4 of those issues later this week.

BHO provides some respite from RBS

Nice to see Barack H. Obama inaugurated today. Unlike 2 million other people, I wasn't there... but it was covered ad infinitum on the TV. And so it should be. This is a big day.

The first decent human being to enter the White House since Jimmy Carter. (OK, so we'll give a passing nod to Bill Clinton in certain respects.) But this blew away any previous American political event I'd seen for sheer excitement generated.

People seemed to like Barack's opening speech - but now the real work begins - and what a hell of a lot of it there is.

During the absurdly long 'transition period' between Obama's win and Bush's departure, the economy has gone from bad to catastrophic, cheap Nazis have taken over Israeli foreign policy and murdered over a thousand Palestinians whilst leaving the Hamas extremists pretty much in place, and the Afghanistan situation continues to deteriorate.

The main worry for Obamaniacs (my affectionate term for the wave of supporters) in 2009 is that expectations for the guy are so high that if he does make mistakes (and who the hell doesn't?) there is a danger that the whole thing will turn very sour. I feel bad raising that now as it detracts from a unique moment in US politics but, thanks to the Bush adminstration's disastrous economic failures, this is the worst situation for an incoming president to be in since 1933. And the Obama administration's success or failure will affect us all. Good luck mate... you may need it. Time to show us what you're made of.

Still, it stopped me thinking about the oncoming collapse of the UK banking sector, which is something - for a couple of hours at least. More on that later tonight.

19 January 2009

Son of Bailout: moving towards a good policy but not there yet...

So today, the markets reacted with horror to Son of Bailout (SoB): the government's new plan to kickstart lending by offering the stricken banks insurance for large-scale losses in exchange for cash payments or shares.

Royal Bank of Scotland, in particular, is close to worthless at 11p, and, while the bank insists that the previous bailout means it has more than enough operating capital to stay solvent, the tanking of its share price suggested that many market participants have already accepted nationalisation as a fait accompli.

As explained in my previous post, I'd also take that view. In fact it would be much easier for the government to get RBS lending if it did step in with full nationalisation. Perhaps it's hoping the bank will collapse and then it'll be able to snap up the remaining part of the bank for nothing. That's possible, but it's also short-sighted - while the govt waits for the collapse, hundreds of firms are going to the wall.

Other banks aren't faring much better. The newly merged, part-nationalised Lloyds Group is down to 65p and will probably join RBS in the state-owned pile before this is all over.

Most satisfying for anybody who dislikes arrogance and idiocy in financial dealings would be if Barclays was forced to go cap-in-hand to the govt for insurance after quixotically refusing assistance back in October, preferring instead to secure wildly expensive funding from the United Arab Emirates. Who will no doubt be less than happy that their investment has fallen so far and so fast... down over 50% since November.

Overall, SoB moves us towards a coherent strategy for resuming lending to UK business but we are still a long way from the endgame here. That will come when the govt takes full ownership of RBS, Lloyds and probably Barclays too. There has already been a turnaround at the already-nationalised Northern Rock, where the government is now planning to expand lending rather than gradually run off the loan book, which was the previous policy. Northern Rock on its own is too small to reverse the economic downturn. But put it together with the big three in a nationalised 'super-bank' and we might have something. Although, of course, co-ordinated international action would make this a lot easier. Let's see what line President Obama takes later this week.

17 January 2009

Back at the BBC (British Banking Crisis): deja vu after only 3 months

Exciting news from the world of finance... Bank shares fall sharply, and the consequent fears over the solvency of the banks prompt ministers to call in the head honchos for emergency meetings with Treasury officials.

It all would look mighty scary if we weren't all suffering shock fatigue from having been here scarcely more than 3 months ago.

So, where did the £39 billion of taxpayers' money that was meant to shore up the banks go? Many people would say "down a big hole", which probably isn't completely right: after all, the banks might have collapsed completely if the govt hadn't put that money in. The problem is that it's - well, not exactly a drop in the ocean, but more like a cup of water in the washing up bowl. The banks may well be sitting on hundreds of billions of pounds of losses, and £39 billion was enough to stop the system from seizing up completely, but not enough to get any kind of confidence back.

That lack of confidence explains why bank lending has been so low. Even when the banks have funds available, the economic situation looks so poor that they ain't gonna lend money out because it's highly unlikely the firm they're lending to will be able to repay the loan if the economy keeps spiralling downwards. So of course, the lack of credit depresses the economy even further... and we have a self-fulfilling prophecy.

There is a way out of this but it will require more drastic action than the govt has so far been willing to contemplate. Essentially, the govt needs to take over the entire UK banking system and then force the banks to start lending out money on the basis that the economy will recover a few years down the line. This would do two useful things:

  1. nationalisation would effectively underwrite the banks' entire losses, which solves the bad debt problem (admittedly with a huge liability to taxpayers); 
  2. as soon as the banks start lending out money on the basis that the economy will recover, this makes it much more likely that the economy actually will recover. 

Of course, international co-ordination would help massively here; if every country did something like this we could probably be back to a high level of economic growth in 12 months' time. Nonetheless, the plan is preferable to the alternative of a deflationary spiral, even in the absence of a co-ordinated international effort.

Once the economy recovers, bank profitability should recover - and hence the government should be able to recoup its investment by selling the banks off when the economy is doing a lot better. Of course, we need much better controls and regulations on banks to prevent exactly the same lunacy in the financial sector which got us into this best. And that's the really tough bit. But that will have to be left to a future post.

So what is the govt coming up with? Apparently an "insurance scheme" whereby the taxpayer underwrites bad debts. This would achieve one of the objectives set out above - it would draw a line under bad losses - but I'm still not convinced that, operating independently under their own commercial imperatives, banks will start lending, because to each one of them individually, the economy still looks f***ed. There needs to be some collective suspension of disbelief effected here. And the best means to do that is to just FORCE the banks to lend. For which you would, in my view, need nationalisation.

So the govt has half a good policy, but that probably isn't enough. And there's an additional problem: if the policy works, but only a bit, it's very easy for the opposition to make the argument that it hasn't worked at all - due to the general deterioration of the economic situation. This would kill off the govt's chances at the next election - recent opinion polls already show them slipping back somewhat from October and November's bounce, although the situation remains highly volatile.

So this really needs to work, guys. My advice to Brown and Darling would be just to wade in with the highest level of intervention imaginable: so far, the more they've intervened, the more popular Labour has become. It's no time for half measures.

12 January 2009

Dubya Bush's last stand

I had a very good laugh today watching Channel 4 News who led with Dubya's final press conference before the handover. Jesus, this guy stays duff right to the end. He said there are "enemies who want to inflict damage on Americans" when his own administration has inflicted more damage on more Americans than any since the US Civil War. He wished Obama good luck - he would have been more honest saying "I got us into a right mess, kid - now let's see you get us out of it".

It was quite hard to disagree with anything George Galloway said (his basic line was that Bush had been a disaster for the developed world and the Middle East). They had a guy from the supposedly 'progressive' Brookings Institute on who wasn't really given a fair hearing but in any case, what he had to say was patent bollocks - saying that Bush will be looked on kindly by historians in the long run. Well, if Obama is actually Mussolini in disguise, that's probably right. But in the real world, the Brookings guy (can't remember his name, sorry) should be ashamed of himself for talking such absolute crap.

My final view on Bush is a bit more nuanced than some on the Left - I don't think he is a complete idiot. On the contrary he's an astute, if limited, politician, who made an agreement with Dick Cheney and with some of the major US corporations - particularly in oil and infrastructure - that he was going to run America in the interests of big business and a few super-wealthy people at the top of the pile. He then proceeded to implement that strategy to perfection over 8 years. 

Huge cuts in taxes for the very rich, massive government deficits going towards pork-barrel spending to favour large corporations (particularly a massive increase in the defence and internal security budgets), and also, post 9/11, using the Patriot Acts to pave the way for the future abolition of the US electoral system and the final corporate takeover of America and the establishment of a corporate-fascist state. That's the long-run Republican agenda. It's anti-democratic, anti-liberal, anti-libertarian and anti-(traditional) conservative. Which explains why Dubya currently has an approval rating of 25%. That 25% is the proportion of the US population who are either benefiting directly from his legislation, or who are so dumb that even after the collapse of the US economy, they still can't see the agenda.

Actually, on the economy, Bush made things worse but the foundations for economic collapse were laid by Reagan and Clinton in the 1980s and 1990s respectively. It was Reagan who began financial liberalisation and Clinton who repealed the Glass-Steagal Act which separated commercial and investment banking. Clinton of course has the excuse that he was just following what had then become the conventional orthodoxy (not a perfect excuse, by any means) - whereas Reagan helped create that orthodoxy. Bush had little in the way of explicit ideological underpinning for any of what he did, which was his strength as a populist politician. But it's also wrecked the Republicans' electoral chances - probably for a long time to come, in the same way that the intellectual incoherence of the Carter presidency killed the Democrats off for a decade.

So I would advise that you ignore any sentimentality which emerges as Bush departs. The guy was not an idiot. But he was a dangerous populist asshole, possibly the worst US president of all time, and we are all much worse off because he was in power for 8 years, and much better off now that he is the hell out of there.

11 January 2009

Facing economic realities - a desperate need to kick ass on both sides of the Atlantic

With the imminent departure of Dubya's Dumbass Duffers from the White House and the US Treasury, we can now see the full scale of the economic horror awaiting President Barack Obama. US employment fell by a post-war (that's World War II, not the Iraq war) record 2.6 million in 2008 and in all likelihood there is worse than that to come, with unemployment likely to go into double figures by 2010 - the worst figure since the 1930s. 

Obama is proposing an $800 bn stimulus package to reflate the economy, which sounds on the face of it like a Big Number, until you read Paul Krugman's latest New York Times column and realise that the 'output gap' - i.e. the value of foregone US production resulting from rising unemployment - is estimated to be over $2 trillion over the next two years. The Obama stimulus plan doesn't even amount to half of the gap (unless it's $800bn per year of course, something that isn't clear from Obama's pronouncements so far - which have been limited). 

Furthermore, 40 per cent of the package is tax cuts - which in current circumstances, are unlikely to boost demand as much as spending increases because people may just save the tax cut rather than spending it. (It's great to be back to good old-fashioned Keynesian economics, kids). 

Why is the Obama administration being so timid? (If, of course, it is going to be that timid - maybe plans will be radically expanded when Obama actually gets into the White House). One possibility is that Obama is trying to go for a conciliatory bi-partisan approach, meeting the Republicans (some, although not all, of whom, are anti-stimulus) halfway. This is the patented Bill Clinton approach to running a Democratic administration and it sucks big time. The USA surely did not vote Obama in just so he could be a more lightweight version of George Bush. It is time to kick some ass out there, and a bold approach now will reap more rewards later than pussyfooting around trying to appease redneck fascist Republican Senators. If Krugman is unwilling to take a job in the administration at any price (which seems to be the case) then the administration should at least listen to him as The Voice of Reason. Other sane voices in US economics, such as James Galbraith of the University of Texas (author of the superb The Predator State) also need to have the ear of the Government. Get that $2 trn stimulus out the door pronto!

Similarly, after a very good autumn, support for New Labour in the UK seems to have fallen away somewhat as people realise that the partial nationalisation of the banks was a holding action rather than the solution to the non-lending problem. New economic data from the UK is looking absolutely abysmal - for example, the fastest contraction of output since 1980 (when the Tories were deliberately trying to wreck the economy!) Down 1.5% in 3 months - 1.5% in a year would have been seen as disastrous, but in one quarter, that's unbelievably bad. 

The latest news reports suggest that the Government will step in and guarantee mortgage lending - for sure, that might be an improvement on the current situation, but it would still leave exactly the same set of idiots running things. Surely a better alternative would be for the Government to take over the entire banking sector and start lending out to businesses based on long-term assessments of growth prospects rather than not lending based on short-term fears of insolvency? We do need really drastic action - even more drastic than we've already had - to sort this one out. And, based on previous observation, the more drastic Gordon gets, the more popular he gets - so why not take this one all the way? Forward to the 1983 Labour Manifesto...

06 January 2009

The Box - More great stuff from Asus

On a happier note, blog readers with long memories may remember that this time last year I was singing the praises of the Asus Eee mini-laptop - a £200 marvel which packed a 7" screen, 4 Gb of flash memory storage and a Linux operating system into a tiny footprint.

One year later and the mini-laptop market is the biggest boom area in computing and the original Eee has been joined by several newer models, some of which have crossed over into the low-end 'big' laptop market.

Asus's plan for world domination of the low-end PC market continues with the Eee Box desktop PC - which is aiming to do for the low-end PC market what the Eee laptop did for the mini-netbook market. For several years now in my idler moments I'd been thinking about building a really small computer - perhaps based around one of the VIA processors that don't require fans as their power consumption is so low - to use as a media PC by the TV: for watching iPlayer, playing MP3s, etc. A couple of things stopped me: (1) the components seemed very expensive for such a low-powered machine, and (2) I wasn't sure the machine would actually be powerful enough to do the job - particularly the onboard video chips. 

And now, along comes the Eee Box, answering both those concerns and then some. 

This thing is minute - measuring 22 x 18 x 3 cm. That's smaller than my Freeview box, ferchrissakes. It's built around an Intel Atom processor, which is the new ultra-low powered Intel chip, and total power consumption of the machine running flat out is about 25 watts.

In terms of spec, you get 1 GB RAM, a 160 GB hard disk, USB ports, ethernet and wireless, and an SDHC card reader. In operation, this is the quietest PC I've ever used. It's quieter than our DVD player. 

Video playback from iPlayer seems fine both in Window and fullscreen on a 1280 x 1024 display (I haven't tested with bigger displays yet). The audio output is on analogue mini-jack or S-PDIF (useful for AV amplifiers).

In short, for £200 this is a superb low-power media PC.

Some of the reviews on the net - this one, for example - have highlighted shortcomings, in particular: 

  • mediocre performance - the Atom is a low-power processor and it ain't gonna be sorting you out for video editing, for example;
  • no monitor;
  • no optical drive;
  • it can't play high-definition video. 

This is all fair comment but to me, it's missing the point. Web-surfing, listening to internet radio, playing MP3s and Divx files and iPlayer are not rocket-science applications - anything from Pentium 3 upwards should be able to cut it. Criticism along these lines is like saying that a Smart car isn't any good at Le Mans - it's horses for courses. 

Having no monitor is actually very good when you think about what most new LCD televisions have, which is... a VGA input. Why the hell would I want a monitor in the living room when I've already got one? Absence of an optical drive doesn't matter to me as I've got an external DVD-writer which I just connect whenever I want to install software (as with the Eee laptop). And I don't care about HD video as my TV, despite being labelled 'HD ready' and having an HDMI input, can't play 1080i without downscaling anyway. 

Also, think about the positives in a living room situation:
  • it's almost noiseless;
  • it's tiny;
  • it's (fairly) cheap.

In fact, it's so good, we've just bought another one - my wife's computer (my old PC) just died 7 years into its life and all she really does is use Word, send email and surf the web, and she's got a good monitor, so the Eee Box seemed perfect.

Congratulations, Asus, on another winner. The world may be going to hell in a handbasket but we can console ourselves that increasingly small, cheap and low-power-consumption boxes are coming our way...

Happy New '09 from Gaza, Gazza and Gazprom

Well, welcome to 2009 where the news just keeps getting worse: 

  • Israel seems to have decided to do exactly what Palestinian militants want it to do - invade Gaza. These guys have learnt precisely nothing from Afghanistan or Iraq: the most surefire way to increase the amount of active terrorist cells in an area is to invade it. Many lives are going to be lost on both sides as a result (including, just now, kids in a UN-run school in Gaza that got shelled by Israeli rockets.) 
  • Russia is bullying smaller countries by cutting off gas supplies again - the quicker the rest of Europe reduces its reliance on gas and moves towards renewables (including, eventually, nuclear fusion) the better. Otherwise there's very little to stop us being held hostage by Russia on any flimsy pretence (apparently Ukraine is supposed to have 'stolen' gas - how, if the Russian Gazprom company controls the supplies?) 
  • Paul Gascoigne was the subject of an horrific documentary on Channel 4 last night - the guy is basically drinking himself to death in very short order. (You can watch it again - in theory - on the Channel 4 On Demand site - but good luck if you try doing that, 'cos we couldn't get the damn thing to work despite trying for 2 hours. The Channel 4 people should just licence the BBC's much-superior iPlayer rather than pushing an inadequate product on the public.
And we haven't even mentioned the economy yet... I'll get on to that in a minute. 

Oh, I forgot. Happy New Year.