Monthly Archives: April 2010

Aiming for best-in-class product at all times

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I’ve decided that Layla Moran, the Lib Dem candidate for Battersea, is going to get my vote next Thursday. I’m a Lib Dem voter and party member of fairly long standing, so admittedly this is nothing out of the ordinary for me. Battersea (Lab: Martin Linton) is something like number three on the Conservative target list, so I don’t expect any miracles. For a long time I was going to try to help resist the conversion to the blue team, but I no longer think a tactical vote will work and I’d rather be counted as adding to the Lib Dem vote share nationally. Also, Layla seems to be doing a decent job of campaigning, and could use the encouragement. I’ve wondered if my cognitive task here could have been eased if only I’d known just a little bit more about the intentions of the other Battersea voters: just one tiny local opinion poll, no? (Update: wish granted, sort of.) Perhaps someone who knows about game theory knows whether or not information like this would have helped, because I don’t. What I will say is that I’m very happy to have made my mind up because now – thank christ – I can stop following the election.

Further, and whether I’m justified in this or not, I’m going to conjecture that lots of other people, having similarly invested in their own decisions, are also tired of the election; and that for this reason we won’t see much movement in the opinion polls before next Thursday. Additional evidence: the percentages in the ‘who won the debate’ polls seem uncannily close to the voting intention polls. So, depending on how exactly these percentages translate to seats, we’ll see around three hundred Tory representatives in parliament come Friday: this is my belief. Even if there’s not a Tory majority, there’ll be a Tory political mass which is bound to have some effect on something. It’s not that the nation is now more Conservative – the Tory vote share won’t have increased by anything much – the problem is that only a coalition will be able to shut the Tories out. The Labour vote is collapsing and the Lib Dems can’t win enough seats to take over the job that Labour was supposed to do.

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essential pathology

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John Harris, writing about the PM’s bid for the votes of people who deal with customers on a daily basis, says: 

This may sound tangential, but I'm rather reminded of a passage from a Tony Blair conference speech that both set out New Labour's credo, and captured its essential pathology. "The character of this changing world is indifferent to tradition," he said. "Unforgiving of frailty. No respecter of past reputations. It has no custom and practice. It is replete with opportunities, but they only go to those swift to adapt, slow to complain, open, willing and able to change." That doesn't describe Gillian Duffy, nor millions and millions of other people. And in this awful episode, here are the wages of that ever-festering disconnection. 

Me, I think Mrs Duffy’s adapting quite well: 

Gillian Duffy is being represented by a public relations agent and will not be giving any further comment this evening on her dealings with the prime minister, the BBC understands. 

I look forward to next Sunday’s News of the World with interest. Once more, Prime Minister, welcome to the world you made.

Alternative to the ECB

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A.K.A. The Bundesbank

Just a quick note for Matthew Yglesias and the three of our readers who read both his blog and ours.

He’s rightly exercised about Greece and its implications for the eurozone. The positions of the ECB and the anti-inflationary approach of the ECB come in for particular criticism. He writes,

Rather than try to run monetary policy that would be suitable for the median European economy, the European Central Bank has insisted on trying to run monetary policy that would be suitable for Germany. And not even suitable for Germany in general, but “suitable for Germany according to hard money fanatics.” That’s probably bad for Germany, but there’s certainly no reason to think it’s appropriate for southern Europe.

The ECB is a Frankfurt-based central bank that is extremely cautious about inflation, in which all members of the eurozone have a seat at the decision-making table. The alternative to the ECB is a Frankfurt-based central bank that is extremely cautious about inflation, in which only German central bankers have a seat at the decision-making table: the Bundesbank.

In the years before the introduction of the euro, only the UK and Sweden managed marginally independent monetary policies, as they do today. (Indeed, German supremacy within European monetary policy dates as far back as 1983 with Mitterrand’s turn away from nationalizations.) Whether Greece weathers this crisis, leaves the euro, or some larger mechanism brings monetary union to an end (unlikely in the extreme), monetary policy will still be made in Frankfurt. The ECB may not be all that good for some eurozone members, but if that is true, then surely a return to the Bundesbank as Europe’s de-facto central bank would be worse.

what gordon should have said

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You’re worried about immigrants? Jesus wept woman, I had this guy shot for you. What more do you want? 

Some of this goes back to the accession of the Poles, et al to the EU, when the government desperately tried to fudge the likely numbers coming in. What they could have said at the time was “ we know that large population transfers tend to make people nervous, but frankly we’re looking forward to getting hundreds of thousands of extra taxpayers in to help pay for all the stuff you get from the government. And it also means your kids can work anywhere they please on the continent too: and what’s more they won’t be stacking shelves. British win!” And just to underscore the point they could have timed a major public spending programme to the arrival of our Eastern European fellow toilers, being experts in the dark political arts and everything. They could have at least redirected some of the extra tax receipts that our new friends have contributed to the Treasury specifically to relieving what extra pressure there has been on schools, hospitals and other public services. 

All else aside, Mrs Duffy was owed an explanation of the likely consequences of the government’s actions at the time. If she’d have been given one, Brown might not have made such an arse of himself now. 

When our kid was young and he thought that there were monsters under the bed we tried to make it clear to him that not only were there no monsters under the bed but that there were no monsters full stop: because when you’re dealing with irrational fear what you need to make clear first of all is that there is nothing to be scared of. 

What the government has done over immigration was firstly to tell people that there were no monsters coming here, thus confirming the notion that immigration is in fact something monstrous; then saying that there are monsters coming here, but don’t worry, we only let them in if we give them licenses and if we find any under your bed we’ll deport them. Sure enough, the treatment certain categories of migrant are subjected to is truly monstrous, when it’s not just foul and mean spirited. This is positive encouragement for people to see monsters where none exist. Finally, an old lady comes along and tells Gordon about the monsters under her bed and he calls her a bigot. Now the Tories are dancing about shouting WOO, MONSTERS! and Gordon’s doom is apparently sealed*. Welcome, Prime Minister, to the world you made. 

 See also Justin, from whom I have snaffled many links in the above. 

*Maybe. On the other hand this seems to rest on a conviction that the “core Labour vote” is synonymous with the “confused Granny vote”, which strikes me as a version of the same metropolitan media condescension that metropolitan media types now like to accuse other metropolitan media and political types of. Hey, ho.

The unsustainability feedback loop

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From the outside looking in, someone trying to figure out exactly why Standard and Poor’s downgraded Greece and Spain — the former to below investment grade — has only the press releases to go on.  And from each, it seems clear that the downgrades are driven by the forecasts for GDP, nominal and real. 

Greece — Under our revised assumptions (see below), we expect real GDP to be nearly flat over 2009-2016, while the level of nominal GDP may not regain the  2008 level until 2017.

Spain — Standard & Poor’s credit analyst Marko Mrsnik said .. ”We now project that real GDP growth will average 0.7% annually in 2010-2016, versus our previous expectations of above 1% annually over this period.”  We have also revised our views on the GDP deflator, so that we now expect nominal GDP to regain the 2008 level by 2015; previously, we had assumed that nominal GDP would exceed the 2008 level in 2013.
 

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Contagion Turns East

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Well, I don’t know how many other people have noticed, but the Hungarian forint has been having rather a hard time of it over the past few days. The currency was down by as much 1.3 percent against the euro at one point today, today making the two-day intraday loss 3.6 percent, and this according to Bloomberg, was the biggest such fall since March last year. The Polish zloty also has weakend slightly, and fell by 0.1 percent to 3.9333 against the euro today while the Czech koruna gained 0.1 percent to 25.582 against the euro. At the same time the cost of credit default swaps on Hungarian debt rose 23.5 basis points to 240. Now virtually all currencies associated with the euro have been having a hard time of it in recent days, but what matters is the magnitude of the pressure being felt in each case, and Hungary here has been unlucky enough to have entered a period of political uncertainty at just the time when the level of market nervousness is higher than normal. There is another problem too. Over 85% of Hungarian home mortgages are not in forints, they are not even in euros, they are in Swiss francs, and the CHF has risen sharply against the euro since the start of the year. So unfortunately Hungarians don’t even benefit from the euros woes.

Really, and unfortunately, this is the one I had been waiting for, and expecting. And precisely why did has the forint tanked in this way? What is so special about Hungary? After all, aren’t many of Europe’s economies seeing the cost of financing their government debt rising sharply over recent days. Basically one of the key reasons the forint has taken such a sharp knock is that Viktor Orban, Hungary’s new premier-in-waiting, just said in public what everyone following Hungary has been thinking (and saying) for weeks now: Hungary’s fiscal deficit is going to be higher (possibly significantly higher) than the target agreed with the IMF. Other factors have also added to the level of concern about the country. What exactly will the core orientation of the incoming government economic policy be, and how much political interference might there be in the financial and monetary institutional structure? Certainly things haven’t been helped by the way Hungary’s incoming Prime Minister has publicly criticised the financial markets regulator (PSZÁF) and even gone so far as to give the impression he would like to replace central bank (National Bank of Hungary – NBH) governor Andras Simor (see Portfolio Hungary account here). In a world like the one we live in right now, what you ask for is what you get, and so get it they did. Continue reading →

The tragic emigres

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I’ve just finished Smiley’s People, the third and probably the best of John Le Carre’s Karla trilogy. It’s a great read, but here’s an interesting point: the book opens with the murder of a retired British agent, an Estonian called Vladimir. Le Carre goes to great lengths to portray Vladimir as the hopeless partisan of a hopeless cause – deserted and ultimately let fall by his erstwhile British case officer, and leading a group of ageing, ineffectual campaigners for the utterly lost and tragicomic cause of Estonian independence.

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Bamfordshire

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A post by Phil Edwards on the Tory phone box posters links to Jonathan Raban’s review of Phillip Blond’s Red Tory. Blond is known to be the think-person for Cameron’s Big Society concept, of which we’ve been hearing … well, we heard about it earlier in the month, I think it was a Tuesday. Raban locates the intellectual heritage of Red Tory in the Catholic Distributist League; a 1920s movement championed by G. K. Chesterton and Hilaire Belloc. New to me, but the basic idea seems to have been more or less this: widespread property ownership is good; rural life shows the way. By all means, be a capitalist, but be a capitalist with a small shop, or a small farm; serve the needs of local folk for a fair price. And go to church.

David Cameron’s constituency is Witney, on the Oxfordshire / Gloucestershire border. This is a part of the world I have some experience of; it’s where some of my family live. I won’t name the village, but Cameron is their MP, and don’t they know it. I’ll try to describe what it’s like around there.

Just as the Distributists would have wanted, a church features centrally in every Cotswolds village; there might also be a common, or some stocks (disused, but cherished). Generally, there’ll be a clear visual hierarchy; it’ll be obvious today, as it would have been three hundred years ago, which houses are supposed to be those of the wealthiest and most dominant. There may be a tract of social housing; but it won’t be central, or in the most picturesque part.

Nothing new in any of that, you might think. But there’s more. The settlement pattern of your typical Cotswold village reflects the historical pattern of English agricultural land tenure; you find houses standing side by side along a central street, each with a strip of land out back. Once, the strips were long and were farmed; today, they are truncated into gardens where some people grow some vegetables. This allows an illusion of self-sufficiency: produce is traded locally, often on an honour payment system (someone puts a basket of tomatoes on their garden wall, and you pay for what you take). But if you did some basic agricultural economics here, you’d quickly show that if the locals tried to eat only what was truly local, and if they tried to pay for it with what they themselves made locally, they’d starve. Despite superficial appearances, they’re just not equipped or organised for that. Artisanal enterprise? There’s a silversmith in Stow-on-the-Wold who might be good for a stirrup cup, but you’ll look long and hard before you’ll find an independent maker and vendor of shoes, saddles, wicker trugs, garden trowels or whatever else it is that’s supposed to be made, sold and used in the countryside.

Even if the locals were equipped as if for the agrarian idyll, I’m not at all sure they’d enjoy it You have to look to what’s not so obvious as you stand in the middle of a Cotswold village: the machinery that makes the whole lot viable and – for some – a lot better than bearable. There are railway lines that make villages into practical commuter settlements, for instance. An older innovation, sure, but the station car parks still fill up reliably on week days. And if trains are not your thing, there’ll be four-lane roads and/or motorways within twenty minutes’ driving time. Either way, you’ll have a car. Further, the blanketing with transport infrastructure means that you won’t just get access to your ordinary high-capital, high-energy, large-scale, globally-supplied need satisfier such as Tesco Extra; interesting retakes on the shed retail concept are also reachable. Daylesford Organic, for instance: a creation of the Bamford family (as in the manufacturer J. C. Bamford). Officially it’s a ‘farm shop’ but it has too many parking spaces for that. What’s more, produce doesn’t just leave the Daylesford Organic farm shop by truck (for the other Daylesford stores, and also for the Ocado distribution centre); it arrives by truck as well: I’m thinking of the Italian olive oil and the Spanish almonds. I don’t know where they get their trugs.

I’ll save the holiday travel habits of Cotswoldians for a later post. I think it’ll be obvious what my point is. Much of what is presented as ‘small scale’ and ‘local’ in the constituency of Witney isn’t small small or local. It’s just more of your aspiration with a countryside theme. The people who buy into Witney are the type who like to patrol the parish bounds with the dogs; they’re usually English-esque – pale, clean shaven and corduroy clad in the case of the men – but they come from all over. And the people who start their lives in the village council estate and then leave; well, they go all over. Alex James, in his extraordinarily creepy 2007 puff piece about the Bamford retail operation, says that “there is not even a hint of the bad things about the world here”. But you can’t start with a visual aesthetic and end up with a social policy. If what you see around Witney is what inspires Blond-ism and hence Cameron’s Big Society, then both of those are just self-comforting fantasy.

PS: check out Tamara Drewe.

Does destiny come from geography or history?

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Writing in Sunday’s New York Times, Robert Kaplan writes one of those geopolitical big-think pieces capable of launching a thousand blog posts.  He argues that Greece’s current predicament, and by extension that of Italy, Portugal, and Spain lies in its position on the Mediterranean and in the type of land in contrast to northwestern Europe which was less conducive to oligarchical land-owning patterns.  Religion then formed a crucial overlay on geography –

It is not only the division between north and south that bedevils Europe. In the fourth century, the Roman Empire split into western and eastern halves, with dueling capitals at Rome and Constantinople. Rome’s western empire gave way to Charlemagne’s kingdom and the Vatican: Western Europe, that is. The eastern empire, Byzantium, was populated mainly by Greek-speaking Orthodox Christians, and then by Muslims after the Ottoman capture of Constantinople in 1453.

Now if you’re into a philosophy of history that sees it all as tectonic plates of deeply-rooted influences, this will seem logical.  And perhaps because Kaplan doesn’t want to sound like too much of pessimist, he ends on this note –

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tzzzzeeep

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Watched The Debate this time. Ho Hum. Brown was a bit better than I thought he’d be. I imagined a conveyor belt filled with rubble chugging its way through the studio, discharging nuggety factoids at random. But he managed to make his personality cohere, more or less. Not a hugely appealing personality, consisting mainly of a lot of statistics held together by a gluey sense of entitlement, but we already knew that. 

Cameron was Cameron. Some of the stuff he was coming up with sounded like the kind of thing people who like that kind of thing like to hear, though it’s a different matter whether they like to hear it from him. He’s caught in the Blair trap: the more sincere he sounds, the more he conveys the feeling that he’s putting one over. 

Cleggy boy ain’t all that. I mean, he’s alright in a "doesn’t wipe his nose on his sleeve" sense, which seems to be all that’s required right now. He sounded a bit apologetic about his best policies, ie on immigration and Trident, which is a mistake. He didn’t exactly squirm; it was more a slightly queasy appeal to reason, with lots of stuff about kicking things into committees. His position on both these issues cries out to be presented aggressively as “plain common sense” and he couldn’t shape up to that properly. He really should have mocked Cameron over his China comments last week. 

Sky had Osborne on afterwards, congratulating them on holding such a wonderful debate, which raises the underlying meta-issue in the election: 

Last week, the Lib-Dem candidate Nick Clegg—the third party candidate in the race—did so well in a television debate that he began to emerge as the logical alternative to Labor. This has caused the Murdoch papers to unleash a full-scale attack on Clegg—with hardly any pretense other than to help Cameron—now known as the “Kill Klegg” campaign. 

First I heard of it, though it’s quite good. 

In turn, the Independent newspaper ran a front pager yesterday with the headline “Rupert Murdoch will not decide the outcome of the election. You will,” challenging the Murdoch coverage of the race.

 Later in the afternoon, in a coming-apart-at-the-seams scenario, Rebekah Wade/Brooks and Murdoch’s son, James—who will both face the wrath of Murdoch senior if they don’t produce a winner—stormed over to the Independent, breached its security systems, barged into the offices of the Independent’s editor-in-chief and top executive, Simon Kelner, and commenced, in Brit-speak, a giant row. Their point was that newspaper publishers don’t slag off other newspaper publishers in polite Britain, but also the point was to remind Kelner that he wasn’t just slagging off another publisher, he was slagging off the Murdochs, damn it. Indeed, the high point of the screaming match was Wade/Brooks, in a fit of apoplexy and high drama, neck muscles straining, saying to Kelner: “And I invited you to Blenheim in the first place!” Blenheim being the Murdoch family retreat and the highest social destination for all Murdoch loyalists and ambitious Brits in the media. 

 This is one way for empires to end. 

Osborne’s comment showed that the Tories’ loyalties are still with the Empire. Nick, I suspect, will be happy to do business come the glorious day. Shame really. Some indication that he wasn’t could see him really attack the Labour core vote, and maybe get not a few Tories on board too. 

Incidentally, I was impressed by the way Clegg used the Lib Dem position on EU membership – an in/out referendum – to encourage Cameron to present his right wing for plundering by UKIP, which Cameron duly did. Maybe that’s a bit premature in terms of votes this time, but I am amused by the combination of “plucky outsider” “Mr honest as the day is long” and “cute as a shithouse rat.” There was the tzzzzeeep of the stiletto about the thing. I just wish he’d done it on Trident.