25 November 2008

Speak softly and carry a big stick

When financial experts first started wringing their hands over the nationalisation of Northern Rock, there was much talk of Moral Hazard - the risk of incentivising immoral behaviour by preventing business failure. Today it seems so many institutions have been shored up, underwritten, merged and injected with government cash, there are more moral hazards than in a vicar's billiards room.

We don't tend to hear much about this phrase anymore, probably because we have moved beyond the point where we can debate the ethics of bailing out large banks. But I think we are finally starting to understand what it means: it's when the government gives a bank a squillion quid to lend to its customers, and the bank decides it wants to keep the money, because all its customers don't have the luxury of Moral Hazard and might go bust. Finally, the government tells them they really should think about letting other people play with the money, and the banks say: "Or you'll do what?"

It reminds me of the observation by the American comedian, philosopher and visionary, the late, great Bill Hicks, about the fact that British policemen do not carry handguns as standard issue. "What do they shout when they're chasing crooks: 'Stop. Or I'll shout stop again'? ". Maybe Alastair Darling should take a leaf out of his book and start carrying a loaded gun to his regular meetings with the banking Chief Execs. Instead of pleading with them to play fair, he could start to redefine the meaning of Moral Hazard.

Neither a borrower or lender be

One outcome of the apparently endless global financial crisis is it makes everybody very relaxed about unfeasibly large numbers. Last year we gulped at the prospect of a £50 billion guarantee behind Northern Rock, this summer we remained calm despite a £500 billion programme of bank guarantees and underwritten savings. So by the time it came to yesterday's Pre Budget Announcement that government borrowing would rise to £78 billion, we were all fairly blase.

In 2010, this borrowing is set to rise further to £118 billion. Meanwhile, in the USA, it was announced that an additional $800 billion would be injected into the American economy, taking their annualised borrowing to nearly a trillion dollars. As this is all being done in order to save a paralysed global banking system, the question occurs to me: who is Alastair Darling borrowing from?

It's such a simple question, and probably explains why I never studied economics. But if no-one has any money, forcing the government to borrow beyond the realms of the human imagination, then who is doing the lending here? Because if the government has run out of cash, and so have the banks, I wonder who actually has all the money that is keeping everything afloat? Probably a ship of Somali pirates on a floating barge full of cash, somewhere in the Indian Ocean.

22 November 2008

A question of privacy

The death of a child in Haringey has been exercising the minds of the fourth estate this last week. Half a million people have signed a petition calling for the sackings of those in charge of his care. His image has been plastered all over every newspaper and media outlet. His parents have been named, shamed, convicted and sentenced over his death, in a public court of law. The sordid details of his sorry, short life have been endlessly picked over, including the results of his post-mortem.

Yet the media persist in referring to him as Baby P. Sticking my neck out, but I reckon it wouldn't really be considered an invasion of privacy to use his actual name, whatever that is. I'd hazard a guess that protection from media intrusion is not something he has much use for these days. At least putting a name to that sad, haunted face might give him a shred of dignity, and remind us he was a person not a political football or means to sell newspapers.

The sound and the fury

Newspapers are very angry places to be at the moment. Frustrated because no-one reads them anymore, their obsolete technology is lost on an entire generation of young people who simply do not read the daily press. Circulations are falling through the basement, and they are reduced to hawking their editions through the lure of tie-in promotions: free DVDs, health spas, discount vouchers, anything as long as it isn't associated with reading the printed word.

Recently they have hit upon a new strategy - creating a climate of anger, harnessing the public reaction, and riding it like a bucking bronco until the next object of bile comes along. In an attempt to appear relevant, online versions of the same press encourage the world to join in the hate - email your views, sign a petition. In London, free newspapers are given out on the streets every evening that consist mainly of the opinions of its readers, the angrier the view, the more likely its chance of publication.

There is no consideration of the implications for this spleen venting beyond the next month's ABC figures, but it seems to be a model in tune with times of uncertainty and economic depression. If we were riding the crest of a booming economy, with the prospects of jam tomorrow instead of bread and dripping, I can't think that the whole Ross/Brand phone pranks story would have garnered the interest it did. Of the 30,000 people who complained to the BBC, about 29,998 never thought to complain until prompted to do so by the media. They bought the papers, logged on to the YouTube postings to enjoy the permission granted by the press to get angry.

This week saw the strategy descend into bathos, as the same set of journos at the start of the week were telling us to be angry about the death of an abused child that, by the end of the same week, urged us to rage about a contestant on Saturday night TV show. There is no quality control - the anger itself is the main thing. So far half a million people have signed a petition with The Sun newspaper following the death of Baby P at the hands of his parents that is revealing in its vagueness: rather than a reasoned assessment of where the fault lies before judgement is made, it demands a mass sacking of anyone who went near the case.

Some might argue this is good for democracy - that at least getting angry is better than the indifference of a non-voting population that feels unengaged with the political process. Personally, I feel P.J. O'Rourke put it best:

"The idea of a news broadcast was once to find someone with information and broadcast it. The idea now is to find someone with ignorance and spread it around."

08 November 2008

Between a Rock and a hard place

Forgive me for coming over all Chris Rock after the euphoria surrounding Barack Obama's election, but there's a part of me that thinks the President Elect's recent elevation might not be the liberal, inclusive evidence of America's tolerance that everyone is reporting it to be. Now the bunting has been packed away and the "McCain/Palin 2008" buttons have hit the remainder bins, the Obama campaign is letting everyone down gently by talking up the size of the task. And with good reason too, as all the sensible analysis points to an economic crisis of biblical proportions.

You can look at this two ways - after eight years of catastrophically bad leadership, the country was crying out for radical change, no matter what colour the candidate. An alternative view might be that things have gotten so bad, a small majority of Americans thought: what's the worst that could happen? The small, cynical part at the back of my mind thinks: what does this say about America, that it takes the biggest crisis of the last 80 years before a black man can make it into the white house?

Actually I don't think this is cynical at all, but quite a reasonable conclusion to draw. After all, Obama didn't start pulling away from McCain until the banking crisis really pushed the US economy down the toilet. President Bush has been setting records for the worst poll ratings for the last three years - to be in the same zip code as him, never mind the same political party, should have been as toxic as a sub prime mortgage in Detroit. If the economy had been bumping along with a few job losses, Cindy McCain would be choosing curtains for the Oval Office by now. Despite the fact that Obama was clearly the best candidate in terms of brains, eloquence, inspiration, organisation, decision-making, judgement, policy, savvy, originality and nous, it took a earthquake to the entire underpinnings of capitalism to give him a chance.

02 November 2008

The unusual suspects

A judge in Spain has recently referred a case for trial for crimes against humanity. What makes this trial unusual is that the accused is the former head-of-state General Franco. Those of you with GCSE history will have already spotted the snag with this plan: the small matter of Franco being dead for more than 30 years. For good measure judge Baltasar Garzon has also indicted 34 other assorted stooges of the former dictator's regime, all of whom are also no longer living. This will obviously limit the ability of the defence to make its case. The other obstacle to overcome is the fact there has been an amnesty law in place since 1977 that protects former regime members from being tried for war crimes.

No doubt there is much soul searching in Spain about whether this is meaningful or helps the country in any way come to terms with its past. But, in the week when it was revealed that British police had probably been under counting the number of violent crimes, I wondered whether there were plans to adopt this approach in the UK.

After all, it has certain obvious advantages - if you can pin something on a dead man, it would certainly help clear-up rates. Or perhaps we will see employment of mediums by the police, to interrogate crooks beyond the grave? The possibility of spectral mugging might explain how I can end up with no money at the end of the month.