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Politics

What Is The Markets?

fruit market in Obaköy, part of Alanya, Turkey
*This* is a market. Accept no substitutes

We’re hearing a lot about how ‘the markets’ are reacting to changes in the Greek and Italian governments. It would seem the broad assessment is ‘unhelpfully’. Mysterious beasts, these markets. The only clear thing is that they’re damnable tricky to please. Whatever you do, it turns out to be not even close to what they wanted. Basically, the markets are a dreadful girlfriend. I know, in reality they are just bunches of people. But you can never trust people in bunches.

The other day I heard someone say that markets are powerful mechanisms for finding the correct price of things because they depend on the ‘wisdom of crowds‘. This is a real and very interesting phenomenon. If you ask a crowd to estimate something, it often happens that the average of their guesses is more accurate than even the closest individual one. In other words, the crowd as a whole seems to know better than any one of its members. It’s as if all their ignorance, being distributed randomly, cancels itself out – leaving nothing behind but the smart.

Which in fascinating and useful to know. It’s not however how markets work. And particularly not financial markets, where what is being traded isn’t a tangible commodity but – when it comes down to it – promises. People making promises to repay a certain amount of money in the future (or, thanks to some of the more complex financial instruments, the past) in return for money now. People packaging up those promises and re-selling them as promises about promises. People trading on promises yet to be made. All for money – which is of course itself only a promise. It’s not a crowd trying to estimate something objective. It’s a crowd all trying to second-guess each other – a deeply unstable situation. It could turn into a stampede at the first peal of thunder. Yet this is what we’re depending on now, so soon after our experience with the property market. We’re incurable.

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Politics

The Liberation Of Wall Street

The corner of Wall Street and Broadway, showin...
Stop Protesting - If You Know What's Good For You

So Wall Street is no longer occupied; not by protesters at least. The encampment has been swept away on the – quite specious – grounds of health and safety. I’m a strong supporter of laws to protect innocent people, so it always angers me to see them abused. Taking something enacted for public benefit and repurposing it to oppress undermines the rule of law and draws democracy into disrepute.

To compound the dishonesty they were told that, this being nothing more than a cleaning, they would of course be welcome to return as soon as it was over.

Only… Don’t bring camping gear.

Whose health and safety anyway? The order cites that of local residents, the emergency services, and the protesters themselves. The former two you could understand if the encampment did present some sort of hazard. (It didn’t.) Those groups have little choice but to be in its proximity. But the protesters themselves? They’re being ordered to leave on the grounds that by assembling peacefully, they pose a health hazard to themselves.

One wonders what form of protest couldn’t be suppressed on such grounds. Leave the powers that be to get on with it. Resistance is bad for you.

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Technology

What Phone Is Right For You? 8 – Nokia Not Dead

I started this guide to choosing a phone not long after Nokia announced their game-changing deal with Microsoft. It seems fitting to conclude the series with the first fruit of that alliance.

Was the wait worth it? Yes. Not, alas, because the new Nokia phones are perfect. It would be wonderful to be able to say your phone-choosing dilemmas were all over, but there is still a way to go. They should be the last major development for a while though, so we know now what the real choices are.

And they are very promising. A few months back Nokia brought out the N9, their first phone with the Linux-based MeeGo operating system. It was a thing of beauty, with a genuinely novel all-touch interface and a unique body moulded and milled from hard polycarbonate and curved glass, but it seems certain now that the operating system is a dead end. It was pleasant if not wholly unexpected therefore to find that their new Lumia 800 is in many respects just a Windows Phone 7 version of the N9. (See them compared point-by-point here).

Or rather, Windows Phone 7.5 – the Nokia is one of the first phones with the new version of the Microsoft OS. And its greater polish, in combination with the the hardware refinement Nokia bring to the party, make the Microsoft system seem for the first time a credibly sexy alternative to iOS and Android.

This phone isn’t going to blow the iPhone 4S or the Galaxy S II away though. Its gestation has taken a long time, and consequently it isn’t right on the cutting edge when it comes to specifications. But I think it will be the first Windows phone to have real mass-market appeal, certainly in Europe. It’s different and eye-catching. In the US Nokia will need to find the good relationships with carriers that have eluded it until now, but with Microsoft at its back that seems eminently possible. Rumour has it indeed that they’re holding back the Lumia 800 so that they can launch with a version capable of using LTE (that is, 4G) on AT&T or Verizon’s network. That would quickly correct the impression most Americans have of Nokia as a maker of only low-end phones.

So though the Lumia may not quite be a world-beater yet, it probably does enough to put both Nokia and Microsoft on track. It lags way behind both Android and iPhone in terms of apps, but going a long way to counter this there’s a huge amount of excellent stuff built right – Office 365, Nokia Drive, XBOX Live, Bing Vision. And the interface, particularly in its bright and curvy Nokia incarnation, is very arguably better than even the iPhone’s. It’s certainly prettier. Would I buy it? I don’t think so. It’s delicious looks sorely tempt me, but I’ll wait for what they’ll come out with next. If they can get back onto the front line of hardware specs we will have a real three-way battle here.

But you should forget Nokia if you want a smartphone right now? No; don’t forget Symbian. Nokia’s previous operating system may have been around for a long time but – unlike MeeGo – it’s not about to go away. They’re still improving on it (the latest version is called Symbian Anna) and there are a great number of apps available. Yes it seems clunky and awkward alongside its younger rivals, but its maturity means there is damn all it can’t do. And if battery life is a high priority for you, a Symbian with a keyboard is probably impossible to beat.

Coming soon: The final phone round-up.

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Politics

President Higgins

On October 29, 2011, two days after the presid...

I’m watching the replay of the inauguration of Michael D. Higgins as President of Ireland (Uachtarán na hÉireann), a significant threshold occasion in our history. An event in my personal life too – this is after all my old Sociology professor. And, one I missed. Yesterday I had to do something to sort out the utter mess my finances had gotten into since the economy hit the windscreen.

It is moving now though, to see one of the few politicians I’ve ever had any respect for become First Citizen. What the hell happened there? After over a decade of naked materialism we’re suddenly electing a socialist intellectual, and with no intervening transition except the global failure of capitalism.

It is a bittersweet occasion though. We now have as President a man who you can say without embarrassment is passionate about equality, about justice, about actually changing society. That we esteem him enough to raise him to this position is a wonderful thing. But at the same time, it’s sad that he was raised to a position of esteem only. As President he has less power than an ordinary citizen; they at least are free to express their own opinions.

Which is unfortunate. Now more than ever we need voices like his.

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Cosmography Politics

11/11/11/11 – A Monument To Worthlessness

Serbian retreat through Albania in 1915.
Peace

The British seem to be going particularly overboard for poppies this year, presumably inspired by the calendrical happenstance of all those ones lining up in a row. But unthinkingly, they only emphasize the tragic aspect of this occasion.

Why eleven? The agreement to end hostilities had been signed more than five hours earlier. The war officially ceased only at the eleventh hour of the eleventh day of the eleventh month because that seemed a suitably grand and historic way to end a ‘Great War’. So they kept on fighting, and they kept on killing, until that eleventh hour came.

How can one feel anything but contempt for that?

But this act of inhumanity was just the start. The victorious powers chose to accept no portion of blame for the hostilities. On the contrary, and despite the fact that a great deal of the credit for the war’s end belonged to the German people for rising up against their leaders, despite the fact that the Kaiser had abdicated and the empire been abolished, they chose to heap all blame – and punishment – onto the people of the new German democracy. The terms of this ‘armistice’ would lead directly to disaster on a previously unimagined scale.

This hour marks not the end of war, but the beginning of revenge.

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Politics

They’re All Bastards

Reaction to Irish banking and financial crises...
The people do not feel well served

Jesus. The UK’s Channel 4 had a documentary this evening called “The Man Who Killed Michael Jackson“. Did they make that last night? Maybe they went through a documentary they already had, bleeping out the word “allegedly”.

News has been extra weird today. A US Presidential candidate vows to shut down the Department of Education, and the most remarked thing is that he couldn’t remember the name of another agency he wanted to close down? Under the influence of the Tea People the Republicans are turning from the party of the American rich into the party of American national suicide.

In France meanwhile, Sarkozy is mooting a two-speed Europe. In this version there will be an ‘inner’ group of stronger economies using the euro, and an outer using… something else. There are merits to this idea. The part that makes least sense is his assumption that France belongs on the inside.

Who owns the banks in Ireland? You would be forgiven for thinking that we had some sort of controlling interest, after having mortgaged our children’s lives to save them from bankruptcy. Apparently not though, because both Bank of Ireland and AIB have point-blank refused a government request to pass on an ECB interest rate cut. You see, they have to obey the laws of the free market. Or all except the one where losing incredible sums of money means you can’t be in business any more.

We should send them a signal. One bank – selected at random – should be allowed to collapse. Just to remind the rest what reality is.

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Humour

Some More #ExtendedProverbs

Winston Churchill
I'll leave out the urine

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness, that Pigs might fly.”

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. No matter what you do.”

“Measure twice, cut once, drop the head neatly into the basket.”

“Dogs look up to us. Cats look down on us. Pigs treat us as equals. Delicious equals.”

“I hear and I forget. I see and I remember. I do and I understand. I explain and I am forgotten.”

“I have nothing to offer but blood, toil, tears and sweat and urine.”

“The more we know, the more we know we don’t know. The more we know we don’t know, the more we know we know we don’t know we more know.”

“All the world’s a stage, And all the men and women merely players; They have their exits and their entrances. That’s how you tell them apart.”

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning of the other end.”

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Politics

How The Euro Exploded, Part 2

Various Euro bills.
Money. It's the root of all ****-ups

Why has the Eurozone gone awry? Why have the economies of Ireland, Greece and – it looks likely – Italy shot off the precipice like runaway trains? Well as in any transport disaster, several things had to go wrong at the same time. Yesterday we looked at Problem one, the credit boom. That was hardly surprising. The next piece of the jigsaw though may be a little more unexpected…

Problem two: The success of the euro. Mad I know, but in many ways the euro crisis was caused by it acting exactly as intended. It immediately improved the economic prospects of the poorer countries of Europe. Well, the poorer ones that were rich enough to join. Currency stability made the ‘peripheral’ economies attractive to money from the richer ‘core’. They became more profitable places to find investment opportunities.

But there were downsides. When a small economy with its own currency enjoys boom times, one immediate consequence is of course inflation. This reduction in the effective purchasing power of the currency generally causes it to drop in value – as if there was a divine law saying the more money you earn, the less it’s worth. But though that’s frustrating, it at least exerts some moderating influence on the economy. It wasn’t long before a strong currency was the very last thing the rapidly-growing peripheral economies of Europe needed. But adjusting it for their sake was out of the question, their interests were secondary at best. The primary goal of the euro, nearly its entire raison d’être indeed, was to be strong. With no possibility of the currency falling it was almost inevitable that these economies would badly overheat.

This was a foreseeable structural problem with the euro. Loosely-attached economies at the fringes were bound to get yanked about violently by the slow but inexorable movements of such a leviathan currency. Yet we still haven’t decided how to deal with it. Had the credit bubble not coincided, we might have had greater time to adjust and put compensating mechanisms in place. But with the bubble and the fluctuation-amplifying mechanism, well, what we got was bursting boilers and third-degree scalding.

And you know what’s the crazy part? With all this turmoil on the bond markets, with all this panic and fear that countries won’t be able to pay their debts, need international aid from the IMF, be forced out of the euro, you might be forgiven for thinking that the euro itself was in trouble. Yet it sails on, imperturbable, as strong as ever. Indeed, many would argue, quite overvalued. Which is really not what you want from the currency that you have enormous debts denominated in.

There is no escaping this: The euro was devised mainly for the benefit of the larger economies, and it is those economies that have benefited most. Yet it is we in the smaller and more vulnerable ones who are being made to suffer for its failings. Here, we’re even expected to return the investments that outside institutions made into our over-inflated property market – the very money that caused it to explode. They want it back.

The enormity of that has still not really sunk in.

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Politics

How The Euro Exploded, Part 1

Berlusconi-comizio
"I have no idea what I'm doing!"

Italian stock markets rally on rumours that Berlusconi may step down. That says everything really. Usually the forced resignation of a head of government sends the markets plummeting, as a country switches from general predictability into leaderless chaos. But it seems even leaderless chaos would be more relaxing than Silvio Berlusconi. You can actually calculate the millions he’s costing his country every minute he hangs on.

If he does go though, he will be the third national leader directly forced out by the financial crisis. I don’t think there’s been such a wave of regime change across Western Europe since 1968. How did it come to this – and to ask the question that everyone really wants answered, whose fault is it?

You can’t pinpoint a single cause in these things of course, but surprisingly I think we can narrow it down to just three:

Problem one: The credit boom. We’ve spoken of this before, but its origins can be traced back to the liberalisation of the US banking industry, and the creativity this consequently introduced into a previously staid profession. In particular, the creativity about what the term ‘asset’ means.

It’s always been quite acceptable to loan someone some money and then consider their promise to pay you back as an asset you own – as long as the value you give to that asset realistically reflects the risk of them not paying you back at all. Be unrealistic however, and you’re in trouble. Though many complex and obscure mechanisms were applied to the task, I don’t think it’s grossly oversimplifying to say the basic problem was that overvalued loans were used as collateral to raise more money, which was then turned into more overvalued loans, which were used to raise more money, which was… Et voilà, magic money from nowhere. Inevitably this reached the point where it was mutually profitable for everyone involved to overvalue the loans they were all giving to each other.

This free money fountain naturally encouraged borrowing throughout the US and Europe, and indeed about everywhere with access to currency markets. The first I knew something had gone badly wrong was when I got a letter from my bank telling me I’d been ‘pre-approved’ for a loan I hadn’t asked for. I’m a freelance artist for God’s sake. When banks go round pushing loans on poor people, the Emperor is out waving his dangly bits to a cheering audience.

But it wasn’t just private borrowing that got out of control. Countries too found credit temptingly cheap. What’s more, easy credit helped fuel a consumption boom, which upped tax revenues, which encouraged governments to ease off rates and make more promises. The problem is that largely fictitious revenues can dematerialise overnight.  Public borrowings and spending commitments on the other hand are not so easily gotten rid of.

This though merely sets the global scene; in Europe specifically there was further trouble brewing. To follow…

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Humour

My Twitter Hobby – #ExtendedProverbs

A mother plays the guitar while her two daught...
Children should be seen and not herded onto trucks

A house divided against itself cannot stand Christmas.

Brevity is the soul of wit generally speaking.

If music be the food of love, play on this pork piccolo.

To travel hopefully is a better thing than to arrive on time.

‘Tis better to have loved and lost, than never to have loved a tall Swedish woman.

A cat may look at a king cobra, albeit briefly.

It’s no use locking the stable door after the horse has bolted it.

Too many cooks spoil the broth; ideally, broth should contain no cooks at all.

An apple a day keeps the doctor away but attracts fruitbats.

You can’t teach an old dog new tricks except ‘play dead’.

Genius is one percent inspiration, ninety-nine percent perspiration, three percent error.

It takes a thief to catch a thief disease.

Life begins at forty, according to new sentencing guidelines.

Flattery will get you nowhere, sexyboots.

It is better to give than to receive anal.

If you pay peanuts, you get monkeys to do your bidding. Cool.

Actions speak louder than words, especially if that action is ‘yelling’.

One man’s meat is another man’s poison, which is half the fun of fugu fish.

Spare the rod and spoil the child, if the child requires major spine surgery.

The rain falls on the just and the unjust alike, but the unjust have your umbrella.

Children should be seen and not herded onto trucks.

There are none so blind as those that will not see, nor deaf as will not hear, nor anosmic as will not smell.

Do unto others as you would have them do unto you is no defence in a sexual harassment case.

A drowning man will clutch at a straw, but throw him a lifebelt you bastards it’s not funny.

All’s fair in love and war and Grand Theft Auto.

Do not let your left hand know what your right hand is doing, it gets jealous.

One man’s junk is another man’s treasure, so ask strange men to help you bury your junk.

The boy is father to the man in parts of West Virginia.