Mark Littlewood has it right: the BNP lost.  The man looks like Billy Bunter (see Matthew Freud in the FT). And I think the BBC made the right decision.

In the meantime, Lib Con had two interesting posts: one, that calls Political Blogging the Highest Form of Journalism.  This makes me wonder, again, why think tanks don’t make a better fist of it.  A lack of typing speed, perhaps.  And a really excellent long discussion of the downsides of open primaries.  This strikes me as an excellent point:

There is a real risk of voter burnout once the novelty of open primaries has worn out. In a seat like Brighton Pavilion you could be looking at four or five primaries minimum then the General Election itself. There is evidence, particularly from the United States where some citizens vote on dozens posts and initiatives annually, that the more things people are asked to vote on, the less likely they are to vote. There can be too much of a good thing.

Now, the Mervyn King Alistair Darling Bust Up.  Who do I side with?  No question: Darling.  Well, Darling and the FSA.  I find the idea that we can put a clever dividing line down the middle of banks and thereby assure ourselves of their non-goingbustingness in future rather naive.    The Guvn’r comes back and says that we don’t know how much capital is enough:

And rather than pay out dividends or generous remuneration, banks should use earnings to build larger capital buffers. But how much larger? We simply don’t know. A higher ratio is safer than a lower one, but any fixed ratio is bound to be arbitrary.

Look, Lehmans and co were leveraged forty or fifty times. If they had been leveraged 10 or 20 times the bust would have been much smaller.  They would not have been affected by a new Glass Seagall, either.  As everyone keeps pointing out, the big headlines from this Crash have all been sitting firmly on one side or the other: NRK, HBOS, Washington Mutual.   Only Citigroup have really straddled.  The banks most likely to be affected by a global Glass-Steagall are the massive European ones.  Now that could be a funny phone call to the supposedly virtuous Germans. . . .

Martin Wolf’s verdict is as ever spot on:

If we moved back to a Glass-Steagall distinction (itself never accepted in continental Europe), we would need to draw a line. But where? Why would lending to households and business be good, but securitising those loans bad? Why would hedging be good, but speculating bad and how might one draw the line between them? Mr King counters that prudential regulation already draws such distinctions. I would respond that regulation has made a mess in doing so. Furthermore, these are not distinctions between businesses.

Hamish McRae adds ten interesting points to the mix.

I enjoyed the article in CentrePiece about the minimum wage.  See my earlier post.  They mention monopsony as the reason there is not a straightforward a priori reason to think that a MW necessarily leads to lower L.  That’s all I’m saying: it is not just about labour demand. It needs empirical investigation: it can’t be established a priori.

For those mad-eyed monetarists who think liquidity is the answer to all our problems, two points:  One, the ECB is now finding it is offering more liquidity than the market wants. DEMAND, DEMAND is the issue. Two, if the liquidity is NOT going into nice Aggregate demand, where might it be going?  Asset bubbles.  And Gillian Tett is worried!

In the corporate bond world, for example, spreads have collapsed for both risky and investment grade credit. Emerging market spreads have shrunk too. Meanwhile, publicly-traded real estate markets (the EPRA index) have soared some 70 per cent, according to Barclays, helping to spark a surge in its overall measure of market risk appetite . . . Yet, if you talk at length to traders – or senior bankers – it seems that few truly believe that fundamentals alone explain this pattern. Instead, the real trigger is the amount of money that central bankers have poured into the system that is frantically seeking a home, because most banks simply do not want to use that cash to make loans . . . is crystal clear that the longer that money remains ultra cheap, the more traders will have an incentive to gamble (particularly if they privately suspect that today’s boom will be short-lived and want to score big over the next year). Somehow all this feels horribly familiar; I just hope that my sense of foreboding turns out to be wrong.

Very well put.


5 thoughts on “Now can we please talk about something else?

  1. “Lib Con” makes me laugh.

    Considering “Lib Lab” ususally implies a coalition between the Lib Dems and Labour, I don’t think the authors of Liberal Conspiracy would to be associated with the concept of “Lib Con”!

  2. Hi Giles

    Can we talk about something different, but the same?

    In our civilised little tete a tete about Theodore Dalrymple a couple of weeks back ( one of the issues we discussed was crime. TD thinks it’s worse than the official stats say, and so do I. You believe the stats.

    You accused me, without being quite so blunt, of being a bit of a conspiracy theory loon. No offence taken, mind (“I never really know what to say to quasi-conspiracy stories, and “they fix the figures” [where ‘they’ refers to quite diligent public researchers] is something I don’t know how to address.”).

    Anyway, I saw this and thought of you:

    (And this – from last year. Oops! They don’t seem to want to come clean, do they?

    Of course, you pre-planned your escape route: ‘The police are not diligent public researchers…’



  3. Hi Tom

    Thanks for the news stories. I didn’t fall off my stool with surprise though: I doubt very much that asking the police about crime provides the right answers. I am not quite as naive as my assumed Panglossian attitudes might suggest: for example, I hope to contribute to a big piece of thnk tank research later this year about the dodginess of education statistics.* Ask the practitioners to measure something and that is what will be done.

    I DO prefer surveys, my own escape route, as you put it. If you want me to reverse out of my short-term views about crime, you would have to show to me that the BCS overestimated crime in 1995/underestimates it now/some combination. I am sure the method is imperfect, but I would need to feel that it had become less perfect in a particular direction for its large improvements not to signify relative improvement. As for absolute levels, who can tell?

    So yes, I agree with you about police stats. I don’t think that their current dodginess tells us something about relative movements. And for the longerterm view (say, the pre-welfare state side, say 1810 to 1900), I am still a firm believer that if some agency had been capable of recording domestic violence, for example, it would have found figures that would curdle the blood. In fact, far more murder than we realise, I suspect. In a pre-lit era with so few domestic rights, how could one tell?

    (*in fact, do you know what: this is my Dad
    and explains my scepticism about certain ways of measuring)

  4. Thanks Giles.
    I’m not sure that the – unsupported – suggestion that there may have been olympic levels of DV in Britain pre 1900 means anything? The point is, we should be better than that. There may have been a lot of cave raiding in the years 4,000BC to 3,000BC, too.
    The education stats are certainly a mess, and I look forward to reading your piece. Again, I’m slightly confused as to why you accept the BCS figures but not the police on crime or the education stats? The BCS is certainly dodgy, too – for the reasons I outline before. If all you say is that it’s as dodgy now as it always has been (without proof of this, though I accept it’s hard to provide proof to the contrary also) then this is indeed a narrow ledge upon which to stand your ground!
    Re murder, I’ll look into that.
    What is certain is that there were no paramedics, intensive care units and blood transfusions to keep alive those who fell victim to violence.
    If today’s rate of violence were to be combined with 18th century medical care… well, I shudder to think.

  5. Hi Tom

    I appreciate my obscure allusions to pre 1900 do not immediately look relevant . . . let me try to explain.

    Since, say, 1700, there has been a massive expansion of personal liberty. This has had many many good effects – freedom to choose your life work, partners, and so on – a large expansion of rights meaning men have less power to tyrannise their household . . . . I won’t go on.

    Now, against this, Conservatives like TD might mention many of the downsides of enlarged freedom. Women behaving horribly in the streets (see other recent commenter), disrespect to doctors as TD described, family structure chaniging in ways that can lead to instability.

    My general point is that these are – obviously – two sides of the same coin. Maybe somewhere some society has managed the transition without some sort of increase in the bad stuff. Some social democratic nirvanna, perhaps. But on the whole I think a lot of the distressing stuff is a direct consequence of life not being a battle against disease and abuse as it probably was. So when people point out what I see as a minor worsening of things since 1960 (say, disrespect to policemen), I like to point to the larger one (freedom from state abuse of power) that this is all part of. Obviously we could all do better and hope for more improvements on both sides of the coin. I take the whole thing in the round and conclude ‘it is better to be alive now, all things considered, than at any other time’.

    I’m explaining myself badly.

    On the stats, I am sure that the BCS is inefficient. Without interviewing 60m people exhaustively, no survey will tell us the exact amount of crime. None ever has. But ‘dodgy’? I think it is probably one of the better ones. The annual poverty stats come from the Family Resources survey, which has 27,000 households. The BCS has 40,000. I still think that if this survey of that many households finds consistent steady decreases in crime – that also agree with a lot of worldwide trends – since 1995, the reasonably default assumption is that such crimes have fallen, unless someone can provide positive proof of a bias that is growing steadily larger each year.

    I can imagine such a bias in education, but the education stats don’t come from such a survey. So my default assumption is the simple, orthodox one: crime has fallen since 1995.

    I need to get back to work . .. .

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