Uncharted Territory

January 2, 2009

Plus ca change…?

…as the French say (sorry about the lack of a cedilla there).

A New Year resolution was to blog about any interesting news stories first thing.  But, plus ca change…

At the start of 2009, though, perhaps I may be forgiven for wondering in what areas of our lives the record is broken and where there really is a trend.

Take the financial crisis.  I sense a worm has finally turned.  There’s a growing caucus bold enough to argue that it isn’t all the fault of bad people (the causes of socio-economic disasters are never quite so simple).  Rather, trade imbalances – the dangers of which many have been warning for years – are the root causeSo says Hank, and I presume Win alluded to much the same thing, though the Times’ report of his Radio 4 interview focuses on the bankers rather than the rest of those at fault (such as those responsible for overseeing the financial system perchance?).

Whilst the discourse around this crisis may be entering a new phase, I very much doubt we’ll avoid similar mistakes in future.  The FT article reporting Paulson’s thinking concludes:

“…avoiding crises in future will require global macroeconomic co-operation as well as better financial regulation and risk-management.”

This “global macroeconomic co-operation” is simply not going to happen.  Pie, meet sky.  If governments instead concentrate on defending their own economies against the positive feedbacks that have turned a US property debacle into Great Depression 2, then we’ll have a much better chance of avoiding GDs 3, 4 and 5.  We’re not going to eliminate booms and busts anytime this century or next, but focusing on minimising the effects – such as the knock-ons from personal and corporate bankruptcies – will help break the cycle of fear that exacerbates the situation.  A little more equality would also help.  In particular, enacting policies to prevent the wages of the low-paid ever again getting so out of line with their housing costs would provide more of a buffer against personal and systemic economic crises.  Hopefully a lot more will be said on this topic in 2009!

I sense, too, that in 2009 more of the political heat in the UK will be directed at Gordon “Superhero” Brown and – perhaps this is wishful thinking – the insufferably smug and incongruously arrogant (in that he doesn’t have anything to be arrogant about) Alistair Darling.  Away over the Christmas period, I was able to access the BBC’s World News channel (why are all the BBCs channels not on cable here?) and caught the interview Darling gave to a sycophantic Robert Peston.  Apparently Freddie G said the Government’s discussion was “less of a negotiation and more of a drive-by shooting”.  Spot on!

How dumb it now looks to be fining the UK banks with (among other things) 12% coupons on prefs. (a lot more than elsewhere, as DeAnne Julius observes).  This doesn’t increase their capital, it decreases it, since the first thing they’re going to do with any profits is pay off this particular debt.

I’ve just started reading Niall Ferguson’s The Ascent of Money.  (And a New year’s resolution is to actually finish it before starting something else).  He makes the point in his Introduction that he aims to improve financial literacy.  Laudable, but doomed.  After a spike of interest in the operation and pathologies of the global financial system, the current crisis will be forgotten, and the next generation will make similar mistakes.

The travails of the global economy has pushed global warming (GW) from the headlines.  But there is more chance of awareness helping solve GW, which is a one-time phenomenon (though there will no doubt be other even slower-burning environmental disasters to deal with).  I don’t agree with the scientists who, according to the Indy, apparently believe we need to start creating new problems.  Didn’t their nursery school teach them the folly of swallowing a spider to catch a fly?

We’re still at the stage of building a consensus for action.  Thinking is progressing, for example, in another book I’m reading (remembering my resolutions!), Oliver Tickell’s Kyoto2.

But something has changed. Global economy, global warming… Anyone spot a pattern here? Maybe 2008 will be remembered as the year the world really became global.

Then there’s the war in Gaza.  2006 revisited?  Not really.  The political climate is different – as if the fever of El Nino has given way to the chill of La Nina.  As we were reminded in Georgia in August, propaganda is now a key determinant of the outcome of these nasty little local difficulties.  Israel realises this, and has raised its game, seemingly with some effect.  Hamas’ position is untenable.  Continuing to fire rockets at Israel, while hoping an international outcry over humanitarian concerns will prevent Israel from achieving its objectives on the ground, allowing Hamas to claim a victory now, like Hizbullah back in the day, simply isn’t going to work this time. C’est pas la meme chose. Hamas will condemn the Gazan people to a nasty winter on CNN if it continues on its present path.

On the other hand, as I remember my MP wisely pointed out last year, there is scant hope for a change in the bigger picture in the Middle East, unless Obama can perform some kind of miracle.   Robert Fisk appears to be a commentator who knows what he’s talking about: cynical he may be, but unrealistic he is not.

What with war in Gaza and the house-price bubble in reverse, it does seem we’ve returned to 2006.  Not only that, Russia is messing with gas supplies to Ukraine.  Again.  But what’s their game?  This isn’t a record that can go round and round.  Every time Russia plays this card it becomes less effective.  Their customers accelerate their efforts to diversify supply and to build facilities to store fuel.  By the sound of it, Ukraine is less over a barrel (or should I say cubic metre!) than in 2006, and can last out for a while.  And if Ukraine ends up paying West European rates for gas, Russia has no lever at all.  You’d think the Kremlin would keep its powder dry.  Or is this latest spat leading to something more serious?

Tricky business, trying to work out what is really changing and what is simply a repeat of the past.

Here’s one observation, though.  Maybe some of the power of the British media is ebbing away.  I refer not to the John Sargeant affair, but to the SBBC Sports Personality of a vintage Year.  To my delight, Chris Hoy won by a landslide, but apparently was not the favourite:

“Hoy, who became the most successful male Olympic cyclist of all time after winning three gold medals in Beijing, said he was ‘absolutely stunned’ to be named BBC Sports Personality of the Year, after recording almost 40% of the public vote. In beating the favourites, Lewis Hamilton and Rebecca Adlington, into second and third place, he overcame one of the strongest fields in the prize’s 55-year history.”

Look, a simple opinion poll could have shown this would happen.  Believing Hamilton would win the award by a lap or two, sections of the media seemingly set out to promote Rebecca Adlington as a rival.  But the British public is not stupid.  Sure, Adlington did a Dame Kelly, winning 2 golds, but Hoy bagged 3 – the first Brit to do this since 1908, FFS – not to mention one in 2004.  Hmm, let’s think about this one, shall we…?

A final thought is that maybe 2008 will prove to be a watershed year, when Britain stopped being a nation of sporting losers.  But don’t bet on it.  Not until after the Ashes anyway!

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