Oligarchs, Banks and other corrupt ogres of our time

The recent collapse or near collapse of many Banks has shown that the ideology of the capitalist free market economy has its weaknesses; Alan Greenspan, former head of the US Federal Reserve, admitted to a US congressional committee last week that he was ’shocked’ at the failure of that model.
Having crowed for years at the collapse of the Russian communist model, and always critical of the Chinese whatever social/economic model they seem to adopt, the US have now to take the bitter pill that some state interventions or part ownership of critical parts of the economy, are necessary to stabilise the model. My prediction is that globally all countries will settle to a middle of the road mix of capitalism and government ownership that best suits their local conditions; let’s hope that one day there is will be an end to this stupid “war of ideologies” which clouds peoples judgement in seeing there own weaknesses.

Apart from the media focus on the collapse of the Banking sector, and the predictable criticism of those that have made millions in bonuses, we now have the press using the term Russian oligarch seemingly as a derogatory term on a regular basis. The Wikipedia entry is typical of many articles in the English Wikipedia that are written from a US perspective (i.e. anything Russian, Chinese, Iranian etc must be evil), it runs “… Russian oligarchs are business entrepreneurs… Rare goods… were smuggled into the country and sold on the black market for a hefty profit, In the 1990s, the oligarchs emerged as well connected entrepreneurs who started from nearly nothing and got rich through participation in the market via connections to the corrupt, but democratically elected, government of Russia during the state’s transition to a market-based economy. “ Got that, this “unbiased encyclopedic” description says “democratically elected”, “corrupt”.

Now look at our Western governments, “democratically elected” i.e. we the people are given a choice of one individual from a previlidged background and another – most media in the UK seem to have forgotten we live in a parliamentary democracy and we vote for a party not a person!, and yes I think “corrupt” is fair description of a number of Members of Parliament who apart from their generous MP’s salaries collect fees for being on the Boards of Directors of companies, who solicit funding from anyone that seems to be worth a million or two, and accept ‘freebies’ from any rich businessman (or should that be oligarch?) that wants a few favours down the line. As one TV commentator remarked – If George Osborne wants to avoid criticism in future he would be wise to not take along his party fund raiser.

Spogs and other thingamajigs

Back in August (“A Quarter of Nostalgia“) I wrote about the “bobbly aniseed jelly ones” in Bassetts’ Liquorice Allsorts, when I should have called them by their ‘correct’ name of spogs! How did I come across this? Well, recently on BBC’s “Breakfast” program they interviewed Danny Danzger and Mark McCrun, authors of a new book “The Thingummy” , this book provides the real names of many common ‘thingummies’ complete with history, myth and anecdote behind them. Apart from explaining that Spogs are the blue and pink aniseed sweets out of liquorice allsorts, the book also gives the name for the groove that runs between your nose and your mouth, the stringy bits of a banana, and the name of the white exhaust trail that an aeroplane makes in the sky! The Retro Sweet Hamper web site clearly know their spogs! But if Spogs are the blue and pink aniseed sweets, please tell me what the yellow thingamajigs are in their picture – I have never seen them in the UK – have you!?

Praise for Gordon Brown from Nobel Prize winner

On Monday it was announced that Paul Krugman has won the Nobel Prize in Economic Science for his work on trade patterns and the geography of economic activity.

Paul Krugman is also a columnist for the New York Times, and in his Monday column he endorsed Gordon Brown’s £500 billion rescue plan for the British banking industry, contrasting it favourably with the American Government’s scheme.

He wrote “Mr Brown and Alistair Darling, the chancellor of the Exchequer … have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up.” He praised the British Government for having acted with “stunning speed” to address the financial crisis, again contrasting Mr Brown’s efforts with those of the US Treasury.

“This combination of clarity and decisiveness hasn’t been matched by any other Western government, least of all our own,” he wrote.
“Luckily for the world economy …. Gordon Brown and his officials are making sense …. And they may have shown us the way through this crisis.”

Since Monday the USA has followed the British example of injecting money directly into the banks as fresh capital and several other European countries have announced similar plans.

It is of course too early to know how effective these measures will be in solving the current global economic crisis, but Gordon Browne has clearly demonstrated that other world leaders are willing to follow his example.

Now that recognised economic expert Paul Krugman has highlighted that Gordon Brown acted swiftly and decisively are we likely to see apologies from those less able politicians and media hacks for their remarks in recent months about Gordon being a ditherer? Probably not, that would take courage*, doubtful if we will ever see articles about the courage of armchair political writers in the right wing British press!

Link to Paul Krugman’s New York Times article

* Link to article “digby-jones-thanks-gordon-brown-for-showing-courage” 3 Oct 2008

* Link to article “EU-treaty-Leaders-praise-Gordon-Brown’s-courage” 19 June 2008

Virgin Views

During recent TV News bulletins we have predictably seen one so called ‘expert’ after another being wheeled in front of the cameras to make their pronouncements on the global financial crisis. Surely one of the most bizarre this week has been Virgin boss Sir Richard Branson being asked his views of the rescue package announced on Wednesday in London.

As an admirer of some* aspects of his life I think it was an event he may live to regret; did he ask to appear or was he invited I wonder? Either way, why would they expect his views to be any more valid than if they had dragged the next passing taxi driver off the street into the studio. Sure, Sir Richard is a colourful character and has a billion or three, at least on paper, but as a risk taker of some extreme, his views on getting a stable economy are hardly likely to be taken seriously. Aside from his failed round the world balloon attempts, several of his businesses have failed or just bump along inefficiently; Virgin Vodka anyone? Virgin Cola? His “bring back the Concorde campaign” while patriotic was hardly a great business proposition either.

Gordon Browne remarked last week, this is not a time for novices to be in charge, I’d add it’s not a time for virgin views on the economy either.

*Here’s an aspect that isn’t so great though, Virgin offered a measly $25 to take the virgin fuels .org domain name off of a 55 year old female American blogger – http://gaiacapitalist.squarespace.com/virgin-notes/ Obviously some Virgin executives would rather waste hours of their very highly paid time threatening legal action against a well meaning and enterprising individual, instead of simply making a sensible commercial offer of a few thousand dollars. As Sir Richard should have learnt by now, some things come back to haunt you.

Percentage Points

“Interest rates cut by 0.5%” say the scrolling headlines on BBC News bulletins today – really?

I’m sure that many people listening to the News in the last 24 hours will be sick of hearing the phrase that governments around the globe have reduced the interest rate by “half a percentage point”, but how many people realise what this means?

A percentage point is the arithmetic difference of two percentages, so for example in the UK the base interest rate has dropped from 5% to 4.5%, i.e. a decrease of “half a percentage point”. This means that the UK base rate has actually dropped 10% (since 0.5% is 10% of 5%, still with me?) not O.5%, since percentages indicate ratios, not differences!

Now can anyone explain what the announcer meant that said rates had dropped by “half of one percent”?