Anonymous vs Aaron Barr
Fascinating and insightful article about the hacking of HBGary Federal by the Anonymous group of hackers. Anonymous come out of it looking both well-organised and ruthless.
Sifting for Gold (Second Issue)
Paul Mason has written another pair of excellent blog posts. The first compares the England football team to Lehman Brothers, and is well worth a read even for those who renounce football and all its ways.
The second highlights the current stress-lines in the world economy. It’s a very good summary of what might go wrong over the coming weeks and months.
Another highlight of the past week has been this video of the known universe. I was sceptical of the bold claim in the title, but it lives up to its billing.
The next two articles will simply be linked without comment, perhaps to add a touch of mystique to their contents:
BBC News – Why Pakistan’s Ahmadi community is officially detested
Borrowing money to buy cake not only harms the cake-eater, but also the cake-seller and those who work for him. The following story tells the abstract tale of how I think the economy in the UK has developed, and what may happen next.
In the happy years of easy credit and loans for all, I run down to the bank and borrow £1000. I then run over to the cake-seller and spend this generous bounty on a £1000 worth of cake. For the briefest period of time, I hold my new cake. Over a slightly longer period of time, I eat it.
The cake-seller is overjoyed, not realising his bumper cake sales came from borrowed money. £1000 of revenue is usually a lot more than he makes at that time of year. When I do the same thing the next year and the year after he realises he can’t keep up with demand.
He needs to open a new cake store.
Unable to afford this on current profits, he borrows money from the bank. He uses it to open the new store and employ a few new staff. Customers continue to flock in, buying ever greater amounts of cake.
For a while, everyone is happy. Until the day comes when I toddle down to the bank (I am no longer able to run; I’m a cake-eater), and they tell me my frivolous borrowing has come to an end; they will lend me no more. The black, crushing realisation sweeps over me; there will be no more cake.
Tears well up in the cake-seller’s eyes as I fail to make my usual cake-round. My eclipsing figure is absent from his doorstop. With no extra cake demand, his new store is forced to close.
Despite borrowing solely to invest, as any sensible person should, he has lost out. Furthermore, his original store is now in trouble. He not only has to pay off the bank loan he used to open his new store, but many of his previous customers are no longer buying as much cake as they used to.
It seems they, fat cake-eaters to a man, also have large bank loans to pay off. Unable to survive both the bank interest payments and the reduced demand from his customers, the cake-seller is forced to close his entire business.
As he shutters his cake palace for the last time, the cake-seller can only think of the his former employees, now jobless. He remembers their enthusiasm, their good humour, and their penchant for spending all their hard-earned money on plasma TVs. Now they have all lost their jobs, what will happen to the businesses where they used to spend their money?
The results of the original bad loan ripple on, and all because a bunch of fat troughers couldn’t stop eating cake.
Too much cake
People have been borrowing a lot of money over the past twenty years, and we’ve finally woken up to the consequences. But there may be larger problems on the horizon. Like cake sellers who goes out of business after their fat, cake-eating customers go on a diet, have UK businesses become entirely reliant on consumers who have no more money to spend?
UK consumers have reached the stage where they can’t borrow any more. More than that, over the coming years they’ll have even less to spend than they did before, as they’ll be paying off all the loans they borrowed during the boom years. And crucially, a lot of them may also start losing their jobs in the near future.
Our response to this has been to drop interest rates, hoping to keep the cake-eaters at the stall for as long as possible. But how long can that continue? Surely we should worry that, given borrowing too much and spending it on cake got us into this mess, borrowing yet more to support the cake-sellers may not be the best way to get back into shape.
If UK consumers have a collective heart-attack from eating too much cake, the cake-sellers will not sell another blancmange for a long, long time. If we take tough action now, at least a cake-eating trougher on a diet can still enjoy the occasional cake; some cake-sellers will still remain in business.
Unintended consequences
Read an extremely touching story on the BBC this morning, which is easily summarised but better read:
What is so profound about the story is that Mrs. Malcolm may have ended up in this situation not through any active decisions she has taken, but entirely through unintended consequences. This is not someone who pursued a life of crime, or actively sought the money the state had to offer. And yet, she finds herself in an inescapable, and desperate, situation.
Situations like these always bring to mind a bizarre question I heard someone ask ten years ago. We were doing First Aid training as part of the Coastguard, and someone I knew, who was prone to such things, threw out the question, “What if you find yourself in a dark alley, and suddenly get shot?” The answer, after a short delay, was, “Don’t put yourself in a dark alley with someone holding a gun.”
The message being that once you’re in a bad situation, it’s very complicated and painful to get out of it. Avoiding the situation in the first place is the best remedy.
This is a very good maxim for how to deal with many challenges in life. In the story of Mrs. Malcolm, we’ve got a hugely complex situation that will require a lot of time and effort to help those involved. And we’ve also got a great many other people, who are not yet in that situation, who we can help. If only we knew who they were, and how to help them.
We need to help all these people, and in doing so become responsible for problems which began before many of us were even born.
A Libertarian Comedian
Found this while trawling through a blog called The Devil’s Knife:
The blog as a whole is occasionally interesting, and occasionally annoying.
Came across a blog called White Sun of the Desert, which contains several excellent posts on the BP oil spill. It’s apparently written by someone within the oil industry, and contains far more information than the rather lacklustre UK coverage of the disaster.
And while I’m here, this video on European debt has made the rounds on the blogs this morning. Apparently put together by an Australian satirist.
The growing debt mountain
The front page of the Independent puts yesterday’s announcement of £6 billion less borrowing in perspective:
Bear in mind this is just the current debt the country owes. Every year we’ll be adding another 150 £1 billion blocks to that mountain.
There was also an excellent interview with Vince Cable on Newsnight last night, followed by a good piece on the problems facing Afghanistan. Well worth watching if you have the time, though the interview with Vince Cable can be best summarised as:
“Cutting £6 billion now was necessary to reassure investors in UK sovereign debt. There’s no doctrine on how far/fast to cut the deficit; we’ll have to see how the economy reacts.”
What makes the economy tick
The current media narrative follows two claims, the first that cuts now are bad for the economy, and secondly that cuts take money out of the economy. Both claims are wrong, and need to be challenged by people on both the left and the right.
Cutting public spending now is a good idea. There are plenty of government projects which we shouldn’t be borrowing money to support. The UK also needs to send a signal that it is serious about tackling its deficit, if only to avoid becoming the latest cash cow for the hedge funds.
We need to avoid cutting projects which fund long-term growth in the economy (better transport, education) while axing many of discretionary projects Labour favoured. Some recently-cancelled examples from the Department for International Development include:
£146,000 for a Brazilian-style dance troupe in Hackney, London; £55,000 to run stalls at summer music festivals; £120,000 to train nursery school teachers about ‘global issues’; £130,000 for a ‘global gardens schools network’ and £140,000 to train outdoor education tutors in Britain on development.
These are not things we want to be borrowing money to support.
We also need to realise that cutting public spending does not take money out of the economy. Public spending comes from tax, and the less government spends the more families and businesses have to spend.
It’s true that cutting spending too fast will cause problems, but the current suggestions of £6 billion of cuts are tiny compared the overall deficit (£150+ billion) and the government budget as a whole. We also need to bear in mind that excessive borrowing will sink the economy just as fast as excessive cuts will.
The trick will be finding the right balance.
Sifting for gold (1st Issue)
A superb summary of the economic history and problems facing Greece and the Eurozone, by Newsnight’s Paul Mason:
Beyond the door marked “Austerity”
Have been a fan of Paul Mason, mainly from his appearances on Newsnight, but more recently from reading several posts on his blog.
An interesting paragraph from the article:
When a Greek man calmly tells you his country is systemically corrupt, that you have to pay a bribe to jump the hospital queue or to pass your driving test, and that politics too is corrupt, geared to patronage and incapable of cleaning up the system, it is a moment of disarming frankness. When the man in question is George Papaconstantinou, the finance minister, that illustrates the scale of the problem.
The Guardian also has a good exclusive. Although it’s widely acknowledged Israel has nuclear weapons, I’ve never seen it confirmed by official documents:
