Daily archives: August 19, 2011

Faint Hearts

I hope that some of the sentencing overreactions to the looting will be corrected. But I saw one hilarious overreaction last night as Spurs supporters were herded past our flat here from Tynecastle after their match. There was the kind of massed phalanx of police that I haven’t seen since the miners’ strike, with armoured helmets and horses much in evidence. In the middle of this mass, much outnumbered by police, was a tiny little knot of Tottenham Hotspurs supporters, being herded towards Haymarket station.

Having seen Spurs hammer Hearts 5-0, I suspect the Spurs fans were too ecstatic to be annoyed. But it looked really extraordinary, so on going down to the chippie I asked a policeman why the huge escort – Hearts supporters aren’t known for violence against visitors. He replied very gravely that the looting had started in Tottenham, and they didn’t want that kind of nonsense here. So either the police had no intelligence on how many Spurs fans were expected, or they had decided to escort them three policemen to every fan. Scottish fear of the barbarian English is quite a wry concept.

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Owning the Parthenon

Ponzi schemes and finance bubbles of all kinds depend on it being in nobody’s short term interest to admit they are worthless – indeed to people having a terrible fear of the consequences once it is discovered the scheme is worthless.

Larry Elliott in the Guardian has an interesting article on how this worked in the great banking bubble. He quotes James Galbraith:

“There was a private vocabulary, well-known in the industry, covering these loans and related financial products: liars’ loans, Ninja loans (the borrowers had no income, no job or assets), neutron loans (loans that would explode, destroying the people but leaving the buildings intact), toxic waste (the residue of the securitisation process). I suggest that this tells you that those who sold these products knew or suspected that their line of work was not 100% honest. Think of the restaurant where the staff refers to the food as scum, sludge and sewage.”

At the moment, everybody knows that Greece will default and cannot effectively reform. But the consequences of admitting this are so disastrous, everybody is pretending not to know. However Northern European politicians are finding that, whatever they agree in cosy EU cabals, their voters are not stupid and are not happy to stump up for massive guarantees sure to be called, and massive loans sure not to be repaid.

Several countries, led by the Austrians, Dutch and Nokialand, now have political leaderships trying desperately to unpick the promises they have made, by demanding solid assets as collateral from the Greek government against any default.

This has caused some puzzlement in the UK Treasury, where a friend of mine is exasperatedly wondering how the Greeks are expected to find up to $100 billion of physical assets to pledge. Greece has a much larger state sector than most other European countries, but any possible assets are slated for privatisation under the vaunted economic reform programme. They can’t both be privatised and pledged for collateral. If Greece had secure reserves it could pledge, it would not be in this mess in the first place, while the tax office building in Thessaloniki or an old coastguard cutter do not carry much genuine market value.

They could, of course, pledge the Parthenon, Mount Olympus etc, I suggest to my friend. She seems to consider it for a moment.

“But think of all the fuss over just the bloody Elgin marbles” she groans.

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Kabul Attack

I am very sorry to hear of the attack on the British Council office in Kabul. I do hope that, as details of the dead and injured start to come in, the count does not rise higher, whoever they are, and that the British Council staff are safe. I am a great believer in the contribution of cultural diplomacy in international peace and understanding, even if I do not support every detail of the British Council.

But this attack does represent, yet again, the folly of the occupation of Afghanistan. It has reinforced old anti-British sentiment dating back to our first invasion of 1839 and a series since. It will be generations before we might be forgiven our bombings, and I can guarantee you that the British Council will not be able to maintain any effective operation in Kabul after our troops slink away defeated.

The British Council opening there at all is empty bravado that has now cost lives.

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