Wednesday, July 28, 2010

I don't know what I'm talking about, but hear me out

The FT blemishes its usual journalistic high standards with a shocking article on climate change. The article reports that the well known subversive left-wing organization the US National Oceans and Atmospheric Administration has released new data confirming what all data from any serious research body confirms, and that anybody older than 30 can pretty much figure out from memory - the world is warming.

The article gives the NOAA report a fair hearing, but then spends exactly the same amount of space citing various 'climate change skeptics', who still don't buy it. Who are these skeptics? Well, the usual figures include Pat Michaels of the Cato Institute and a guy from the Competitive Enterprise Institute (whose qualification to research climate change follows naturally from its slogan 'Free Enterprise and Limited Government'). It also cites Stephen Goddard, 'a blogger', and someone called David Herro 'a financier who studies climate change as a hobby'.

Now I would like to think that the FT's readership will look at this and think 'what a bunch of dorks the climate skeptics are'. But surely some won't crack the code? Why give half the space in an article in a paper like the FT to people with no qualification to say anything about the issue? Do they ask David Beckham what he thinks about financial reform?

On reflection, David Beckham has as much chance of saying something meaningful as many economists. But climate science is real science, and I honestly don't care what some random blogger or banker thinks about it.

Let's hope they're right

Following on from the recent debate about public spending cuts, Mervyn King's appearance yesterday offers us a more rounded view of where British macroeconomic policy is going. Unlike Claude Trichet, King is quite happy to maintain ultra-loose policy, even suggesting a return to quantitative easing is necessary. All this in spite of inflation being well over half a point higher than target.

If things go well, the government can reduce the deficit and let monetary policy take the strain. All that of course depends on demand being sustainable at current interest rates. If not, we're ****ed.

Tuesday, July 27, 2010

More fiscal fairy stories

The latest piece of neoliberal ideology masquerading as solid fiscal policy advice in the FT can be found here. Apparently 'Austerity drives can unleash confidence'.
The British state will, by cutting its spending, encourage private initiative, so fiscal consolidation can be pro-growth, as in Denmark, and Canada, some time or other.
I'm hearing this so often now it sounds like there is some kind of crib-sheet being sent out by the Mont Pelerin Society to idle hacks who want to push on with the 'shrink the state' rhetoric.

We can't leave it all to Paul Krugman. Where are the leadership voices here?

Friday, July 23, 2010

Niall Ferguson, macroeconomist to the stars

Niall Ferguson has written an amazing piece contributing to the FT's austerity debate.

Not surprisingly, Ferguson doesn't buy the Keynesian line that deficits stimulate economic activity and help the recovery from the financial crisis. No shocks there. The shocking thing is what a pathetic argument he presents.

So for Ferguson, the deficit run by the US, whose output is a third of the world economy, looks like the policies followed by multiple defaulter Argentina. The Chinese who are bankrolling the US deficit could withdraw and leave the American government high and dry. Even though that would leave them with a pile of worthless paper and make their own products unsaleable in the process. Anyway, the obvious thing to do is abandon this reckless fiscal loosening and adopt balanced budget policies, like... yes, like Ronald Reagan in the 1980s (the 1980s don't count as history, presumably, so Ferguson has no idea what happened in that decade).

Ferguson is embarrassing. There is a coherent argument for fiscal tightening, and it is nicely expressed by Marty Feldstein, also in the FT. For Feldstein, a 'double dip is a price worth paying'. The ideal policy would be a gentle fiscal contraction gaining in intensity over time, but voters and markets will not believe that governments will stick it out, so the only credible policy is to tighten straight away. This will increase unemployment in the short run, but that's a price worth paying if we are to return to fiscal balance.

Now that is a coherent conservative position. Why can't Ferguson come out and say what he thinks: that the destruction of jobs is a price worth paying for a balanced budget, instead of pretending that government deficits crowd out private sector investment, investment which would produce goods that no-one will buy? That would make sense, even though it is a still a questionable argument - 'paradox of thrift' and all that.

Tragically, the Ferguson line is pretty much what the Con-Lib Dem coalition seems to be buying into. Public sector workers will be thrown out of work, and the government fondly imagines the private sector will hire them all with the funds no longer placed in government bonds. We'll see.

Hoover in Frankfurt

Now that everyone has forgotten what the fear of a financial meltdown feels like, Jean Claude Trichet feels like it's time for a return to business as usual - fiscal consolidation is back on the agenda. In an article in today's FT, Trichet tells us 'it's time to tighten'. Everybody. Obviously, the private sector, brimming with confidence, will spend what the governments stop spending. Or maybe not. Maybe instead we'll have 10 years of high unemployment, just like in the 1980s. But that, of course, is a price worth paying, to get deficits back down to 3%. And even if we have a double-dip recession and deficits don't manage to get back down to 3%, at least Jean Claude will have done the right thing.

Monday, July 12, 2010

What's wrong with Dutch football

Beats me. But thank God they lost. Holland brought us back to the 1970s: not total football, but the kind of systematic violence that teams like Leeds United used to adopt to frighten teams into defeat. Spain, to be fair, were up for the fight and managed to keep their cool for the most part. Great for Iniesta to take the glory, after he did the same in the Champions League.

I'm wondering what the reaction will be amongst Catalan nationalists, with so many non-Castilian and Barcelona-based players? Visca la selecció espanyola? Or just visca Catalunya (conveniently ignoring Casillas' great save or the fact that Iniesta is from Albacete)? Not easy to see this team as a symbol of rancid Francoist nationalism.

Thursday, July 8, 2010

What's wrong with the world we live in

Well, obviously plenty.

But it's hard to find a more eloquent illustration of what is totally nuts about the world in 2010 than this little story told in the FT.

Hundreds of football fans heading for the Spain-Germany semifinal - and what a game - on scheduled flights were unable to land in Durban because the airport was clogged up with private jets. The obtrusive celebs included King Juan Carlos of Spain (OK we'll let that pass) and such well known football fans as Paris Hilton and Leonardo di Caprio.

This is the world we live in. We must make way for the rich, whether it's trying to get to a game, or - maybe more important - paying the bill for the crazy ways they tried to get richer when standard productive investment got too boring for them. Maybe people will apathetically let this happen for ever. But if at some point they decide enough is enough, it's going to get ugly.

Sunday, July 4, 2010

What's wrong with English football part 3

Just thought it worth noting that two of the four countries left in the World Cup have no Premiership players in their squads (Uruguay and Germany), whilst Spain has 3, but only Torres has played consistently (and poorly, so far). The Netherlands has 5 Premiership players in the squad, but only three have played so far.

On the other hand Australia, Nigeria, and France had 7 players from English teams, and failed to get out of their group, as did the US who scraped out of theirs. And what to say about the performance of the team with the most Premiership players... (England, with 23 out of 23).

Maybe Joe Cole's remark that England were 'simply not good enough' should get a prize for statement of the obvious. The only reason it seems shocking is that we remain convinced that the strength of the Premiership should be an indicator of the strength of the national team. But in fact there is another way of looking at this: another striking feature of the England squad is that all 23 players have played their entire careers in the Premiership, meaning that they have at no point been exposed to a different approach to the game (counter-attack football remaining a particular blind spot).

The Premiership may be the 'best league in the world' (may be) but many of the world's best players do not play in England; and England's squad is perhaps uniquely lacking in the experience of playing regularly outside their home country (only Italy, another tournament flop, can match this). Some of our players (Lampard, Gerrard, Rooney, Ferdinand) are big stars in the Premiership, but most of the squad are most certainly not. So the Premiership gives a stage to our best home-grown players, but the success of Premiership teams is just down to money, which allows us to sign many top-class players from overseas. It has nothing at all to do with the quality of English footballers, which has barely improved since Sky transformed our national game.