The price of everything

The end of the long con

“Around 2002, a developing country defaulted on its debt. Following protracted negotiations, agreement was reached that the bad debt would be replaced with a smaller amount of new good debt, with all investors losing around half their original investment. The country’s finance minister, accompanied by a vast retinue of assistants and bankers, embarked on a road show to sell the deal.

 

“In Tokyo, the meeting attracted a vast throng of aged Japanese retirees, who had invested their savings in the defaulted securities, on the recommendations of financial advisers to earn interest rates higher than those available in Japan. At the end of the minister’s presentation, a frail, ancient Japanese woman stood up and spoke. In a quiet steady voice, she explained the hardships that the loss had caused. She wanted to know “whether there was any chance she would see any of her money before her life ended.”

 

-       From ‘Extreme Money’ by Satyajit Das.

 

In July 2008, a bank in Zimbabwe cashed a cheque for $1,072,418,003,000,000 (one quadrillion, seventy-two trillion, four hundred and eighteen billion, three million Zimbabwe dollars). It had taken 28 years from independence for the former colony of Rhodesia to become an economic basket case.

“Inflation in Zimbabwe was 516 quintillion percent (516 followed by 18 zeroes). Prices doubled every 1.3 days. The record for hyperinflation is Hungary where in 1946 monthly inflation reached 12,950,000,000,000,000 percent – prices doubled every 15.6 hours. In 1923, Weimar Germany experienced inflation of 29,525 percent a month, with prices doubling every 3.7 days. People burned Marks for heat in the cold Northern German winter. It was cheaper than firewood. The butter standard was a more reliable form of value than the Mark. The German government took over newspaper presses to print money, such was the demand for bank notes. The abiding image of the Weimar Republic remains of ordinary Germans in search of food pushing wheelbarrows filled with wads of worthless money.”

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Juking the stats

ASSISTANT PRINCIPAL: “So for the time being, all teachers will devote class time to teaching language arts sample questions. Now if you turn to page eleven, please, I have some things I want to go over with you.”

 

ROLAND “PREZ” PRYZBYLEWSKI (a former policeman): “I don’t get it, all this so we score higher on the state tests? If we’re teaching the kids the test questions, what is it assessing in them?”

 

TEACHER: “Nothing, it assesses us. The test scores go up, they can say the schools are improving. The scores stay down, they can’t.”

 

PREZ: “Juking the stats.”

 

TEACHER: “Excuse me?”

 

PREZ: “Making robberies into larcenies, making rapes disappear. You juke the stats, and majors become colonels. I’ve been here before.”

 

TEACHER: “Wherever you go, there you are.”

 

-       From the HBO TV series ‘The Wire’.

 

At the end of last week, pictures of fruity girls jumping for joy at their A Level results managed to push the grim stock market news off the front pages for a while. Pictures like this:

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Crowd Control

“The degree of the moves shows the markets are pricing in something really apocalyptic.”

 

-       David Shairp, strategist at JP Morgan Asset Management, quoted in the FT.

 

Extraordinary scenes here in the UK, with a parasitical underclass robbing, torching and looting businesses. But enough of the bankers – why did a segment of Britain’s ‘lost’ urban generation suddenly turn feral ? The comparison between out of control financiers and disaffected violent youths is not merely a tired snipe against our unreconstructed banking class. There are wider social tensions busily simmering away. Perhaps some of the rioters who took to the streets of London, Birmingham and Manchester last week have started to twig that they face a lifetime of higher taxes (if they can get jobs at all) and diminished social services courtesy of decades of swelling “entitlement”, the accumulated benefits of the baby-boomers that preceded them, and the damage wrought by self-interested financiers playing at casino capitalism of no social merit whatsoever. Not so much Generation X as Generation Ex: ex-jobs, ex-growth, ex-prospects. We have had politicians pocketing illicit expenses, and bankers trousering unjustifiable bonuses even as the financial system totters at the cliff edge. Is trashing Miss Selfridge really so different ?

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A Modest Proposal..

..For Preventing Bankers From Being A Burden To Their Country, And For Making Them Beneficial To The Public

It is a melancholy object to those who walk through this great town or travel in the country, when they see the streets crowded with bankers, all in rags and importuning every taxpayer for alms. These bankers, instead of being able to work for their honest livelihood, are forced to employ all their time in money printing, speculation or in sponging off the state.

I think it is agreed by all parties that this prodigious number of bankers is in the present deplorable state of the kingdom a very great additional grievance; and, therefore, whoever could find out a fair, cheap and easy method of making these bankers sound, useful members of the commonwealth, would deserve so well of the public as to have his statue set up for a preserver of the nation.

But my intention is very far from being confined to provide only for commercial bankers (i.e. professed beggars); it is of a much greater extent, and shall take in the whole number of investment bankers and central bankers into the bargain.

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