Fool's Gold: Review.

An enthralling race through the anarchy, selfishness and ultimately vandalism of financial capital. It puts the last decade of capitalist "development" in context and is taut as a thriller in its last couple of chapters.
Although many of the processes are complex Gillian Tett explores the foundations of them well so even if you get a little bit lost you have the basic understanding of what the bankers were getting up to.
Her journalistic style makes it readable but I would criticise the referencing which is patchy. It seems to be trying to nod its head to academic work (Tett studied anthropology prior to FT journalism) but not fully engaging with it. The references either should have been ditched or more fully developed. Perhaps the latter could not happen because of speed of publication as it is pretty contemporary.
Though Tett states in the conclusion that she is angry over the mayhem unleashed by the banks her prose does not really reflect this in the way say Naomi Klein would. Understandable given the different politcal complexions but this position is a boon here. Taking a fairly diffident style in reporting the banks dealings in credit derivatives as they get more and more ludicrous is actually pretty effective.
I am not 100% sure why she chooses to focus her discussion through the prism of JPMorgan and she occassionally falls into the trap of character biography of some of the protagonists (see Robert Peston review from last year) but normally pulls back from the brink.
It definitely deepened my understanding of how the banks pursued profits through essentially gambling on losses and defaults, hedging their bets, swapping risks and expanding credit exponentially. It made me angry and I will use it for future reference.
One quote to show the madness - when the sub-prime mortgages started to default in big numbers in 2006 the banks actually increased their exposure to it : " Between Oct and Dec 2006 banks issued a record $130 billion in CDOs alone double the level of a year ago and 40% were created from sub-prime mortgages". And they wonder why people dont trust the banks!

Return of the Samurai.

With all the exaggerated talk of an economic recovery sounding more and more like an alcoholic convincing himself he's kicked the habit and can just have a couple of drinks there are some pretty significant happenings out east, far east which undermine the whole picture.

It should be noted the first foreign leader that Obama chose to meet was the PM of Japan, Aso on February 24th of this year. Even though he was a lame-duck leader who was going to lead the LDP to its worst result in its history a near wipeout for a party that had run the country for nearly 50 constant years. The reason was, of course, economic Japan holds a massive amount of US Bonds -second only to China- thus supporting the massive debt which American capitalism has.

This has lead to a lot of resentment by buying dollars they are adding to their problems by strengthening their own currency. This means that exports - a critical part of their economy - are weakened. Sony made their first loss for 14 years. The economic turmoil largely led to the defeat of the LDP the only other time they have lost power very briefly was in response to the recession of the early 90s which its domestic economy has never fully responded to.

Although the new PM Hatoyama is an establishment figure his financial advisers took a much more strident approach to the US - this was also reflected in some foreign policy pronouncements. For example reviewing the US military bases on the islands. Concretely they want to promote Samurai bonds based on yen - more importantly they want America to buy them so that Japan is not so reliant on the dollar.

The Finance spokesman for the new governing party the DPJ wants to promote other bonds as reserve including IMF and Samurai bonds. Obviously the current situation suits the US as they remain the world's reserve currency everyone has to come and buy them. This in turn finances its debt. So will the new government push US capitalism on this issue? This will have a bigger impact on global recovery than a lot of the superficial stories appearing in the British press. There is speculation that this is just nationalist rhetoric for the election and this wont materialise.
Indeed it seems that the Finance spokesman who promoted this policy :Masaharu Nakagawa may be being sidelined with veteran politician Fujii aged 77 likely to get the job. This shows the issue may not be live for a while but it is definitely one to watch if/when the economy goes down again.

Cuddly capitalism?

Review of BBC Business guy Robert Peston's book: Who Runs Britain?


Very readable and full of jaw dropping statistics on New Labour's obsession with the super wealthy and their lifestyles which is likely to bring them down. Particularly good are the chapters on private equity, pensions and the peerage scandal.

There are problems with work however - it doesnt really feel like a whole book more a collection of writings - which it is not sold as. The chapter on Marks and Spencer for example doesnt even follow the same structure as the rest and repeats points made in other parts of the book. The conclusion is also contradictory which strikes at another flaw - Robert Peston's ambiguity.

Some of his writing condemns the wealthy with also harbouring a large amount of admiration for them. He condemns pension schemes for not following private equity in taking huge risks - surely if they had done this we'd all be in even biggertrouble than we currently are. His support for Post Office privatisation in the current climate is also faintly bizarre.

His political position reminds me a bit of Brian Gould in the 80s Labour Party - remember him! A moderniser at the time calling for popular capitalism in 1987 booed at conference etc but by the time Smith was dragging Labour to its neo-Liberal position Gould ended up on the left of sorts! I think he stood against Smith in 1992. Essentially a lover of the exploitative system of capitalism but not its excesses.
Having said that a good guide to the current crisis - not completely thorough though - it was published in the midst of it and that does come across

I'll Protect you for the Hooded claw

As the economic crisis maintains its momentum despite the stock exchange displaying its usual bi-polar elements, there are worried glances by the neo-liberals as regards the p-word: Protectionism. This is anathema to the globalisation disciples like Brown, Blair etc yet although all the leaders are protesting against the possibility of bringing back national barriers there are several straws in the wind that shows the big capitalist powers are drawing up their drawbridges.

Sakorzy in France is trying to woo car business back from Slovenia - fellow EU member. As discussed below China have killed off the Coke deal: dead in the sugary water. American Congress puts Buy American steel clause in new public building projects. Oz politicians campaigning against the Chinese state owned metal company buying a huge stake of Rio Tinto mines. Even Britain which under Nulabour was arguably the most globalised part of the global economy - literally everything was for sale- hence why belief that Britain will suffer more than most other countries in recession is urging Banks to lend to domestic customers hence negating foreign investment.

Its all little bits and bobs just now but could mount up particuarly if populist politicians take up the mantle - sadly more likely than the left at the moment given the general weakness of socialism internationally.

In truth free trade was always a bit of a myth - witness the continual failure of the WTO talks but the shift is still significant, particularly ideologically.

In other news Hungary latest to lose PM cos of IMF austerity and Serbia need to go back for more cash with conditions.

As obsolete as...?

Doing my usual reading of my paper from the back business pages first - it's the only way to really understand the world - I came across a small bit about the way the economic crisis has hit Eastern Europe who were already up to their eyes in debt badly.

Our old friends the IMF as outlined in Naomi Klein's Shock Doctrine have got their claws into Hungary and Latvia and are eyeing up Serbia, Agencies are giving Latvia a junk rating for credit which is almost unheard of for a country. My pals Wullie and Jo were recently there and said that heavily armed cops were very visible. No wonder - there were riots in January not really reported anywhere but see here: http://www.youtube.com/watch?v=o6TNr1OVVrA

This has resulted in the PM resigning last week - surprisingly because the IMF told him to cut public expenditure and raise taxes. The IMF are still circling though so whoever wins an election if it is called expect them to be told what policies they have to implement whatever their policies were.

And yes I know that the photo is EMF but in my defence it is unbelievable....

L-Idyll: the brutal truth.

A relatively late trip to supermarket for weekly shop. Bit down cos of end to good weekend and numerous domestic and work tasks mounting up. But a chat with the woman on the check out gave a big dose of perspective and showed how hellish this economic crisis is getting.

My local supermarket Somerfield was bought out last summer by the Coop. So it has been known that our place is going to go and replace by Lidl who must have bought the site in G hill.

So staff have been worried a lot as my weekly chats has shown. If they would be kept on what the transition would be etc.

The checkout worker told me that at a meeting on Friday Lidl announced that the the building would shut for 6 months from March 7th and all staff would lose their jobs. Although 100 work there Lidl only plan to have 15 staff who would multi-task. They also have to sort out their own tax and insurance - essentially be self employed. No sick pay or paid holiday entitlement. Absolutely outrageous and shows how capital is using the crisis to carry out a lot of excesses.

You can sense the despair in the shop and the shelves are almost bare - no new stock being delivered a la Woolies and Zaavi. My worries over the renegotiation of my weekly shopping ritual is nothing compared to the shock facing 100 low paid shop workers. Grim grim grim....