It is Obvious

Chris Rick has got altogether too much to say

Archive for July, 2012

Man bites dog – they always do

Posted by chrisrick13 on July 7, 2012

It is obvious: it is alright to be paranoid.

I cast my mind back to 2008 and Lehman brothers and their bankruptcy.  Nearly 4 years since that happened.  How much has banking regulation changed in that time?  How many bankers have been put in jail?  Zero on both counts.  I do not have the words to express my contempt, and it is not at bankers.

The government has proposed a parliamentary enquiry into the latest, not betrayal of trust, but the latest discovered one.

The Labour party have said that is no good and proposed a judicial enquiry.  This completely emasculated the parliamentary enquiry.  The government cannot possibly put up their hands, apologise and express their thanks to the Labour party for putting them straight.  It is almost as if a couple of bankers wrote the script…

It is obvious: it is alright to be paranoid.  The consequences of being wrong are much less than if you are not.

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Count the feet

Posted by chrisrick13 on July 4, 2012

It is obvious: rational organisms are predictable

It is the basis of economics.  If you act in your own best interest then any large number of you will act with consequence in predictable ways.  Thus the future can be predicted and it is possible to change the rules so that the mass of people will act how you want them to.  The only problem is the comprehensive failure of economics to predict or direct in recent years.  Part of it is because of the many exotic financial instruments that small numbers of people can operate for very large effects.  They may well still be predictable but they have very different agendas and are very mobile in their actions and effects.

So to the Greek people.  If I was Greek I would have all my Euros in a foreign bank where they could not be turned into drachmas.  They are doing that in large numbers.  I would also try and maximise the money I have.  One way to do this would be to stop paying bills.  Due process in the chaos that is Greece will be lengthy.  At the end of it on the last occasion I pay, but I have put a 3, 6, 12 month delay into paying a bill.  If I do that out of choice then the people I owe money to have to do that because they don’t have my money to pay to their creditors.  The effect quickly runs through the economy.  So the economy is slowing rapidly.  This means that  the government cannot meet the conditions it signed up to and  receive bailout money.

Do not forget that the bailout money is nothing more than a loan so the country can go into more debt to keep paying its bills until the economy recovers, growth returns and it can start paying the money it owes.  This is an equation that has no solution.  It is modelled on the bankruptcy where the liquidator comes in and tries to buy time to save the business by still trading to get income and  stops paying bills to gain cash flow.  Even if the EU and IMF can and are prepared to put money into Greece in large amounts over a long period until the country can pay its way in 20 or 30 years time, the Greek people will not put up with that.  As a rational person a Greek citizen can see that they can push the EU/IMF for as much as they can, ignoring any conditions, and leave the Euro when the money stops.  It is far and away the best option.  So it matters little what the EU does, other than giving Greece a couple of hundred billion and writing off all debts, the Greek people will act in a perfectly predictable way.

Have the leaders of the EU seen it yet?

It is obvious: rational organisms are predictable to all except those who need to act on those predictions

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