Posts tagged with "capitalism"
Sunday, 21. December 2008, 02:55:40
pyramid, swindle, Money, Ponzi
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Last week the BBC finished it's dramatization of Dickens' Little Dorrit in fine style. As anyone who knows the story is already aware, the grand denouement comes when Mr. Murdle's bank collapses and pretty much everyone in London who has any money to spare promptly goes bankrupt, all except...
Well naturally there is more, but I won't spoil it all for you just in case you should want to read the book at some time and expand your mind. Suffice to say that Murdle was running a Ponzi scheme, paying out dividends to existing investors from money invested by newcomers. Naturally it all falls apart, no one has yet come up with a Ponzi / pyramid scheme that didn't.
Some of the clues that Dickens leaves in all his stories circulate around certain character's names. Some of them are - shall we say? - 'onomatopoeic'.
Fast forward to this week, and meet one Bernard L. Madoff, his surname is apparently pronounced 'made-off', which is precisely what it did with a great wodge of a lot of other people's money. You'd have thought the name would have been a bit of a clue. Another clue might have been that his hedge-fund operation was completely independent of his other business and was to all intents and purposes a one-man operation. Some reports have mentioned his son as a guarantor, and the size of the accounting firm that Okayed his books varies between one and three personnel, although all stories agree that Madoff was their only customer. It's undeniable that the firm ran a hedge fund which was not registered with the SEC until September 2006 and, according to reports, never inspected thereafter.
So why would lots of rich people who are now seriously less-than-rich trust this operation which, when analysed now, gives the distinct impression that it was not only a one-horse operation, but that it wasn't even being operated by the horse? Well maybe this had something to do with it. As a former chairman of the Nasdaq stock exchange Madoff was a big man on Wall Street, not convinced yet? Try this then. His "Thoughtful analysis of how modern regulatory systems make cheating virtually impossible" has been one of the most viewed clips on Youtube in the last few days. How can you not trust a guy who gives lectures on Youtube? He's one of Today's Generation, he's hip to the jive...
Sorry, I drifted away for a second there.
The point is this guy got away with swindling a lot of people for a very long time, and while we can chuckle with glee at some rich toffs suddenly finding themselves in the same position as the rest of us, it's also kinda sad to see some charities have been broken by his shenanigans, and it's those of us who support charities that will have to make up the shortfall.
Barclay's bank are saying that it may be two year's before banks get back to lending money "Normally". They're blaming the world financial crisis, I think they had money invested with MurdleMadoff.
The guy that made that gloomy prediction was Barclay's chief exec John Varley.
Now there's a Dickensian name if I ever heard one.
Tuesday, 18. September 2007, 23:30:48
groo, capitalism, finance, Northern Rock
Yup. If I'd done what I suggested yesterday and bought stock in Northern Rock I'd already be showing a profit. It happened faster than I thought because the government decided to issue a guarantee that all monies invested in NR would be backed up by we the people. Actually they claimed that it was being backed up by them, but I don't see the cash coming out of their pockets.
And what do I think of this turn of events? I can see you're wondering.
Dumb, dumb, dumb, and dumber than that, to be perfectly honest. You can't go around promising to bail out one industry without all the rest wanting a share. Mark my words, Grasshopper, the rush starts here. It won't be restricted to business either. I'm thinking that the pensioners who lost out on various mishandled pension funds will be politely enquiring if the government would like to provide similar backing for their funds.
I lost a few quid with an Australian insurance/assurance company that decided the market over here was too tough and went home, leaving my policy in limbo, the interest rate dropped to 1% but I couldn't cancel because the early cancelation clause was horrendous.
My claim for government assistance is in the post. :holding my breath:
Monday, 17. September 2007, 19:41:49
Northern Rock, finance, capitalism, mortgages
Well I guess I've written about northern soul, it's time I wrote something about Northern Rock.
In Britain, as, I assume, in most of the other countries of the world, we support our banks. It's bad for the national image if the banks go belly-up. Our method is to use nanny, or as it's more commonly known, The Bank of England. If a bank hits the skids because of something the government's done or not done, in comes nanny with her hands in the purse, all the bank needs to do is ask.
That's what Northern Rock did.
There are many reasons for Northern Rock's trip down the pan, first and foremost is the problem that the US mortgages market is having at the moment. Suddenly banks became wary of 'Spreading the load' and they cut back on lending money to one another. Northern Rock likes to borrow money from other banks. They do this to fund mortgages that they issue on quite ridiculous terms, terms that the borrowers will be completely unable to meet should they suffer any financial setback whatsoever during the run of the mortgage, which is sometimes right up to retiring age. They are, in fact, banking on their victims to improve their financial position in order for them to pay off their mortgages. This is completely legal, but also slightly dodgy, and the other banks have decided they don't want to be a part of it if the mortgage industry is in meltdown.
David Cameron, the leader of her majesty's opposition, has of course got an opinion on this. It's Prime Minister Gordon Brown's fault. This is odd because in the early days the Conservatives were claiming that the reason Brown was so successful at handling the economy was that he was just doing what they had already been doing, and there's the rub. Brown's (And ipso facto the Conservatives) policies are certainly partly to blame, but what is Cameron's solution? Well as usual he doesn't have one, he knows the problem, and gives every indication that he has the answer, but he never actually tells us what it is. Or maybe he does know what it is but doesn't want to say so because it goes against everything he believes in.
The system doesn't work.
It doesn't work because stupid people who can't work out for themselves that if the Bank of England is backing Northern Rock then it won't go bust unless the 5th wealthiest nation in the world goes bust, queue up for hours, days even, just to withdraw their money and put it into another financial organisation that is just as unlikely to go bust. The effect of this is to create a self perpetuating prophecy. The bank's assets diminish and its shares start to fall. But it still has all those mortgages bringing money in, so it still has a regular income, making it a prime target for a takeover. If I had money in Northern Rock I'd whip it out and buy shares in the company right now.
So who's the loser in all this? On the face of it, no one, but when the takeover happens I wouldn't want to be one of the people who has a mortgage with the company...
Monday, 16. July 2007, 16:23:18
short-termism, politics, capitalism, rant
Short termism is a plague of democracy. Proof, if it were needed, that even the best of systems has its faults. Someone once said that the best form of government would be a benevolent dictatorship, which is probably true, but since it's about as likely as workable communism or perfect democracy we'll give that one the flick.
"But wait!" I hear you cry (Bloggetic licence
), "Surely there are workable examples of benevolent dictatorship? What about Cuba, or China?" Well let's forget for the moment that both of those are actually communist states and accept that they are in effect dictatorships, given that their leaders are there for the duration. This
should give them the option of taking long term decisions.
So how come neither of them do?
I've decided that mankind is incapable of long term planning. If the figures coming out of China are correct then as a result of their surge into the capitalist arena one in five of their citizenry in the 'developed' zones are now clinically obese. It's taken them less than a decade to almost catch up with Britain and the USA (We're 1 in 4 in case you didn't know).
Why didn't they spot that one coming? I asked (And received no reply, how rude can a nation get?) in a previous blog why China couldn't learn from our mistakes as they industrialise their nation, and not do stupid things like polute their own people. Now this.
Obviously no one looked that far ahead.
So if they can't do it, what do our politicos with only a few years of guaranteed power do?
Well, not forsee that those pesky Chinese and their opposite numbers in India might want some of our food for a start. Now that some of them have money they inexplicably want to eat good food. The same good food that we already have dibs on, the swine. Our problem is that most of this food comes from overseas, and those unspeakable foreigners have the shear audacity to use our capitalist system against us and sell the stuff to the customer that doesn't keep making demands about how well they treat their employees and the environment and other awkward stuff like that.
And why are we buying all this stuff from abroad? Because many years ago some other short-termist idiots didn't realise that allowing our population to reach the point where we couldn't feed ourselves was not a good idea. As a result of this the Germans had loads of merry fun taking out our supply ships in an attempt to starve us out. They'd have succeeded too if it wasn't for the fact that... well... that they didn't (Note to self: Watch the next WWII documentary that comes up and learn something...).
Where's this short termism taking us next? Well Gordon Brown thinks building millions of homes in the south east of England would be a start. Apparently the idea that all these new homes would probably be snapped up by the idle rich who are already responsible for several towns and villages being less than 50% native hasn't struck him, nor has the simple logic that if everyone moves into the south there won't be anyone left in the north, which will not incite new businesses to set up shop up there.
What I'm never going to understand is why capitalist systems suddenly get all soft and squishy when it's their backsides in the blender. The roads aren't big enough for all the lorries. Fear not! We'll build new roads across our scarce countryside. People are using these new roads to come here and there's no houses. Not to worry, we'll build new houses all over our scarce countryside. There are people living here and they have no jobs. Fret ye not. We'll let industry run riot over out scarce countryside.
The laws of supply and demand say that if we've got it we'll supply it, if we've not you can't have it. So why not just tell the lorries that if the roads aren't good enough they can shift onto the railways, that if there are no homes people should go and live where there are houses, and extending this logic, if Heathrow is full then
no more 'planes can land there, it's not some kind of God given right, and if that means that some people aren't going to get their holiday in the sun then they should have booked earlier then someone else wouldn't be getting their holiday in the sun. Holidays in the sun may be jolly nice things to take, but they're not a right either.
The list must be endless. Build cars that can't exceed the speed limit, renationalise the utilities, put buses under council control, make owning a house that isn't lived in for over 180 days a criminal offence, stick a legal limit on the number of kids being dragged screaming into a crappy future a family can have...
All unpleasant and unpopular, but all decisions that someone somewhere
should be taking, for the sake of the future. But short termism won't allow it. People must be pleased right now so that they'll vote for us now, not 50 years into the future. Meanwhile, for some inexplicable reason, great swathes of the rest of the world want to be just like us, and the only thing that's holding them back is the fact that we want to be even more like us than they do...
Saturday, 14. July 2007, 11:34:22
stupidity, radio, grunch, capitalism
Amazingly, 'Ofcom' isn't a website dedicated to getting us all to switch off everything to save the planet, it's the organisation that controls the radio waves in the UK, although why they didn't just call it TOTCTRWITUK, or maybe an anagram of that, I don't really know. What does 'Ofcom' mean? Please tell me it's not 'Office of Communications', I'd much rather it stood for 'Obstinate fargling creatures on methadone' or something else more appropriate.
According to their website "The radio spectrum (the frequencies on which services are broadcast) is a scarce resource; therefore, the government has empowered the Radio Authority to plan and manage its use for the commercial radio sector. This is to ensure that the relevant frequencies are used efficiently and effectively."
I don't quite see the connection between 'Commercial sector' and 'Scarce resource'. Why exactly should scarce resources which by rights should belong to everyone, be given to the commercial sector? And since when has the commercial sector used anything efficiently and effectively? I think there are a couple of tribes about to be thrown out of their rainforest who don't quite see things that way. Maybe it depends upon what you actually regard as being 'effective' or 'efficient'.
Having money does not make you an expert, it makes you rich. There is no evidence to suggest that just because you could afford to bid more for your bit of the radio spectrum you have a better plan for it, it simply means that you're going to have to make a lot more money to pay for it, and that means heading straight for the lowest common denominator with money in its pockets.
Adult orientated pop with loads of flashbacks to a better time then.
It's long been proven that pop radio makes money, so the pop radio people can afford to bid big and win the national licences, thereby giving us national pop stations. Niche markets like jazz, country, soul, or Himalayan throat music can only afford, at best, regional, and more often, local licences. Now c'mon, is that really efficiency in action? It's obviously not effective because it means that huge swathes of the country aren't covered by a station playing their kind of music.
To make niche market radio viable it needs a national licence, that way it may just drag in enough listeners overall to pull in enough advertisers to pay for it. Pop radio can survive quite happily on a local licence, any city in the country has enough pop fans to drag in the ads and pay the bills for at least two stations.
So why are the licences being handed out in the opposite direction?
Answers, on a postcard, to Ofcom, please.
Tuesday, 3. July 2007, 16:46:04
sport, football, capitalism, rant
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So, in view of my generally low opinion of sports and my overwhelming dislike of pretty much any political system on the planet, here's a blog about football and capitalism.
This is a quote from the BBC news site.
"Charlton Athletic are to announce the shock closure of their women's team. The club's entire women's section - senior teams, academy and centre of excellence - are to be scrapped.
The decision is part of drastic cost-cutting measures being carried out following the club's relegation from the men's Premier League last season. Women's team manager Keith Boanas confirmed to BBC Sport: "All the staff involved in the women's set-up have had their employment terminated." An official club statement is to be made next week but on Friday, Charlton chief executive Peter Varney released a statement outlining a "significant level of cuts" at The Valley.
Captain and England defender Casey Stoney, angry at the closure of the women's section, said: "I'm disgusted with the club - the men get relegated and we get punished. The club's only trophies in recent years have been won by the women's team - and in the last four seasons we were the only side apart from Arsenal to win major honours. Seven weeks ago we played in front of a record crowd at the FA Cup final - that's now our last match and I'm totally gutted for everyone involved on the women's side."
In other words the men's team get relegated, this means that all that lucrative TV money all but dries up and they have to make cutbacks, but the unsuccessful men's team are still the biggest earners so the losers are the (3rd in the league) successful women.
There are so many things wrong with this that it's hard to know where to start, let alone when to end. It proves that there's no point in being good at what you do, it's being popular that counts. Anyone else noticed that that applies to pretty nearly any business you can think of? It shows that the top clubs are way too greedy for their own good. They use their power and influence to make sure that they get the bulk of the money, and that therefore there will never be anyone who can compete with them to interfere with that cash flow. Anyone else noticed that this isn't restricted to football?
What's sad is that there will be scores of people up in arms about this, and not one of them will consider that it's the fault of the system.
I don't doubt that a backer will leap in from somewhere to make a hero of himself and save Charlton's women from ignominy, but he's gonna be somone else with more wealth than anyone could possibly deserve to have spending money that could be used to help out people who really need help while the system of over-rewarding the guys who already have too much just money rolls on...
It's being so cheerful as keeps me going.
Friday, 9. February 2007, 21:54:38
Socialism, capitalism, communism, rant
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It's an argument that occasionally breaks out on various forums around the net. 'Communism doesn't work'. Of course it doesn't. For communism to work you'd have to: a/ Eliminate money, and b/ Line everyone that didn't think it was a really good idea up against the wall. It's a Utopian dream, and for as long as people want to keep ahead of the Joneses it'll remain a dream.
Unfortunately those who propagate the 'Communism doesn't work' line appear to believe that therefore, automatically, capitalism does work.
No it doesn't.
Last night on the BBC World Service's 'India week' they were explaining that despite India's burgeoning economy, the gap between the rich and poor was simply becoming more and more pronounced. Blow me if they didn't follow this item with a trail for an upcoming series about China, where it appears that despite China's burgeoning economy, the gap between the rich and poor is becomeing more and more pronounced.
It's not like this is in any way something new. It happened in Russia after the overthrow of communism, it happened in Nicaragua after the elections which overthrew socialism, hell's bells, it happened in Britain while the madwoman Thatcher was in charge.
It's really quite simple.
When people say "Anyone can make money" they're lying. Well, OK, speaking literally, anyone can make money, but pretty much anywhere in the world if you try it you get arrested. Only the mint can manufacture money, everyone else has to persuade others to hand over some of theirs by begging for it or working for it. Or maybe by showing them some pictures you took last summer with an enormous telephoto lens. Now most countries try to keep the issue of money down to the actual wealth of the country, so if there's only that much wealth in the world it has to be a finite source. Therefore if, under a burgeoning exonomy, people are getting richer, other people must be getting poorer. It's absolutely the only way it can work. To put it another way, it doesn't work.
For a start the system requires a workforce to actually do the work. If every one of the world's employees decided that they were going to become entrepreneurs the whole of the world's economy would collapse overnight, and the only people who'd survive would be the ones that could actually do something for a living. This, in part, was what was behind Thatcher's destruction of the Trade Union movement. Trades Unions are workers bodies (Usually elected by a greater percentage of those eligible to vote than the policians who we expect to run the coutry for us), who try to balance, or maybe 'upset', the bias between those who exploit and those who are exploited. By simply denying the Trades Unions their power the Thatcher was able to create a society where, oh look, the rich got richer and the poor got poorer.
Now previously we'd had a glorious system whereby power in government bounced backwards and forwards between the Labour Party, which was pretty much in hock to the Trade Unions, and the Conservative Party, which was, as now, almost completely beholden to the guys at the top. They both denied it, but let's be honest, does anyone really believe that people, be they rich or Trade Union members, give away money to the people that they want to rule the country without expecting anything in return?
So the Labour Party did this, and the Tories undid it when they got in, and vice versa, and by and large we bounced along quite nicely. Then the media joined in. It was almost like everyone except me thought that the media were honest and that when they said that everyone in the Trade Unions and Labour party were scoundrels of the first water, then it had to be true. Rupert Murdoch's character assassination of anyone who proved too successful in either of those two bodies was positively Victorian, but it mattered not that whenever the stories came to court he lost, he was rich, he could afford it, and anyway, his media never publicised losing, except on occasion to dismiss the result as an outrage to justice.
The Labour Parties solution was simple. They moved right. Right into the Tories arena in fact, where they promptly pinched some of the Tories big business backers, including Rupert Murdoch. Looking back it seems hard to believe that there was a time when the Conservatives stood to the left of the current Labour party, but it's right there in the history books. Back in the days before there even was a Labour movement the Tories were the party of the left. They were responsible for the majority of nationalisations.
Try reminding them of that now.
You see? There once was a time when even the Tories knew that capitalism didn't always work.
And they reckon that we're not dumbing down...
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