Calculus for journalists

“What do they teach them at these schools?” wondered the Professor in C.S. Lewis’s The Lion, the Witch and the Wardrobe.  The Professor, of course, was concerned about logic. But I wonder too – not about logic, but about maths. Especially among journalists writing about life expectancy and other long-term trends. Here is the FT proclaiming “Average life expectancy falls”. This is the headline for a chirpy piece about how reduced life expectancy could make things easier for pension funds facing big deficits.  There’s only one problem with this. Life expectancy isn’t falling. And the report the FT cites does […]

Read More

Bitcoin and bimetallism

I wrote a piece on Forbes recently in which I described a bimetallic system of coinage and suggested how such a system might work – or rather, fail to work – for Bitcoin. These are the relevant paragraphs: In a bimetallic system, there are effectively two currencies which are linked by a fixed exchange rate set by fiat. At the end of the 19th century – the time of Bryan’s speech – Britain’s copper penny was worth 1/144 of one pound. Other denominations of coin were created by multiplying up the penny: so the silver sixpence was unsurprisingly worth six […]

Read More

Crypto-tulips

Here is a very familiar financial bubble, in pictorial form: And this is what it looks like, charted: In those days, of course, tulips at least had to be able to flower. But things have changed since then. There are three key stages in the lifecycle of a financial bubble: The “Free Lunch” period. A long, slow buildup of price distortion, during which investors convince themselves that rising prices are entirely justified by fundamentals, even though it is apparent to (rational) observers that they are buying castles built on sand. The “This is nuts, when’s the crash?” period. Everyone knows […]

Read More

Asymmetric herding

Ten years ago today, Chuck Prince, then chief executive of Citigroup, dismissed fears of a financial crisis. “When the music stops, in terms of liquidity, things will be complicated,” he said in an interview with the Financial Times in Japan. “But as long as the music is playing, you’ve got to get up and dance. We’re still dancing”. He wasn’t dancing for long. Less than a month later, the first bank failed. Over the weekend of 27th-29th July, IKB Deutsche Industriebank AG, one of Germany’s key “Mittelstand” lenders, was bailed out by a consortium of German banks after credit markets […]

Read More

The Worst Political Storm In Years

A year ago, I attempted to look beyond the shock of the Brexit vote and its associated economic disruption, and see into the distant future. I saw a completely different political paradigm, though I could not discern its shape. And I saw a possibility that, like Hong Kong in 1997, the fears of economic disaster would prove baseless, and Britain would have a bright future, though one which I could not imagine. I called on everyone to try to make Brexit work: Not for a long time has the future been so uncertain. In the short-term, there will be pain. […]

Read More

When vultures cooperate

Rather to my surprise, the Co-Op Bank has had a reprieve – well, perhaps more like a stay of execution. Even more surprisingly, this has come from what many would regard as a most unlikely source. The American hedge funds that rescued the bank back in 2014 are about to rescue it again, with a little help from their friends and relatives. “Vulture funds” are behaving most unlike vultures. Four months ago, the Co-Op Bank put itself up for sale. Unable to comply with the capital plan agreed with the Prudential Regulatory Authority, and apparently unable to persuade its hedge […]

Read More

The newly dreadful state of the Union

Last Thursday’s election was a shock. It was appalling for the Tories, extraordinarily encouraging for Labour and something of a “meh” for the Liberal Democrats and the Greens. And it was dreadful for nationalist parties. UKIP was completely wiped out, ending up with no seats at Westminster and a hugely reduced share of the poll. The SNP lost seats, and even Plaid Cymru did less well than it had hoped. Nationalism, it seems, is dying down. Well, in the UK, anyway. Faced with a disastrous result, any half-decent party leader would step down. To his credit, Paul Nuttall, the UKIP […]

Read More

A beautiful death

My mother, Joy Cooke, died last Wednesday, 24th May, at the age of eighty-seven. It was a peaceful end. Beautiful, in a way. Mum had been ill for a long time. She had vascular dementia, triggered by an accidental morphine overdose after an orthopaedic operation in 2013. She also had COPD, brought on by a lifetime of smoking. For the first year of her slide into the oblivion of dementia, she was cared for by my father. But in August 2014, after she became doubly incontinent and both physically and mentally frail, he had to admit that her care was […]

Read More

Squaring the circle on immigration

It had to happen. Amber Rudd, the Home Secretary, has refused to commit to a net migration target. Facing a barrage of complaints from the hospitality industry about potential staff shortages post-Brexit, Rudd appears to be softening the government’s line. She told BBC Radio 5Live’s Pienaar’s Politics: “My personal view is we need to continue to bring immigration down. I want to make sure that we do it in a way that supports businesses.” So what way might that be, then? After all, her boss is on record as saying she thinks net migration should fall to the tens of thousands. […]

Read More

Intergenerational unfairness

This thread on Twitter has attracted a lot of attention. It goes some way towards explaining why older people are generally in favour of Brexit, and why Theresa May’s “strong and stable” mantra particularly appeals to the baby boomer generation. For those who aren’t on Twitter, I’ve paraphrased part of the thread here. I have been thinking about the “strong and stable” mantra, in the context of my mum, who thinks Theresa May is great. Mum is a product of post war Social democracy (born 1947). She got 6 good O levels despite failing the 11+, and went into the […]

Read More