Change we can read

That didn't take long.

Feels good, don't it?

More thoughts later.  

Better Angels

So we come to it at last, the great battle of our age.  I believe that just about everything that could be written about the US elections has been written (somewhere there are monkeys with typewriters about to lose their jobs) but I'd just like to chuck in a final few observations.

First up, why should I, as an Englishman in Scotland, give two hoots about whoever the damn Yankees elect to strut around in front of old glory for the next four years? The first answer to this is about power, and the second more interesting answer is about legacy and philosophy and dreams.  The first answer is obvious, so its the second one I want to dwell on here for a moment.

It was F Scott Fitzgerald that called the United States the 'last and greatest of human dreams.' America is the expression of some of the finest impulses and traditions that have shaped my own country and my own beliefs.  It is ultimately an enlightenment project, an attempt to create a country and system of Government based on reason, self determination and, to quote one of the greats, government of the people, by the people and for the people.  While its self conscious striving towards this ideal has been tarnished by some horrific acts, those acts are no different than those of every other industrialised country, but we hold America to a different standard.  I'm not looking to downplay its crimes here, just to point out that the US suffers in comparison with its flighty rhetoric, but at least it has the rhetoric and it lives up to it more often than I can quite credit  It is the best, bravest and most important attempt to make the idea of democracy and freedom stick, which is why its actions and elections are so important.  If the yanks can't make this work, it probably can't be done.  The American Caesar, the man to break the republic and establish a tyranny of fire and glory is always closer than we care to think.

The ideas that animated the founding fathers and still course though America today are ideas that spring from my country, or counties in fact.  It was the infringement of ancient English liberties that so enraged the colonists.  It was said in the build up to the English Civil War that 'magna carta is such a fellow that he will have no sovereign'.  That was as true in the fields of Virginia was it was in the downs of Sussex.  In fact, it could be said that the American Revolution was a replay of the English Civil War (minus some of the religious headbanging) and the same side won.  The US is the finest expression of the better angels of the English political nature.  The Scots shaped it too.  The extraordinary flowering of the Scottish enlightenment forged ideas that became the tools of the craft of Constitution building in the hands of Jefferson and Adams.  Hume and Adam Smith's thoughts on the nature of man and the best form of government to manage him directly inspired the founding fathers.  In other words, the project of America is the project of all of us who see ourselves in the enlightenment tradition, especially if we are at all proud of what the sons and daughters our own lands contributed towards it.

My next observation is a bit less pompous.  This election has been so much fun.  I'm going to miss it.  I've really enjoyed the musings of Michael Tomasky and Oliver Burkeman at the Grouniad, and Fivethirtyeight's been brilliant. If there's a rookie of the years for this election its surely Nate Silver (though a certain Mr B Obama might run him close.)  The Economist's multi coloured bloggers at Democracy in America have great too (and funnier than I ever expected.)

Finally, and for the first time in a long time, I feel like we are on the threshold of something glorious in the election of Obama.  America needs to dream itself up again and he can do it. Something extraordinary is happening.  He'll let us down, the world is a hard and unforgiving place, the challenges he faces are colossal, and he's just a bloke, but for a glorious moment here I feel like I can believe in a political system, believe like I feel I should be able to.  

Live up to yourself, America.  There are some of us out here that share something deep in our souls with what you can be.  Be true.

Panic on the streets of London

Its Monday, it must be a meltdown.  I was going to open tonight by suggesting that matters would be immeasurably improved if every stock and bond trader on earth had to wait 24 hours and have a really nice calming cup of tea between receiving a piece of information and making a trade.  The idea here being that a little cooling off period might help forestall the storm-fronts of fear (or, in the olden days, irrational exuberance) that pass through the markets.  Then I stopped and thought about it, and realised that the bastards have had all weekend to take the dog for a walk and drink calming cups of tea, and what to they do?  Come into work on Monday morning and TOTALLY FREAK OUT.  

Unless you've been doing something interesting today, rather than sitting at work and watching the FTSE attempt to tunnel straight to hell like the rest of us, you'll realise that stock markets have gone down.  A lot.  There are couple of things about this that make me properly nervous.  

The first is that they've had all weekend to be happy that the Paulson plan to save the world has passed Congress, and furthermore all of Congress has buggered off to campaign for their cushy jobs and can't do any more mischief.  Instead, our old mate the market is now worrying that the bailout isn't big enough (to put the bailout in scale, if they divided it up between the entire population of Great London it would give everyone $93,000 - so it ain't small), and that the US treasury can't administer it.  Seeing as the US Government under the Disgrace can't administer their way out of a paper bag, they may have a point there.  Still, there must be some competent people left.  Please?

There's also been more bad news.  Fortis, a huge Dutch / Belgian bank that no one had heard of has been part nationalised and broken up.  Another huge German financial institution that no one has heard of is also boned.  Iceland appears to be headed back to the dark ages, which is bad news for Iceland because that's not a country where I'd choose to sit out a dark age (I'd pick Italy, I reckon) and also bad news for the rest of us, because last time they ran out of land and stuff they kicked off in a major way.  Wouldn't want to be on Lindisfarne right now, that's all I'm saying.  Meanwhile the German government is guaranteeing all deposits, except it isn't, but its now too late and everyone else is guaranteeing things in a mad beggar-thy-neighbour race to the bottom.

But even after that catalogue of doom, there is another reason I'm a bit nervous.  Its this: lots of bad things are happening, but I'm not sure that they explain the fact that the FTSE has had its biggest ever one day fall, and the Dow is also gyrating like a drunk stripper, but with less class.  In fact I don't think anything really explains the hysterical falls in the markets, and that's what worries me.  Panic is setting in.  Not fear, or horror, or dread at loosing your shirt on a swop deal with Cuban penny shares, but actual, stone cold, panic.

Now panic is irrational, which means that no rational act by Government or God almighty or Warren Buffet can defuse it.  It replaces reason, annihilates thought.  Its is extreme and overpowering.  The Greeks thought it was caused by the God Pan himself, and they also thought that those whom the Gods wish to destroy they first make mad.

(Incidentally, the thought of that Greek sense of panic - a sudden irrational, overpowering fear overcoming someone in a lonely spot, is a deeply chilling thought.)

Anyway, my point is this - if the markets are panicking, then this is the moment it moves utterly out of control.  If it continues to drop, we'll get closer to the capitulation moment, which is sort of the event horizon for financial Armageddon.  Its the moment when traders think, 'ah fuck it' and sell everything no matter what the price.  Chaos ensues.

Why Now; and MechaHillary

In the midst of last night's screed about the credit crunch, whores, coke, Yale, Minehead and semi demonic beings neither living nor dead, I fell to a-thinkin, which is never a good idea.  And my though was this: why now?  Why didn't the whole ridiculous, marvellous dance continue on and on?  Was it some kind of financial gravity that pulled us all to earth?  Did some derivative apple fall on Ben Bernanke's head?  Or to put it another way - if the whole thing was a confidence trick based on magic beans, why did it grind to a halt when it did?  I mean, we can nail the start of this thing to a particular day - the ninth of August 2007.

The truth of the matter is that I don't know, but I'm on the internet and so therefore will posit a theory which may or may not contain a grain of the eternal.  Anyway, this is how science works as Stuart and Karl Popper both assure me.

My theory is that it was driven by two main factors.  They are that a load of the cheapo deals that friend Cletus had taken out to buy his shack come to an end, and the second is the rise of commodity prices.

Mortgages deals first.  One of the more underhand tricks used by mortgages brokers in the US to get Cletus and his ilk (y'know, decent working people, young families, older folks who'd dreamed of owning their home, mugs like that) to buy, was to offer low low low introductory rates. Not low like you get in the UK, where the intro is 4% and the real rate 6%, but deals where when the intro wears off the repayments go up by between 60 and 150%.

Woah.  

Now I don't know about you, but if my mortgages payment went up by 150% I'd be eating out of a tin can.  These evil mortgages are called ARM, and we all of us are in ARMs way.  Sorry.  Anyway, the full sorry saga is in the previous link, which goes to that notorious hand wringing liberal journal, business week.  The other thing I'd point out is the date of the article - September 2006.  Bear mind as well, that even for people who had normal mortgages interest rates went up from 1% (which is better than free money because its below the rate of inflation!) to 5.35% between 04 and 06.

As business week reports, people whose mortgages are going up start to default, poisioning the well that feeds the magic beans.  Winter is coming.

Thing two is that around about this point, the price of stuff (or commodities, as they call it in financial circles) which had been going up for a bit, started to bite.  Inflation started to creep up.  Oil went up.  People whose budgets were based on a historical view of oil at $20 a barrel were looking down the barrel (sorry again) of $70 or $80.  There's less money to go round baby, let's stick the keys through the bank's letterbox and light out for the border.  Or go and stay at Mom's.

Part of this price rise was driven by ferocious demand from the Chinese.  Here is a picture of Chinese ships queuing up outside the coal port of Newcastle in Australia.  That's a lot of demand.  And part is the old ghost at the table, peak oil.

Anyway, that's my theory - mortgages got harder to repay and people bailed on 'em. This is down to increases in prices and stupid, stupid deals.  Fuck me, I'm brilliant.

But why the tenth?  That's the day it went public, when BNP Parabis, a big old French bank said they couldn't value their CDO's 'n' shit, because no one was buying or selling them anymore.  The magic had worn off the beans.  Before then, it had been boiling away for a bit.  A subprime lender had filed for bankruptcy.  The Fed said they thought the whole thing might cost the then large sum of $100bn.  Borrowing was hard to come by.  The music hadn't stopped, but it was going seriously out of tune, and yet while it was still playing people were still dancing.

MechaHillary

This excellent piece in Salon reflects on the feelings of a serious feminist about the Sarah Palin broohaha.  Now, I am not serious, but I am a little bit of a feminist, insofar as I think people should be judged on their merits, so I've got a refinement to the plan to offer.  Rather than Hillary Clinton stopping Palin, we need MechaHillary.  You know it makes sense.

Aaaaaalborg

The Danish Pepys might be distressed to learn that while the Wolves still ride high, Danish side Aalborg have been beaten tonight by Manchester United in a shock result.  Berbatov scored twice, his first goals for the club, which gives me a excuse to copy this picture of him.  What a snakey cool mutherfucker.  

Finally, thanks for reading and for your comments.  Figure I've got Sil to thank for the traffic.  Hope you enjoy it more than work.