Tag: Financial Times

Please, please watch this

And I wish I knew what to say…

This is a video that is three years old.

But it is more pertinent today than it was when it was first released.

The video asks ‘… why we never really learnt how to talk about this’.

The video is a little less than ten minutes long so watch it now, with the family as well, if that is appropriate, and perhaps have a discussion afterwards.

Jean and I do not have any answers especially when the news is all about other things.

Yes, we know that the climate is changing but what exactly does that mean is a more difficult question to answer. Mind you there are a growing number of organisations committed to finding answers.

Yes, there are many scientists who have clear opinions on the situation but we need a global movement, NOW, to address this very urgent requirement, and there is no sign that the global community are even talking about climate change let alone doing something.

Please, please watch this:

I would love to hear your thoughts.

Scum worse than a dog!


I am indebted to Per Kurowski who yesterday sent me an email about the atrocious recent act in North Korea.  Per writes the blog A view from the Radical Middle and has been a good friend of Learning from Dogs.

Per’s email read:

Lowly opinions on dogs


With respect to the execution of Jang Song Thaek the North Korea government issued a statement calling him “Despicable human scum who was worse than a dog”… and I just felt you could have a real serious issue with that.

Merry Christmas


My reply to Per included, “I did hear about the statement and your thought also crossed my mind, then something came along and I forgot to do anything about it. Will be corrected in a post coming out tomorrow.”

Per’s email included a link to a Financial Times article that is not visible unless one registers with the FT.  However the relevant section reads thus:

Jang Song Thaek

Jang’s summary execution – reported by state media on Friday – marked a spectacular demise for a man seen until recently as the most powerful adviser to Kim Jong Un. It also raised questions about the potential for further instability in the court of the world’s youngest national leader.

Describing him as “despicable human scum”, state media said Jang had been put to death immediately after his conviction for treason by a military tribunal, where he confessed to having plotted a coup against Mr Kim.

If one then goes to the full text of that state media report, then one reads (my emboldening):

It is an elementary obligation of a human being to repay trust with sense of obligation and benevolence with loyalty.

However, despicable human scum Jang, who was worse than a dog, perpetrated thrice-cursed acts of treachery in betrayal of such profound trust and warmest paternal love shown by the party and the leader for him.

Frankly, if one cogitates about just a few of the qualities of dogs: integrity, loyalty, unconditional love, trust, openness, forgiveness, affection – then this world would be one hell of a better place to live for all humans if only we learnt to live like dogs.


Thanks Per!

In praise of fairness.

An original idea that shouldn’t be regarded as innovative.

We live in interesting times!  Whenever I use that phrase, and it seems to slip from my lips too often these days, I am reminded of the ancient Chinese curse, “May you live in interesting times!

There are a goodly number of countries that have legislation that ‘impose’ a minimum wage for employees.  Here in the USA, the Federal level for 2012 is $7.25 per hour but it isn’t necessarily the same across all States.  Based on a 40-hour working week, 50 weeks a year, that comes to a gross of $14,500 for the full year.

Let’s contrast that with a person who has been in the news recently, Mr. Bob Diamond, Chief Executive of Barclays.

As the BBC reported on the 2nd July,

Mr Diamond has said he will not take a bonus for this year as a result of the scandal.

It is not the first time the 60-year-old Boston-born former academic – he began his career as a university lecturer – has made the headlines.

Mr Diamond was previously best-known for his huge wealth: last year he topped the list of the highest-paid chief executives in the FTSE 100.

‘Unacceptable face’

In 2011 Mr Diamond earned £20.9m, comprising salary, bonuses and share options, and he is reported to have a personal wealth of £105m.

There has long been controversy about the amount he earns.

In 2010, Lord Mandelson described him as the “unacceptable face of banking”, saying he had taken a £63m salary for “deal-making and shuffling paper around”.

Barclays dismissed the figure as “total fiction” saying that his salary as head of Barclays Capital was actually £250,000.

BBC business editor Robert Peston said he believed Mr Diamond had earned £6m in 2009 from a long-term incentive scheme and £27m from selling his stake in a Barclays-owned business that had been sold.

So whether he earns £20.9m, £6m or even £250,000 frankly makes no difference to the fact that the gap between what the poorest may earn and the sorts of monies that are given to Mr. Diamond and his like is just plain wrong.  [And since writing this on Monday, the news broke on Tuesday morning that Mr. Diamond is now unemployed.]  Don’t often quote the bible in Learning from Dogs but 2 Corinthians 8:13-15 is irresistible (King James Version),

Our desire is not that others might be relieved while you are hard pressed, but that there might be equality.  At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need. The goal is equality, as it is written: “The one who gathered much did not have too much, and the one who gathered little did not have too little.” [my emphasis]

I subscribe to Naked Capitalism and the other day there was a deeply interesting article about France pushing for a maximum wage.  Let me take the liberty of quoting all of it,

SUNDAY, JULY 1, 2012

France Pushing for a Maximum Wage; Will Others Follow?

A reader pointed out a news item we missed, namely, that the new government in France is trying to implement a maximum wage for the employees of state-owned companies. From the Financial Times:

France’s new socialist government has launched a crackdown on excessive corporate pay by promising to slash the wages of chief executives at companies in which it owns a controlling stake, including EDF, the nuclear power group.

In a departure from the more boardroom-friendly approach of the previous right-of-centre administration, newly elected president François Hollande wants to cap the salary of company leaders at 20 times that of their lowest-paid worker.

According to Jean-Marc Ayrault, prime minister, the measure would be imposed on chief executives at groups such as EDF’s Henri Proglio and Luc Oursel at Areva, the nuclear engineering group. Their pay would fall about 70 per cent and 50 per cent respectively should the plan be cleared by lawyers and implemented in full…

France is unusual in that it still owns large stakes in many of its biggest global companies, ranging from GDF Suez, the gas utility; to Renault, the carmaker; and EADS, parent group of passenger jet maker Airbus.

Of course, in the US, we have companies feeding so heavily at the government trough that they hardly deserve the label of being private, but the idea that the public might legitimately have reason to want to rein in ever-rising executive pay is treated as a rabid radical idea.

From Doug’s post:

For those, however, receiving bailouts, deposit insurance, government guarantees, tax breaks, tax credits, other forms of public financing, government contracts of any sort – and so on – the top paid person cannot receive more than twenty-five times the bottom paid person. This ratio, by the way, is what business visionary Peter Drucker recommended as most effective for organization performance as well as society. It also echoes Jim Collins who, in his book Good To Great, found that the most effective top leaders are paid more modestly than unsuccessful ones. And, critically, it is a ratio that is in line with various European and other nations that have dramatically lower income inequality than the United States.

In other words, the French proposal isn’t that big a change from existing norms, at least in most other advanced economics (ex the UK, which has also moved strongly in the direction of US top level pay). But despite the overwhelming evidence that corporate performance is if anything negatively correlated with CEO pay, the myth of the superstar CEO and the practical obstacles to shareholder intervention (too fragmented; too many built in protections for incumbent management, like staggered director terms; major free rider problems if any investor tries to discipline extractive CEO and C level pay, which means it’s easier to sell than protest) means ideas like this are unlikely to get even a hearing in the US.  Let the looting continue!

As Patrice Ayme commented on that Naked Capitalism article, “France will pass the 20 to 1 law, as the socialists control the entire state, senate, National Assembly, Regions, big cities, etc. Only the French Constitutional Court could stop it.  That’s unlikely, why?  Because one cannot have a minimum wage, without a maximum wage. It’s not a question of philosophy, but of mathematics.

Let me go back and requote this,

 …. the top paid person cannot receive more than twenty-five times the bottom paid person. This ratio, by the way, is what business visionary Peter Drucker recommended as most effective for organization performance as well as society. It also echoes Jim Collins who, in his book Good To Great, found that the most effective top leaders are paid more modestly than unsuccessful ones. And, critically, it is a ratio that is in line with various European and other nations that have dramatically lower income inequality than the United States.

Thus if society was to embrace this approach to fairness, in America the top paid person in 2012 in the USA would be on 25 times the minimum wage level of $14,500 a year or, in other words, $362,500 a year.

I’m not a raving liberal but I am bound to say that this sits pretty well with me.  How about you?

As I opened, an original idea that shouldn’t be regarded as innovative.

Joining the dots?

A guest post from Perfect Stranger.


Yesterday, I had the pleasure of publishing a guest post from Patrice Ayme about the important subject of Energy Question For The USA

One of the comments on that Post was from Per Kurowski, a former Executive Director of the World Bank.  He reported about a letter he wrote that was published in the Financial Times back in April, 2005.  That letter set out the case for,

A sensible country would raise tax on petrol, so what is US waiting for?

Sir, it is hard to understand the United States of America! It has a huge fiscal deficit; it has a huge current-account deficit; it is by far the world’s biggest oil consumers both in absolute and in relative terms; now willing to explore for oil and gas in Alaska, it shows itself to be aware of the difficult energy outlook the world faces; it seems aware and resolute about the environmental problems (ignore the Alaska part) as it imposes other expensive environmental regulations, such as recycling—which, as no one likes to do it, requires the hiring of Salvadoreans; it speaks all over the place about having to reduce the vulnerabilities of its oil supplies.

As any other sensible country would, in similar circumstances, increase the taxes on petrol consumption and substantially help to solve all the above-mentioned problems; and as the US has always shown willingness to pull together as a nation, recently even to the extent of going to war on shaky grounds, the big question remains: why is it that the leaders of the US do not even want to talk about a substantial tax on petrol?

The letter struck me as eminently sensible.  Then a while later Perfect Stranger emailed an equally valid alternative approach and that now follows as a guest post.


Many years ago while working for Lehman Bros I did a spreadsheet relating to oil profits based on government taxes, I can assure you that having the USA government (or any other government) raise taxes on oil will do the complete opposite to what everyone expects it will do.

Any taxes raised will only end up in the federal coffers, they will not harm the oil companies because they will simply marginally raise the price of fuel meaning they will still receive the same profits while the government gets even more. The consumers will hurt in the pocket and nothing else will happen.

If for some reason the government found a way to stop the oil companies from any marginal increases then the oil companies would simply raise their fuel transportation costs and lump the entire loss on the Petrol Station operators meaning the operators would lose out, the oil companies would still receive the same profit and the government would still end up with more money in their coffers.

But oil consumption would remain the same, in other words .. raising taxes (or lowering them ) will do no good whatsoever

So the answer to using less fossil fuels, as I keep on saying, is not up to any government nor is it up to the oil companies nor is it up to science, the blame lies entirely on the people who choose to drive to the shops to buy their bread and milk instead of walking whatever short distance that might require.

This is something I have found throughout the entire global warming movement, everybody tends to expect that it is up to governments and science to find solutions when in reality it is we who cause the problems and it is we who should be fixing them … THE GOVERNMENTS CANNOT HELP THOSE WHO WILL NOT HELP THEMSELVES, as long as we keep demanding the same lifestyle they have no choice but to provide us with it.

It is the same with coal, gas and oil in power plants, they only get burnt because we as consumers draw the power from the grid, in other words, we demand it, and if the companies don’t provide enough we get all sorts of blackouts,then we whinge, the companies get fined, directors get jailed for failing in their duty to the public and still .. more coal, gas and oil gets delivered to the power plants.

Spending less Energy and Wasting less Heat is actually the “only” solution that will work, anything else, any other form of debate or discussion on the issue is just another way of extending a debate that should have been over decades ago .. because that is the only possible solution, there really is no other solution, none whatsoever, there are no other answers.

The truth of the matter is that nobody wants to do anything about it except to continue the debate all the while expecting others to resolve the issue while they sit on their butts and talk about how things are going ever so slowly and that it must all be the fault of somebody else.

The oil companies cannot stop producing fuel nor should they be stopped as this would destroy our entire civilization, I am amazed at the ignorance in even discussing such an issue, it’s as if people imagine that by stopping oil and other fossil fuels over, say the next 10 years, that somehow some magical system would suddenly develop to replace them.

Do you realize that it took over a hundred years to build our existing fossil fuel based society and that currently only 3% of that has been replaced by alternative energy sources and that it has taken 3 decades for that to occur, all over the world?

There is no miracle technology that can be implemented fast enough to save us, there never has been, EVER, even nuclear power cannot be produced fast enough for our needs, we have to save ourselves.

So use some common sense and realize that the only possible solution to the global warming issue is for all of us to get into conserving energy and wasting less heat and above all … educating others into doing the same thing.

You leave it too long and we are all going to die ,,,,,, and it’s a guarantee we shall blame some else for it 😦

Footnote: This is a warning given to us by one of the greatest scientists who ever lived, comparable only to both Issac Newton and Albert Einstein.

Lord Kelvin

Within a finite period of time past, the Earth must have been, and within a finite period of time to come the Earth must again be, unfit for the habitation of man as at present constituted, unless operations have been, or are to be performed, which are IMPOSSIBLE under the laws to which the known operations going on at present in the material world are subject.” – Lord William Kelvin.

As they say, the solutions to the problems of the future may always be found in the lessons of the past.  As we can see by Lord Kelvin’s warning, this problem has never had a technical solution and we have little time to learn that one lesson.


As much as I respect Per’s opinion, indeed I wrote yesterday, “The points you make seem complete common sense.” the argument put forward by Perfect Stranger really does ‘join the dots’ for me and, I suspect, for many others.  Indeed, as Wen Scott commented on last Tuesday’s Post,

For my own personal experience, my husband and I have concluded that the only way we can make a contribution is to make our own grass-roots changes. We are solar, heat with wood (carbon neutral), composting toilets and kitchen scraps, and lately are choosing as much local food, goods and services as possible. The Transitions movements are a great example and well worth emulating for all of us.

I think it’s pretty clear that waiting around for governments and big business to solve environmental problems is dangerous to our health and well-being — it’s important to hear voices directly from our scientists, but I think we are very foolish (insane) to refuse to take action now. What are people waiting for, and at this date, does it really make much difference who or what is causing such environmental and climate devastation?

What’s the saying…. walk softly and leave nothing behind but your footprints. Even that may be too little, too late, but let’s hope not.

And it is thanks to Wen’s blogsite that I was linked to the following video,

We are living in exceptional times. Scientists tell us that we have 10 years to change the way we live, avert the depletion of natural resources and the catastrophic evolution of the Earth’s climate.

The stakes are high for us and our children. Everyone should take part in the effort, and HOME has been conceived to take a message of mobilization out to every human being.

For this purpose, HOME needs to be free. A patron, the PPR Group, made this possible. EuropaCorp, the distributor, also pledged not to make any profit because Home is a non-profit film.

HOME has been made for you : share it! And act for the planet.

Yann Arthus-Bertrand

HOME official website

PPR is proud to support HOME

HOME is a carbon offset movie

More information about the Planet

The Greatest Crash – footnote

The story that could run for an awfully long time!

I rather revealed my newness as a US resident by posting my review of David Kauders’ book The Greatest Crash over 2 days last week,  one of them being Thanksgiving Day.  Despite that 1,895 people viewed my review which was entitled The end of an era.

A week has now passed since that review.  I was curious to see what sorts of headlines had been making the news in the last 7 days.  It’s just a random trawl through those items that have captured my attention.

Let’s start with the Financial Times, November 27th,

The eurozone really has only days to avoid collapse

By Wolfgang Münchau

In virtually all the debates about the eurozone I have been engaged in, someone usually makes the point that it is only when things get bad enough, the politicians finally act – eurobond, debt monetisation, quantitative easing, whatever. I am not so sure. The argument ignores the problem of acute collective action.

Last week, the crisis reached a new qualitative stage. With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function.

Wolfgang concludes his article thus,

Italy’s disastrous bond auction on Friday tells us time is running out. The eurozone has 10 days at most.

Then my print copy of The Economist that arrived on the 26th had this lurid cover page,

Unless Germany and the ECB move quickly, the single currency’s collapse is looming

The leader article contains this paragraph,

Past financial crises show that this downward spiral can be arrested only by bold policies to regain market confidence. But Europe’s policymakers seem unable or unwilling to be bold enough. The much-ballyhooed leveraging of the euro-zone rescue fund agreed on in October is going nowhere. Euro-zone leaders have become adept at talking up grand long-term plans to safeguard their currency—more intrusive fiscal supervision, new treaties to advance political integration. But they offer almost no ideas for containing today’s conflagration.

and a few paragraphs later, this,

This cannot go on for much longer. Without a dramatic change of heart by the ECB and by European leaders, the single currency could break up within weeks. Any number of events, from the failure of a big bank to the collapse of a government to more dud bond auctions, could cause its demise. In the last week of January, Italy must refinance more than €30 billion ($40 billion) of bonds. If the markets balk, and the ECB refuses to blink, the world’s third-biggest sovereign borrower could be pushed into default.

Then on Sunday, 27th, MISH’s Trend Analysis blogsite reveals,

ICAP Plc, the world’s largest inter-dealer broker (one that carries out transactions for financial institutions rather than private individuals), is now Testing Trades In Greek Drachma Against Dollar, Euro

ICAP Plc is preparing its electronic trading platforms for Greece’s potential exit from the euro and a return to the drachma, senior executives at the inter-dealer broker said Sunday.

ICAP is the latest firm to disclose such preparations, joining the growing ranks of banks, governments and other key players in the global financial system whose officials are worried enough about the stability of the common currency to be making contingency plans for a possible break-up.

Then Bloomberg published an article by Peter Boone and Simon Johnson, the latter of Baseline Scenario fame, that opened as follows,

Investors sent Europe’s politicians a painful message last week whenGermany had a seriously disappointing government bond auction. It was unable to sell more than a third of the benchmark 10-year bonds it had sought to auction off on Nov. 23, and interest rates on 30-year German debt rose from 2.61 percent to 2.83 percent. The message? Germany is no longer a safe haven.

and concluded,

Ultimately, an integrated currency area may remain in Europe, albeit with fewer countries and more fiscal centralization. The Germans will force the weaker countries out of the euro area or, more likely, Germany and some others will leave the euro to form their own currency. The euro zone could be expanded again later, but only after much deeper political, economic and fiscal integration.

Tragedy awaits. European politicians are likely to stall until markets force a chaotic end upon them. Let’s hope they are planning quietly to keep disorder from turning into chaos.

Finally, on the 29th the BBC News website carried details of the Autumn Statement made by British Chancellor, George Osborne, to Parliament.

Osborne confirms pay and jobs pain as growth slows

Chancellor George Osborne has said public sector pay rises will be capped at 1% for two years, as he lowered growth forecasts for the UK economy.

The number of public sector jobs set to be lost by 2017 has also been revised up from 400,000 to 710,000.

Borrowing and unemployment are set to be higher than forecast and spending cuts to carry on to 2017, he admitted.

Just look at that figure of public sector job losses – 710,000!

Well that’s more than enough from me but it does surely endorse the opening views that David Kauders expounded in his book, as carried in my review, and reproduced here,

Starting with the first sentence, David sets out the core problem;

This book argues that it is impossible to expand the financial system much further.

expanding this a few paragraphs later,

This is the financial system limit: lack of new borrowing plus excessive weight of debt obligations from past borrowing combine to slow economies down. This is the barrier whichever way policy makers turn. It is like the lid on a boiling kettle. Enough steam can lift it for a while but it always snaps back into place. The financial system limit is a roadblock preventing growth.

A few pages later in this opening chapter ‘The roadblock preventing growth‘ this limit is explained thus,

Policy contradictions also show us that the financial system has reached a roadblock. The glaring conflict between bailout and austerity is at the core. Each bailout or stimulus requires creation of more credit, leading to false financial speculation, and for a short while markets recover their poise. The threat of inflation returns. Later, bad debts rise, the markets tumble again and a new crisis emerges. Austerity, the alternative policy, cuts spending thereby cutting the immediate level of economic activity and bringing economic decline more quickly than the stimulus alternative. Whichever way they turn, the authorities are damned.

You can understand why I called this Post a ‘footnote’ not an endnote.

The end of an era, part two.

A review of David Kauder’s recently published book, The Greatest Crash.

Details of the availability of the book are included at the end of the review.

Extracts from the book included are with grateful thanks to Sparkling Books.

Part One of this review was published yesterday which needs to be read before Part Two.


Chapter 5 continues by examining the over-bearing consequences of excessive public spending, excessive Government regulations, substitute taxation, weakness of Treasury forecasts, and so on. While these are UK issues, there is no doubt that similar restraints of free enterprise exist in many other western nations.

In Chapter 6, ‘Group Think‘, David looks at the strange ways in which we form opinions.  It’s a topic that has been discussed and written about widely but the point behind this chapter is that people have in great part lost the ability to discern truth from fiction, with terrible implications when it comes to understanding how individuals are affected by government and bureaucratic institutions.

The chapter closes;

One of the remarkable points that I have found in writing this book is that many of the detailed errors, incorrect policies et al, have already been amply documented by others. But we never learn. The delegated society, the strength of lobby groups and vulnerability of our political system to pressure, the sheer volume of noise in the media and on the Internet, the immediacy of the demands of daily life, all combine to make our collective memory rather short.

Amen to that!

Chapter 7, ‘Academic differences of opinion‘, was surprisingly short at just 6 1/2 pages. One would have thought the subject worthy of a much longer review especially as David was exploring the fundamental differences between Keynesian and Ricardian economic theories and opportunities for alternative theories. Must say that that I laughed out loud (David’s book is a little short on humour!) at the sentence on p.127 that ran, “One correspondent writing to the Financial Times proposed that economics should be declared a failing discipline, economists as not fit for purpose, and a physicist put in charge of sorting their theories out.

Chapter 8, ‘The dark side of capital markets‘, is the penultimate chapter and quite a technical one at that. But David manages to trip through esoteric aspects, well esoteric to the lay reader, in a manner that keeps one involved.   Here’s an example from early on in the chapter.

Capital markets follow a long cycle beyond the experience of most practitioners, detectable only by understanding history and then applying this understanding to contemporary conditions.

It didn’t mean much to me. Then the next sentence;

The principles are identical for any market where prices depend on the supply of credit: equities, bonds, property and commodities are all markets where the prices must relate to the availability of credit.

That, at least, was understood but still the penny hadn’t dropped. Then came;

Bond prices prosper when credit is lacking while the other three prosper when credit is abundant.

That then made sense to me but still only at some academic level. David then followed those sentences with these two paragraphs;

The whole market cycle consists of bull market followed by bear market, as surely as night follows day. The bull market in assets is driven by an increasing supply of credit and economic expansion, since more credit leads to higher prices. The bear market in assets is driven by less credit and economic contraction; there is no purchasing power to keep asset prices high. Only fixed interest bonds are contra-cyclical, declining in price as credit expands and rising in price as credit sinks.

There are two useful theories for analysing the whole market cycle: conversion flow and Dow theory.

So in half-a-page of text, the book effectively educated me and then showed the relevance of that learning to the world I was living in. Cleverly done!

Chapter 9, ‘The attitude change‘, is, without doubt, a clincher of a close to this fascinating book. The sentiments conveyed in this chapter are so unexpected that, forgive me, it would be wrong to explicitly refer to them.  Buy the book!

Let me just say that the last chapter fully endorsed me calling this review The End of an Era.

Overall conclusions

This is an important book from a writer who has both the academic and professional experience to enable him to form the views that he expresses. Only time will tell if the whole scenario that is envisaged by Mr. Kauders will play out as he expects. My personal view is that it will.

For individuals and business alike, reading The Greatest Crash will inform you in a manner that I would argue is critical when one notes the precarious and potentially unstable period we are living through. The decisions readers make after reading the book are beyond the remit of this review and, of course, David Kauders, but, at least, read the book!

Prof. Myddelton in the book’s introduction wrote, “But one of the things we need now is new thinking on the fundamentals.” Perhaps not new thinking on fundamentals, as the Prof. puts it, but a reinstatement of core fundamental values.

I am not alone from sensing that the world, especially the western world, is transitioning from an era of greed and materialism, seeing a world of unlimited resources, to a different societal relationship with planet Earth, the only planet we have. A transition across all layers of society towards the values of truth, integrity and compassion; values whose day has come.

The Greatest Crash reinforces immensely my notion that this truly is the end of an era.


Want to buy The Greatest Crash?  The ebook was published in October worldwide, the  paperback published in the UK on the 1st November UK, the hardcover being released any day now in the UK.  For North America both the paperback and hardcover versions are being published on 1st February, 2012.

Full details from the Sparkling Books webpage here.

Copyright © 2011 Paul Handover

April Fool!

If only it was all a giant spoof, a huge joke played on us all!

I was intrigued by a quick look-up on WikiPedia to see that the history of April 1st, as a day for foolish ideas, goes back a very long way.  Here’s a small extract from the relevant page on WikiPedia,

In Chaucer’s Canterbury Tales (1392), the “Nun’s Priest’s Tale” is set Syn March bigan thritty dayes and two<. Chaucer probably meant 32 days after March, i.e. May 2, the anniversary of the engagement of King Richard II of England to Anne of Bohemia, which took place in 1381. However, readers apparently misunderstood this line to mean “32nd of March,” i.e. 1st April. In Chaucer’s tale, the vain cock Chauntecleer is tricked by a fox.

I mean wouldn’t it be wonderful if there was a press release today from, say, Goldman Sachs, sort of along the following lines,

At Goldman Sachs, success without integrity is failure.

Goldman Sachs’ culture reflects more than a structure. It is a statement of values. Our commitment to integrity, teamwork, excellence, meritocracy and innovation enables us to build our relationships, with clients and with colleagues, on honesty and trust. It drives our ability to deliver extraordinary client service and to generate superior long-term financial performance for our shareholders. Our values inspire us to give back to the community through volunteerism, philanthropy, scholarships and outreach. Each of us in the firm takes pride in our role as a steward of the Goldman Sachs legacy. We understand that our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore.

The above part is taken from the Goldman Sachs website.  Great stuff.  Let me see if I can add to that, in recognition of the date.

Since the publication in the Financial Times in August 2009 of an article referring to our reputation, from which is quoted, “In a survey of 17,000 Americans, Brand Asset Consulting found that Goldman’s stature – as measured by several gauges of brand strength – had suffered in 2008 and 2009.” the Board of Directors have this day resolved:

  • to ensure that no person in the company is paid more than 25 times the annual pay of the lowest worker
  • that the company shall end the practise of claiming tax favours for any form of executive compensation, including stock options
  • that the money saved from the previous two resolutions shall be paid into an industry-wide fund to support all those citizens that are homeless and destitute as a direct result of the global financial crisis of recent times.

There, isn’t that nice!


Time for a laugh!



Pass the parcel

Congratulations to Martin Wolf of the Financial Times

An article was published in the FT on the 29th June that beautifully describes the ways in which we are all being so beautifully ‘screwed’ by the world of finance.  (Note, you may need to register to see this article, but please do.  Registration is free and the FT is full of great content.)

It starts like this:

This global game of ‘pass the parcel’ cannot end well

By Martin Wolf

Published: June 29 2010 23:31 | Last updated: June 29 2010 23:31

Paul here. Pass the parcel is a game for kids’ parties that involves passing a multi-wrapped ‘present’ around where the kid holding the parcel when the music stops gets to unwrap one sheet, then passes it on, etc., etc., until the kid holding the parcel with just one wrapper on it when the music stops gets the present.

Martin continues:

Our adult game of pass the parcel is far more sophisticated: there are several games going on at once; and there are many parcels, some containing prizes; others containing penalties.

So here are four such games. The first is played within the financial sector: the aim of each player is to ensure that bad loans end up somewhere else, while collecting a fee for each sheet unwrapped along the way. The second game is played between finance and the rest of the private sector, the aim being to sell the latter as much service as possible, while ensuring that the losses end up with the customers. The third game is played between the financial sector and the state: its aim is to ensure that, if all else fails, the state ends up with these losses. Then, when the state has bailed it out, finance can win by shorting the states it has bankrupted. The fourth game is played among states. The aim is to ensure that other countries end up with any excess supply. Surplus countries win by serially bankrupting the private and then public sectors of trading partners. It might be called: “beggaring your neighbours, while feeling moral about it”. It is the game Germany is playing so well in the eurozone.

It’s an article that really does need to be read in full. Martin concludes thus:

Yet it is quite clear that an isolated discussion of the need to reduce fiscal deficits will not work. These cannot be shrunk without resolving the overindebtedness of damaged private sectors, reducing external imbalances, or both.

The games we have been playing have been economically damaging. We will be on the road to recovery, when we start playing better ones.

Now I really don’t want Learning from Dogs to focus on ‘doom and gloom’. There’s more than enough of that to go round twice and thrice.

But when someone writes in such a great clarifying way – then it deserves the widest promulgation. The more we all know about the games being played, the better we can change the rules to benefit society.  Well done, Martin.

By Paul Handover

Poor old Europe!

Why has it seemed like pushing water uphill for so long?

I’m in my mid-60s, having been born six months before the end of WWII.  From the earliest days that I can remember, my parents loved to holiday in France and Spain.  In those days if one was to motor into Europe then it was a case of the car being craned aboard the ferry from England to France.  How things change!

Modern cross-channel ferry

Much later on in life, I did business extensively in many European countries and, for a while, taught sales and marketing at the international school, ISUGA, in Quimper, NW France.  (Indeed, fellow Blog author Chris Snuggs was my Director of Studies at ISUGA – that’s how we came to meet.)  I like to think that I have a reasonable understanding of the variety of cultures that is Europe.

So while acknowledging the convenience of a common currency (sort of) and ease of border transits, the one thing that has remained in my mind is that each country in Europe is very, very different to the other.  These core differences have always struck me as so strong and deep-rooted that any form of real union was a ridiculous concept.  The present deep problems with Greece seem to be the tip of this fundamental issue.  Thus a couple of recently published articles, on Baseline Scenario and The Financial Times seem worthy of being aired on Learning from Dogs.

First, the article by Simon Johnson on Baseline Scenario:
Read more of this Post

In praise of Yves Smith

Helping thousands better understand this crisis

Yves’ Blog Naked Capitalism has been mentioned many times on Learning from Dogs.  Indeed, she was one of the Blog authors highlighted recently in this Post.

Yves Smith

I fail to understand how she finds the hours in the day to write in such detail – but those of us interested in getting under the skin of our present economic situation are all the better for it.  Here’s a great example that was published on the 23rd February.  I quote the opening paragraphs and then link to the rest of her post. From here on is her piece:


Martin Wolf, the Financial Times’ highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson’s Doomsday cycle post from yesterday.

Let us cut to the chase of Wolf’s argument:

Now, after the implosion, we witness the extraordinary rescue efforts. So what happens next? We can identify two alternatives: success and failure.

By “success”, I mean reignition of the credit engine in high-income deficit countries. So private sector spending surges anew, fiscal deficits shrink and the economy appears to being going back to normal, at last. By “failure” I mean that the deleveraging continues, private spending fails to pick up with any real vigour and fiscal deficits remain far bigger, for far longer, than almost anybody now dares to imagine. This would be post-bubble Japan on a far wider scale.

Yves here. Notice he associates success and failure with polar options. But how can you “reignite the credit engine” when the financial system is undercapitalized even before allowing for the need to take further writedowns? The IMF has found the converse in its study of 124 banking crises, that purging bad debt is a painful but necessary precursor to growth. So I fail to understand how Wolf envisages that “skip Go, collect $200″ of releveraging quickly comes about. And in fact, it turns out that Wolf’s “success” is a straw man:

[to read the rest click here, Ed]

By Paul Handover