Daniel Hannan is a legend. His blog on telegraph has been one of the most consistent sources of fresh air for a last couple of years. His speech in Strasbourg in front of Gordon Brown not only collected million hits on youtube, but may have played a role in changing the course of history. After all, Brown was there promoting the New Deal and The Biggest Fiscal Stimulus The World Has Even Seen - and that was his last public appearance before he climbed down from the tree and started pretending that this was not what he planned G20 meeting to be all about.
But here he was today on his blog, setting out a view that only Members of Parliament can become ministers in HM Government. According to him, being "democratically elected" is the only qualification needed to run any Government Department.
First of all, most of MPs are not even elected based on their personal qualities or abilities. People tend to vote for party rather than for individual who represents the party in their constituency. So the individual MP is actually democratically elected only by members of his party who happen to be registered in specific geographical area. And even this process is constantly being fiddled with, with candidates being parachuted by party establishment.
But let's put that aside for a second. Let's assume that all our MPs actually won over hearts and minds of sufficient number of people in their constituences to win themselves a seat in the Commons.
Does this make them more suitable to run a department than say, somebody who actually knows something about the field he is supposed to oversee ?
I am not saying that you can't acquire that knowledge after being elected as MP, but with ministers looking at their appointment as mere step in the career towards the top of the greasy pole, there is no reason for them to do that. What's more, usually, there is no time too, with cabinet reshuffled every year or so.
What we have as a result is a set of incompetent people, trying to govern departments they have no knowledge about. No wonder they can't get anything done - if you put me in pilot's chair now, I would not be able to take off, no matter how much I want it.
Unfortunately, this incompetent approach is rooted deep into our culture at the moment, with TV programms advocating the public vote as the best tool to determine one's suitability for specific role getting the best ratings.
It's up to Andrew Lloyd Weber and Alan Sugar to decide whether they want to distribute important jobs in their businesses based on public opinion.
But running a Government is a much more complicated matter than singing a song. And we need as many specialists there as we can get. Now more than ever.
And this is not how dictatorships start: specialist ministers seem to work just ok in US.
It's probably ok to insist that PM must be elected ( although some of the best British Prime Ministers in the glory years were actually sitting in Lords ) - but then it should be left to him to find the best man for any job, whether within the House Of Commons, or outside of it.
As a result, of course, less career politicians will be given ministerial jobs.
I can only hope that this is not what Mr Hannan is worried about.
Friday 8 May 2009
Thursday 7 May 2009
This Time Next Year ...
This just in: apparently, China is not esctatic about QE and is switching from bonds to raw material.
As Ambrose Evans-Pritchard writes in his telegraph article, "China is irked by Washington's response to the credit crunch, suspecting that the US is engaging in a stealth default on its debt by driving down the dollar."
Yep. That's exactly what US and UK are doing at the moment. If you can't pay off your debt, why not inflate it away ? They've been quietly doing it for a long time, taking most of their residents along for a ride ( wasn't it fun to borrow 125% of your house value to find out it's only worth 50% of the house a couple of years later ? ).
Now the debt became too big for usual inflation to erase it, so they are creating hyperinflation to clear the mess.
Who wins ? Anybody who borrowed money on a fixed rate - including US and UK governments. And anybody who lended money on a variable rate or linked to inflation. Rates will go through the roof, compensating for lost value of the original loan. And inflation-linked bonds will still be valuable even after the storm.
Who loses ? Everybody else. All the variable-rate borrowers, which will see their monthly payments rise probably much quicker than their wages during the hyperinflation. But also all the savers on fixed rates, including bondholders - both domestic and foreign.
No wonder Chinese are nervous.
There is a bit of difference though between US and UK here. Most of the major holders of bonds and currency are caught in a dollar trap - they have too much invested in it to be able to offload it without losing most of what they have. In a lot of ways, Chinese control the value of dollar every bit as much as Americans - but they are even more inclined than Americans not to let it drown.
Something tells me that they don't have a similar problem with the pound. They can give up on it without losing too much ground. That's why BoE should be extra careful not to give them additional reasons to do that if they want to avoid printing million-pound notes in 2011.
But then again - I am not sure they want to avoid it. I would not be surprised if they have asked their creative department to come up with ideas how such a note would look like.
All the Del Boys from around the country might finally get their wish - this time next year, we'll all be millionaires.
As Ambrose Evans-Pritchard writes in his telegraph article, "China is irked by Washington's response to the credit crunch, suspecting that the US is engaging in a stealth default on its debt by driving down the dollar."
Yep. That's exactly what US and UK are doing at the moment. If you can't pay off your debt, why not inflate it away ? They've been quietly doing it for a long time, taking most of their residents along for a ride ( wasn't it fun to borrow 125% of your house value to find out it's only worth 50% of the house a couple of years later ? ).
Now the debt became too big for usual inflation to erase it, so they are creating hyperinflation to clear the mess.
Who wins ? Anybody who borrowed money on a fixed rate - including US and UK governments. And anybody who lended money on a variable rate or linked to inflation. Rates will go through the roof, compensating for lost value of the original loan. And inflation-linked bonds will still be valuable even after the storm.
Who loses ? Everybody else. All the variable-rate borrowers, which will see their monthly payments rise probably much quicker than their wages during the hyperinflation. But also all the savers on fixed rates, including bondholders - both domestic and foreign.
No wonder Chinese are nervous.
There is a bit of difference though between US and UK here. Most of the major holders of bonds and currency are caught in a dollar trap - they have too much invested in it to be able to offload it without losing most of what they have. In a lot of ways, Chinese control the value of dollar every bit as much as Americans - but they are even more inclined than Americans not to let it drown.
Something tells me that they don't have a similar problem with the pound. They can give up on it without losing too much ground. That's why BoE should be extra careful not to give them additional reasons to do that if they want to avoid printing million-pound notes in 2011.
But then again - I am not sure they want to avoid it. I would not be surprised if they have asked their creative department to come up with ideas how such a note would look like.
All the Del Boys from around the country might finally get their wish - this time next year, we'll all be millionaires.
Printing Their Way Out Of Recession.
The Bank Of England has just announced that they are about to create another £50bn of new money to be used mostly to buy government bonds.
As Edmund Conway points out in his telegraph blog, the yields on the bonds (which are the perfect indication of level of reluctance in the market to purchase them ) went up in anticipation of BoE announcement and went down sharply when the announcement was made.
The message is simple - while you're buying the bonds, we'll buy some too. Once you're out of the market - we'll follow you through the door.
That more or the less leaves BoE and it's Governor (who is appointed by PM ) as the main (potentially, only) buyer of Government bonds - in other words, the only lendor still willing to lend money to the Government.
So, when the Government tells us that they are going to "borrow" some astronomical sums to service their client state, it should be clear that they actually mean to print the money they need. If only each of us could have had this option - to add arbitrary sums of money to our current account to cover any past or future excessive expenses...
What happens next ? It's quite simple really - unlimited supply of any substance devalues it. Sand might cost money in other parts of the world, but try selling it in Sahara. As there are no real limits to the amount of money BoE will need to create to keep this spendaholic Government afloat for the next year or so, pound is in real danger of becoming Sahara's sand ...
As Edmund Conway points out in his telegraph blog, the yields on the bonds (which are the perfect indication of level of reluctance in the market to purchase them ) went up in anticipation of BoE announcement and went down sharply when the announcement was made.
The message is simple - while you're buying the bonds, we'll buy some too. Once you're out of the market - we'll follow you through the door.
That more or the less leaves BoE and it's Governor (who is appointed by PM ) as the main (potentially, only) buyer of Government bonds - in other words, the only lendor still willing to lend money to the Government.
So, when the Government tells us that they are going to "borrow" some astronomical sums to service their client state, it should be clear that they actually mean to print the money they need. If only each of us could have had this option - to add arbitrary sums of money to our current account to cover any past or future excessive expenses...
What happens next ? It's quite simple really - unlimited supply of any substance devalues it. Sand might cost money in other parts of the world, but try selling it in Sahara. As there are no real limits to the amount of money BoE will need to create to keep this spendaholic Government afloat for the next year or so, pound is in real danger of becoming Sahara's sand ...
Getting serious
We've started off this blog a couple of weeks ago with some mockery stuff - but since then Brown and Co did everything possible to prove that they don't need any help to look ridiculuous. Most careers in politics have two phases - the rise and the downfall. And it's usually quite easy to pick out moments that identify each of these phases. The moment of triumph and the moment when it becomes obvious that the game is up.
With Brown, it's different. I can't think of a memorable high point, and there are too many low points to pick one. "Saving the world" was a perfect candidate, until the expenses horror movie appeared on Youtube. Once he's kicked out of No.10, he should really try his luck in Hollywood - this was the scariest smile on the screen since Jack Nicholson's "Here Comes Johnny" scene.
However, the scariest part here is that he may still have another 13 months to improve on this performance and deliver even better symbol of his disastorous reign.
So it's probably time to put the mockery aside and get serious.
With Brown, it's different. I can't think of a memorable high point, and there are too many low points to pick one. "Saving the world" was a perfect candidate, until the expenses horror movie appeared on Youtube. Once he's kicked out of No.10, he should really try his luck in Hollywood - this was the scariest smile on the screen since Jack Nicholson's "Here Comes Johnny" scene.
However, the scariest part here is that he may still have another 13 months to improve on this performance and deliver even better symbol of his disastorous reign.
So it's probably time to put the mockery aside and get serious.
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