Welcome to the financial pages…please leave your brains and ethics outside the door.

This from today’s FT – it’s a classic (my emphasis)

‘Prominent City figures are bemused at the outrage surrounding the “cash for access” scandal.

For some of those who make up the Conservative party’s most important donors, outside influence on policy is simply a healthy part of the democratic process. But they understand others may not see it that way: none of the people the Financial Times spoke to would talk on the record.

One said: “The fact that politicians are willing to hear views from different people is to be applauded. They should listen to what people – including concerned business people – have to say.” ‘

I love it. Gypsy Dave Camerlot waves his hand over the crystal ball, looks up at major Property Developer Hugh Smoreland, and says “I see a Bill to pave over the countryside….cross my palm with more silver, and I might be able to see more clearly when and how….”

Another belter from Jeremy Warner in the Telegraph today. Jezzer thinks the UK economy is ‘looking up’. Obviously, he needs to look up more figures. See what you think. Not that I want to bias you or anything, but this was my response in the thread:

‘The US provides an encouraging template. Typically about six months to a year
ahead of us in the economic cycle, the US seems now to be quite close to
self-sustaining recovery’.
The naivety of this statement is astonishing.
Man in White House have election to win, Jeremy.
Bernanke in Fed Reserve offer note of caution.
US housing has fallen in value for the third month in a row. Now hear this: the US has NEVER IN HISTORY recovered from recession without a recovery in property values.
Please stop treating this as just another cycle, and see it for what it is – a notional money/QE/Zirp/CDO disaster now almost upon us.
The economy of the UK is indeed looking up: to Heaven, to which it prays “God help us”.

75 thoughts on “Welcome to the financial pages…please leave your brains and ethics outside the door.

  1. Exactly,as Professor John Hobson,at Sheffield University, and Dr.Linda Taylor, at Nottingham University,have been harping on about since way before 2006,”IT’S THE DERIVATIVES STUPID!”.Dr Taylor in particular has been taking an opposite to that of the dominant Chicargo school,decrying their obsession with monthly payments only ,whilst ignoring the total debt.Both have been talking of a debt jubilee,in this of course much pain will be taken by both sides.But of course they will be ignored long after all the debt implodes,including student debt,which has just recorded a dramatic uptick people unable to pay their loans.

      • @OAH

        Steve Keen does not advocate a debt Jubilee. He advocates that everyone is given a fixed amount of money with which they can pay off debts. Any remaining cash left over after your debts are paid is yours to keep. Any businesses that are still in debt after this will need to take steps in accordance with their insolvency.

      • @OAH

        Fair enough, and few people would see any difference!

        However, given that Steve Keen is very clear on this issue, it was fair to point this out.

  2. @John: I know you know this…but when watching, listening and reading the output of virtually the whole of broadcast and printed MSM and the political elites, one has to clearly understand that none of them are publicly willing to admit the true state of the global economy and the massive debt crises. In fact, many of them don’t even understand the bigger picture and others have agendas to follow. None of them have a solution that doesn’t involve lots of time for debt deflation. The elites have no patience for that.

    What they really want is to re-inflate the credit bubble model that has served them well for a generation and which peaked, then exploded in the years 2001-2008+. Their policies are intended to achieve that. Those who have opinions which are contrary to this establishment thinking are simply ignored and dismissed as cranks or whatever.

    Delusion rools!

  3. I too was astounded by the said article, it was in a similar vain to the one written a while ago by AEP who also waxed lyrically about the US recovery.
    Do you think it’s possible they are talking in some sort of double speak? You know, what ever I say or write means exactly the opposite?
    They surely must be having their arms twisted to write such tosh?
    Or maybe they dare not tell the truth for fear of causing mass panic.

    • It’s the problem with our elite journalists (and many policy makers). They have mostly been educated at the graduate level and worked for a number of years in the US thereby becoming mouthpieces for the giagantic PR machine that is the United States. The brainwashing that occurs there is a wonder to behold, few can resist it successfully for long and most succomb. That is one reason it is so insidious to have the IMF, the World Bank and the UN all located there.

      What most observers are missing is that we are in Kondratiev (60+ years long wave) winter. The 60 years and the 30 years cycles are coinciding at the present time and we are struggling along the bottom. I believe we entered this phase around 2000 (and wrote so at the time). The onset was covered by Greenspan’s expansionary credit policies from 2001 when he said ‘ I would love to be Chairman during the Kondratiev winter because I believe I can beat it’. Arrogant, ignorant twat! That said, I think we could see more sustainable recovery in 3-4 years and markets will anticipate this recovery. Bad stocks will beat bad money and bad bonds.

      • Oldasiahand

        The Beebs Stephanie Flanders is an interesting case, she posted this not long ago – carefully coached by BOE EX Goldman Sachs Ben Broadbent. A load of crap in my opinion, but anyway she was in the States as a speech writer & advisor, working for King of the neo-cons Larry Summers. Since she arrived home she seems to be not too keen on Cameron & Osborne & at one time dated Ed Balls & Milliband.

        It all seems a bit wierd & incestuous, influenced by a neo-con, but doesn’t seem to like Camerlot, gets on well with bankers, but slept with Labour.

        http://www.bbc.co.uk/news/business-17398014

      • Steviefinn

        Stephanie is an interesting bird: posh totty, daughter of Flanders of Flanders and Swann fame (mud, mud glorious mud etc.), American mother, Oxbridge and Harvard educated, ex FT and a real economist. She went to work for Summers in the last year of the Clinton administration, presumably because she is a dual national. Summers, I would not really count as a neocon. (A neocon in my book is a Wolfowitz or a Perle, a left winger converted to Fascism on the foreign policy front.) Summers doesn’t do foreign policy and is at heart a Keynesian (son in law of Paul Samuelson) who opportunistically picks up supply side ideas if he can earn big fees from his hedge fund buddies.

        Stephanie is probably at heart in the limousine liberal Hampstead class tending towards permanent anarchic opposition.She is a member of the Cockburn family: Claud and Alexander etc.

      • Oldasiahand

        Thanks for the info. I had Summers listed as a neo-con or neo-liberal because of his support for the repeal of Glass-Steagall , his opposition to any regulation of derivatives & his self labelling as a Freidmanite, Perhaps he just knew where his bread was buttered.

        As for Stephanie she seems confused like her MSM articles, although to be honest I have only read a few of them & they are soon forgotten. If she is a real economist, why does she let herself be led by an ex Goldman Sachs banker ? A very wishy washy, Glitterati girl with no real voice ?. It will be interesting to watch some of these MSM types subtly shift their ground as the situation worsens & the truth seeps out, it’s already happening in Ireland, but thanks to the internet & some people’s memories, at least a few are being shown up as the liars they are, with their insistence ” that they knew all along “.

    • KFC
      There are fat and unpleasant men on the Island of Sark who occasionally (aka every day) exert something of an influence upon events down at the Daily Seismograph. Allegedly.
      They do not pay UK tax.
      The same is true of Rupert Murdoch.
      Both of them want the Coalition dead, buried, and replaced by something, er, more to their liking.
      Myself, I think this would be like being airlifted off the Poseidon by Ryanair.
      But in the case of Jeremy Warner, I think it’s simply because the bloke doesn’t know which way is up.

    • There was a time when I read every issue of The Economist and the FT. In those days, they both supported sound-money economics. But I noticed that over a period of time, both newspapers turned Left and adopted Keynsian economic ideology and the debt-fuelled model of economics. They followed Blair and Brown and believed Brown’s arrogant claim of having abolished boom and bust. Nowadays, very few of their journos have much to say that makes sense. I don’t bother reading their tripe any more.

  4. A lady from the DT rang me yesterday offering a cut price subscription for a daily delivery of this tosh. She seemed quite offended when I explained that the newspaper’s totally unlrealistic and distorted cloud cuckoo land coverage of economic events was free on the Internet. And then you would only read it for a giggle.

  5. ‘The US provides an encouraging template. Typically about six months to a year ahead of us in the economic cycle, the US seems now to be quite close to self-sustaining recovery’.

    I think you know as well as I do that a journalist is handed a piece of paper with some figures on it. Perhaps it is a learned document, perhaps some trade figures. Whatever it is, given the mass of data available, it is possible to show pretty well whatever one chooses to say. To a journalist with the insight of Mr Warner at the Telegraph, these figures are final.

    It is the same with the ratings agencies, banks and goodness knows how many other institutions. They read the figures, class the goods at “AAA” and that is that.

    Even the inflation figure which on the face of it is simple, has teeth. This figure in the UK is calculated in a different way than in Europe! The UK and US use a concept called “Hedonic Accounting” which is explained here: http://bit.ly/hedonic-inflation-accounting. In essence, it massages the apparent figures downwards. It is a perfectly reasonable practise when presented in a certain way, and to people who, like Mr. Warner, look no further.

      • @Chris

        No, they do not think that. They are very proud of people who think. They enjoy the company of people who think.

        The problem is that they do not have any breadth to their thinking, they cannot see beyond the printed letter.

        That is the problem.

    • @Gemz: Thanks for posting that link. I knew about ‘hedonic inflation accounting’ a few years ago and actually explained how it works in the US on this blog a month or two back with an example of new car prices from year to year, where the US stats people claim a car price has gone down this year compared to last year because this year’s model has extra features which are stripped out for comparison purposes to compare with last year’s price. That a buyer still pays more dollars for this year’s car and cannot buy it cheaper than last year’s, is ignored by the stats people.

      It is useful that people understand the dishonest lengths that the politicos go to to deceive us about inflation. The UK CPI is a complete crock and probably has little use more than as an ongoing comparison. It certainly does not capture true retail price inflation for many millions of people.
      CPI measurement was introduced by one Mr Gordon Brown…imagine that!

      • @BT

        well done for trying to explain Hedonic whatsiting. Not an easy task!!

        The problem is that most of the office guys would see this approach as entirely justified because “that is the system we use to generate the inflation rate”. It gives a measurable result.

        I could be wrong of course. I often am. In my mind it is a fudge beyond fudges.

      • Gemz
        Reminds me of part of the advert jingle…
        “…. a finger of fudge is just enough to give yourself a treat”

        all sorts of alternatives though!

      • @Gemz; Well, hedonic inflation accounting is not really that difficult to understand. And I can see why the stats people like to use it to make their price comparisons more accurate. They have a strong argument. Of course, it’s in the interests of politicians which is why it was introduced.

        And what we don’t know is whether they use it in the reverse. Eg: when a food item or choc bar of (say) 500 grams weight and costing €4 suddenly becomes only 450 grams at the same price to deceive customers – we are once again seeing a fair bit of this in the UK – is that correctly recorded as a 10% price increase by the stats people? I don’t know the answer but I have suspicions…

      • @Stephen
        it would explain some of them. It is the thinking that allows Hedonic accounting to be effective that is the root of the problem. That thinking leads to debt bubbles, trashed currencies and industries off-shored. It is the “bottom-line” thinking that cannot see a way out, and at the same time is terrified by debt bubbles that in reality are nothing but thin air.

  6. I would, entirely seriously, contend that our very means of communication – our language – has in a manifestly real sense been eroded and devalued by misuse. Political correctness, the phrase is enough to freeze both the heart and the brain, is an identifiable symptom of this terrifying cultural malaise. After all, get people in a position where they are unsure about expressing themselves or what they understand and you have a fiercely effective form of control and denial. We may not be seeing hyperinflation in the money supply yet, but we certainly now have it in our language which in many ways is even more worrying. Hyperinflated language is, of course, bollocks aka Newspeak. Orwell was a truly remarkable and prescient man; if you haven’t read The Road to Wigan Pier I would heartily recommend it.

    • @Hb

      The English language has had many more words in its compass since the times of the middle ages. It has always been a language in which you can describe things accurately.

      A language is used by all, not just by those who run the MSM and government.

      The problem that you are alluding to is not the language, but the thinking: it is the sort of thing that leads to (for example) the definition of a cabbage. This in turn led to many laws that define and characterize the uses of cabbage in the EU. As far as I recall they run to around 6,000 words (pages?!) and tell you about things you never really needed to know. Indeed much that is important about a cabbage is missed out on entirely. Why? Because the people discussing cabbages have never grown them. Let alone let them flower or saved the seed. They would no more know a cabbage gone to seed than they would a dead nettle in all likelyhood.

      Language expresses thought. It can express a great deal more, but the person speaking must be able to think, feel and understand these things before they speak of them. If your thinking is limited to the logical, illogical things like cabbages can lead to serious problems, all of which need dealing with. It is not sufficient to say “eat your greens”.

      • Yes, naturally, it starts with the thinking; subvert the thinking and you subvert the language. The language, however, being the thinking made manifest, is the tool with which we communicate the meaning of our designs (thinking) and you can’t make much with broken tools.

      • @Hb

        it is a little more general than that. Thinking may be subverted, sure. The bigger problem is that thinking these days is largely too narrow. Most academic institutions teach people to think logically and consequentially. They do not allow for “wooly minded side-stepping” that is my stock in trade.

        What is not realized is that there is a place for wooly-mindedness, but it is in the realm of feeling and emotion, not hard material.

        When 90% of purchases made by a person are done on an emotional basis, you can see that an understanding of wooly-minded thinking is actually quite important. It is also an extremely powerful tool when used properly. That proper occasion is when you have very large amounts of data and little time to analyze it. Learn a few tricks to characterize it, and you have neat bundles each of which can be dealt with in detail – but it means making a choice between the important bits and the unimportant bits. This is the root of what is commonly called the “80-20 principle”.

      • @Gemz

        I sort of understand what you are saying but wouldn’t use the woolly word. Thinking outside the constraints of obvious logic (‘the box’) is hugely important but just because a thought originates with emotion doesn’t mean that it is axiomatically imprecise; if that’s what you mean, which it possibly isn’t, I agree without qualification and… um…in the altogether..

        Have to go and earn a crust…

      • Would suggest that a lot of the reason for all these pages of definition is down to money (EU subsidy in a lot of cases) where as fast as a new definition is raised another way round it is created

        C.A.P. ~ Farms ~ French (all but) smallholdings

      • @Hb

        I used the “wooly” word because that is how many people see it. It is thinking that is, let us say, unhinged. That is the only way I can properly describe it. It is unconnected let us say. Using a language that is directed at the material and fixed, it is not easy to describe.

        What it is, and can do for you is work with the emotions because it lives in the emotional realm. Emotions are constantly changing, yet have an eternal character. Love will always be love, hate will always be hate. Their character will always be the same, but never the actuality.

        It is indeed “out of the box” and the problem is that outside the box, where everything is neat and orderly*, the outside is anything but. It is disorderly, chaotic and irregular. Spend a while watching the waves outside from your box-like thinking and you will see that they all go the same way. They can be rough one day, smooth the next. When you set sail in your lifeboat, do so on a calm day and enjoy a treat. When a storm brews, return to your box for safety.

        As to thinking inside the box, it is orderly and neat just so long as everyone thinks as you do. When they don’t it is actually as chaotic as anything outside the box – only you can’t see it because you cannot think like that and so it is a self-healing circle. You can’t find a way out because you aren’t aware of it; you aren’t aware of it because …

      • I mentioned TRtWP because it is a collection of essays and reportage rather than a novel. In it he specifically identifies the dangers of both technology and, by extrapolation, the welfare state as well as giving a visceral account of miners’ working conditions etc. His ability to read the signs at such a distance was both uncanny and, of course, completely or at least significantly ignored… and the helicopter hadn’t been invented yet. (forgive me Leonardo)

      • @Hb

        I have read all of Orwell’s works. The quality of writing is outstanding.

        I agree with his prescience in Wigan Pier. What he was witnessing was the initial stages of a world caught in the “make it more efficiently, make it cheaper and charge less for it” trap. That of course had the knock-on effects of wage-pressure (downwards). I doubt if Eric Blair (to give him his real name) would have experienced the full force of the General strike as he was in Burma (again I could be wrong) but the effects would have been there as witness in later years. The country was very changed after that.

    • @Here-on-me’-bus….I like to think that Orwell saw the BIG picture, in that he extrapolated the results of decision making some 50+ years hence from that time. Oh, that we all could vote for peeps who are able to see the potential successes and pitfalls of a quick ‘vote-winning’ policy, and thus temper their final decision accordingly.And with true grit………..

      Sadly, the need to be liked (get more votes) over-rules any prescient common sense, and so we get to where we are…..where ‘elf and safety’ and ‘human rights’ take over, because no-one actually believes in common sense anymore!

      I HATE being cynical, but common sense says…….

      • Common sense doesn’t really get a look in now compared to the “short termism” thinking of those who supposedly make decisions to our benefit

      • @mrspiano…. I think that you are completely right and am quite unable to fault your logic.

        There is a difference between cynicism and healthy suspicion, aka self defence, which those who have been in the world long enough to learn prudence have added to their humanity. I have read enough of your comments to know that you are of the latter persuasion.

        Haironmebust

        p.s. where have you been anyway?

  7. How about the language used to describe the current financial situation in Spain: “The country’s central bank said today there had been an “activity contraction dynamic” in the first three months of this year”

    http://www.telegraph.co.uk/finance/debt-crisis-live/9168461/Debt-crisis-live.html

    Translation courtesy of D Tel:
    “the Spanish economy is back in recession, after shrinking in the first quarter of 2012, following a contraction in the last quarter of 2011″.

    • Yes, it’s a sign of the times – and the reason that JW started this blog – the examples are everywhere! When in public these days, all too often I feel as if I have the word UNBELIEVER (or possibly REJECT) stamped in red across my forehead. It’s something to do with the fixed look of consternation and bewilderment that puts people off perhaps but the reproachful looks worry me. I am 60 tomorrow but refuse to accept that these feelings are purely a function of age.

      • First, Happy Birthday for tomorrow! “refuse to accept that these feelings are purely a function of age.” Only in as much as we are wiser now and can see through the bollocks!

      • @kfc

        Many thanks. True, I just didn’t expect there would be so much of it, or that the strain would be so virulent, necessitating the vital but very time consuming burden of deconstructing it in order to not get sucked in! Silly me…

      • @Hb

        Happy Birthday to you,
        Happy Birthday to you,
        Happy Birthday dear Hieronymous (bit long that, had to scrunch it)


        Happy Birthday to you!

  8. Pingback: John Ward – Welcome To The Financial Pages.. Please Leave Your Brains And Ethics Outside The Door – 27 March 2012 | Lucas 2012 Infos

  9. Apart from Liam Halligan on a Sunday, the DT is no longer worth reading.Liam lives in the real world, along with Steve Keen and Peter Schiff.

    • Thiever
      I think Ms Armitstead shows cynical promise. And when he is angry enough, AEP is still reliable.
      Some of them, however, are nothing more than Sarkist bumboys.

  10. Ho hum .. even the DT sports coverage has become pants . Is it possibly because the journos now write more articles than before due to Web publishing ? Certainly plenty of articles appear to be just ‘filler’ these days .

    • Saloon, perhaps it’s because they have taken a lead from the EU politico’s and are writing up the ‘result/recommendation/policy’ before the game has been played and/or finished?

  11. Highly significant agreement reached with regard to approval of EU bailouts in Germany:
    “Under a compromise reached between the ruling parties and the opposition on Tuesday, Germany’s parliament will decide on future measures to release billions of euros to bail out troubled EU member states. The deal fulfills a requirement for greater parliamentary powers stipulated by the country’s highest court” http://www.spiegel.de/international/europe/0,1518,824104,00.html
    However, there is a sting in the tail:
    “Only when secret steps need to be taken, such as the purchase of government bonds in the secondary market to aid troubled states, will approval be left to a small panel representing parliament. That will ensure the confidentiality required for the operation to have the desired impact on financial markets.”
    Opposition parties in Germany have also had another success in that they have managed to delay Merkel’s plans for budget discipline:
    “the main opposition parties on Tuesday rejected plans by Merkel’s government to push a European pact on budget discipline, the so-called fiscal pact, through parliament by June, saying more time was needed to complement it with measures to boost growth.”

  12. Way off topic but, in case anybody here is affected:
    It has emerged that more than 13 million customers of Barclays bank have been exposed to potential fraud. Researchers revealed that users of the bank’s ‘contactless’ debit or credit cards, designed to allow users to make payments when held next to special ‘readers’, could have their details stolen without their knowledge through special devices built into new mobile phones. The data could be gathered by the users of mobile phones by just ‘tapping’ wallets or pockets containing the contactless cards. The Department for Business, Innovation and Skills has called for urgent action. The Information Commissioner, Christopher Graham, has raised the prospect of potential fines for Barclays.

  13. off topic…but

    Greece will be defaulting next week and leaving the euro thursday 5th april.
    Make sure you have cash in hand for a month or so.

  14. Bit this can’t be true its all the fault of nasty ‘Anglo-Saxon’ bankers, the EU tells us there banks are whiter than white (and passed all their stress tests with flying colours!)

  15. Just yet another zillionth confirmation that msm journos have shit for morals. Mainstream prostitues expousing the company line.

  16. John, can anyone unearth Jezzer’s academic quals. I would simply love to know if he has an O’level or just CSEs

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