Some time ago I picked up on a terrific LRB article on ‘Cityphilia’ by John Lanchester. Well, now he’s written the companion piece, ‘Cityphobia’. Here’s how it opens:

Byron wrote that ‘I think it great affectation not to quote oneself.’ On that basis, I’d like to quote what I wrote in a piece about the City of London, in the aftermath of the Northern Rock fiasco: ‘If our laws are not extended to control the new kinds of super-powerful, super-complex and potentially super-risky investment vehicles, they will one day cause a financial disaster of global-systemic proportions.’

Lovely stuff.

Typically astute column by Simon Caulkin…

As Martin Wolf wrote in that well-known socialist organ the Financial Times, ‘either banking should be treated as a utility, with regulated returns, or it should be viewed as a profit-seeking industry that operates in accordance with the laws of the market, including, if necessary, mass redundancies’. Since the latter is unacceptable, he concluded, we have to move towards the former – and regulation must include pay above all.

In this context, the dire warnings from the free-market champions about the perils of interfering with today’s pay-setting methods take on a surreal air. If companies and shareholders really are ‘better at setting salaries than bureaucrats’, as The Economist affirms, given that ‘better’ has resulted in the almost complete meltdown of the global financial system, what, please, would ‘worse’ look like?

I’m glad he picked up the absurdity of the Economist’s frantic attempt to straddle the chasm between admitting the colossal screw-up that the banks have managed and avoiding the inescapable conclusions to be drawn from it.

Barack Obama in St Louis. From the Huffington Post.

From Register Hardware

First Gartner and now IDC has highlighted the rise of the Small, Cheap Computer as one of key product categories keeping the European PC market afloat.

Laptops too are helping keep vendors’ heads above water, and together with the SCCs helped shipments of all types of personal computer grow 27 per cent year on year during Q3, IDC said.

Notebook shipments were up 52 per cent when comparing Q3 2008 with Q3 2007. SCC shipment growth can’t really be considered since the first one, the Eee PC 701, didn’t go on sale until Q4 2007, and up to that point the only alternative, the UMPC, didn’t really trouble the score-keeper.

We can say that European netbook shipments went from zero in Q3 2007 to over 2m in Q3 2008, a figure that’s just under ten per cent of the 27.9m PCs shipped into Europe in Q3 this year.

This is a good illustration of the Law of Unintended Consequences. All of this NetBook activity dates from the appearance of the OLPC.

… in 1931, Al Capone was convicted of income tax evasion and sentenced to 11 years in prison. He was released in 1939. Wonder if any of the authors of WallStreetCrash 2.0 will go to gaol?

Well, well. The Icesaver saga gets more interesting by the hour. Here’s today’s Telegraph…

A series of official Government statements yesterday showed that several universities, as well as hospitals, police forces, charities and more than 100 local councils are now potentially facing financial crises after being blocked from accessing funds in Icelandic banks adding up to at least £1.164 billion.

Cambridge disclosed it had £8.5 million in Heritable, a subsidiary of the failed Landsbanki, and £2.5m in Glitnir, but said that the funds represented just three per cent of its total bank deposits.

Another 11 universities meanwhile, including Manchester University, the Open University, Glyndwr University, based in Wrexham, and Manchester Metropolitan University have deposits in Icelandic banks adding up to £66 million.

A Cambridge spokesman said: “We have alerted HEFC (the Higher Education Funding Council) and we are seeking to have a concerted recovery effort with the other British universities affected.”

One of the funniest things about these depositors is that they all solemnly explain that they poured money down the Icelandic drain after taking the best possible “professional advice”. Who are these mysterious advisers? And shouldn’t someone now be sueing them for negligence?

Hooray! Paul Krugman has been awarded the Nobel Prize for economics. Here’s why. Better explanation here. Bet Bush & Co are pissed off. And already the fruitcake right is spluttering about it.

Thoughtful piece by James Robinson about why even the specialist media were taken aback by the banking crisis.

Should City editors and economics correspondents have predicted it?

Alex Brummer, the Daily Mail’s experienced City editor, believes they should have done. He argues that, although City journalists covered the problems of some individual companies creditably, few grasped the enormity, or scale, of the situation.

‘They were slow off the mark originally,’ he says, pointing out that young journalists who weren’t working during the last financial crisis in the 1970s did not have the foresight to realise that a problem at one institution can quickly become a problem for all. ‘That has something to do with the age profile. They’ve been brought up in a period of non-stop output and growth. I cut my teeth as a financial journalist in the white heat of the 1976 financial crisis, when 25 banks went under. Having lived through all of that you learned a [crisis] spreads from one institution to another and [governments] need to do something very quickly to stabilise the system.’

Brummer’s historical perspective is something only a few share. Jeff Randall, a business journalist and the Daily Telegraph’s editor-at-large, has been warning about personal debt and an unsustainable housing boom for years, and others have voiced similar concerns. Yet few identified the sub-prime market, or the credit crunch, as triggers that would push the world to the brink of recession, and senior figures at the FT admit they should probably have done better in that regard. Dan Bögler, the paper’s managing editor, says: ‘We believed the bankers when they said derivatives were making the world safer by spreading risk. But in reality it became a game of pass the parcel and the parcel ended up in the hands of those who least understood it. We take our share of the blame for that.

‘Why didn’t we spot it? Unfortunately, financial journalists – and the FT has better-trained financial journalists than others – don’t really understand this stuff, and they join a long list of people that starts with bank regulators, central bank regulators and money managers.’