Category Archives: Beyond belief

The Met’s Rodney King moment

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This morning’s Observer column.

The police have two choices. Accept that digital technology will make them accountable for their actions or try to control the technology. In any normal society there would be no decision to be made. But since 9/11 the threat of global terrorism has given the state – and its security apparatus – carte blanche to take whatever measures it deems necessary. And it has imbued in every uniformed operative, from ‘Community Support’ officers and the bobby on the beat to the bored guy in the airport checking your toothpaste, the kind of arrogance we once associated only with authoritarian regimes.

You think I jest? Talk to any keen amateur photographer. As a group, photographers have been subjected to increasingly outrageous harassment by police and security operatives. (For a partial list of incidents see bit.ly/22VFRX). Try photographing a bridge, public building or a police car parked on a double-yellow line and you will have a goon demanding your camera, image card or film.

Better still, ask John Randall, a Tory MP who recently told the Commons how one of his Uxbridge constituents, a Mr Wusche, photographed properties he thought were in bad repair to pass on to the council…

Marina Hyde had a great column on the same subject in yesterday’s Guardian:

If there is anything to feel optimistic about today, perhaps it is the hope that we are witnessing the flowering of an effective inverse surveillance society. Inverse surveillance is a branch of sousveillance, the term coined by University of Toronto professor Steve Mann, and it emphasises “watchful vigilance from underneath”, by citizens, of those who survey and control them.

Not that turning our cameras on those who train theirs on us is without risk. Indeed, one might judge it fairly miraculous that the man was not forcibly disarmed of his camera phone, given that it is now illegal to photograph police who may be engaged in activity connected to counterterrorism. And as we know, everything from escorting Beyoncé to parking on a double yellow while you nip in to Greggs for an iced bun can now be justified with that blight of a modern excuse – “security reasons”.

Yet it will by now have dawned on even the most dimwitted Met officer that it is increasingly impossible for them to control the flow of information about their activities – to kettle it, if you will – no matter how big their army of press officers putting out misleading information in the immediate aftermath of any event may be.

Did the Met genuinely think they could prevent the emergence of a far more joined-up picture of Tomlinson’s passage through the City of London that afternoon, much as they thought they could suppress the details about Jean Charles de Menezes’s tragic final journey? If so, their naivety is staggering…

Some people have emailed to say that they find the closing prediction of my column (that police from now on will start confiscating cameras) implausible. Well, they clearly haven’t read Section 76 of the Counter-Terrorism Act, which came into force on 16 February. That makes it an offence to photograph any police officer or member of the armed services in ways that could aid terrorism. As Roger Graef (one of the wisest people I know in this field) pointed out yesterday much — if not most — policing of demonstrations these days is ‘justified’ not just under the Public Order acts, but anti-terror legislation which gives anyone in uniform authority to do or ban almost anything.

In fact, one of the great ironies of the Bob Quick case is that the photographer who took the picture could have been prosecuted under Section 76. And probably would have been if he hadn’t got the picture out quickly.

The bigger picture is that Osama bin Laden has won, hands-down. He provoked Western democracies into an obsession with security that justifies any degree of trampling on liberty. He stimulated the introduction of legislation (like the Patriot Act in the US) and the Counter-Terrorism Act in the UK which enables the State to treat ANY activity, including legitimate democratic activity (like protesting against the looting of the banking system, the launching of a war under false pretences, the banning of fox-hunting or airport expansion) not as a nuisance to the normal business of a city but as a threat to the State itself.

Beeb haters: be careful about what you wish for. You might just get it

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Lovely column by Marina Hyde.

Only this week The Wire’s own Dominic West said that British TV lacked high-end contemporary drama but did costume drama brilliantly – a statement swiftly spun and used as a stick to beat the BBC by the very people who would like nothing more than for most of the corporation’s output to be bonnet- and corset-wrapped. Fortunately, by yesterday morning the mother of all anti-BBC bandwagons was fully operational again, as Ofcom finally handed down its fine to the BBC for the Russell Brand/Jonathan Ross Sachsgate business, allowing Beeb bashers to once more swarm the airwaves and internets to rail against the monstrous licence fee.

Have any of these people seen the likes of Moment of Truth, one wondered idly, in which our hero Mike Darnell hooked up semi-witting participants to lie detectors, whereupon they were asked “Do you really care about starving children in Africa?”, or questioned about their porn-watching habits?

Whether or not it is a fact capable of being grasped by those who wish to destroy the BBC, this is what their telly will look like if and when they succeed. Not necessarily immediately, but give it a couple of years and we’ll be slinging nymphomaniac dwarves on to an island with the worst of them.

The reason we are forced to make do with BBC shows such as Blue Planet or Little Dorrit, or indeed acclaimed programmes on commercial channels, is that rival broadcasters cannot compete with the BBC for funding. They therefore have to compete for quality, an arrangement that in the good times raises standards across the board. In these grim economic times for commercial broadcasters, the licence fee might be the only guarantee that programmes will be made at all…

Great stuff. Every time I have an American guest and they listen to Radio 4 or see BBC4 or 2, they shake their heads in wonderment that such things are still possible. And yet there are lots of folks around in the UK (not to mention in the Daily Mail) who would like to destroy it.

The Quiet Coup

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Charles Arthur spotted this extraordinary piece in The Atlantic.

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time…

James Cascio has also been reading this piece and has written a post putting it in a wider context.

Taking the long view of the banking crisis

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In the last week I’ve been brooding about what lifted the US out of the Great Depression. The (terrifying) answer is: the Second World War. So you might say (I mused) that what we really need now is a bloody good war. Except of course that today’s wars do not require national mobilization (as we saw with the adventure in Iraq); they just require us to spend unconscionable amounts of public money on fancy kit. And then along comes this remarkable, long, thoughtful and persuasive piece by James Galbraith arguing that nobody — including Obama’s team — has the measure of the scale of the crisis yet.

Is there anything today that we might do that can compare with the transformation of World War II? Almost surely, there is not: World War II doubled production in five years.

Today the largest problems we face are energy security and climate change — massive issues because energy underpins everything we do, and because climate change threatens the survival of civilization. And here, obviously, we need a comprehensive national effort. Such a thing, if done right, combining planning and markets, could add 5 or even 10 percent of GDP to net investment. That’s not the scale of wartime mobilization. But it probably could return the country to full employment and keep it there, for years.

Moreover, the work does resemble wartime mobilization in important financial respects. Weatherization, conservation, mass transit, renewable power, and the smart grid are public investments. As with the armaments in World War II, work on them would generate incomes not matched by the new production of consumer goods. If handled carefully — say, with a new program of deferred claims to future purchasing power like war bonds — the incomes earned by dealing with oil security and climate change have the potential to become a foundation of restored financial wealth for the middle class.

This cannot be made to happen over just three years, as we did in 1942-44. But we could manage it over, say, twenty years or a bit longer. What is required are careful, sustained planning, consistent policy, and the recognition now that there are no quick fixes, no easy return to ‘normal,’ no going back to a world run by bankers — and no alternative to taking the long view.

A paradox of the long view is that the time to embrace it is right now. We need to start down that path before disastrous policy errors, including fatal banker bailouts and cuts in Social Security and Medicare, are put into effect. It is therefore especially important that thought and learning move quickly. Does the Geithner team, forged and trained in normal times, have the range and the flexibility required? If not, everything finally will depend, as it did with Roosevelt, on the imagination and character of President Obama.

This is a great piece — very long but worth the time and effort. Here’s another passage that struck me:

The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?

The oddest thing about the Geithner program is its failure to act as though the financial crisis is a true crisis — an integrated, long-term economic threat — rather than merely a couple of related but temporary problems, one in banking and the other in jobs. In banking, the dominant metaphor is of plumbing: there is a blockage to be cleared. Take a plunger to the toxic assets, it is said, and credit conditions will return to normal. This, then, will make the recession essentially normal, validating the stimulus package. Solve these two problems, and the crisis will end. That’s the thinking.

But the plumbing metaphor is misleading. Credit is not a flow. It is not something that can be forced downstream by clearing a pipe. Credit is a contract. It requires a borrower as well as a lender, a customer as well as a bank. And the borrower must meet two conditions. One is creditworthiness, meaning a secure income and, usually, a house with equity in it. Asset prices therefore matter. With a chronic oversupply of houses, prices fall, collateral disappears, and even if borrowers are willing they can’t qualify for loans. The other requirement is a willingness to borrow, motivated by what Keynes called the “animal spirits” of entrepreneurial enthusiasm. In a slump, such optimism is scarce. Even if people have collateral, they want the security of cash. And it is precisely because they want cash that they will not deplete their reserves by plunking down a payment on a new car.

The credit flow metaphor implies that people came flocking to the new-car showrooms last November and were turned away because there were no loans to be had. This is not true — what happened was that people stopped coming in. And they stopped coming in because, suddenly, they felt poor.

Strapped and afraid, people want to be in cash.

Ghost twittering

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It just goes to show that nothing’s straightforward — not even Twitter.

The rapper 50 Cent is among the legion of stars who have recently embraced Twitter to reach fans who crave near-continuous access to their lives and thoughts. On March 1, he shared this insight with the more than 200,000 people who follow him: “My ambition leads me through a tunnel that never ends.”

Those were 50 Cent’s words, but it was not exactly him tweeting. Rather, it was Chris Romero, known as Broadway, the director of the rapper’s Web empire, who typed in those words after reading them in an interview.

“He doesn’t actually use Twitter,” Mr. Romero said of 50 Cent, whose real name is Curtis Jackson III, “but the energy of it is all him.”

In its short history, Twitter — a microblogging tool that uses 140 characters in bursts of text — has become an important marketing tool for celebrities, politicians and businesses, promising a level of intimacy never before approached online, as well as giving the public the ability to speak directly to people and institutions once comfortably on a pedestal.

But someone has to do all that writing, even if each entry is barely a sentence long…

Just for the record, I really wrote this post! Honest.

Joined-up government, not

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Fascinating post surveying the linking policies of UK public sector websites. I particularly liked the London Fire Brigade site which operates one of the most restrictive linking policies in existence, banning deep-linking and threatening “further action” for “breach” of this “legal restriction” if you’ve not informed LFB you’ve linked to their site:

ATTENTION: LINKING TO THIS WEBSITE INDICATES THAT YOU ACCEPT THESE TERMS OF USE AND LEGAL RESTRICTIONS AND THAT YOU WILL ABIDE BY THE GUIDELINES SET OUT BELOW. IF YOU DO NOT ACCEPT THESE TERMS OF USE OR YOU DO NOT AGREE TO ABIDE BY THESE GUIDELINES, DO NOT LINK TO THIS WEBSITE

If you provide hyperlinks to this Website, you agree that you…

* shall not link to an internal page of this Website that is located one or several levels down from the home page or bring up or present Content of this Website on another website without our prior written permission; shall not link to a website that is not owned by you;

* shall inform us in writing of the link; and

* shall immediately discontinue the link if instructed to do so by us.

We expressly reserve the right to revoke the right granted in this section for any breach of these Terms of Use and to take any further action it deems appropriate in respect of such breach.

Something for Tom Watson, I think.

Thanks to Tony Hirst for the original link.

What they ought to have known about Northern Rock

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From Robert Peston’s blog.

The National Audit Office’s report into the events leading up to the nationalisation of Northern Rock can be captured in three simple points, none of which will surprise you:

Northern Rock branch1) In 2004 and subsequently, the Treasury – under the then Chancellor, Gordon Brown – didn't appreciate that banks were taking on dangerous risks by becoming dependent for funds on wholesale markets, and didn’t see the urgency of making adequate preparations for the possible collapse of those banks (even though it recognised that it didn’t have an adequate system for dealing with such crises);

2) In the autumn of 2007, the Treasury – under the current Chancellor, Alistair Darling – didn’t expect house prices to fall by more than a few percentage points and didn’t believe the UK would suffer a recession;

3) Until far too late, all the authorities – the Treasury and the Financial Services Authority in particular – had a hopelessly naïve view that Northern Rock was not taking excessive risks by providing 100% mortgages at the top of the housing market.

The banking crisis: lunatics now running the asylum

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Interesting column from Paul Krugman, one of the few people who talks sense at the moment.

So now we have a bank crisis. Is it the result of fundamentally bad investment, or is it because of a self-fulfilling panic?

If you think it’s just a panic, then the government can pull a magic trick: by stepping in to buy the assets banks are selling, it can make banks look solvent again, and end the run. Yippee! And sometimes that really does work.

But if you think that the banks really, really have made lousy investments, this won’t work at all; it will simply be a waste of taxpayer money. To keep the banks operating, you need to provide a real backstop — you need to guarantee their debts, and seize ownership of those banks that don’t have enough assets to cover their debts; that’s the Swedish solution, it’s what we eventually did with our own S&Ls.

Now, early on in this crisis, it was possible to argue that it was mainly a panic. But at this point, that’s an indefensible position. Banks and other highly leveraged institutions collectively made a huge bet that the normal rules for house prices and sustainable levels of consumer debt no longer applied; they were wrong. Time for a Swedish solution.

But Treasury is still clinging to the idea that this is just a panic attack, and that all it needs to do is calm the markets by buying up a bunch of troubled assets…

Krugman’s becoming increasingly vehement about this. Why?

Because I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second. So it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.

That’s the nightmare. I’m not usually a pessimist, but I have a sinking feeling that the people who are supposed to be in charge of this are really out of their depth. And — as Joe Nocera and David Brooks pointed out so eloquently yesterday — the politicians are, if anything, making things worse. Here’s Brooks:

You’d think if some tiger were lunging at your neck, your attention would be riveted on the tiger. But that’s apparently not how it works in the age of global A.D.D. As a tiger sinks its teeth into the world’s neck, we focus on the dust bunnies under the bed and the floorboards that need replacing on the deck. We live in the world of Perverse Cosmic Myopia, an inability to focus attention on the most perilous matter at hand.

The tiger, of course, is the collapsing world financial system. Americans actually have a falsely mild view of this crisis because the economy is worse abroad. The U.N.’s International Labor Organization projects between 30 million and 50 million job losses worldwide. Central European countries are teetering; Japan’s economy is horrifying; and the Chinese job creation machine is losing the race against its demographic pressures.

Brooks is critical of Obama.

The president of the United States has decided to address this crisis while simultaneously tackling the four most complicated problems facing the nation: health care, energy, immigration and education. Why he has not also decided to spend his evenings mastering quantum mechanics and discovering the origins of consciousness is beyond me.

The results of this overload are evident on Capitol Hill. The banking plan is incomplete, and there is zero political will to pay for it. The president’s budget is being nibbled to death. The revenue ideas are dying one by one, while the spending ideas expand. By the latest estimate, the health care approach will cost $1.5 trillion over 10 years and the national debt will at least double, while the Chinese publicly complain about picking up the tab.

But at least Obama is distracted by Big Issues. Congress, on the other hand, has lost its marbles…

The Washington political class has spent the past week going into made-for-TV hysterics over $165 million in A.I.G. bonuses. We’re in the middle of a multitrillion-dollar crisis, and our political masters — always willing to throw themselves into any issue that is understandable on cable television — have decided to risk destroying the entire bank-rescue plan because of bonuses that account for 0.001 percent of the annual G.D.P.

Even this is not the most idiotic of the distractions. For that, you have to look abroad.

Joe Nocera wrote an impassioned polemic against the righteous bloodlust which has gripped the House of Representatives over the A.I.G. bonuses.

By week’s end, I was more depressed about the financial crisis than I’ve been since last September. Back then, the issue was the disintegration of the financial system, as the Lehman bankruptcy set off a terrible chain reaction. Now I’m worried that the political response is making the crisis worse. The Obama administration appears to have lost its grip on Congress, while the Treasury Department always seems caught off guard by bad news.

And Congress, with its howls of rage, its chaotic, episodic reaction to the crisis, and its shameless playing to the crowds, is out of control. This week, the body politic ran off the rails.

There are times when anger is cathartic. There are other times when anger makes a bad situation worse. “We need to stop committing economic arson,” Bert Ely, a banking consultant, said to me this week. That is what Congress committed: economic arson…

Nocera’s point is that while the bonuses are indeed repulsive, they are a sideshow. And they will have the effect of ruining the chances of taxpayers ever getting their money back. For example,

During his testimony on Wednesday, Mr. Liddy pointed out that much of the money the government turned over to A.I.G. was a loan, not a gift. The company’s goal, he kept saying, was to pay that money back. But how? Mr. Liddy’s plan is to sell off the healthy insurance units — or, failing that, give them to the government to sell when they can muster a good price.

In other words, it is in the taxpayers’ best interest to position A.I.G. as a company with many profitable units, worth potentially billions, and one bad unit that needs to be unwound. Which, by the way, is the truth. But as Mr. Ely puts it, “the indiscriminate pounding that A.I.G. is taking is destroying the value of the company.” Potential buyers are wary. Customers are going elsewhere. Employees are looking to leave. Treating all of A.I.G. like Public Enemy No. 1 is a pretty dumb way for a majority shareholder to act when he hopes to sell the company for top dollar.

All of which brought Edmund Burke to mind. The reason we have representative democracy is to strike a balance between the need to respond to the public’s wishes and the risks of lurching on the tidal surges of public outrage. Congressmen (and MPs) are representatives, not delegates. We pay them to make up their own minds, to consider things in the round, to ponder the knock-on effects of policies — in short to think.

A.I.G. Planning Huge Bonuses After $170 Billion Bailout

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From this morning’s NYTimes.

The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

So, let me get this straight: the contract which must be honoured is such that it rewards employees for running the firm into the ground? At this point you really begin to wonder if the people who created this system ought to be sectioned under the Mental health Acts.