Sunday, December 27, 2009


There is a new epidemic in the world.

I call it "Positivitis".

It is a mental disease, which causes the victim to systematically over-evaluate everything that puts her or him in a "positive" frame of mind, and to discount everything that might put her or him in a "negative" frame of mind.

Victims of this disease insist on defining "positive" and "negative" according to their own whim or fancy.

Generally, however, "positive" equals "anything that enables me to continue feeling happy with my chosen way of life".

"Negative", for those suffering from this disease, equals "anything that causes me to question any aspect of my lifestyle, opinions or moods".

Probably, throughout history, there have been individuals who have suffered from "Positivitis".

However, these individuals usually belonged to the ruling elite and were therefore only a handful in any society.

Since the 1980s, the number in the global elite has greatly increased.

We who read this Blog in all probability belong to the global elite, because of education, access to the internet and other technical resources, as well as financial resources that, even among the so-called "middle class" today are greater than most kings enjoyed through history.

That is something that is well hidden from us because of the incessant propaganda which tends to prompt us to be focused on the rat race.

We therefore do not even realise that confronted with an enormously significant choice: to use our resources and situation merely to live as comfortably as possible, or to use our status and resources to struggle for making the world better.

Those who attempt the latter are trying to be true realists. Those who attempt the former choose the disease that I call "Positivitis".

If the disease affected only the individuals who make a deliberate choice of "Posititivitis", that would be bad enough.

But some sufferers of "Positivitis" choose an extreme form of the disease: "Fundamentailst Positivism" or even "Fascist Positivism".

"Fascist Positivists" are those who deliberately blind themselves so totally to reality that they ferociously and violently attack anyone who is a realist.

Unlike "Fascist Positivists, "Fundamentalist Positivists" do not to attack those who are realists. But "Fundamentalist Positivists" do feel compelled to use their position to distort reality for others, by producing propaganda about "Positivism".

A headline from a recent newsletter from one of the most respected Business Schools in the world provides an instructive case study.

Here is the headline: "All Is Not Doom and Gloom for Artists".

From the headline, one would expect that there is something objectively good starting to happen for artists. Perhaps a new source of funding. Or a new channel of publicity. Or an opportunity to have more cheaply the supplies they need for their profession.

But on examining the article, one finds that there is no additional source of funding, no additional channel for publicising their work, no means of obtaining the supplies they need more cheaply. In fact, nothing objectively better at all: "For working artists, the recession has meant lower income from sales and reduced support from grants".

So what's the good news? Apparently, "about one-third ...say they are experiencing more openness to collaboration, one-third say they are able to experiment more, and one-tenth of the respondents say they are able to get cheaper work space now.".

Let's think about those three elements.

On the first element, if one-third say that they are experiencing more openness to collaboration, does that mean that perhaps one seventh are experiencing the same level of openness to collaboration, while the rest (the majority) are actually experiencing less openness to collaboration?

On the 2nd element: if one third say they are able to experiment more, what does that tell us about the other two-thirds? Are the vast majority (two-thirds) actually experimenting less?!

Similarly, on the third element: if only one-tenth are able to get cheaper work space now, does that mean that nine-tenths are not able to get cheaper work space even with the decline in real estate prices since some time in 2007?

The kind of "Positivitis" displayed by the Business School newsletter is particulary galling in view of the following facts that are also quoted:

* Two-thirds of artists hold at least one job in addition to making art

* Artists’ incomes are relatively low (two-thirds made less than $40,000 in 2008), and 51% reported an actual decrease even in that small art-related income from 2008 to 2009

* Forty percent of artists do not have adequate health insurance and more than 50%are worried about losing what they do have.

All that such "Fundamentalistically Positivitist" articles do is to put a "positive spin" on a worsening situation for artists.

"Fundamentalistically Positivist" articles and feel-good speeches help to create or perpetuate an illusion - in this case, that the situation is not so bad for artists after all, so that we are discouraged from concern about the situation of artists, and de-motivated from doing anything to improve the situation. Sphere: Related Content

Wednesday, December 23, 2009

Has Twitter been hacked?

Never usually have difficulties getting in and out of Twitter - but having difficuty today!

Has Twitter been hacked?!

As I try to log out, it takes ages and doesn't succeed in logging me out. On trying several times, I notice that the URL reads: "". Is that normal? I don't recollect having seen that URL earlier... Sphere: Related Content

Sunday, December 20, 2009

The division of Chinese state-owned companies into two classes

Following the impact of the financial crisis on China's corporations, which slashed profits in the last quarter of 2008, profits remained negative on an annualised basis for 9 months to the third quarter of this year.

By current quarter, most industries appear to have returned to profit.

But an interesting picture emerges of the new class-division of Chinese companies.

The top-performing companies are the 131 centrally-controlled companies, whose profits were up 3.4% for the year through November.

Worst performing are the Local-government-controlled companies who suffered a loss of 8.9%.

Total losses by state-owned companies were 1.9%.

The reasons for the difference in performance are interesting to speculate about, but of course no one except the Party really knows. Sphere: Related Content

Copenhagen's NON-agreement: developing countries shoot themselves in the foot

It was clear for a long time that neither China nor the USA were keen on any real or binding agreement at Copenhagen.

The final result is a non-binding "promise" of a measly USD 10 billion a year for the next three years, with the idea that this might be increased by 2020. Given that there is no agreement about which specific countries will provide this money, which countries it will go to, in which amounts, on what conditions and by which mechanisms - and given the non-history of the "Millennium Development Goals"! - it is clear that what emerged from Copenhagen was a grand total of nothing.

Non-binding offers of cuts in carbon emissions, such as from China immediately before the summit can be considered to have been either mere posturing or in line with what the Chinese were planning anyway - and had no relation to the summit.

What is not clear is why the rest of the developing world (including India) wee so keen to avoid confronting China and the USA on the matter and arriving at an international deal that committed everyone else. That would have isolated the two bad guys and exercised at least some moral pressure on them - not that America has in recent times shown itself amenable to international pressure - let alone China of course.

So Copenhagen can be summed up as follows: duped by China and the US, the developing countries have shot themselves in the foot.

Assuming the consensus thinking about climate change is anywhere near correct, guess which countries are going to suffer most from the consequences? China and India. We have the largest coastlines, and the largest populations near them. We are more dependent on the monsoon and on the water that flows from the Himalayas than any other countries in the world. Naturally, in proportional terms small island states may be completely wiped out, but in terms of actual numbers of people, the damage in China and India will be much worse.

However, the economic and moral impact of the lack of an agreement at Copenhagen will be most on the USA. Not only has it delcined from providing leadership on a matter of global importance, its industry will continue to be hollowed out as more and more of that is outsourced to countries with lower environmental and human standards.

Global trade without global rules disproportionately disadvantages countries with the best environmental and human standards. Sphere: Related Content

Saturday, December 19, 2009

Ten Lies that perpetuate the crisis

1: "Bankers and traders are cleverer than regulators"

2: "Booms and busts are inevitable"

3: "No one saw it coming"

4: "Bubbles cannot be identified till well after the fact"

5: "Legislation is the same as intervention"

6: "Markets free of state interference are good (true), so we should have markets without rules (false)"

7: "We can have markets without rules and without umpires"

8: "We can have global markets without global rules"

9: "Markets cannot be global without a global currency" (global currency competition actually helps global financial stability; there is a trade-off between efficiency and stabilty - too many currencies are inefficient, but too few make for instability and therefore concentration of power)

10: "Capitalism is the best, why change it?" (Since the 80s, we haven't had "capitalism", what we've had is "casinoism") Sphere: Related Content

Thursday, December 17, 2009

How many American families are losing their homes?

Well, according to Sojourners, on average the figure is one American family every 13 seconds (that's 6,600 per day).

This is not due to the subprime issue caused by unbridled speculation making life too expensive for people who had just been able to afford their mortgages. No, that was all two years ago.

So what is causing this new wave of foreclosures? Apparently, it is due to Americans losing employment. As the unemployment rate has climbed and climbed (and looks set to continue climbing, in spite of the temporary improvement just recently), an increasing number of Americans are losing their homes. Apparently, 50% of American homeowners have so little saved that if they are likely to lose their homes if they are out of work for as little as one month.

Savings rates are improving in the US, but not improving so very much yet. Meanwhile, the more Americans turn to saving, and the less they spend, the more it will hurt the export-oriented economies, led by China. Sphere: Related Content

Eleven Lessons for a Realistic Human Rights Policy

Dr. Friedbert Pflueger, who is a Member of the International Advisory Board of the World Security Network Foundation, in the course of his eminently sane analysis of US policy since Carter to Obama, during his recent inaugural lecture as Visiting Professor, Department of War Studies, King's College, London, enunciated the following 11 principles of a realistic human rights policy:

"Human Rights should be one cornerstone of a democracy's foreign policy. The spread of individual freedom, democracy and justice enhances also the security of free nations. Human rights can only be protected and saveguarded at home, if they are also a serious issue abroad. A democracy, which enjoys rights at home, but does not care about rights abroad, will loose the support of its own people.

Different cultures, historical backgrounds or religious traditions do not allow to apply the concept of a Westminster democracy everywhere at any time. Therefore human rights policies should concentrate on gross violations of rights such as torture. Its aim should be to fight the hell, not to create heaven.

Accordingly not preaching, a „we-know-better"attitude, arrogance or self-righteousness should be avoided. Human rights policy may not come about as moral imperialism.

While free elections in a specific country should be an aim, they are by far not the most important indicator for a free society. More emphasis should be given to the rule of law, the Habeas Corpus principle and of accountability and reliability of the government.

While the concept of human rights is a concept of individual rights vis a vis the government, those rights need social conditions to flourish such as basic standards concerning food, housing, education the rights of women etc.

Human rights can not the only aim of a countries foreign policy, often not even the most important one. It has to be balanced with other aims. So hard compromises are inevitable. You would like to criticise the Chinese human rights record, but on the other hand you need the Chinese as a partner of nuclear non-proliferation policy against Iran. Or: You would like to criticise Russia for closing down a free TV-station, but you want to achieve an important disarmament or climate agreement at the same time. So you have to develop skills and ideas to pursue the one cause without entirely give up the other. There are no clear formulas for a decision; it has to be case-by-case. The criticism of double standards is to a certain extend inevitable.

Sometimes you serve your cause better by quiet diplomacy. There are cases, when a statesman visiting a foreign country has the chance to free imprisoned dissidents or improve their living conditions. Sometimes he/she would harm his cause by speaking out and reaches results by interfering in a way, where the country in question can save its face. But quiet diplomacy should never become an alibi for doing nothing.
Use, wherever possible, multilateral institutions to foster human rights. Strengthen the International Court of Justice, reform the UN-human rights commission, use summits and every possible international forum to work for progress in the field of human rights.

If there is a real humanitarian catastrophy or genocide, do not rule out the use of force - a humanitarian intervention might be necessary. Without the willingness to fight for the idea of freedom, nobody would have stopped Adolf Hitler and Srebrenica would have been repeated. The threshold for such an intervention should be very high and in accordance with international law.

Be on the other hand aware of the limits of your countries power. Henry Kissinger explained his reluctance with aggressive human rights policy not with moral ambiguity or a lack of interest, but: "Imperatives impose limits in our ability to produce internal changes in foreign countries. Consciousness of our limits is recognition of the necessity of peace". (Statement before the Senate Foreign Relations Committee, 19. 9. 1974)

The best way to serve the cause of human rights is the example a country gives with the practise at home. That has made the United States a beacon of freedom to the world Therefore Guantanamo was a grave mistake and should become history soon. John Quincy Adams stated in his famous address on the tasks of the American nation on July 4th 1821: "Wherever the standard of freedom and independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad, in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own. She will commend the general cause by the contenance of her voice and the benignant sympathy of her example".

It seems to me that the trouble with Professor Pflueger's entirely sensible suggestions is that they assume, on the one hand, genuine commitment to human rights on the part of leaders, and, on the other hand, the acceptance by the public that leaders are acting in good faith. Is either of these true today? Sphere: Related Content

Wednesday, December 16, 2009

Does Modern Communication Technology Increase Isolation - or Doesn't It?

Just as some "research" finds that a particular item in your diet is good for your heart, while other "research" finds that the same item is bad for your cholesterol - or something equally idiotic - so we have opposing results of "research" on the topic of whether new communication technologies increase or reduce social interaction.

A widely-reported 2006 study showed that, since 1985, Americans have become more socially isolated: the size of their discussion networks declined, and the diversity of those people with whom they discuss important matters has decreased. Americans have fewer close ties to those from their neighborhoods and from voluntary associations. Internet and mobile phone technologies enable and support social ties that are relatively weak and geographically dispersed, not the strong, often locally-based ties that used to be a part of peoples’ discussion network before such technologies became pervasive. The result is that people are pulled away from traditional social settings, neighborhoods, voluntary associations, and public spaces.

By contrast, the Pew Internet & American Life Project, which does a lot of useful work, has just relesed the results of its "Personal Networks and Community Survey", involving telephone interviews with a nationally representative sample of 2,512 adults. The interviews were conducted in English by Princeton Data Source, LLC between July 9, 2008 and August 10, 2008, on behalf of Princeton Survey Research International.

The survey was undertaken specifically to explore issues that were not probed directly in the 2006 study and other related research: the role of the internet and mobile phone in people’s core social networks.

This Pew survey finds that Americans are "not as isolated as has been previously reported. People’s use of the mobile phone and the internet is associated with larger and more diverse discussion networks. And, when we examine people’s full personal network – their strong and weak ties – internet use in general and use of social networking services ... are associated with more diverse social networks."

The phrasing above seems to suggest that the 2006 study was wrong. However, common sense tells you that the two pieces of "research" were examining different things:

If you relate to a larger number of people they will by definition be more diverse; and if you relate to a larger number of people, as there are only 24 hours in each day, your interactions on average will certainly be less deep. Indeed, your interactions may ALL become less deep.

Common sense also tells you that, if you use the new communication technologies, the possibility of connecting with people in more distant places will reduce the time you have available to relate to people nearer by. You can see this most clearly on any underground, bus or airplane: in the pre-tech days, people chatted much more easily with their (temporary) neighbours. Now practically no interaction takes place with one's temporary neighbours as everyone is too busy either listening to music or chatting with someone far away - and, as the conversation is taking place more or less in public, the conversation can't be about anything very deep. The same thing can be seen in real neighbourhoods, where people tend less and less to know their next-door neighbours and can now link up with people very far away. Equally, people may link with even a larger number of voluntary associations, but they now relate much less actively with any of them.

In brief, we don't need such "research" to tell us what we already know: these technologies have their uses, but they also have their drawbacks. All new technologies are double-edged. What we really need to learn is how to use them well and wisely. That is something for which research cannot be designed. Research leads to mere quantification of specific elements of what is needed for the sort of holistic knowledge on the basis of which life can flourish. And it has long been known that there is a wide gulf between knowledge and wisdom. Sphere: Related Content

A Global Civil War?

One of the organisers of the event mentioned below summarised my talk there, which I have adapted slightly as follows:

"Under a barrel ceiling dating back to before Christopher Columbus, and facing a stained-glass window depicting the Pilgrim Fathers praying as they left Holland for America on the Mayflower, some 200 people gathered on Friday to discuss with half a dozen speakers the topic of what the next twenty years might bring.

The English Reformed Church was formerly the chapel for a sisterhood of the Beguines, a 14th-century order of deaconnesses residing in an enclosed courtyard called The Begijnhof. The courtyard is entered through an inconspicuous archway making it a restful haven in the centre of the city. After the city sided with the Reformation, the church was presented to English-speaking Protestant dissidents living in the city, among them the Pilgrim Fathers. Since then, the church has continued to be used by the English-speaking community in Amsterdam down to the present day.

The occasion was an opportunity to reflect both on the past and on the future.

Prabhu Guptara, originally from India but based in Switzerland, asked where globalisation is leading us. Until a few months ago, he said, that was easy to answer. One view of the future was, until recently, clearly winning; the view that said that greed is good.

The view that was losing was the values of the Protestant Reformation, which had for the last 500 years shaped everything that makes the West the envy of the rest of the wrold - e.g. universal literacy, freedom of thought, freedom of expression (and therefore open debate), science and technology, the rule of law, material abundance, loving those who disagree with you(or at least tolerating them), environmental responsibility, humanitarian concern, freedom of association, political democracy.... These values are not perfectly respresented in the West, but they did start originally being embodied in society for the first time with the Protestant Reformation, and did increasingly mark society first in the West and then, by its influence, in the rest of the world - till the 1980s.

However, a great change took place around the 1980s. Ayn Rand’s philosophy, that greed is good, was endorsed by the majority of the elite on both sides of the Atlantic.

The exponential, irresponsible and risky growth in recent decades stemmed from this view. The new practical godlessness created the boom of recent years, claimed Prabhu, until the last few months.

While World War 2 ended with a balance of power between the USSR and the USA, communism’s collapse twenty years ago had left one superpower. But then 9/11 had introduced a multipolar world, accentuated by the latest crisis. Whether a multipolar world is good for humanity remains to be seen, and it will be determined by the choices made by the new powers such as China and India, as much as by the old powers. There is also the related question of whether the new powers, such as hina, will be continue to be able to negotiate the turbulent waters of the sort of global casino that we have created since the 1980s.

What then lies ahead? Greater peace or increased regional conflicts? A new world war even? Increasing protectionism and competitive devaluation of currencies could still lead to the second possibility, he pointed out, in the same way as these precise factors had led to World War I and World War II. Protectionism and devaluation are therefore factors to watch closely.

The other key factor to watch is the current global discussion about the reform of the financial sector, in order to return it to the sort of responsible social function it had till the 1980s.

This is one example of a key area where global society is being confronted with a huge choice. If the wrong options are chosen, a new feudalism could return, in which a few super-rich would keep the rest of population under control.

Alternatively, biblical values could produce a world that is genuinely humane, just and environmentally responsible. Due to technological advances, which of course also go back to the Protestant Reformation, we have for the first time the possibility and means of clothing, housing and feeding everybody.

Global society is, in fact, facing a global civil war, between two sets of ideas: one of human responsibilty to society and to God, stemming from the Protestant Reformation but originating much earlier, in the Hebrew Bible; and the other rooted in the equally ancient "values" of human rationality, capacity and greed.

The future will have a more explicit clash between these two sets of values, predicted Prabhu, as he stepped from the podium." Sphere: Related Content

Manipulation of Official Statistics

As my regular readers will know, I have a personal campaign against the manipulation of official statistics. In the course of this campaign, I often cites US figures. As a non-American, I am conscious that I should really quote Swiss or British or Indian figures as these are the economies which I know best. However, to its credit, the fact remains that the US is still the most transparent country in the world. More facts are more easily available to everyone in the world about this country than about any other.

For those who would like to follow vigorous discussions about facts regarding the US but from a US source, you might find it interesting to look at the website titled, "ECONOMY IN CRISIS America's Economic Report - Daily".

You will find there, for example,Thomas Heffner's post, "A Sinking Ship Full Steam Ahead", in which he takes on GDP, productivity and job creation figures
[Open in new window] Sphere: Related Content

Another misleading headline, this time about Singapore

A piece by an analyst today reads: "Is Positive Growth in Singapore Sustainable?".

This would seem to indicate that "positive growth" is taking place in Singapore, and the question that is going to be asked by the piece is whether that growth is sustainable.

However, when one reads the piece, one finds that there is NO growth taking place taking place in Singapore: all that is happening is that the decline is slowing down!:
"the pace of contraction in retail and auto sales decelerated significantly in October 2009. Retail sales contracted 4.4% y/y, the smallest decline in 10 month, in October after falling a revised 12% y/y in September. Auto sales contracted 14.6% y/y in October after plunging 36.3% y/y in September...". Sphere: Related Content

Saturday, December 12, 2009

"Unsocial Hours: Unsocial Families?"

Though I am an admirer of the work of The Relationships Foundation and generally try to keep up with their work, I have only just got around to reading their pamphlet ‘Unsocial Hours: Unsocial Families’.

It is necessary reading for everyone concerned with the health of individuals, of families and of society.

Written by Clare Lyonette and Michael Clark, "Unsocial Hours: Unsocial Families?" surveys the international literature on the impact of long and atypical hours working on family life, but particularly on the effects on couple relationships and the wellbeing of children.

Available at:
[Open in new window] Sphere: Related Content

Thursday, December 10, 2009

Propaganda or Illiteracy?

Here is a headline from a recent newletter: "Japan Recovery Stalls: GDP Growth Climbs to 0.3% q/q in Q3"

The headline contradicts itself by saying first that the recovery "stalls", and then that growth "climbs".

The newsletter goes on to say: "Japan's real GDP growth for Q3 2009 was revised down to 0.3% q/q from a preliminary estimate of 1.2% q/q."

So only after you read that sentence is it clear that the growth rate was not what it was estimated to be. Indeed, that the growth rate was actually less than the estimate.

Nothing happened to the real growth rate: it was what it was. The recovery neither resumed nor stalled.

What happened was that the earlier guess or estimate was wrong, and we now know what the real growth rate was: a measly 0.3%.

So was the newsletter indulging in propaganda or is it that its writers and editors are simply illiterate - or perhaps suffering from temporary linguistic amnesia?

I don't know. But it certainly isn't communication! Sphere: Related Content

Monday, December 07, 2009

oil to fall, dollar to rise

Given the enormous over-supply of oil at present, look for the price of oil to fall significantly, perhaps even catastrophically, over the next few weeks. That will impact all commodities...

Gold? Rather more complex at present. Unlikely to fall significantly. Probably will continue rising at least till mid-January.

Look for the Remnimbi to hold steady or, more likely, decline further.

The Indian Rupee should continue to improve.

The Euro will come under pressure, perhaps huge pressure, as spreads widen on the EU's peripheral countries.

Contrariwise, expect the dollar to rise. Could rise dramatically. Sphere: Related Content

Sunday, November 29, 2009

Financial and asset bubbles cannot be avoided, but....

We are constantly bombarded with the propaganda that financial and asset bubbles cannot be avoided.

This is meant by interested parties as a move to paralyse debate about the number and size of bubbles and whether anything can be done to limit those.

An exactly parallel statement might be that life is full of dangers. But that does not mean that nothing can or should be done about such dangers and, in reality, each of us goes about reducing such dangers as far as possible.

Even those among us who enjoy extremely dangerous activities such as going to the frozen wastes of the Antarctic or the Himalayas, or take to bungee jumping and such, do take all the training possible, all the equipment possible and all the safeguards possible to minimise risk.

So the intelligent question to ask is NOT "Can asset and financial bubbles be avoided" (which would be like asking "Can dangers be eliminated from life") but: "Can the frequency, number and size of bubbles be contained?"

And the answer to that question is a clear "YES".

Two DVDs have recently been produced which provide easy-to-follow light on related subjects:

1. Dr. Bernard Lietaer's "Money for the Future" (the German-language version, "Geld für Zukunft" is on the same DVD), and

2. Dr. Margrit Kennedy's "Re-inventing Money" (the German-language version is "Geld new gestalten", also on the same DVD).

The first lasts 50 minutes, the second 65 minutes. Both are produced by Zeitfilm Media GmbH, Rutschbahn 33, 20146 Rotherbaum, Hamburg, Germany (Telephone: +49 40 414699-40). The cost is Euros 17.80 each, or 30 euros for the two. Regretfully, Zeitfulm does not seem to have an email ID that is publicly available, nor is their website in English at least at present! However, an order in English to the following should secure your copies: Sphere: Related Content

Tuesday, November 24, 2009

Going fast versus going further

While in Birmingham, UK, recently, I was reminded of an old saying that is too easily forgotten (at least by me!): "If you want to go fast, go alone; but if you want to go further, go with others". Sphere: Related Content

Saturday, November 21, 2009

How Airlines Can Improve Profits While Encouraging Healthy Habits Among Passengers

On a recent flight, I noticed that the following alcoholic drinks were on offer: two kinds of beer, three kinds of white wine, two kinds of red wine, and at least a dozen different kinds of spirits.

By contrast, there were only two kinds of non-alcoholic drinks: orange juice and apple juice.

I should point out that I have nothing against people consuming alcohol in reasonable quantities outside aircraft and airports. But I do get irritated by the consumption of alcohol in airports and flights because alcohol dries out the human body, which is why the medical advice is that one should not consume alcohol for a sufficient time before getting on a flight, nor should alcohol be consumed during a flight.

The body dries up during flights anyway - partly as a result of the radiation that comes through the body of an airplane at high altitudes, and partly because of the processed air that one has to breathe during flights. Adding the dehydration caused by alcohol is pretty stupid. On long flights, consuming alcohol can contribute to the formation of blood clots and what is called deep vein thrombosis.

So we have airlines encouraging unhealthy behaviour.

But the really interesting thing is that airlines are encouraging unhealthy behaviour at an increased cost to themselves!

Fruit juices are not only much healthier to consume during flights but also cost much less than alcoholic drinks. And there is such a wonderful array of fruit juices that could be offered! BTW I am always puzzled when I am offered orange juice in countries where no oranges grow - and I am even more puzzled when restaurants in many countries cannot offer me the juice of any of the fruits that do grow in their country.

Anyway, my point is that airlines can contribute to the health of their passengers at the same time as they can improve their profits if they stop serving alcoholic drinks during flights. Sphere: Related Content

Thursday, November 19, 2009

British Woman now occupies most powerful post in the EU

It is ironic that the British, who are so very anti-EU, are going to supply, with effect from December 1 this year, the person who will occupy the most powerful post in the EU: Baroness Catherine Ashton is to be the "High Representative for Foreign Affairs and Security Policy" - a title that is impressively long as it is important.

The Baroness has been the EU's Commissioner for Trade, a position in which she has not made many waves, but in which she has no doubt built up considerable and appropriately high-level experience of the workings of the EU.

I was chatting a few days ago in Oxford with my friend Professor Miguel Mesquita da Cunha, who used to be an Adviser to an earlier EU President, and whose opinion it is that ever since the UK joined the EU, it has supplied people for key posts in the EU. Most British people do not realise what a sea-change has come about in the EU over the years that they have been part of the EU: when they joined, the EU was dominated by the French and the first language of the Commission was, for all practical purposes, French. With the accession of an increasing number of countries, the French influence has been marginalised. And, as most of the "new" countries prefer English, that has become clearly the dominant language. Not only that, English-language thought-forms and Anglo-American values are clearly winning out over traditional Continental European values. At least, that has been the trend up to now. So much for Miguel's view.

It remains to be seen whether the current crisis, and the operation of the new Lisbon Treaty from December the first, will change the trend and, if so, in what direction. Sphere: Related Content

Friday, November 13, 2009

The UK is trying really hard to address the challenge of unemployment in the country

There are now two separate agencies checking passports on arrival at Heathrow - at least there were this morning when I landed from the US.

One agency was checking at the end of the arrival pier, the other at the normal Passport Control kiosk. Sphere: Related Content

Inter-religious Dialogue

A friend , John, who is a Christian, copies me on a letter he writes to a Muslim friend of his:

"I was prompted by Karen Armstrong’s article in the Guardian today, where she suggested that truly Socratic dialogue should be conducted by expressing yourself clearly as a gift to your debating partners.

"The question arises as to what followers of Jesus can offer to members of other faiths that seems to be unique to Jesus.

"If we just list common points between the faiths the result can look can look rather like a list of middle class values!

"The combination of the following things seems to me to be unique to Jesus. They were revolutionary in Jesus’ time and continue to be so. The problem is that the conflict between virtue and power usually results in power getting the upper hand.

"Jesus’ responses to his own persecution and his entreaty to his followers are quite sublime.

"I quote from the New International Version of the Bible.

1. “Love your enemies and pray for those who persecute you.” Mathew 5 v 43

2. Jesus on the cross said -

“ Father forgive them for they do not know what they are doing” Luke 23 v 34

3. The “Sermon on the Mount” Mathew 5 vv 3-11

Blessed are the poor in spirit, for theirs is the kingdom of heaven.
Blessed are those who mourn for they shall be comforted.
Blessed are the meek, for they will inherit the earth.
Blessed are those who hunger and thirst for righteousness, for they will be filled.
Blessed are the merciful, for they will be shown mercy.
Blessed are the pure in heart, for they will see God.
Blessed are all the peacemakers, for they will be called the sons of God.
Blessed are you when people insult you persecute you and falsely say all kinds of things against you because of me.
Rejoice and be glad, because great is you reward in heaven, for in the same way they
persecuted the prophets who were before you.

5. The Lord’s prayer. Mathew 6 vv 5 – 14

“ Our Father in heaven, hallowed be your name.
Your kingdom come, your will be done on earth as it is in heaven.
Give us our daily bread.
Forgive us our debts, as we have forgiven our debtors.
And lead us not into temptation, but deliver is from the evil one.
For if you forgive men when they have sinned against you, your heavenly Father will forgive you. But if you do not forgive men their sins your Father will to forgive your sins.”

6. The parables of Jesus in the gospels ------in which he says “ The kingdom of heaven is like this…………….”

"Would it be possible and valuable for you to set out the unique gifts other faiths can offer to each other?

"I once attended a dinner in London hosted by Sigi Sternberg where Muslim Jews and followers of Jesus shared their faith in after dinner discussion. It was quite inspiring".

As someone who finds formal "inter-faith dialogue" totally boring, but always values more personal sharing, I thought the point that John made at the end rather more my cup of tea.

Though I should say that what John regards as "middle class values" are in fact, historically speaking, Biblical values that were the cultural creation of the Protestant Reformation, even though that has not yet quite succeeded in overcoming bourgeois values.

However, I responded to John somewhat as follows:

Dear John
many thanks for copying me on this
I seem somehow to be under the impression that what is unique about Jesus the Living Lord is His promise to come and live in the hearts of those who choose to follow Him, so as to renew in them day by day a desire to grow more closely into God's moral/ spiritual/ emotional likeness...
his teachings are at best beautiful thoughts, though arguably more beautifully expressed than by others, if we do not have the experience of His living in us
Prabhu Sphere: Related Content

Dialogue on Religion and Business

I have just participated in a discussion on the subject, as part of the agenda at one of the more important business fora in the world. At the session, moderated by the Chairman of Lazard International, Ken Costa, there were representatives of Protestant, Roman, Muslim, Buddhist, and Jain traditions (not all apeaking only on their own behalf).

While the others said nice things, the most useful contributions for the business audience came from the Buddhist, Robert Thurman, who pointed out that leaders "are always in danger of being misled about the real situation in their firms by their own subordinates" and by the Protestant, Rick Warren, who argued persuasively that we need to think not only of the "two-legged stool" of Public-Private Partnerships but rather of the "three-legged stool" of Public, Private and Faith-based partnerships: the power of faith-based institutions to contribute to the elimination or amelioration of social evils is hugely underestimated or ignored.

He also spoke stirringly of the Five Global Goliaths in today's world: Conflict (spiritual, perpersonal, inter-generational...), Corruption or unethical leadership, Extreme Poverty, Pandemics and Illiteracy.

Altogether, the speakers offered a paean of praise for religion that seemed to me perhaps justified in view of the brief time dedicated to the subject. However, it did seem to me open to the charge of being unduly uncritical of religion.

Religion has, and continues to be, itself a source of corruption in most parts of the world, it continues to justify and participate in economic and social exploitation, and it is too closely allied to and often itself becomes a base for power. At least that is my viewpoint as a disciple of someone who was so anti-religious that the religious-political establishment decided that the best way to deal with his criticisms was to eliminate him. The establishment, having found this to be an ineffective strategy, then proceeded to try and co-opt his followers into the power structures - a challenge with which his followers still struggle.

Anyway, from my point of view, the discussion would have been much more useful if there had been, on the part of the religious leaders on the podium, a little less self-congratulation, and a little more engagement with the ethical mess in which business is today. The topics slated for discussion were: "Has global business lost its moral context? If so, has this loss contributed to the global downturn? Can belief systems help us generate the co-operation that is needed to renew growth?" - excellent topics that were wholly ignored by the speakers, who went on far beyond their allotted time (as is, I think cynically, surely an occupational hazard for them), leaving then little time even for the participants to pick up the slack. Sphere: Related Content

Wednesday, October 21, 2009

On the day the oil price touches $80, ironically, a renewed push to dilute attempts to limit speculation

Isn't it ironic that on the day that newspapers are abuzz with the news that oil is already back to $80, we have the FT reporting that "US plans for an aggressive crackdown on energy speculation are in danger of unravelling, with leaders at the US commodity regulator raising doubts about proposed reforms"

Why is this? Principally because of - you've guessed it! - concerns that if the US introduces tough rules, then trading will simply move to other countries.

Democart-nominated CFTC commissioner Michael Dunn, who earlier said the CFTC should consider new speculative limits, is reported to now say: “When a contract trades globally, it may be detrimental to US markets for the CFTC to act unilaterally on position limits while other countries with benchmark contracts chart different courses”.

So, as I have argued consistently for several years, global markets have only two choices: either the current more or less unregualted market, or global rules applied consistently across all countries. Continuing with unregulated markets will bring back oil prices at $120 (and perhaps even $250 as some authorities predicted only a short while before the crisis). Putting in place global rules will limit boom-bust speculation and ensure that prices reflect, as they should, genuine demand. Sphere: Related Content

The first political party to start moving in the right direction

The UK is dominated by two political parties: the Conservative ("Tory") Party and the Labour Party. However, from time to time, the third-largest party, the Liberal Democratic Party (LibDem), swings the balance between the Conservatives and Labour.

The LibDemsf appear now to be moving towards system solutions, or at least much more radical reforms than are currently being considered by the two major parties, as well as by the UK Treasury and the UK's financial services regulator, the Financial Services Authority.

Nick Clegg, the Liberal Democrat leader, has apparently now asked Vince Cable, the Liberal Democrat Treasury spokesman, to look at subjecting banks to a “premium rate” of corporation tax. This is because of public concerns at current bank profits and expected bonus payments in view of the limited competition in the financial services sector, following the dissolution of a few banks, and the limitation of activities by many others.

The LibDems are looking at a new bank tax which they believe be in force for several years - in fact till all state support has been withdrawn from the financial system. The Lib Dems have also become the first political party in the world to want to break up large banking groups. Sphere: Related Content

Tuesday, October 20, 2009

The Governor of the Bank of England Governor breaks with the deadly consensus

I am delighted to see that Mervyn King, the Governor of the Bank of England, has broken with the orthodoxy that encourages a boom-bust economy and passes on the cost of bank failures to the ordinary taxpayer while providing the bulk of profits from bank successes to bank shareholders, directors and employees. Mr King put it this way: “Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

In calling for banks to be split into separate utility companies and risky ventures, he called in effect for the return of the provisions, in the USA, of the Glass-Steagall Act - but at a global level.

By saying it is a delusion to think tougher regulation will prevent future financial crises, Mr King is arguing that what is needed is not more regulation but a structural solution which prevents them becoming “too large to fail” in the first place.

Most of the orthodoxy continues to focus on what are merely useful measures such as ensuring that banks have more capital, forcing banks to hold debt that automatically turns into equity in a crisis, ensuring that banks arrange in advance for their orderly death with so-called “living wills”, and limiting the incentives given to bankers for taking system-threatening risks. Such measures will be useful, but are not adequate for preventing future crises, as I have repeatedlz argued in this blog. Sphere: Related Content

Saturday, September 26, 2009

It is not all relative. It is all relatives.

Did you realise that the UN Declaration of Human rights, includes the following: "The family is the natural and fundamental group unit of society and
is entitled to protection by society and the State"?

However, in the decades since that declaration was signed by every civilised country, those very countries have turned around and, so far from protecting the family, actually undermined the family by means of taxation, welfare, changes in the financial and debt systems, housing and land issues, employment and work (usually under the guise of "equal opportunities"), education (which means maass brainwashing in many things), and of course the criminal justice system.

You may not believe me in all the details of the above statement. But you only have to look around you, or look at the statistics in almost any country, to realise that, whatever the causes, the result is a decline in the occurence of the family, and the richness of family life.

You may not like my views, you may still be open to a sober analysis of the situation, such as you find in "The Penumbra Effect: Family-centred Public policy", which has just been published by The Relationships Foundation, based in Cambridge, UK (

That publication includes the following passage, which I thought might interest you too:
"The family has been, is, and will continue to be the most important single source of wellbeing for the majority of people. ‘It’s all relative’ has been a central tenet of post modernity – in a world without absolutes, everything is relative. This report seeks to subvert that basic proposition. In a world of change, family remains. In times of transition, we turn to our extended families and relatives. Relative means dependent on or interconnected with something else. It also refers to a person connected with another by blood or affinity. The extended family brings these meanings together to conclude this report. The centrality of family to all aspects of society enables us to proclaim, ‘It’s all relatives’." Sphere: Related Content

Tuesday, September 22, 2009

A Tepid Compromise: The EU proposed three bodies to regulate and supervise finance

According to the latest proposals from the EU, three new pan-European supervisory agencies (one each for banks, insurers and securities markets) are to be created for the purpose for drawing up and helping enforce a common rulebook for each activity throughout the EU.

The bodies will have more powers and resources than the three existing EU committees, which play only a co-ordinating role.

What will weaken the ability of the proposed three bodies will be recognition of the principle of “fiscal responsibility”, meaning that the new supervisory structure must not intrude on states’ finances.

Why will it weaken these bodies? Because fiscal IRresponsibility by states is one key reason for irresponsibilty by individual companies as well as by the system as a whole.

In the event of a dispute with or between member states, there an appeal would be possible, ultimately to the European Council, where the final decision would be by qualified majority voting. This makes the whole elaborate creation of these bodies subject to political rather than rational criteria.

Possibly, these proposals from the European Commission may be the best that can be managed at present, but it falls far short of what is needed.

What is needed? Two things: a single regulator and a (separate) single supervisor for the EU.

Why a single regulator for 3 different kinds of activities (banking, insurance and securities markets)? Because these three are converging - or one should say have increasingly converged, and will continue converging ever more, into a single seamless set of financial transactions. This is already largely the case, with the three activities being kept artificially separate for regulatory purposes in areas where these are kept separate (the UK and Switzerland, for example, already have one regulator supervising all three activities).

So why two separate bodies (one for rule-setting and one for rule-enforcement)?

Because rule-setting is and should be a different activity from rule-enforcement.

Naturally, learning from rule-enforcement should feed into the rule-setting process.

But that is better and more transparently done by two separate bodies than by a single one.

So much for the matter of the three bodies that are proposed.

Separtely, there is a proposal for a new “European Systemic Risk Board”, made up of representatives of central banks and financial supervisory groups from the 27 countries which constitute the EU.

I am glad that such a Risk Board is proposed. However, having the same people in the Risk Board as ultimately control the 3 bodies will do nothing to provide confidence in the risk assessments of the Board.

Morevoer, systemic risk in Europe cannot be separated from systemic risk in the USA or in Asia - the current challenges arise from systemic problems in the USA, and the next crisis will arise from challenges in Asia.

While a European Systemic Risk Board is better than no Board at all globally, it would be better for there to be a global board - and one along the lines that I proposed in my article in the New York Times Online ("DayBook" section) at the end of June this year. Sphere: Related Content

Monday, September 21, 2009

When does non-discrimination against a minority go so far as to become discrimination against the majority?

When there is a concerted effot to enshrine it in provisions such as are foreseen in the USA's Employment Non-Discrimination Act (ENDA) which is apparently set to be debated on September 23.

As far as I can see:
if passed, ENDA will make it difficult for sports organisations to decline applications for employment from those who believe (like myself) that sports are bad for health.

ENDA will make it difficult for anti-nuclear (peace) organisations to keep out those who are committed to encouraging nuclear weapons.

We can expect to see the depressingly entertaining spectacle of environmentalist organisations being infiltrated by a dedicated minority of anti-environmental activists with the sole purpose of closing down the enviromentalist organisations.

And ENDA will make it impossible to prevent card-carrying members of the Communist Party from being recruited for the managerial cadre of US Government Agencies including the Defense Forces!

Welcome to the new and fascinating world of the United States of Lunatica. Sphere: Related Content

Wednesday, September 09, 2009

What causes share prices to move?

If you want a nice academic discussion about the two principal views regarding why share prices fluctuate, go to:

One view is the "rational expectations" one, which opines that the market rationally analyses all news in relation to a company, and decides....

The other is the "differences of opinion" model, which believes that different market players come to different conclusions about a company and that it is the "clash of views" which eventually results in a particular level of demand for a company's shares (thus determining the price of the shares).

Unfortunately those models won't give you much real insight into the question of what causes fluctuations in share prices, because academic researchers usually take a fragmented and atomised view, divorced from real life.

In real life, the share price of a particular company shifts mainly because of reasons that are never discussed in the literature.

It is elementary economics that price is a function of demand versus supply. Naturally, if the number of shares of a company increases for any reason that could affect the share price too, but the share price usually moves because of fluctuations in demand - or, to be more precise, because of fluctuations in the numbers of people wanting to sell those shares versus the numbers of people wanting to buy those shares. Naturally, price plays a role here too, so the picture is a little complicated. But let's simplify it by saying that when an individual or mass of people with a large amount of money wants to buy shares in a particular company, the price of that company's shares is going to rise. Contrariwise, when a large number of people who hold a company's shares want to sell, the price is going to drop.

So what determines whether a lot of money chases or wants to exit a particular stock? Regretfully for our academicians above, both "rational expectations" and "differences of opinion" are second-order drivers of behaviour.

What are the first-order drivers of behaviour? This becomes easier to see if you look at it not from the point of view of the company in question but from the viewpoint of investors.

OK, so what drives investor strategy? It is essentially portfolio theory. As anyone who has ever professionally managed a portfolio will tell you, portfolio managers are seeking to balance two things: making as much money as possible on the one hand and, on the other hand, seeking to reduce risks - because investing in shares can produce profits, but you can also lose some or all your money if you have to sell at a lower price than you bought or if "your" company becomes bankrupt.

How does looking at a portfolio of investments enable one to achieve a balance between risk and profit? By deciding, in view of one's life circumstances and personal risk-appetite, what proportion of the portfolio should be put in relatively safe assets (let us say US Treasury Bonds) and what proportion should be put in riskier assets. Naturally, there is a gradation here, and some bonds are riskier than others (with junk bonds being among the riskiest) - on the other hand, some companies may be relatively stable while others are of course relatively volatile.

The rule of thumb is "no gain without pain" or "no risk, no fun". In other words, the safer options produce fewer returns on investment but you are less likely to lose your money - while the riskiest investments may produce the largest returns.

Having established the rough proportions to be allocated to safe versus exciting possibilities, how does a portfolio manager go about deciding where to invest the money that has been allocated to the exciting possibilities? The first thing that is looked at is country risk. So if China is viewed favourably (as it is at present, totally irrationally), then the portfolio manager is likely to want to put a relatiely large proportion of the money, with which s/he wants to play, in that country. On the other hand, if a particular country is looked at unfavourably, for example Zimbabwe(for rational or irrational reasons), then the portfolio manager is likely to want to exit that country (if indeed s/he has investments in that country to start with). The second thing at which any portfolio manager looks is the relative profitability of the different "sectors" in which investments can be made. Everyone knows that in boom times some industries flourish whereas those industries may do badly in times of recession - and that the case for other industries is vice versa.

It is only after the country and sector allocation has been decided that a professional manager decides which companies to look at within that sector and country.

In other words, the largest movements of capital take place primarily because of country and sector reasons, and only very secondarily because of reasons to do with particular companies.

Let us take an example. My son is the CEO of an Indian food company in Switzerland. His company is NOT publicly traded, so nothing will be gained or lost by using that as an example.

If I as a portfolio manager, had let us say 1 billion British pounds to put into exciting investments, the first question I would decide would be: in which countries to put how much money. This would be influenced, among other factors, by perceptions of political risk as well as currency risk. So let us say in current circumstances, that I decide to invest 25% in the USA, 25% in the EU, 10% in Switzerland, 10% in Japan, 10% in China, 10% in India and 10% in the Middle East.

Of my one billion, I now have only 100 million to invest in Switzerland.

Now, to what sectors am I going to allocate these 100 million? Let us imagine it is 40% to green industries, 10% to the manufacturing and machine tools sector, 10% to the financial services industries, 10% pharma, 10% to "fast moving consumer goods", 10% to tourism and 10% to "other" companies.

Now, of my 100 million, you can see that there is only 10 million that is available for all the "other companies"! Let us say that, for some reason, the portfolio manager decides to put 1 million into the leisure and entertainment sector, and for some reason decides to put 100,000 francs into my son's company.

Now let us see what happens if there are rumours of a political crisis or a natural disaster or some financial scandal with wide implications in China. Clearly the portfolio manager will decide to eliminate or reduce her/his China investments. Let us say s/he decides to reduce the China investments by 50%. Now s/he suddenly has 50 million to put somewhere else. Clearly, this money could be re-allocated according to the rest of the existing proportions between the areas concerned, or it could be disproportionately distributed. Naturally, as the world is so interlinked, the portfolio manager is going to think about which companies are going to be hit by the problems in China. S/he might conclude that most US companies are going to be hit as China is going to be forced to disinvest from the US - with a resulting hit to the US dollar. In addition, s/he might conclude that the EU is going to be hit because the European economy being highly manufacturing based and export-oriented, is so exposed to the Chinese market. So that leaves Switzerland, Japan, India and the Middle East. Let's say the portfolio manager decides to put 10 million each into the others, but 20 million into Switzerland (as it is considered a safe haven). You can see that even if this money was allocated in the exact proportions that the earlier money was put into Switzerland, suddenly 200,000 become available to be invested in my son's company - which should lead to an immediate rise in the price of his shares, even if nothing material has changed in his company.

That, in rather simplified terms, is the entire magic of the movement of the price of shares. "Rational expectations" affect the choice of a company within a sector. "Differences of opinion" do affect this to a certain extent but have a much larger impact on country allocation.

However, the above explanation depends on the traditional view of the world which has come into question in the last 20 odd years - and with the crisis, everything is up for grabs. With too much money being printed, country-performance was converging in an overall global bubble as was sector-performance over the 20 years preceding the crisis.

Now no one knows anything about how sectors will perform, let alone countries. The "best-peforming countries" (e.g. China) are notoriously opaque.

That is why everyone rushes around like sheep or like lemmings trying to follow where the share price appears to be moving, one finger in the air, the other hand's fingernails being bitten to the quick trying to get into markets which appear to be rising to get out of markets before they deflate.

It is not so much "difference of opinion" as "non-existence of opinion" (because no one understands what is happening). And it is certainly not "rational expectations".

If only all this had no effect on your life's savings, investing might be quite fun right now. Sphere: Related Content

What has driven gold to over $1000?

Clearly, enough of the big boys do not believe that the economy is improving, or they would not be putting their money into gold.

An alternative explanation is that momentum trading has gone mad once again, expanding further the bubble in the gold price.

A third explanation is that investors are becoming aware of the constraints on growth (and therefore returns), and are therefore searching for more reliable returns - or at least security.

Probably all three factors have contributed to the rise in the gold-bubble.

Will be interesting to watch how big the bubble grows and who gets hurt when it collapses. Sphere: Related Content

Tuesday, September 08, 2009

two steps forward (and, so far, no steps backward)

Regulators have now agreed at least a few rules that will help prevent another bubble similar to the one whose burst-effects we all suffer at present

Last weekend the G20 agreed on proposals that have now been given shape by regulators at Basel. The new rules will force banks to improve the quality and extent of the capital buffers they hold to absorb shocks such as the ones that led to the bursting of the bubble.

Moreover there are now going to be limits on how much banks can borrow. Wheter these are adequate remains a moot point: the ceiling on borrowings is likely to be 25 times assets.

In my view, this is too huge a multiple. The parallel would be if a company with assets of 1 billion, could borrow 25 billion. Or if you as a private individual with assets (perhaps a house) worth 1 million could borrow 25 million. If such a proportion is preposterous for individuals and for companies, it is equally preposterous for banks.

However, it is certainly better than the previous situation where banks could borrow an unlimited amount, at least in theory. And 25x may be the most that regulators can achieve at present without upsetting the global economy too much.

In any case, the unfortunate result is going to be even less lending by banks! At least for the time being. And therefore an even longer recession.

But that relatively short-term cost is worth paying: if the soundness of banks improves, they will run into trouble less often and will therefore need to be rescued by taxpayers less often - and the fortunes of the global economy will be smoother as a result.

One other piece of progress is that bank supervisors can now limit, in good times, how much banks pay out to shareholders. That will enable and indeed force banks to build “counter-cyclical” buffers for bad times.

Isn't it a sign of our degenerate age that such commonsensical activity as saving for a rainy day (which every individual surely should try to practice without being forced to do so!) needs legislation?

Naturally, these (and other rules which will come into play soon) will make banks less attractive to investors interested in quick and high returns.

Equally, however, this will make banks MORE attractive as more reliable and secure long-term investments.

The precise rules are still being formulated and the Basel committee is expected to publicise concrete proposals by the end of the year and adjust them by the end of 2010 after carrying out an impact assessment. Expect people who have their eye fixed on short-term profits (whatever the cost to the rest of the world) to lobby fiercely against the letter as well as the spirit of such rules. Sphere: Related Content

Friday, September 04, 2009

A Question for Transparency International: Is Finland really one of the least corrupt countries in the world?

For evidence that Finland is more corrupt than commonly realised, perhaps even inside that country, see Jacob Matthan's forthcoming book, INHERITANCE NIGHTMARE.

Summary, chapter of contents and ordering information are all at: Sphere: Related Content

Wednesday, September 02, 2009

Are the financial structures beginning to change? Yes...

Before the crisis, I was one, of only a handful of people that I knew about, who focused on the role of speculation in driving up commodity prices.

While that is still unconventional, I am pleased to see this morning that one major global financial institution, Deutsche Bank, stopped issuing "oil notes", which let speculators bet on oil prices. This is the first product in exchange-traded commodities to be abolished in anticipation of the regulatory crackdown on energy speculation

This could be seen as only a tiny step in the reform of the financial system - and, in a sense, it is. But it is a giant step for Deutsche Bank, and I salute it this morning for having eventually done the right thing.

Many more financial institutions need to follow. And regulation does indeed need to kick in to eliminate other still-legal but unhelpful practices.

I should say that I am not a great believer in regulation, except in sofar as it creates a level and reliable field for playing the right sorts of financial games.

What are the right sorts of financial games? Those that help create genuine human welfare - and therefore genuine wealth. Sphere: Related Content

Tuesday, September 01, 2009

Reginald Massey's book ‘INDIA: Definitions and Clarifications’

Reginald Massey's book ‘INDIA: Definitions and Clarifications’, published in the UK and reviewed earlier on my Blog, finally has an Indian publisher.

Abhinav Publications is bringing out an updated edition under the title: ‘SOUTH ASIA: Definitions and Clarifications’. Sphere: Related Content

Sunday, August 30, 2009

Finally, the end of the legacy of Mrs Thatcher?

The bubble that built up after the "roll-back" of the state under Mrs Thatcher burst some months ago, but the philosophy that she espoused seems to be up for challenge only now.

In today's Financial Times a British think tank, Policy Exchange, calls for a publicly-funded bank focusing on energy, communications, utilities, schools and hospitals - not to mention transport!

This would amount to re-nationalisation by the back door, and is being called for in an exchange (or reversal) of policies not merely by ANY think tank, let alone a leftist think tank, it is an exchange of policies being called for by the favourite think tank of the CONSERVATIVE leader, David Cameron, who has inherited Mrs Thatcher's mantle. What delicious irony! Policy Exchange indeed!

The danger is that the backlash against Thacherite policies will go too far.

What Policy Exchange, or any other think tank for that matter, ought to pursue before specific recommendations such as this publicly-funded new bank, is a debate on the role of the state versus the role of the private sector - and not merely in the UK but globally.

Without that global perspective, debate and consensus we are condemned to swing between on the one hand the Keynesianesque/ trade union extreme that preceded the Reagan/Thatcher era, and on the other hand the monetarist/ bubble era heralded by the Reagan/Thatcherite extreme. Sphere: Related Content

Friday, August 28, 2009

Should central banks target stock prices?

That is the title of a paper just published by Paul De Grauwe, on behalf of the Centre for European Policy Studies, Burssels, Belgium:
[Open in new window]

Based on a more academic Working Document, it asks whether central banks should target stock prices so as to prevent bubbles and crashes from occurring.

This was as unthinkable only a few weeks ago as Lord Turner championing the idea of the Tobin Tax (see
[Open in new window].

While I have long argued for the Tobin Tax, I maintain that targeting stock prices alone is half-baked. We need a system of independent, comprehensive watch on global stability such as outlined in my article in the New York Times Online ("DealBook" section) some weeks ago.

Not only can an independent comprehensive view never be provided by individual countries or by individual measures such as targeting stock prices, doing such things would be simply counter-productive in terms of system stability. Sphere: Related Content

Russian President Medvedev becomes a Buddhist goddess, apparently becaue he upholds the Rule of Law

On the first official visit by a head of state to Ivolginsky, a Buddhist monastery in Buryatia, eastern Siberia, President Medvedev was hailed as a Buddhist goddess, Tara.

Tara is not much known in the land that is the birthplace of Buddhism (India) but Tara is thought, at least by some devotee, to be the mother of all Buddhas. She is considered to typify compassion and serenity, which Medvedev is thought to embody - at least according to the spiritual leader of the monastery, Pandito Khambo Lama Damba Ayusheyev.

When asked about the president’s spiritual elevation, the Pandito is reported, by the the Interfax news agency, to have responded: “It’s very hard to understand this for non-Buddhists and even for some Buddhists too.”

Yes, very hard indeed.

Russia’s Buddhists consider all the country’s leaders to be an emanation of the female Buddha - a belief that dates back to the 18th century when the Empress Elizabeth officially recognised the religion.

According to the Pandito: “The leader of the country is a man who bears very serious responsibility for others. The Buddhists must support him, identifying him as a deity.”

Well, what are gods and goddesses supposed to do? Fulfil your wishes, of course! So it was entirely appropriate for Medvedev to promise financial support to the Buddhist community and to announce that he will introduce Buddhist chaplains to the Russian Federation’s army.

The latter action may make him popular among the nation's 0.7% who are Buddhist, but is likely to make him much less popular among the nation's 63% who are Russian Orthodox. After 70 years of thorough Marxist propaganda, only 16% say they are non-believers, according to a poll by the Russian Public Opinion Research Center.

So why has President Medvedev accepted the role of a Buddhist goddess? According to Geoffrey Bamford of the Oxford Centre for Buddhist Studies:“It’s a psychological thing that doesn’t quite have a parallel in our language. It’s philosophically based. Saying he is a goddess is a bad translation.For Buddhists he represents a bundle of qualities on the contemporary political scene. Identifying him as White Tara is a shorthand way of visualising that bundle of qualities in order to summon them up in oneself. Medvedev’s thing is the rule of law – he’s a lawyer. He produced a remarkable state of the nation address in November last year in which he anatomised the difficulty of making a modern state out of Russia. It was basically about being a law-based society and this, I think, is the characteristic that the Buryats and the Kalmyks identify in him when contemplating the White Tara.”

Interesting philosophical and practical question: Is accepting the role of a god in line with promoting the rule of law?

Another interesting question: Which societies have been most committed to the rule of law?

Readers of my blog will be aware that my answers to these questions are, respectively, "No", and "Northern Europe and North America". Sphere: Related Content

Are we anywhere near recovery yet?

That the answer is "No" is confirmed by the latest figures from the Federal Deposit Insurace Corporation:

All the institutions insured by it together reported a net loss of US$3.7 billion in th quarter ending June 2009, even though they had a net income of US$7.6 billion in the previous quarter.

Provisions for loan losses totaled $66.9 billion in the 2nd quarter this year, an increase of $16.5 billion (32.8%) year-on-year.

Extraordinary losses stemming from writedowns of asset-backed commercial paper totaled $3.6 billion.

Noninterest expenses were $1.7 billion (1.7%) higher year-over-year - though it must be conceded that this may have been primarily due to increased FDIC deposit insurance premiums.

Indicators of asset quality continued to worsen during Q2.

And so many people still want to believe not merely that we have reached the bottom of the cycle but that things are actually improving! Sphere: Related Content

Wednesday, August 26, 2009

Are we at the bottom of the crisis?

It is difficult to say whether we are.

While most "authorities" are happy to have announced teh end of the crisis, we need to keep in mind the following factors:

1. I have commented earlier that there is too much printed money in the world, as a result of over-printing over the last 20 or so years. This money acts as a natural booster of the economy, because no one who holds money likes to keep it under the mattress so to speak. In other words, there is a systemic "push" to invest, and everyone has been indoctrinated in the last 20 years to believe that equities will always outperform other forms of investment "in the long run" (whatever that is). So even Pension Funds which should have an interest in stable long term returns, and therefore should invest largely in bonds, tend to invest largely in equities. Beliefs about where the money should go act as a self-fulfilling prophecy - money goes to where people believes it should go, creating a demand for equities that is systemically too high (i.e. higher than it should be, given fundamentals). That is what explains "animal spirits" in the stock market.

2. We can therefore say that the crisis is over not when investors rush into the stock market (which has happened, and will happen several times before the crisis really eands), but when real expenditure returns to the market. That is mostly cosumer expenditure historically, but there is no reason why capital expenditure should not take its place. In fact, tax incentives to increase capital expenditure in relation to green technologies would be the most intelligent way of increasing consumption, but no one is doing that in any substantial way at present, leaving it to private consumption to drive the economy. What about government expenditure? It is of course a significant factor at present, but it can never be large enough to really drive the economy, first because it is not large enough in relation to private and capital expenditure and because it usually takes too long and is usually not productive enough (governments tend to spend on defence, infrastructure and social services). Briefly, government expenditure is up practically all over the world, but capital and private expenditure is not up - and till that improves the crisis will not be over.

Private expenditure tends to be driven by three factors (beliefs, employment levels and house prices). The beliefs can be manipulated by government propaganda and stock prices. Employment figures can be manipulated by governments to a certain extent. House prices tend to be relatively objective, though of course governments can and do intervene in the housing market.

We have been told that employment will not pick up for some time. But that is simply what the US government believes, or would like us to believe.

As for housing, The S&P/Case-Shiller 20-City Composite Index fell is still declining, having fallen 15.4% y/y in June 2009 after declining 17.1% y/y in May.

By June 2009, average home prices were at similar levels to what they were in early 2003.

From the peak in mid-2006, the 10-City Composite is down 32.5% and the 20-City Composite is down 31.4%. If one agrees that the peak was hugely exaggerated, the questions are: (a) has the decline now reached the lowest it is going to reach? and how long will it be before there is a sustained (even if slow) rise in price of say 3% or more a year? My answer to (a) is "No", though I do not know how much further house prices have to fall (I hope not a lot). My answer to (b) is that no one knows, not even governments who have made public their "belief" that house prices, employment levels and the economy in general will start coming out of the recession in 2010.

For the reason that I mentioned at the start of this post, too much money sloshing around the system creates systemic distortion and unpredictability. It can (as it has already) cause an apparent end to the crisis very much sooner (or very much later) than 2010.

My view continues to be that we will continue to yo-yo along something like the bottom, reaching marginally lower levels (which will be systemically discounted - at least, so I hope!) and touching marginally higher levels (which will be systemically heralded as the end of the crisis.

Certainly it helps if large numbers of business leaders and ordinary people behave as if the crisis is over.

But watch the fundamentals I mention above.

Governments have begun to put many sensible things in place, which I have been arguing for, and which are helping to resolve the crisis, but we still have the unresolved question of toxic assets - all that we have done is move them from private hands to the hands of governments. In one or two small countries, we see encouraging signs that at least some of the toxic assets are no longer toxic. Assets become less toxic or eventually beneficial as the economy improves, but become more and more toxic as the economy deteriorates. It is only as the bulk of toxic assets in the world economy as a whole are sorted out that the fundamentals will have been addressed sufficiently. Sphere: Related Content

Thursday, August 20, 2009

The idiocies of Lists and Rankings

Forbes magazine (USA) has just a Special Report listing "The 100 Most Powerful Women".

According to this, the most powerful woman in the world is Chancellor Angela Merkel of Germany. This is possibly true.

The 2nd most powerful woman is Sheila Bair, the Chairman of the United States' Federal Deposit Insurance Corp - also possibly true.

However, the 3rd most powerful woman - hold on to your seat! - is Indra Nooyi, the CEO of PepsiCo. This too might be true, except that, down at number 13 on the list, BELOW Cristina Fernandez, President of Argentina, is our own Sonia Gandhi!

Well, Forbes is an American magazine, so I guess their perspective must be that the further away geographically from the US one is, the less important one must be! Sphere: Related Content

Monday, August 17, 2009

The latest from the Global Association of Risk Professsionals

In relation to my review of Dr Willi Brammertz's book, a friend draws my attention to last week's Newsletter of the Global Association of Risk Professionals (GARP), which had a stunning bit of news:

GARP has now moved to accepting that standard contract types need to be defined for credit derivatives. It also now accepts that higher capital charges need to be made if standards are not followed. You may recollect that these are two key proposals made in Dr Brammertz's book.

The new GARP view is a bit of a revolution for the organisation - even if, in light of the crisis, the change of heart is not wholly unexpected.

At present, the GARP proposal is limited to credit derivatives - but it should be applied to all financial contracts, as Dr Brammertz quite correctly argues in his book. Sphere: Related Content

Iran is apparently now going to have WOMEN in the Government!

Well, to be precise, what is being signalled is women members of the Cabinet:

Iran's president, Mahmoud Ahmadi-Nejad, said he would nominate at least three female ministers to his cabinet, reaching out to the women who have been particularly active in post-election protests against his government:

Even if it is a result of mere politics of the most cynical sort, the move should be welcomed by all people of goodwill as a dilution of Islamism (which, by the way, is a heady but contradictory mixture of Koranic, traditional and reactionary views).

Most importantly, it should be welcomed as signalling a change in the oppression of women that has occured again in newly-Islamised societies - think, for example of the re-suppression of education for women in Afghanistan and of acid being thrown on women who are not dressed in the traditional burqa.

If women are in the cabinet in Iran it will be more difficult to suppress women's rights not only in Iran but in all the places where Iran's influence runs, from Lebanaon to Afghanistan (and much wider!). Sphere: Related Content

Saturday, August 15, 2009

Are all religions the same?

In response to one of my posts, a friend writes: "All religions are the same. It is the belief which counts. Believe in Him and you can never fail".

I could respond with material to fill a book, but I'll confine myself to the following:

Dear A

Your sort of comment is often heard nowadays, but it doesn't bear examination.

First, not all "religions" accept that there is a "Him" (or "Her" or "Her/Him"). Buddhism, Jainism and Vedanta (if you consider them "religions") believe either in an "It" or finally in nothing, depending on which version of these you accept.

Then, it is not merely a matter of belief. In Judaism and Islam, e.g., what is expected is that you commit yourself to quite specific actions too - e.g. Ramadan or Shabbat or eating or not eating certain kinds of food or….

Finally, "believe in Him and you can never fail" is a modern corruption of traditional religions, most of which hold that you will reap the reward of your good deeds in the NEXT life though in this life you may and probably will have HUGE problems.

"So what?", you may retort, "The average person lives on the basis I have indicated and scholars may go hang".

Well, belief systems have consequences not only at the individual level but also at the social, economic and political level. That's why India is still so corrupt and backward while Northern Europe was cleaned up by the Protestant Reformation, with an impact slowly in other parts of the world due to the social, economic and political progress that resulted there being copied by other parts of the world - including our own country.

The attempt to produce the shoots without the roots is interesting and can even be encouraging, but roots have to be put down sometime if you want growth to be sustained. Sphere: Related Content

Friday, August 07, 2009


Having been a vigorous atheist from the age of 8, I became a follower of Jesus at the age of 14. Ever since then I have tried in my feeble and failing way to invest at least some energy in making the world a little better. That had huge consequences for my family, including having to leave the country I love. However, even in the more congenial West, one is always conscious of how deeply unfashionable and unrewarded it is to be engaged even partially in something so quixotic. From time to time, one gets discouraged.

Then I call to mind the story of the discouraged prophet who complained to God that he was the only prophet left unkilled by a wicked queen and that even he was being hunted. The prophet is told that actually seven thousand people were still faithful to God. In the Bible, three symbolises God, seven symbolises perfection, and ten symbolises plenitude - so you do not need me to spell out what ten times ten times ten indicates. In another story, the prophet Elisha asks God to give his discouraged servant a momentary glimpse of what is really going on, so that he is encouraged.

An experience like those happened to me yesterday, when I received the following mail from someone who I had never even heard of earlier:

"I teach both an undergraduate course in organizational behavior as well as an MBA course in leadership and organizational behavior at Rowan University in Glassboro, New Jersey.

"Ever since I heard your program on NPR's Speaking of Faith on “The Gods of Business,” I have begun these courses by asking the students to listen to that program and then write a three-page “working note” (based on the idea originated by A.K Rice at the Tavistock Institute).

"It has been a wonderful way to get business majors to take seriously the relationship between their goal of learning how to make lots of money and their responsibility as citizens of the human community. They respond thoughtfully and it sets the stage for a usefuI semester. I thank you and Krista Tippett for the conversation."

Dr. Thomas Michael, who is Professor Emeritus at the Rohrer College of Business, goes on to say "I intend to begin the MBA class with the program again this September" and then to ask some questions that I was happy to try to answer.

Dear Dr. Michael, thank you. I do not know if you realise it but in Hebrew, which is the language from which your surname comes, "Michael" means "Who is like God". Because Michael is the name of one of the chief angels in the Bible (as well as in the Koran), I take it that the name indicates that, of all created beings, Michael is most like God. In the two or three glimpses we are given of him in the Bible, Michael both works actively himself for God, and assists and encourages others in their work.

Dear Dr. Michael, I have no idea whether you put your trust in God or do not even believe that He exists. But in working for ethics and responsibility you are acting like the angel - indeed like God, as God Himself directly encourages us and requires us to be...and you may not have realised this either, but you encouraged me like your namesake angel yesterday. Sphere: Related Content

Thursday, August 06, 2009

How can the economy grow if consumption does not pick up?

What is the basic problem with the global economy today?

I have made my view quite clear in this blog: unfashionably, I maintain that the fundamental problem is still toxic assets - and, while a temporary reprieve has been provided by governments being persuaded by our elites to spend an unprecedented amount of tax money, the result is the economic decline is merely slowed or halted, at the expense of massive public liabilities that will haunt the relevant countries for decades to come.

And "slowing down or halting the decline" is not the same thing as an economy that is growing healthily!

In the global economic model that we have at present, economic health depends entirely on consumption.

The US has been the primary consumer in the world, with private consumption in 2008 amounting to some US$10 trillion, which accounted for 16% of global output. By contrast, private consumption in the EU, even though it is a much more populated region, was about US$9 trillion; and the largest population group in the world, Asia, provided less than US$5 trillion of consumption. This was already in the middle of the crisis, with spending in the US and Europe slowing from their usual highs, and spending in Asia being artificially boosted by government actions.

US and EU consumption is continuing to slow due to more people being "let go" from their jobs, and those who have money becoming much more careful about when and how they spend.

Will Asia be able to take up the slack? As far as I can see, not in terms of private consumption. Even in the case of governments with cash, e.g. China, they have not so far succeeded in encouraging private consumption, rather the governments has spent money on things such as highways (which is of course very good, and which does indirectly put money in the hands of employees).

So we have two choices: either re-expand global consumption with all the ecological consequences, or we can re-orient the global economy towards a more rational and sensible model - on which I have written at several points in this blog and in various articles. Sphere: Related Content

Wednesday, August 05, 2009

China's "Economic Growth Story"

Readers of my Blog are aware that I have for years been skeptical of the figures that are routinely produced regarding "China's economic growth".

Naturally, I have no doubt that economic growth is taking place. My skepticism relates only to the kinds of figures that are bandied about by officials as well as non-officials.

Now the Financial Times newspaper becomes the first of the respectable Western periodicals to join the skepticism:
[Open in new window]
Sphere: Related Content

Friday, July 31, 2009

Don't take your eye off the ball

The global economy is still overwhelmingly driven by the USA, Europe and Japan - though you might not think so, given all the noise about the rise of China and India.

Even if one uses as the basis of calculation the fashionable but ridiculous idea of Purchasing Power Parity (PPP), the US and Europe account for around 45% of world GDP and 60% of global personal consumption spending in 2007. Over half of world exports and imports originate from these countries, as do nearly three-fourths of global outward foreign direct investment and a similar share of global mergers or takeover deals.

The rest of the world is inevitably dependent on what happens in the "driver or central economies".

The "marginal or peripheral economies" are always more badly hit than the central economies during a bust phase of the economic cycle, but the peripheral economies rise more quickly during the boom phase.

As the global economy at present bumps along an artifically-sustained bottom, the effects on the peripheral economies are patchy - the "leading peripheral economies" have maintained some sort of equilibrium overall though parts of their economies too have been hit. Meanwhile the "even more peripheral economies" have been uniformly hit.

Of course if your economy was dependent on exports, then it was more likely to be hit by the crisis.

And it is likely to continue to be hit by the crisis unless your government can stimulate internal demand.

Naturally, the more your government tries to stimulate internal demand by spending money or reducing taxes, the weaker it will get in terms of its finances (on China, which is reckoned to be an exception to this rule, I have written skeptically earlier).

A few such countries caught in this dilemma (e.g. Iceland) can try to rush into the arms of larger economic groupings for protection. Most do not have this option.

They should think seriously of adopting one or more complimentary currencies as a mechanism that can help their economies stabilise - and not just in the current crisis. Stabilisation is as much needed when nearing the top of a boom as it is needed when nearing the bottom of a bust. Sphere: Related Content

Wednesday, July 29, 2009

What kind of risk-appetite has returned?

Appetite for risk seems to have returned - but only, so to speak, for "simple risks" such as equities and bonds. There is a simple reason for the return of the risk appetite, when the fundamentals have not been sorted out: when people are paid to be "active", they HAVE to be "active" if they don't want to lose their jobs.

On the other hand, appetite for what might be called "complex risks" is yet to return (and a good thing, too?):

Chicago-based Hedge Fund Research claims to have found that hedge fund assets are still on their way down; in the final quarter of 2008 investors withdrew $152 billion while, in the 2nd quarter of 2009, withdrawals were at a lower level of $43 billion.

Though there was an increase in the value of hedge fund assets by $100 billion in the second quarter, this was entirely due to an improvement in investment performance (and that, as far as I can see, was itself due to the effects of all the stimulus packages around the world rather than any extraordinarily intelligent actions on the part of hedge fund managers - I am not implying that they were doing anything stupid, simply that they were doing, as far as can be worked out, what might be called "normally intelligent" things).

So "simple risks" may be accepted or declined with greater alacrity right now, but the appetite for "complex risks" is still declining. Sphere: Related Content

Friday, July 24, 2009

Visit to Israel (continued)

It is a fortnight since I returned from Israel and I have been too busy to put anything more down regarding it! So I know that if I don't do it NOW, it won't get done at all!

At this time of year, Israel is of course extremely hot. 43 degrees on the Golan Heights, 37 in Haifa (where we were based). Even in Haifa, and at the top of Carmel, it was so hot that I, in spite of being Indian, could only sleep because of the sea breeze which is quite strong at night.

On our drive around to Lake Galilee, I am told (and see) that the water level is 8 or possibly even 10 metres below what it should be - and it is the main source of water for the whole land! We discuss why the level has dropped. It occurs to me that the expansion of the human population around the lake may be at least one factor. The population of Israel has gone up from 800,000 at the time the country was established, to some 8 million today. All around the Lake, there is evidence of new building, mostly by expansion of old settlements, some of it along the lake but a surprising amount up the hills aorund.

However, our guide mentions that Israel has the number one position in the world for recycled water. "Guess how much of the water in the country is recycled?", he asks. I have no idea so make a wild guess: 30%? The correct answer is 85%, says our guide. "And which country has the 2nd highest amount of recycled water?", he continues. Again, no idea. This time I am so totally stumped that I cannot even offer a wild guess. The correct answer is apparently: Spain. But our guide is not satisfied by how much of my ignorance he has already exposed. "How much of the water in Spain is recylced?", he asks. Again, no idea. "Fifteen per cent", he says. I am astonished. "Only 15%?!", I ask. That is incredibly huge gap betwen the number one country at 85% and the number two country at 15%. I must check the background to that out some time....

At the beautifully preserved and maintained Orthodox Monastry in Capernaum to which he takes us, I see in the fenced-off garden, a donkey and a variety of hens, ducks, geese, peacocks and peahen - even though only one monk lives here (as far as we were told).

By contrast, when we drive a couple of minutes to the nearby Roman Catholic occupied site of the town of Capernaum, it seems very established and prosperous but not nearly so well kept. It is prosperous because of the hordes of tourists who are brought to visit it, as it has a sort of church built in such a way as to more or levitate over the supposed site of the home of Peter - you can peer down on what is left of the town. However, the simple explanation why it "must" be Peter's house don't add up: that is the largest of the structures (presumably a dwelling, though there is no evidence of that!) but we have no indication from the records that Peter was anything other than an ordinary fisherman from a human point of view.

The "white synagogue" nearby (also much visited and within the "occupied site") is only from the 4th century, and my guess is that the myth regarding which is Peter's house originated then, with the need for the newly-converted Emperor's folk to dignify the history as much as possible. The "white synagogue" is built literally on top of the synagogue which existed in the time of Jesus and to which Jesus may have gone (one can peer down to the original at one or two places, though you see hardly anything). So what you have in the splendid ruins of the white synagogue is a moden (4th century) ruin on top of the old ruin - really, nothing worth seeing for the pilgrims who come here. But, I guess, as pilgrims, they don't really come to SEE anything, they come because they acquire some sort of satisfaction from having visited the site

At the entrance to the Roman Catholic occupied territory, the bronze and larger than life size statue of Peter by some pious sculptor makes him look rather gormless.

On our way around the lake, we stop to see if there is anything at Magdala but there is only a sort of banner by the side of the road informing us that the tiny ruins (three quarters surrounded by a sort of holiday hotel site, and one quarter bounded by the road) are all that are left of a once-prosperous fishing village. However, just up the hill is the "modern" village of Migdal (which we do not see as the possible connection between the two only dawns on me some time later, when I opine that the ancient village probably went much higher up the hill - the lower part was ruined in some battle or other, while the uphill part survived and was built up again later....Again, something to be checked out when one has the time....

A bit further around the lake, I ask our guide/ driver to kindly take us off his scheduled route to follow a sign advertising "The museum of the ancient boat". The museum itself is much like most museums, but the boat takes the cake for the best thing seen on the entire tour. It is 10 metres long, and I wonder why I am moved to see it. Possibly because it is a real thing from the time of Jesus, not merely some interpretation of some ruin that you can hardly make out. The story of the finding of the boat, and its extraction from the mud of the lake, and the years and effort and money that were required to get it to a state in which it can be seen by the public - all that is very well told in the video show which is offered, and I suppose is part of the reason I am so impressed. Was this one of the boats in which Peter fished, or any of the others who are mentioned in the historical records? Was this a boat in which Jesus himself travelled on one of his many recorded and unrecorded journeys across the lake? These are among the questions that the museum poses in written form near the exhibit. The questions are interesting, but not as interesting as the exhibit itself, though another of the signs there shows all the different kinds of wood that went into the boat, from which it can be deduced that the boat was used over a long time, and (as it was repaired again and again by employing different kinds of wood) was used by relatively poor people, at least at some point in time - presumably as the entire region went from prosperity at the time of Jesus to poverty following the destructio of Jerusalem by the Romans in 70 AD.

I observe that the northern end of the lake is stony and arid, but the middle starts being more hospitable nad the southern valley of the Jordan seems quIite productive and almost green.

We start driving up the Golan Heights, which I mentioned earlier, though we visited it almost at the end of our day-long tour. It is not only extremely hot, even the air is hot. In north India, we call the hot summer wind that blows the "loo". The Heights are what may be described as a single strip of hills, between 1000 and 1300 metres high between the river Jordan on one side, and the plain with the Sea of Galilee on the other. From the Heights, one can see right across the whole plain of Galilee (Israel is a tiny country, and relatively thin). I had not realised it quite so starkly earlier: whoever controls the Heigts controls the water supply for at least the whole of the northern part of the country. From the viewpoint of their national defence, it would not just be extremely stupid for Israelis to give up the Golan Heights, it would be tantamount to national suicide.

On the heights, there are several disused bunkers originally built by the British to keep an eye on what is today Syria and Jordan. I have never actually visited the site of a bunker earlier. All around there are signs warning visitors to keep to the market paths as mines were laid down all around and there are still many unexploded ones that may still be live. However, the bunkers could be a good tourist attraction - specially for children - and it would not take that much money to get them cleared and cleaned....

The Golab heights seem to have both Arab and Jewish settlements but both seem relatively new - or at least not ancient.

I know a bit about Judaism but had not realised the distinction between those Jews who are secular, those who are "merely" observant of the religious lawas, versus the "religioius" do no work nor serve in the army and have to be maintained out of the taxes of those who do work! It appears, however that the religious seem very well organised and have been able to defend their benefits successfully so far.

It is a pleasant and unevetful drive back to Haifa. On the outskirts, a former dump is being beautified _ there are aertistically shaped margins that have been bricked out and various flora planted. However, cows are wandering the area freely as we drive past on our last evening here - reminding me of India once again.

In Haifa, I am startled to see a sign announcing "George Eliot Street". Why does Haifa name a road after George Eliot, I ask my guide. This time it is his turn to appear ignorant. Another thing I must check out some time.

Truth to tell, I have seen hardly anything in the week or so I have spent in Israel. But I too feel a curious sense of satisfaction at having been here and seeing whatever little I could see.

BTW, I did not see a single tank in my entire week there (though my wife tells me that she saw one). I did see soldiers with guns, but they were either manning security check points for tourists in Jerusalem (I will post something on our few hours in Jerusalem, when possible) or they were on trains riding to and from their training. Each Israeli, man or woman, has to give THREE YEARS of life to the military. That is extraordinary, but not so extraordinary as how little the normal rhythm of life is impacted by security considerations compared to the portrayal of Israel in the media. When we mentioned to a few friends and relatives that we were going to Israel, the instant and universal reaction was: "Dangerous!". Actually, except for the soldiers with guns on the trains, the land was entirely normal. The hotels were nearly fully booked, whether those top of the range or those that are youth hostels.... No we didn't stay in either. Sphere: Related Content