Why are we ruled by the illogical?

3467

why-are-we-ruled-by-the-illogical

I've long been saying that recent events might mean we should have more regulation of the financial sector. It might also mean less and I'm certain it should mean different regulation. But could we please have an absolute moratorium on illogical, just plain counter-productive, regulation like this?

Today, as part of that effort to make markets safer, lawmakers in the European parliament are expected to back new rules that will force banks to retain 5 per cent of the securitised products they originate and sell.

Now a reasonable thumbnail sketch of what happened is that the banks went overboard in a wave of euphoria about the joys of securitisation. in fact, they thought that these whizzy CDOs were such fun that they weren't going to flog them on to the pension funds and the insurance companies as originally planned. Nope, these things were so super that they were going to keep them. And so they did keep them until everyone woke up with a hangover one day and realised that they weren't so whizzy or super duper and immediately started calling them "toxic assets". And then the banks went bust.

So the legislators suggestion to stop this happening again is that the banks should be forced to do what made them bust rather than just left to make a stupid decision like that on their own? Everyone's got to do it not just a few?

Now some will say that having to keep a portion of a securitisation will make the banks look a little harder at them and their risks. Perhaps, but this is the point. Up until 18 months ago the banks were indeed looking at these securitisations and they thought they were just peachy. Best thing since sliced bread in fact right up to the point that they thought that they weren't any more. So such a law would not have changed their behaviour at all. Except, of course,  for those people who didn't get swept away in the euphoria and so didn't keep the toxic assets on their books.

Yes, of course we need laws, of course some form of regulatory system has to be in place. But does it have to be so blitheringly stupid a one? One that forces every bank to do what has just sent half of the banks into bankruptcy?

TNG with Brooks Newmark MP

3454

tng-with-brooks-newmark-mp

Brooks Newmark MP, marked Obama's first 100 days in office with a speech as guest speaker at this months TNG meeting. In his description of the new President of the United States, he evaluated that a lot of his policies were, “Bush-like", pointing out that his policy of ‘Big Government’ and the immense fiscal stimulus were not dissimilar to that of his predecessor.

Nevertheless, the main scope of his speech embarked on what Obama has and will achieve in his Foreign Policy. The pull out of Iraq followed by the increased number of troops in Afghanistan is very much heading in the same direction a Bush. Newmark stated that Obama has put significant emphasis on his dealings with Israel, pin pointing that he will continue to promote a two state solution.

As well as this, he highlighted the importance of Iran and how Obama has attempted to improve relations with the country. For now this has wrong-footed Ahmadinejad, though he insisted that the President might be disappointed when his outstretched arm is not taken by Iran. If and when this occurs, it will be in interesting to see how comparable his reaction will be with that of President Bush.

TNG with Brooks Newmark MP

3455

tng-with-brooks-newmark-mp

Brooks Newmark MP, marked Obama's first 100 days in office with a speech as guest speaker at this months TNG meeting. In his description of the new President of the United States, he evaluated that a lot of his policies were, “Bush-like”, pointing out that his policy of ‘Big Government’ and the immense fiscal stimulus were not dissimilar to that of his predecessor.

Nevertheless, the main scope of his speech embarked on what Obama has and will achieve in his Foreign Policy. The pull out of Iraq followed by the increased number of troops in Afghanistan is very much heading in the same direction a Bush. Newmark stated that Obama has put significant emphasis on his dealings with Israel, pin pointing that he will continue to promote a two state solution.

As well as this, he highlighted the importance of Iran and how Obama has attempted to improve relations with the country. For now this has wrong-footed Ahmadinejad, though he insisted that the President might be disappointed when his outstretched arm is not taken by Iran. If and when this occurs, it will be in interesting to see how comparable his reaction will be with that of President Bush.

Caught up in struggle

3458

caught-up-in-struggle

Given man's nature, freedom will always be in jeopardy, and the only question that need concern each of us is if and how well we took our stand in its defense during the short period of time when we were potentially a part of the struggle.

Benjamin Rogge

Blog Review 956

3464

blog-review-956

Explaining what Brown's really been doing to the poverty figures.

Of course there's a waiting list for subsidised housing. It's subsidised!

No, we really don't like asset forfeiture laws. They inevitably lead to situations like this.

Is the Chrysler bailout all about the unions? Of course it is.

What happens when you vote against an autocrat and the autocrat finds out you've voted against him. Actually, that this happens shows that he's an autocrat.

The real problem with the MPs' expenses system is that it moves them out of the tax system that the rest of us have to endure.

And finally, not an advertisement by the US Tourist Board.

Why are we ruled by the ignorant?

3465

why-are-we-ruled-by-the-ignorant

It's a very cuddly idea, isn't it? That if only women had been running the banks then we wouldn't have had the crash.

Some women MPs have claimed that the 'testosterone-fuelled' financial meltdown could have been avoided if there had been more women in decision-making positions.

As we all know instinctively, there are no power crazed Gorgons and it was entirely the testosterone pumped out by all those unutterably horrid men that led to the banks falling over.  Unfortunately, as so often happens,  instinct isn't all that good a guide to complex matters.  Before we go off and do the feminine thing of what feels right, perhaps we should go and look for some empirical evidence to support our prejudices? You know, be horribly male about it all?

Hmm.

This paper investigates whether exposure to the opposite sex induces greater risk-taking in both males and females.....Both males and females viewing opposite sex photos displayed a significant increase in risk tolerance, whereas the control subjects exhibited no significant change.

Yet another beautiful theory destroyed by an inconvenient fact. The truth is that if we want to reduce risk tolerance in the banking system we have to entirely purge women from it. Or men of course.

To be honest, I don't mind all that much about being ruled by those with prejudices. I've a few of those myself. But I do mind being ruled by those that are ignorant. After all, they've got £660 billion a year of our money to educate themselves with, don't they? Couldn't they use it on something a little more productive, perhaps measuring their knee jerk reactions against reality, rather than the dross they currently splurge it all on?

"I'm not a Conservative, I'm a believer in freedom"

3459

qim-not-a-conservative-im-a-believer-in-freedomq

Milton Friedman on self-interest and the profit motive

Blog Review 955

3463

blog-review-955

Yet anopther reminder that it doesn't matter so much what resources you pour into the public education system. Much more important is what you do with the resources you have.

Free markets aren't without regulation. The major differrence in regulation between free and unfree markets is that in free markets the regulating is done by people who actually know what they're doing.

Today's installment of "incentives matter", the game every economic actor plays: "Interestingly Dick Cheney's first daughter, Elizabeth, was born 9 months and 2 days after the Selective Service System announced that childless married men were to be drafted."

Those who have done nothing wrong do have a great deal to fear.

How to decode bureaucratese.

Finally, someone standing up to state sponsored theft.

And finally, how to decode politicianspeak.

What Say the Reeds at Runnymede?

3447

what-say-the-reeds-at-runnymede

A poem for our current band of politicians to read:

Rudyard Kipling (1865-1936)

At Runnymede, at Runnymede,
What say the reeds at Runnymede?
The lissom reeds that give and take,
That bend so far, but never break,
They keep the sleepy Thames awake
With tales of John at Runnymede.

At Runnymede, at Runnymede,
Oh, hear the reeds at Runnymede:
'You musn't sell, delay, deny,
A freeman's right or liberty.
It wakes the stubborn Englishry,
We saw 'em roused at Runnymede!

When through our ranks the Barons came,
With little thought of praise or blame,
But resolute to play the game,
They lumbered up to Runnymede;
And there they launched in solid line
The first attack on Right Divine,
The curt uncompromising "Sign!'
They settled John at Runnymede.

At Runnymede, at Runnymede,
Your rights were won at Runnymede!
No freeman shall be fined or bound,
Or dispossessed of freehold ground,
Except by lawful judgment found
And passed upon him by his peers.
Forget not, after all these years,
The Charter signed at Runnymede.'

And still when mob or Monarch lays
Too rude a hand on English ways,
The whisper wakes, the shudder plays,
Across the reeds at Runnymede.
And Thames, that knows the moods of kings,
And crowds and priests and suchlike things,
Rolls deep and dreadful as he brings
Their warning down from Runnymede!

Blog Review 954

3444

blog-review-954

Ooooooh, yes, let's tax something to make it cheaper!

It would appear that the real cause of global warming is the US Post Office.

How to save the Indy: if anyone wants to, that is.

Contrary to popular belief, yes, you can buy advertisements on the BBC (and it has to be said that Netsmith has a sneaking admiration for the PR type that cooked this one up).

When people start to think that France is a better place to do business from: well, isn't it time to look at why they are?

If you investigate people for fraud, or at least if you investigate certain groups, then you have to compensate them because you are investigating them.

And finally, the names of those who support the Prime Minister are revealed!