alphacalifragelistic

Localgirl deserves our congratulations, as fiction publishers and agents are deluged with manuscripts. Secondly, I think the industry statistic is that something like 12,000 novels are currently published in the UK every year. To put that in perspective, of that number, just ask yourself how many new novels did you or anyone you know buy and read this year? Sean is right. Not only that localgirl has done incredibly well to pick up a publishing contract (which implies talent on her part), but that the odds are sadly against any budding novelist. I am sorry if that sounds pessimistic, but I would prefer to call it gritty realism. Having worked in publishing, albeit in non-fiction, I would have to tell you that although most people might well have a book inside them, that is probably exactly where it should stay. Sanity Girl's comments are echoed by a friend of mine who has just left a big literary agency. I recently spoke to a former graduate of City University's MA in Creative Writing. He was the only one in his class with a publishing contract, despite the university laying on a panel of agents and publishers to review their year's work. With apologies to computedshorty in advance, if you just want to produce a book for friends and family, then rather than dropping ?4,000, as suggested above, please consider using a service such as: http://www.lulu.com Lulu allows you to upload files to their system, which it can then print out and dispatch as books on demand. They charge on a per book basis. (Although, it is a US company, so the dispatch fees to the UK can be quite large.) By comparison, competitors such as LightningSource have set up fees. (Well, they did the last time I looked anyway.) You could even just go along to the Blackwell's flagship branch at 100 Charing Cross Road, to check out their new 'Espresso' book printing machine. This allows you to print your own book(s) from files you supply. Details here: http://www.guardian.co.uk/books/2009/apr/24/espresso-book-machine-blackwell http://www.which.co.uk/reviews-ns/blackwell-books-on-demand/index.jsp http://www.printweek.com/News/MostEmailed/822157/Blackwell-install-on-demand-Espresso-book-machines-across-UK/ In addition, there are open source DTP packages knocking about now, such as Scribus, but you might be able to get away with using OpenOffice for text output (as Adobe pdf files), which is also free. So, I would suggest that you might find 'Click Book' surplus to requirements, if you are prepared to put in the time. The choice is yours. In other words, you can produce something decent for a very small initial cost. By comparison, there are plenty of vanity publishers and printing companies out there which are unscrupulous enough to 'help' you, for a fine fee.

Five stars review in today's Indie: http://www.independent.co.uk/arts-entertainment/music/reviews/pixies-brixton-academy-london-1801205.html As opposed to a 'Five Star' review in the Indie. May the Lord protect us from another visitation by Romford's answer to the Jackson 5.

Saw them at the Kilburn National (or was it the Town & Country Club?) a LONG time ago, when they were supported by Pere Ubu, perhaps on the rationale that their frontman was the one lead singer fatter than Frank Black in US indie music at the time. I digress... Anyway, they were AWESOME. My best friend went along to that with me and caught them in Manchester again, many moons later, during their reunion tour in 2004 IIRC. When I asked him for the comparison, he told me that musically they were still A1, but you could practically feel the rays of loathing they were mentally directing at each other. So I hope there was more peace and love amongst the band in Brixton. I suspect that the earlier reunion tour may just have been one mandated by the US Inland Revenue Service, rather than springing from their collective love and mutual admiration. As for Kim Deal, that girl has lived. I can remember reading an interview when she confessed how she used to neck happy pills to rave through the weekend, then crawl into work after barely any sleep, in order to work in an information security job for a Boston bank. Shame 'The Breeders' weren't that much cop...

@ Huguenot "I do wish that a chap of your clearly talented insight would turn his mighty intellect to finding solutions rather than pointing out obstacles. It is most particularly chaps like you who need to get on board and apply themselves." Yeah, but no, but yeah. I think we do need to start with a realist view of the mess we are in, in order to know how to get out of it. For example, sadly, the current political debate does not favour honesty and robust debate about the current state of our country's finances. Clegg has just been mauled in the press for pointing out the imminent reductions in public expenditure that are coming, whichever party ends up in power. Anyone who has read the output of the IFS over the past two years would have been able to work that out for themselves. That old line that the electorate can only bear so much truth appears to have been validated. Secondly, part of the problem in reacting to the crunch is that interpreting it has been like a bizarre sort of magic intellectual lucky dip. Everyone gets a prize vindicating their earlier belief systems. So working out how to respond and what policies to adopt as a result is tricky. Note the lack of uniformity in our collective postings above. Just to tease that 'lucky dip' point out a little more (madam)... I know 'Socialist Alternative' (as opposed to the SWP, splitters!) politicos who read this all as a portent of the inevitable collapse of late stage capitalism and a vindication of classic Marx. I know market fundamentalists, who blame it on earlier state (or quasi-state) mediated rescues of the likes of LTCM, thereby creating moral hazard risk resulting in over leveraging and under-pricing of risks. I know Austrian School economists who point the blame at lax monetary policy. I know fiscal (small 'c') conservatives who point the blame at a Keynesian / Hicksian style debt fuelled expansion of the public sector. I know Keynesian economists who say that the problem is the lack of government intervention and management of the economy. I know people who blame the British crunch on the creation of tripartite regulation in 1997. I know people who blame this on the US 1999 de facto repeal of Glass-Steagall. I know people who blame the Clinton administration's efforts to encourage wider home ownership in the States. I know people who blame it all on the collapse of Lehman Brothers, resulting in a surge of systemic risk. I know other people who blame it all on the following bail outs of other financial institutions, in order to quell that systemic risk. The causes and details of the 1929 Wall St crash and subsequent Great Recession of the 1930's are still being argued about in the academic literature. So, aside from knowing a lot of people, can I start with a nudge from Plato to say that at least I know that I don't know much for certain. OK, on a more positive note can I make the following suggestions: 1.Engagement in public policy formulation can actually be surprisingly easy. If there is something you have a particular interest in or concern about, sign up for the email circulars and go along to the public lectures and events at the likes of the RSA, RAE, Royal Society, the think tanks, Westminster Hall debates, etc. Access to the politicians, journos, academics and think tank staffers working in a specific field is possible and can even be trivially simple to do. 2.Increased capital adequacy, a more sceptical approach to aspects of financial innovation and the imposition of what I would call 'financial fire breaks' in the banking system, isolating utility banking from areas prone to systemic risk, all seem to be things that we can agree are a GOOD THING, even if the devil is in the detail. 3.The stats in my earlier posting do indicate that financial services are a golden goose that we should hesitate before grinding into nuggets out of righteous indignation. Firstly, is that sector crowding out other industries? If not, then there is no either / or, zero sum choice we need to make. Secondly, can we fix it so it doesn't do wider macro-economic damage during the downturns in its cycles? Thirdly, given that the City is a centre for global finance (such as 70% of global bond trading), even if the net social utility for its customers is zero, London and Britain could still be a beneficiary of that trading activity. In other words, there is a lot to play for, if we can get this right. 4.There are potential solutions to some of the major problems we are facing, such as moving towards a more balanced energy mix, with an emphasis on renewables and better transport technology. Fortunately, that nasty market thingy is providing capital allocation via VC funding to this sector, to the likes of Tesla Motors, Better Place, etc. At the risk of echoing James Murdoch, for renewable technology to succeed it needs to be profitable. I actually trust VC's more than Whitehall bureaucrats in finding and funding winners in that field. 5.As bad and imperfect as democratic market capitalist societies can be (cf. California's current problems), they are still a hell of a lot better than the alternatives on offer. The environmental degradation found in East Germany after the fall of the wall and current abject poverty of North Korea act as empirical testament to that. We are at least in the 'least worst' class. I know Cuba looks nice in the brochures, but it's not. Really. 6.One of the key arguments that any actions taken by Britain or indeed Europe to counter climate change are pointless, since China is not on board, now looks bogus given the recent commitments made by Hu Jintao. To answer the cynics out there who would query whether this has the backing of self interest, can I point out that the smog in Beijing, the cost of imported petro-chemicals and the market opportunities that Chinese PV and wind turbine manufacturers have in their sights, should help their Damascene conversion along. 7.I take ????'s point that we still have strengths in life sciences (pharma and genetics) and engineering (high tech manufacture, aerospace, er, arms), but add the caveat that a key input factor for those industries (to sound particularly bloodless) is skilled employees. Tertiary educational excellence (in parts) is not enough and there are profound problems with aspects of our primary and secondary systems. The alternative is to import talent. Although Silicon Valley is staffed with the products of India's IIT's, is that sustainable? As for cultural industries like TV, well, format sales like 'Millionaire' are doing OK, but the sector is actually pretty miserable right now, thanks to migration to the web of customers and advertising, along with channel proliferation slicing the cake into ever smaller portions.

Should you get the chance over the next 6 days (after which I believe it expires on the BBC's iPlayer), there is a decent Radio 4 feature on aspects of a nascent European energy policy that you can listen to here: http://www.bbc.co.uk/programmes/b00mr1wc It details the development of a 'Supergrid', which would allow the transfer of electricity across the continent. Given that one of the problems with renewables like wind is their intermittent power generation, this should help smooth supply. Hmmm, so that would be far sighted policy, joint action and infrastructure support for green energy production. Not all bad news, is it?

@Mockney At the risk of sounding all earnest on this, the RAE & Royal Society are doing some decent work publicising this. If you can blag a ticket (it is for academics) you might want to go to this: http://www.raeng.org.uk/events/pdf/Solar_Thermal_Power_Plants_flyer.pdf Solar thermal requires fewer technological and scientific leaps than the likes of fusion, commercially viable long life PVs, etc. Basically, you need mirrors, Stirling engines and high voltage DC lines to get you started, all of which we can do. There is a massive solar thermal energy plan to supply Europe (mostly from the Maghreb) that has been doing the rounds for a while. However, it looks too expensive, by comparison to some of the alternatives coming online: http://www.desertec.org/ http://www.eurosolar.de/en/index.php?option=com_content&task=view&id=356&Itemid=98

You want stats, I got stats... In 2007, financial services contributed ?33 billion to the balance of payments (up ?7bn from 2006). The sector accounted for 10.1% of UK GDP, rising to 14% if ancillary activities (such as accounting & legal services) are added. Jobswise, it was responsible for 1 in 30 jobs in the UK that year. In 2006, 1.07 million people were employed in financial services, up around 7,000 compared to 2005. The share of GDP dipped from 6.6% in 1996 to 5.5% in 2001, before rising to the 2007 figure quoted above. By comparison, manufacturing's share has fallen from 21.1% in 1996 to 13.2% in 2006, with the trade deficit in manufactured goods rising from below 20 billion Euros to 80 billion Euros over the same period. By 2006, financial services paid a quarter of all the corporation tax raised that year (equivalent to 8.9 billion Euros) and the sector's workforce paid 13.6 billion Euros in income tax, which was 12% of all income tax receipts. I.e. The tax contribution of the sector and its workforce was both massive and disproportionate to its size. Sources: http://www.esrc.ac.uk/ESRCInfoCentre/KnowledgeExch/Financial.aspx http://www.esrc.ac.uk/ESRCInfoCentre/Images/Financial%20Services_tcm6-29921.pdf http://www.sii.org.uk/crm/SIIRevie.nsf/articlesbyunivid/Z643D5367556E96EA8025736900367DBB?editdocument http://www.financialexpress.com/news/uks-financial-services-share-rises-to-9.4-of-gdp-in-06/256893/ http://ukintaiwan.fco.gov.uk/en/doing-business/business-investment-in-uk/uk-business-environment/uk-financial-services/ Citing, in turn, reports from 'International Financial Services, London'. (No, I haven't heard of them either, but they appear creditable enough for the ESRC to quote from.) Sorry for the 'Euros' denomination above, but you have to work with what you're given I guess. So, lots of people in the sector and payroll appeared to be growing overall during the recent boom. (Although, with a single 2005-2006 observation detailed above, you would be within your rights to still be sceptical.) Just some observations, but the sector dipped in 2001, courtesy of the dotcom crash, the twin towers attack and Enron I presume, with a much lower share of GDP. I.e. It was - and is ? both volatile and susceptible to global conditions. I would guess that the cusp side of that, is that if London based trading of bonds, foreign equities and derivatives comes roaring back, then there is scope for a significant recovery, given the City's share of global trading. However, there is the potential that we could lose that to Singapore, Shanghai, Mumbai or Dubai. Hence the sensitivity over new capital adequacy rules, bonus curbs, further regulation, etc. (The ex pat tax driven hedge fund exodus to Geneva was talked up two years ago, but I wonder how significant it proved to be in the end. - I recall that European finance was supposed to be marching over en masse to Frankfurt in the mid-1990's, so perhaps the City is more resilient than we may fear.) Secondly, manufacturing is knackered, falling by roughly 40% in a decade in terms of its share in UK GDP and with an egregious balance of trade in that sector.

@ Mockney I'd get a beachside residence and Bermondsey disappears. What's not to like?

@ Mockney I live on a hill. Hence the lack of concern about rising sea levels. My ceiling lights don't work with low emission bulbs (due to the constant minimal current of a dimmer). Hence my annoyance about being left in the dark before ceramic, OLED lighting has reached the market. They've just been a bit previous with the policy, that's all. More seriously, apologies for the hospital / carbon juxtaposition, which was unfair. However, there is a serious point about the likely cost to the NHS from the EU carbon trading scheme. Certain loss for uncertain benefit = difficult sell.

@ Mockney, down a dirty telephone, "We need our scientists and inventors to be every bit as admired as Barnes Wallace or Turing." Er, dude, an unfortunate couple of examples, as I think you'll find that Turing suffered horrendously at the hands of the British state towards the end of his life. Or is that 'thereby ending his life'? (Hope you signed the petition BTW.) Barnes Wallis had great difficulties getting his bouncing bomb and swing wing technology adopted by the British government. Still, it's a good general point. On lightbulbs, can you find me a 100w equivalent long life low energy bulb for under a tenner that can cope with my lounge's dimmer switches? - I am literally gloomy about the chances of that. Another example of policy that has genuinely not been thought through. @ Brendan You forgot the stakeholder consultation exercise and environmental impact study required before they could build a shelter. Sadly, a fire would be banned as the island council passed a resolution early on to be carbon neutral. "We all have to make sacrifices. No, literally. - We've got nothing to eat." Hmmm, I think we're all getting a bit 'Lounge-y' (myself included), still, it's been a long week and it's a grim topic.

@ Mockney "On the contrary my gut instinct tells me that it's easier than we fear." Really? R.E.A.L.L.Y? As soon as fuel prices began to bite via the fuel tax escalator, the truckers jammed up the motorways. When the government mooted a mandatory energy performance certification component of the HIPS assessment process, journalists queued up in the press to chuck bricks at the heads of any minister involved. Look at the protests that plans for on-shore wind installations generate. The carbon trading schemes in the US & Europe are both in a mess, so public policy solutions in this area appear to be highly problematic. (Just look at the cost burden that would be imposed on the NHS by a rigorous carbon tax. - "Minister of Health Mockney Piers today explained that the Great Ormond Street Hospital for Children would be closed due to increased costs resulting from the imposition of the new EU carbon tax, explaining that 'sacrifices must be made to secure the future of our children, the one's that survive the closure of this hospital that is'.") The government has just spent ?300 million via the car scrappage scheme, on encouraging us to buy more cars, to plaudits in the press. (BTW, just ?6 million is believed to have been spent on cars made in the UK. Another. Brilliant. Move.) It is all very well blaming the current set of politicos - and they damn well deserve it. However, public engagement goes both ways and this is the lot we picked. The 'Them' is 'Us'. In the same way that the financial market players we decry for their selfish investment decisions include our own pension funds, whom we would be highly critical of should they move to fuzzier mandates that resulted in us ending up with delayed or reduced pensions. If you do not think that an electorate can suffer from cognitive dissonance, just take a look at the mess the State of California is now in, helped along by a series of implicitly contradictory referendums thanks to direct democracy initiatives. Many of the things we would both like to see require asking people to make certain losses for (relatively) uncertain benefits. That is a big ask. Fundamental reform of financial services suffers from the same problem. Good luck to anyone that campaigns to reduce access to mortgages (with stricter deposit & credit assessment requirements), split investment from retail banking (thereby hammering the likes of Barclays) and lessen the attractiveness of London as a home for global capital. Lastly, I think this might cheer you up, as (I think) Lord Skidelsky has been arguing that one long term solution to the problems of the finance sector would be if economists were taught less maths and more history. Props to history grads, even if I hear you'd make a terrible Minster of Health.

@ Jeremy The difficulty is that 'strategic planning' was used as a covert excuse to chuck loads of money at dying nationalised industries in the past, such as British Leyland. More modern large public projects that leap to the public's mind include the Dome and the ever increasing budget largesse of the 2012 Olympics. Hence the appetite for massive investment in public infrastructure in things like a smart grid, high speed rail, etc, is curtailed. Re. the energy sector, we had a golden opportunity to use North Sea offshore platform technology to give us a commanding lead in offshore wind (also making use of our idle shipyards), but that was lost. We are doing well with installations, but the firms involved all seem to be American, Danish, German and Chinese. As for nuclear, Brown sold Westinghouse to Mitsubishi in 2006. Another brilliant move, which echoed his decision to sell half of the country's gold reserves, at an average price of $275 an ounce, at the start of the decade. - Best. Chancellor. EVER! @ Mockney Re. education... To give just one example, not one state school in Islington Borough now offers single subject science A Levels, thereby ruling out uni applications in those subjects. The problems we face, in terms of energy, feeding the world, creating new industries, etc, all need scientists and technologists. We just won't be getting any from state schools from boroughs like Islington. - It is not just the economy that this lot have messed up. Which brings me back to an earlier point. Does anyone have a convincing explanation of how we are all going to get out of this mess? Given that our world beating financial services industry appears beaten and that financial innovation is unlikely to command the interest and premiums it did in the past, just what is it that will generate the sorts of value and mass employment (whether direct or ancillary) that we will need to recover? North Sea oil is in decline, our tech start ups decamp to Silicon Valley at the first chance they get, manufacturing is being outsourced to lower wage economies...

@ SeanMacGabhann "and with respect to anyone going into detail about the various factors, debt values, GDP blah blah blah - I am officially not listening to ANYONE who is making any kind of prediction. If we have learned anything from recent times it's that no-one knows jack. A very very small number of people are able to point to predictions they made 3 years ago, which turned out to be largely true but that doesn't mean it was expertise on their part - it could just as easily have been a maverick reaction to prevailing consensus It could all fall off a cliff tomorrow or it might start to get better, or it might through another sudden cycle - but we'll manage." - Whoa, cool your jets pal. Firstly, I don't think anyone's claiming omniscience here. Secondly, the title of the thread might indicate what we're all trying to do here. Given that all three major political parties are now actively and explicitly planning significant 10%+ public sector expenditure cuts, that does have some predictive utility. If I were working in the public sector, I'd hold off on increasing my debt exposure (given the prospect of wage freezes and lay offs) and I wouldn't bank on that retirement date staying fixed on a future calendar. Medium term public policy is being formulated that will have direct effects on parts of the economy. Add to that the prospect of a >10% reduction in a sector that is 43% of the UK economy and I think it is fair to say that will have a significant ceteris paribus effect on the economy, roughly equivalent in size to the current reduction we have already suffered due to the crash. My point is that this is separate and additional to the impact of the financial credit crunch. Fingers crossed, that fiscal tightening will be made while the private sector starts growing again, over 2011-2015, so it could be balanced out, but that is a big ask. As for the canard that 'no one knows anything'. Well, up to a point Lord Copper. I remain sceptical about effective market timing techniques, but there are people out there who made substantiated cases that we were in a bubble. - Roubini's work on MEW driven consumption in the US, or the analysis by Smithers (which reached the public via Martin Wolf on the FT) on cyclical P/E ratios, to name just two. That is a bit more than just saying "this all looks a bit toppy to me squire". My take is that the equity rebound was driven by the wave of relief that systemic collapse appears to have been averted, helped along by supply chain re-stocking resumption that resulted in earnings reversion. In addition, equity prices have often decoupled for extended periods from their underlying economies. As for VAT, of course retailers will complain when it increases. It is the de facto 'don't fire me, our results are all down to that nasty government' card for every CEO who underperforms. Given the thin operating margins, fixed costs and 2.5% implicit increase in net revenues that the 15% VAT rate handed retailers, I suspect that the reduced rate did have an effect upon that sector, which was masked and matched by plummeting discretionary consumption. Hence the collective shrug of indifference we witnessed in the press. Mockney, I suspect that most of the posters above would happily sign up for a manifesto that included things like an increased emphasis on viable clean energy and a Doha WTO round that reduced trade barriers for third world country exports. ("Piers for PM"?) However, selling that to a sullen electorate facing high energy bills and the prospect of unemployment is a difficult task. Not impossible, it just needs leadership and a bit of guts. In addition, if the economy stays mullered, we have less cash to spend on green energy R&D, a smart grid, whizzy lower carbon high speed train lines, etc. Secondly, implementing a global Glass-Steagall v02 would require co-ordinated and collective action. Add to that the possibility that any refuseniks might benefit (albeit perhaps on a temporary basis) from a potential flight of business, a la post-war Euro-Bond market's transfer to London from the States. I could see Dubai / Qatar making a sustained attempt to entice investment banking operations with a more relaxed capital adequacy regime than stricter European and American equivalents. You may well say good bye and good riddance, but check out the likely loss in UK GDP & the implications for our taxation revenue. Harder than it looks, innit.

There is a decent round up of the likely depth of the public sector cutbacks we can expect, by Robert Chote (of the IFS) in today's Times. http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6837508.ece Vince Cable is now predicting that we will need a ?112 billion tightening of public sector expenditure over five years. So, to recap: - The BoE has put ?175bn of QE into the economy, with the underwhelming result thus far of a temporary plateau in the macroeconomy and house prices. - Unemployment is increasing fast. - 10%+ cuts in public spending over 2010-2015 apply directly to the 43% (approx) share of UK GDP that is the public sector's share. Therefore, to be (very) simplistic, Cable's envisaged fiscal tightening would contribute a ceteris paribus reduction in overall GDP of around 4.3% (10% x 43%) by itself. This is on top of the -5.7% (apr) fall detailed in the NIESR graph linked to above. - The base rate is already at a minimum of 0.5% and will rise if QE induced inflation kicks in. This is surely a 'W' scenario in the offing, with another dip on the way, even if the pain ends up being distributed selectively rather than broadly. For instance, if a 10% cut in public sector expenditure is spread evenly, the proportional effect would be almost twice as bad for the North East as for the South East of the UK: http://www.bbc.co.uk/blogs/thereporters/markeaston/2008/06/map_of_the_week_public_spendin.html The VAT reversion back to 17.5% (or even the mooted 2010 increase to 20% under consideration by the Conservatives), looks awfully like the sales tax imposition that is thought to have helped snuffed out Japan's recovery in the 1990's. Add in the risk of public sector strikes and / or disruption in response to pay freezes, etc, along with energy price shocks or gaps over the next few years and there seems to be scope for further shocks to the system. Even if it looks as if governments seem determined to support any more wobbly institutions that have the potential to generate systemic financial contagion.

For those interested in the policy debate in this area, could I suggest that the open access LSE public lecture detailed below might be a worthwhile event to attend. http://www.lse.ac.uk/collections/LSEPublicLecturesAndEvents/events/2009/20090824t1232z001.htm The Cocaine Wars: The Mess We're in and How to Get Out of it Date: Thursday 15 October 2009 Time: 6.30-8pm Venue: Hong Kong Theatre, Clement House Speaker: Tom Feiling Tom Feiling analyses the thinking behind drug prohibition and how and why the strategies embarked on to date have failed so spectacularly. His critique draws on research and interviews he conducted with those with first-hand experience of cocaine and the campaign to prohibit cocaine, for his new book The Candy Machine: How Cocaine Took Over the World. He then looks at the advantages and disadvantages of the alternatives to current anti-drugs policies. Finally, he discusses how a legal, regulated market for cocaine might work in practice. After graduating from the LSE in 1990, Tom Feiling spent 10 years working in documentary production. Among the documentaries he has made are '33% Heroin', which looked at heroin users in London, and 'Resistencia: Hip-Hop in Colombia', which looked at the crises afflicting Colombia through the eyes of its rappers. Tom has also worked as Campaigns Director for the NGO Justice for Colombia. The Candy Machine: How Cocaine Took Over the World is his first book. The event is free and open to all with no ticket required. Entry is on a first come, first served basis. Any queries, email [email protected] or phone 020 7955 6043.

I know it's wrong, but I like that Quo track. In fact, I like it, I like it, I like it, I like it, I li-li-like it. Ahem. Anyway, back to business, or rather economics. Roubini has yet to cheer up and is predicting a 'U' shaped anaemic recovery: http://www.ft.com/cms/s/0/90227fdc-900d-11de-bc59-00144feabdc0.html If you have missed it, Paul Krugman & Niall Ferguson are currently slugging it out over how much QE is too much: http://business.timesonline.co.uk/tol/business/economics/article6806419.ece I am not too sure how much to read into Whitney's prediction. Courtesy of state-by-state legislatures, the US does not really 'do' nationwide retail banking to the same extent as the UK, or Europe in general. As a consequence, there are loads of small, poorly capitalised banks, serving local geographic markets. There is actually a fair case to be made for rationalisation and consolidation in that part of the US banking sector, even if that runs against the sentiment of 'It's a Wonderful Life'. BTW, I always thought Pottersville looked a more exciting place to live than Bedford Falls, but that might indicate that I am at fault, rather than the premise of the film. Although, I note that I am not alone: http://archive.salon.com/ent/feature/2001/12/22/pottersville/index.html Pardon me, I digress. Anyway, while aggregation may make sense in that part of the market, it was damaging elsewhere. With the 1999 de facto repeal of Glass-Steagall, commercial and investment banking have already been consolidated in the US, which enabled systemic risk to pass from the investment banks into the 'real economy' and ensure that the sector was too big to fail. In other words, cross-sector consolidation helped get us into this mess, via the threat of systemic collapse. Sadly, a disaggregation, to give us safer 'utility' banking and high risk investment banking with a decent fire-break in between the two, is not in prospect. Osborne mooted enacting the legislation for it in the UK, but it was swiftly pointed out to him that without the US acting in concert, it would be pointless (and give UK banking a competitive disadvantage), courtesy of the international nature of finance. Obama has people like Larry Summers (head of the US National Economic Council) in the heart of his administration, who supported the original 1999 repeal of Glass-Steagall while they were in the Clinton White House. So do not expect any movement on this. Fundamental reform, to address the root causes of current problems, looks unlikely. After all, Obama has enough problems with healthcare reform at the moment...

Jeremy, I think I'll take that claim of a tiny brain with the use of the same salt that Piers took a pinch from when you suggested you suffered from economic illiteracy. To stay on topic, before I zoom off it, today's announcement of another ?50bn of Quantitative Easing should indicate what the BoE thinks of the current state of the economy. In the unlikely event that you have yet to read these, or that anyone else will be remotely interested, there are a couple of papers linked to below on the use of parallel processing to carry out derivatives valuation: http://techresearch.intel.com/userfiles/en-us/File/terascale/Ct-appnote-option-pricing.pdf http://www.d-fine.co.uk/deutsch/Bibliothek/Fachartikel/WilmottMagazineJulyAugust2008ChristophBennemannMarkWBeinkerDanielEgloffMichaelGaucklerTeraflopsforGamesandDerivativesPricing.pdf

Jeremy, I take your point that government expenditure, is - broadly speaking - dependant upon taxation revenue (and the expectation of future taxation revenue), which in turn is dependant upon the wider economy's health. An initial caveat would be that asset sales, mineral rights licences, etc, can obviously impact revenues. A second one would be that with a fiat currency, the government can do the equivalent of running the printing presses. (I believe the BoE is merely carrying out an electronic transaction for the current Quantitative Easing programme.) However, history has plenty of lessons for us to say that is not such a great idea. So you are right. Except that you are not. The government is an economic actor in its own right. By reneging on spending commitments, cancelling funding and reducing payments, it firstly reduces immediate demand. (People have less to spend, therefore they spend less.) Secondly, the insecurity and uncertainty it engenders, reduces the likelihood of private sector investment and commitment of funds on projects that are dependant upon that spending. 'Stop start' government expenditure introduces counter-party and liquidity risk into economic transactions that are reliant upon government expenditure. Since its effect is pervasive throughout the economy, that affects all of us, both directly and indirectly. (What use are the current collection of half built schools and FE colleges that have now had their funds cancelled?) Let me give you another specific example. What if the next administration were to say that, all things considered, we cannot afford the 2012 Olympics after all and that all spending on it would be cancelled henceforth. The immediate fiscal consequences would be positive, as funding ceased immediately. However, which major commercial or residential property developer would ever trust HMG ever again? All of the future investment projects tied to the Olympics site in Stratford would be reviewed and - most likely - cancelled if possible. (I am ignoring the strictures of contract and tort law here, to simplify the case, as no doubt lawyers would be fired up if this were to occur in reality.) In other words, the secondary effects of reduced capital expenditure on that project would be damaging to the economy. Rather than commit funds under conditions of either uncertainty, or rather the certainty of ongoing depressed demand, the paradox of thrift kicks in. It is rational to hoard resources if one expects continuous depressed demand. (E.g. Why buy a house if you think prices will fall further?) Keynes believed that economies do not necessarily mean revert to a single specific equilibrium, which was the envisaged classical model at the time. By contrast, he mooted that economies could have a series of different outcome equilibrium states, dependant - at least in part - upon people's expectations. If a government's actions improve the expectations of investors, consumers, producers, by - for the sake of argument - committing to purchase of otherwise abandoned property developments for alternative use as social housing, then - the argument would be that a vicious spiral downwards, via positive feedback, is potentially avoided. In theory, therefore, there is the potential for government to act as a form of economic stabiliser. As long as it reads economic cycles correctly and spends or invests wisely. I would argue that neither condition has been fulfilled by the current bunch. Goodbye to boom & bust anyone? Nevertheless, if you buy into the idea that economic cycles can oscillate widely and that there are hysteresis losses for people during the extremes of the cycle, via poor investments at the peaks and the social costs of mass unemployment during the dips, then moderating the amplitude of those cycles appears to make sense. (People who lose their jobs tend to be progressively less likely to find further employment the longer they are out of work.) If governments can effectively do this, then, well why not? (Please note the qualifier in that sentence.) If they are able to stimulate demand during conditions of temporary economic depression, then surely that is beneficial. The difficulty is with knowing when to commit funds, on what and when to stop. One could characterise this as the fiscal equivalent of monetary policy. The risk is committing funds to duff projects such as 'bridges to nowhere' (as witnessed in Alaska and Japan) and building up massive debts which - in turn - negatively affect expectations and drain resources in of themselves, or of throwing so much money into the economy that runaway inflation results. Now then, a neo-classical economist of the Austrian school would be emitting smoke from both ears by now. It is worth noting that there are now plenty of revisionist reviews of the economic history of the 1930's. The UK did not appear to do as badly as cultural memories (based on contemporary work by Orwell, etc) make out. Nor did the New Deal act as a cure all in the US. (Double digit unemployment only ended there as a consequence of WWII.) Moreover, the dead weight costs of taxation lower the incentives to produce and potentially reduce the circulation of money. (Check out the 'Laffer Curve' online.) I.e There are valid debates to be held whether government expenditure, or simple tax reduction, would be the better economic stimulus. There are further complications to do with defining economic growth itself. (If your house is burgled and you claim on the insurance, the economy 'grows' due to the circulation of money. I doubt you would feel any better off though.) I would also add that the increased allocation of resources to the NHS over the past 12 years appears to have been accompanied by a reduction in its productivity. (Good luck measuring that BTW.) An economy is a dynamic system (with lag effects). Reduced government expenditure, leads to reduced output, which reduces taxation revenue - in of itself, which in turn reduces funds for government expenditure. There is a (semi) closed feedback loop in play. To be fair, on also needs to take other phenomena, such as the 'crowding out' of private investment and consumption by public expenditure, into account. However, just as bankruptcy risk can outweigh the benefits of altering the debt-equity ratio of a company's finances, the 'pump priming' benefits of government expenditure can be nullified by concerns about fiscal sustainability. If UK interest rates shoot up due to international investors downgrading UK government debt, over fears that it will be unable to repay it (or that the pound will sink due to economic concerns), then it is clearly counter-productive. (S&P has already downgraded its outlook for Britain's sovereign credit AAA rating. We may have already run out of runway.) It is this constraint, along with fears of inflation if QE continues, which will prevent the UK government from continuing to use fiscal stimulus to maintain current levels of consumption in the economy. I just find it a bit of a stretch to see what will fill the gap. Perhaps I am underestimating our world beating financial services industry? Lastly, have a look at how austerity measures are affecting Latvia and Ireland. Take a look at how government expenditure is softening the impact in Denmark, Sweden and Norway. (You may want to ignore Norway due to its unrepresentative oil & hydro-power resources.) If you want evidence of the effects of reduced government expenditure, along with control cases for comparison, check them out. Then factor in the forecast of a 7% reduction in UK government expenditure (as evaluated by the IFS) in the current budget. P.S. Respect to Jeremy for coding the parallel processing of portfolio valuation. Sorry for the nerd question, but are you using something like CUDA on NVIDIA graphics processors?

May I add some further caveats. Friends of mine in the charity / NGO sector also report significant constraints. Their own investment funds have tracked the markets down, reducing the amount of money they have to spend. (An administrator at a foundation told me back in May that they now have a third less money to spend as a result.) Anecdotally, I have been told that rather than hiring people, many charities are having to do the opposite. Secondly, they are currently besieged by former bankers, consultants and the like, looking for jobs within that field in an effort to - in the words of a mate of mine in the sector - "wash the stink off themselves". (Sorry to be so direct there, but it is a verbatim quote.) Public sector spending will have to be significantly curtailed, due to our ballooning national debt. Indeed, there are specific plans to do so: http://blogs.telegraph.co.uk/finance/edmundconway/100000302/education-spending-will-be-cut-here-it-is-in-black-and-white/ Note the 21.7% cut in funds for the Foreign & Commonwealth Office in 2010. Given ongoing obligations in terms of embassies, core staff, long term commercial contracts, etc, I have difficulty in seeing how that would even be possible. In other words, the public sector is unlikely to be a source of economic growth in the near future, due to fiscal constraints. There comes a time when quantitative easing ceases to be worthwhile, due to the raised cost of government debt as the bond markets (& rating agencies) lose confidence in UK gilts. However tempting it might be to inflate our way out of this mess, that may be simply replacing one set of problems with another. Roubini's take on the US economy is that the consumer led boom of the middle of this decade was due to a massive increase in personal debt, mediated via credit cards and Mortgage Equity Withdrawal (MEW). There are parallels with the UK. His point is that the credit card companies are no longer willing (or able) to hand out VISA cards like they were tokens in packs of Shreddies. Moreover, Mortgage Equity Withdrawal is now dead in the US, as is lending secured on property assets in the UK. The loss of this money feeding into the economy is significant. In US terms, MEW accounted for about $700bn in 2005 alone. I.e. The stimulus packages that have been cobbled together are more than balanced by this loss alone. So, while we have avoided a complete systemic collapse in banking, profound economic problems remain. As the risk of anecdotal extrapolation, the current small increase in house price indices (which BTW do not include repossessions in their data, thereby resulting in statistical bias) appears to be a result of constrained supply, as potential sellers hunker down and step out of a market that they believe undervalues their primary asset. The government has quietly gone out of its way to encourage 'sensitive' handling of mortgagees in financial trouble, including mortgage holidays (as granted this month to a neighbour a few doors down from me) and the like. If Danny Blanchflower is right and we are due to see another 1 million + people in UK unemployment by the end of 2010, I think it is fair to expect more forced property sales and fewer prospective buyers. - Who buys a house when they are about to lose their job? Lead indicators, such as new graduate unemployment, are ugly. (I believe that is currently at 50%.) Incidentally, since this bit of SE London is seen as 'up-and-coming', perhaps this entire area might be considered a useful economic indicator in itself. Can I moot that the withdrawal of external private property developer partners from schemes such the New Cross Gate multi-million pound Clutch Clinic development, augurs badly. If medium term development projects are being cancelled, then expectations for a reversion to business as usual in the next 2-3 years are clearly being questioned by professionals in the field. Nevertheless, if one looks at graphs of house prices and unemployment during the early 1980's, house prices bottomed out before unemployment peaked. Moreover, stock markets seem happy to climb the 'wall of worry' in anticipation of better times ahead. Company earnings have not been as dreadful as earlier forecasts were making out, although expect some nasty surprises from acknowledged corporate pension fund liabilities to come out of the woodwork over the next year. In short, I have yet to read a compelling and substantiated 'growth story' yet, describing how and why the UK economy is about to rebound. Reports that we as not as badly dented as it first appeared hardly qualify. Therefore, mark me down as believing that recovery will be 'long, slow and bumpy' and I am glad I do not work in the public sector as that party is definitely over. Please prove me wrong.

@ Moos ?... at least I talked to your friend, the Man With The Burglar Stories *waves* !...? ++> Why thank you kindly. [Waves back.] @ citizenEd ?Nice to meet 'O', the interloper from Telegraph Hill Village.? ++> Ah, er, I guess that would make me the Village Idiot. Or if I'd brought any t'hill locals along, we'd be the Village People. Hrmmmmm... @ citizenEd ?Many a story from a lifetime of London living; though I'm sure he was not even 30!? ++> I'm actually only 6 years old, but half of my life has been spent in New Cross Gate and you have to grow old fast there in order to survive. It's like dog years. (Or is that 'dogged'?) To those who thought the Rye Hotel was not up to snuff, check out my lavvverly (lavvy?) local in New Cross Gate: ++> http://www.stopthestrip.org/4952.html ++> Three of us went on to The Bishop, in order to try to heal the schism between the two Saturday drinking factions. To those who tried to stop us from going, can I just ask you all to stop bashing The Bishop. It's a fine pub, with fine people and it had a solitary hound in attendance. (So there was something for everyone.) ++> However, I did meet two EDForummagers there who claimed to be professional mud-wrestlers and someone who pretended to have lasted three years at Keele University despite having a first name of 'Piers'. (Anyone who has ever visited Stoke - and returned - will know that is surely impossible.) - Think I'm fick or summink? ++> On a less facetious note, it was a pleasure to meet you all and I hope to get the opportunity to do so again in the future. This is just my take, but I only knew one person at the Rye Hotel in advance, yet I found the crowd there immediately welcoming. Moreover, everyone I met was a delight to chat to. Perhaps I am easily pleased?