Wednesday, 29 February 2012

Warren Buffet - a Jaded Sage?

The jaded sage
By Chan Akya in Asia Times Online

Warren Buffett, besides being the Sage of Omaha and one of the wealthiest men to ever walk this planet, is also an American hero. A man who popularized the notion of investing your savings prudently, taking a knife to Wall Street excesses and more recently, the architect of an effective minimum tax for rich Americans. All in all, your regular billionaire next door.

Of course I can also recount all the reasons why anyone who bothered to print this article and read the first paragraph got disgusted, crumpled the paper into a little ball and threw it into the nearest waste bin.

You know, stuff like his holdings in major American scams like Moody's which he purchased due to the massive profits they were making from selling fake triple-A ratings all around. Or his rescue of such amazing firms as Goldman Sachs in the midst of the financial crisis, in effect protecting them not so much from aggressive market speculators but perhaps the major regulatory bodies as well (Mr Buffett is a known supporter of and donor to President Barack Obama).

Even that supposed act of folksy good humor ("my secretary pays a higher tax rate than I do") hides an ugly word: "legacy". Mr Buffett is old and if he had wanted to pay higher taxes, well he had the last 60 years in which to do it.

But I don't care about any of Mr Buffett's flaws any more than I lose sleep over that stupid woman who unfailingly puts mayonnaise on my sandwich despite being told not to every day. My getting upset doesn't change a thing, and just ends up spoiling my day: it's easier for me to just buy my sandwiches somewhere else. That's where I left Mr Buffett - that is, until his latest investment letter hit the web and through acts of generosity by my friends, made it into my inbox. Ten times over.

Cold on gold
I don't know why so many of them did that - but it may have something to do with his statements about irrational choices that investor make about assets. He writes:
The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As "bandwagon" investors join any party, they create their own truth - for a while.
Okay, so if I understand this right, Mr Buffett objects to the fact that gold cannot be manipulated, conjured up out of thin air and that it draws a bunch of people weary of Keynesian money printing into its fold. I am not going to suggest that Mr Buffett is thick or something, but isn't all of the above the very point about owning a store of value in the first place?

I don't know about you, but if I could travel through the centuries I would sure as hell like to have in my pocket something that would still be worth something in purchasing power that approaches its current value.

Imagine the following scenario: your grandfather leaves us some wealth but you only get it 50 years later. Now, what would you have liked that "wealth" to have been: cash in US dollars or gold coins? Of course other assets would have worked better - "shares in Apple" for example. Then again, if your grandfather had given you shares in Apple and you got them in 1998, your general feelings of gratitude towards him would have been a somewhat dimmer.

Then Mr Buffett goes on with his diatribe:
Today the world's gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce - gold's price as I write this - its value would be $9.6 trillion. Call this cube pile A. Let's now create a pile B costing an equal amount. For that, we could buy all US cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world's most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

... A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops - and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Yup, valid points there. Then, again Mr Buffett, I wonder how those farmers would pay for the oil to use in their harvesters and how those oil workers would pay for all the grains they would need to eat. Would they own shares in each other and pay the other party dividends in kind? Or would they transact with a common currency, like gold?

And all the analysis misses the point about corporate fraud, that uniquely American preoccupation that has seen many a top firm go completely bust because of financial and accounting shenanigans. If Mr Buffett had mentioned BP instead of Exxon (and written this article two years ago rather than now) he would have had egg on his face. (See also "BP, Bhopal and Karma", Asia Times Online, June 19, 2010, one of my past articles on the subject of corporate responsibility.

Mr Buffett misses the point entirely about what gold is and what it is supposed to do. In a world where investors have ample reason to lose faith in governments and the financial system, the position of a common store of value that is recognizable and usable across all humanity and is itself beyond religion and politics in terms of being manipulated around (besides being no mean feat by itself) is made stronger, not weaker.

That is not to say that I am recommending you folks to buy gold and nothing else; my view has always been that a building up a little hedge for your financial assets with physical gold is no bad thing. I don't speculate in gold nor do I believe you should.

Of course, he clarifies similar points later on his spiel as follows:
My own preference - and you knew this was coming - is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola, IBM and our own See's Candy meet that double-barreled test. Certain other companies - think of our regulated utilities, for example - fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets. Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See's peanut brittle. In the future the US population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.
Really? The best that Mr Buffett can conjure up as stores of "productive" assets are those that generate software consulting services, sugared water with noxious chemicals and over-sweet artificially flavored foodstuffs? Is it possible that all of these companies will even exist 200 years from now, or will a bunch of lawsuits or corporate fraud take one or more of them down as they have many an American corporation?

This is neither about questioning his investment choices nor indeed to taunt a proud American on that country's potential failings. The investor letter though is emblematic of the core ill plaguing the West now; namely a failure to question the current logic of organization underpinning the economy.

On the other end of the scale, it is not immediately apparent that a deleveraging America would need as many cans of sugared water with noxious chemicals as it does now; nor indeed that the current system of savings through stocks could survive a Japan-style lost decade when the locus of the economy shifts from consumption to production.

In a different way of thinking, it is a good thing that Mr Buffett writes his letters the way he does now. Two decades from now, economists and students of finance may ponder the madness of our times that made a man like him the foremost investing genius in the world.

It's all upto Morgan

For much of his career, Eoin Morgan has had the door opened welcomingly wide for him. No longer
Ed Smith
February 29, 2012

As two dazzling, attacking shot-players, Eoin Morgan and Kevin Pietersen are often talked about in the same breath. Indeed, they are the two top batsmen in the World T20 rankings. But there the similarities end.

I am not referring to their diverging current form. Pietersen has confirmed a spectacular return to form, with two ODI hundreds and a match-winning 62 not out in the deciding T20. Morgan, in contrast, has struggled this winter and been omitted from the England Test squad that will play Sri Lanka.

No, the deeper differences are more revealing. Pietersen is a natural outsider who has had to make his own way; Morgan has always benefitted from the smiles and support of the cricketing establishment. Pietersen forced his way into international cricket through sheer weight of runs; Morgan was hand-picked as a potential star. Pietersen's critics have always been waiting for him to fail; Morgan's many admirers have always made the most of his successes.

Pietersen came from a great cricketing culture, South Africa, where he never broke through. Even in Natal, he was not earmarked for future greatness. In coming to England to pursue a better cricketing future, Pietersen made himself doubly an outsider - the foreigner determined to achieve greatness among an adopted people.

Morgan, in contrast, is the lauded favourite son of Irish cricket. He has always been the brightest star in a small galaxy. Not for him the waiting and wondering if he would make the grade. Irish cricket has been spreading the word about Morgan - that he was a phenomenal talent - from his teenage years.

In 2007, Middlesex played Ireland in Dublin. Ironically, two of Middlesex's best players were Irish - Morgan and Ed Joyce - so it was a homecoming of sorts for them. Though Joyce was the older, more senior figure, it was Morgan who bestrode the scene. He was a different man in Ireland; he was top dog and he knew it. In time, Middlesex and England fans also came to know and admire that cocksure character.

But if we dig a little deeper, the Morgan story is less conclusive that it first appears. When he was first selected for England in 2009, Morgan had already proved certain things in county cricket. We knew that few players (if any) have a greater natural ability to strike the ball with immense power derived from timing rather than brute strength. We knew that he had an instinctive feel for one-day and T20 cricket, a hunter's thrill of the chase and a showman's love for the stage. We knew that his outward demeanour was apparently confident and yet hard to read.

We also knew - if anyone cared to look at the numbers - that his first-class record was unremarkable (he averaged in the mid-30s) and that his temperament had rarely been tested in circumstances that didn't suit him.

Now, three years later, our knowledge of Morgan has not advanced all that much. Yes, we have learnt that he was not phased or overawed by international cricket. But few thought he would be.

In more substantive terms, Morgan has succeeded at things he was always good at, and struggled at disciplines that do not come easily to him. Morgan's instant successes in international T20 and ODI cricket reflected his dominant reputation in those two formats in county cricket. In the same way, his relative lack of success in Test cricket reflects his track record in all first-class cricket.

Sport gets harder in many respects, and the sportsmen who thrive in the long term are those who have the personality to take more of the weight on their own shoulders. Ultimately a great player must be his own problem-solver, therapist and coach

We are about to learn a lot more about Morgan. This is the first time in his cricketing life that he has been on the outside. Until now, he has been the beneficiary of a never-ending fast track - the path ahead constantly being cleared for him. At Middlesex the coaching staff fretted about anything that might "hold Morgan back", even when his first-class numbers did not demand selection. One coach used to begin selection meetings by asking, "How are we going to get Morgan into the team?" As though Morgan himself shouldn't have to worry about the troublesome details of getting runs and making his own case. England, too, picked him at the first available opportunity.

Well, the era of fast-tracking and "how are we going to get Morgan into the team?" just ended. For now, he is on his own, armed with just a bat and his dazzling skills. He will have to make his own way back. The door is far from closed. But nor is it permanently wide open.

Great players in every sport will tell you that it is much harder to stay at the very top than it is to get there in the first place. The same point can be phrased differently. As sportsmen get older, they have to become ever more self-reliant. The support systems drop away, one by one, leaving you standing alone. Adoring coaches who were once enamoured of sheer talent become frustrated by the failure to convert talent into performance; team-mates who once sensed a star in the making begin to expect games to be won, not merely adorned; fans are no longer thrilled by what you can do, but increasingly annoyed by what you cannot.

Sport gets harder in many respects, and the sportsmen who thrive in the long term are those who have the personality to take more of the weight on their own shoulders. Ultimately a great player must be his own problem-solver, therapist and coach. That revolves around character, not talent.

Many people - including me - believe Morgan is one of the most gifted cricketers in the world. In my new book I wanted to explore the careers of a couple of athletes - drawn from all sports - who had been blessed with truly remarkable talent. The two examples I used were Roger Federer and Morgan.

Morgan has already proved me right about his talent. Now comes the interesting part: what is he going to do with it?

Tuesday, 28 February 2012

Trust Business above all is David Cameron's motto.

Britain is being rebuilt in aid of corporate power

Trust business, Cameron tells us, self-regulation is a force for social good. Silly me – I thought it was an invitation to disaster
Illustration by Daniel Pudles
They used to do it subtly; they don't bother any more. Last week a column in the Telegraph argued that businesses should get the vote. Though they pay tax, Damian Reece maintained, they have "no say in the running of local or national government". To remedy this cruel circumscription, he suggested that elections in the UK should follow the example set by the City of London Corporation. This is the nation's last rotten borough, in which ballots in 21 of its 25 wards are controlled by companies, whose bosses appoint the voters. I expect to see Mr Reece pursue this noble cause by throwing himself under the Queen's horse.

Contrast this call for an extension of the franchise with a piece in the same paper last year, advocating an income qualification for voters. Only those who pay at least £100 a year in income tax, argued Ian Cowie, another senior editor at the Telegraph, should be allowed to vote. Blaming the credit crisis on the unemployed (who, as we know, lie in bed all day devising credit default swaps and collateralised debt obligations), Cowie averred that "it's time to restore the link between paying something into society and voting on decisions about how it is run". This qualification, he was good enough to inform us, could exclude "the majority of voters in some metropolitan areas today". The proposal was repeated by Benedict Brogan, the Telegraph's deputy editor.

No representation without taxation: wasn't that Alan B'stard's slogan in the satirical series The New Statesman? Votes for business, none for the poor: this would formalise the corporate assault on democracy that has been gathering pace for the past 30 years.

This column is a plea for distrust. Distrust is the resource on which democracy relies. Distrust inspires the scrutiny and accountability without which representation becomes a lie. Distrust is all that stands between us and bamboozlement by people who, like Reece, Cowie and Brogan, channel the instincts of the billionaire owners of newspapers and broadcasters.

Last week David Cameron argued that those who say business "isn't really to be trusted" do so as a result of "snobbery". Business, in fact, is "the most powerful force for social progress the world has ever known". Not democracy, education, science, justice or public health: business. You need only consider the exemplary social progress in Zaire under Mobutu, Chile under Pinochet, or the Philippines under Marcos – who opened their countries to the kind of corporate free-for-all that Cameron's backers dream of – to grasp the universal truth of this statement.

He gave some examples to support his contention that regulation can be replaced by trust. The public health responsibility deal, which transfers responsibility for reducing obesity and alcoholism to fast-food outlets, drinks firms and supermarkets, reaches, Cameron claimed, the parts "which the state just can't".

Under the deal, Subway and Costa are "putting calorie information up front when people are buying". The state couldn't possibly legislate for that, could it? Far better to leave it to the companies, who can decide for themselves whether they inform people that a larduccino coffee with suet sprinkles contains no more calories than the average Olympic sprinter burns in a month. He forgot to mention the much longer list of companies that have failed to display this information.

Another substitute for regulation, he suggested, is a programme called Every Business Commits. Through its website I found the government's list of "case studies of responsible business practice". Here I learned that British American Tobacco is promoting public health by educating and counselling its workers about HIV. The drinks giant Diageo is improving its waste water treatment process. Bombardier Aerospace is enhancing the environmental performance of its factories, in which it manufactures, er, private jets. RWE npower, which runs some of Britain's biggest coal and gas power stations, teaches children how to "to think about their responsibilities in reducing climate change".

All these are worthy causes, but they are either peripheral to the main social harms these companies cause or look to my distrustful eye like window dressing. Nor do I see how they differ from the "moral offsetting" that Cameron says happened in the past but doesn't today. But this tokenism, in the prime minister's view, should inspire us to trust companies to the extent that some of the regulations affecting their core business can be removed.

We are living through remarkable times. The government, supported by the corporate press, is engaged in a naked attempt to rebuild the life of this country around the demands of business. Extending the project begun by Tony Blair, Cameron is creating an economy in which much of the private sector depends on state contracts, and in which the government's core responsibility is to provide them. If this requires the destruction of effective public healthcare and reliable state education, it is of no concern to an economic class that uses neither.

The corporations gaining ever greater powers will be subject to less democratic oversight and restraint, in the form of regulation. Despite the obvious lesson of the credit crunch – that self-regulation is an invitation to disaster – Cameron wants to extend the principle to every corner of the economy. Trust them, he says: what can possibly go wrong?

Monday, 27 February 2012

WikiLeaks publishes STRATFOR intelligence emails

Whistleblowing website WikiLeaks has started to publish more than five million confidential emails from a global intelligence company.
The emails, dated from July 2004 and late December 2011, are said to reveal the "inner workings" of US-based company Stratfor.
The group said the emails show Stratfor's "web of informers, pay-off structure, payment-laundering techniques and psychological methods".
WikiLeaks claims the company "fronts as an intelligence publisher", but provides confidential intelligence services to large corporations such as Bhopal's Dow Chemical Co, Lockheed Martin, Northrop Grumman, Raytheon and government agencies, including the US Department of Homeland Security, the US Marines and the US Defense Intelligence Agency.
At a press conference in London today, WikiLeaks founder Julian Assange would not reveal where the emails had come from.
"We are a source protection organisation," he said.
"As a source protection organisation and simply as a media organisation we don't discuss or speculate on sourcing."
The documents are believed to have come from loose-knit hacker group Anonymous, which claimed to have stolen information from the firm in December.
WikiLeaks said the material contains privileged information about the US government's attacks against Julian Assange and WikiLeaks and Stratfor's own attempts to subvert WikiLeaks. The group said there are more than 4,000 emails mentioning WikiLeaks or Julian Assange.
But today Mr Assange said more information would emerge in the near future: "We have looked most closely at the actions against us, the bigger story is likely to come out of this probably in three or four days' time."
Mr Assange said: "Today WikiLeaks started releasing over 5 million emails from private intelligence firm Stratfor based in Texas, the United States.
"Together with 25 other media partners from around the world we have been investigating the activities of this company for some months.
"And what we have discovered is a company that is a private intelligence Enron.
"On the surface it presents as if it's a media organisation providing a private subscription intelligence newsletter.
"But underneath it is running paid informants networks, laundering those payments through the Bahamas, and through Switzerland, through private credit cards.
"It is monitoring Bhopal activists for Dow Chemicals, Peta activities for Coca-Cola.
"It is engaged in a seedy business."
Mr Assange said Stratfor was using the secret intelligence it had paid for to invest in a wide range of "geopolitical financial instruments".
"This makes News of the World look like kindergarten," he added.
Mr Assange said the exposure of the emails was part of a long history WikiLeaks has had in exposing the activities of secret organisations.
"The activities of intelligence organisations increasingly are privatised and once privatised they are taken out of the realm of the Freedom of Information Act, of US military law and so they are often used by governments who want to conceal particular activity.
"But Stratfor is simply out of control.
"Even as a private intelligence organisation it is being completely hopeless in protecting the identity of its informants, or even providing accurate information. It is engaged in internal deals with a financial investment firm that it is setting up.
"It really is some type of Enron where there is not even proper corporate control within the organisation."
WikiLeaks said it had worked with 25 media organisations to investigate and information would be released over the coming weeks.
The group said the emails expose a "revolving door" in private intelligence companies in the US, claiming Government and diplomatic sources give Stratfor advance knowledge of global politics and events in exchange for money.
"The Global Intelligence Files exposes how Stratfor has recruited a global network of informants who are paid via Swiss banks accounts and pre-paid credit cards," the group said.
"Stratfor has a mix of covert and overt informants, which includes government employees, embassy staff and journalists around the world.
"The material shows how a private intelligence agency works, and how they target individuals for their corporate and government clients."
WikiLeaks accused Stratfor of "routine use of secret cash bribes to get information from insiders", and claims an email from chief executive George Friedman in August 2011 suggested his concern over its legality.
In it, he wrote: "We are retaining a law firm to create a policy for Stratfor on the Foreign Corrupt Practices Act.
"I don't plan to do the perp walk and I don't want anyone here doing it either."
The group said: "Like WikiLeaks' diplomatic cables, much of the significance of the emails will be revealed over the coming weeks, as our coalition and the public search through them and discover connections."
It said Stratfor did secret deals with dozens of media organisations and journalists - from Reuters to the Kiev Post.
"While it is acceptable for journalists to swap information or be paid by other media organisations, because Stratfor is a private intelligence organisation that services governments and private clients these relationships are corrupt or corrupting."
The group said it has also obtained Stratfor's list of informants and, in many cases, records of its payoffs.

Sunday, 26 February 2012

Some History of Monetary Unions

Making friends the shared currency way

Greece is falling out with its neighbours over their common currency - just as it did about a century ago. But forging closer bonds through shared currencies rarely works for long, says historian David Cannadine.

The continuing travails of the Greek economy and the threat they represent to European Monetary Union may both seem novel and unprecedented, but in several significant ways, we've been there before.

Far from being a recent innovation, there have been monetary unions for almost as long as there has been money. But across two and a half millennia, and whatever varied forms they may have taken, few of them have endured, which helps explain why they've been so easily and so largely forgotten.
On earlier occasions, too, the part played by Greece has been pivotal - sometimes positive but sometimes negative. And history has recently been repeating itself in other ways, for the present single currency is not the first such European scheme from which Britain has held aloof.

It's no exaggeration to say that European history is littered with the ruins of earlier endeavours. The most immediate predecessor to the EMU was the 19th Century Latin Monetary Union, which attempted to unify several European currencies at a time when most circulating coins were still made of gold or silver.

It came into being in August 1866; its initial members were France, Belgium, Italy and Switzerland, and they agreed that their national currencies should be standardised and interchangeable. There was no shared, single legal tender, but the currencies of the member countries were pegged at a fixed rate with each other.

Two years later, the four founding nations were joined by Spain and Greece and in 1889 the union was further enlarged by admitting Romania, Bulgaria, Venezuela, Serbia and San Marino. Thus the enlarged Latin Monetary Union lasted until World War I, which abruptly brought to an end the global financial system based on the gold standard. The result was that the LMU effectively came to an end in 1914, although it lingered on as a legal entity until its formal dissolution in 1927.

Negotiations to bring such a union into being had started in 1865, and Britain had initially been part of them. But two proposals were made, which proved to be a major stumbling block: the first was that the UK must reduce the amount of gold in its sovereigns, albeit by only a tiny amount, to make one pound sterling the exact equivalent of 25 French francs.

The second was that Britain must give up shillings and pence and decimalise its coinage to bring it into line with the other European currencies. Neither of these proposals was deemed acceptable, and so then, as in 1999, Britain stayed out, and left the continentals to their own devices. It also showed no interest in another and even more grandiose scheme floated by the French in 1867, for what was termed a "universal currency", which would have been based on equivalent gold coins to be issued by France, Britain and the United States.

Here were signs and portents aplenty of recent British attitudes and behaviour.

As Walter Bagehot, the essayist and editor of The Economist, put it in the late 1860s, there seemed to be a real danger that, "Before long, all Europe, save England, will have one money, and England will be left outstanding with another money."

If this happened, Bagehot went on, "We shall, to use the vulgar expression, 'be left out in the cold'. If we could adopt this coinage ourselves without material inconvenience, I confess I, for one, should urge our doing so."

But Bagehot believed that the practical difficulties of such a step were "simply insurmountable". He feared more generally that "the attempt to found a universal money is not possible now", and the unhappy fate of the Latin Monetary Union would later bear him out. Yet with the establishment of the late 20th Century European Monetary Union, it did seem as if the state of affairs, which Bagehot one day envisaged - and feared - had come very close to realisation.

But in 2001, Greece joined the European Monetary Union, and the rest, as they say, is history - but a history that is not yet anything like being over.

Ever since it gained its hard-fought independence from the Ottoman Empire in 1832, Greece has been plagued by recurrent budget crises, frequent state defaults and long periods during which it's effectively been cut off from the international capital markets.

So while it was one of the earliest nations to join the Latin Monetary Union, its membership soon became more a cause of concern than celebration, for its chronically weak economy meant successive Greek governments responded by decreasing the amount of gold in their coins, thereby debasing their currency in relation to those of other nations in the union and in violation of the original agreement.
So irresponsible and unacceptable did Greece's behaviour become that it was formally expelled from the Latin Monetary Union in 1908. As a result, some effort was made to readjust the nation's
monetary policy and Greece was readmitted to the Union two years later. But by then, the whole enterprise was increasingly fragile, its future looked increasingly uncertain, and the outbreak of WWI was only four years off.

The Latin Monetary Union was not the only one of its kind in Europe during the 19th Century. A German monetary union was created in 1857, which replaced the many different currencies of the many different German states with a dual system based on the north German thaler and the south German gulden. It proved to be a rare success story among such ventures, surviving until German unification in 1870, when political union was effectively aligned with monetary union and five years later the two separate currencies were replaced by the reichsmark.

Less successful was the Scandinavian Monetary Union, established between Denmark and Sweden in 1873, which was joined by Norway two years later. The aim was to do for Scandinavia what the Latin Monetary Union was attempting more broadly for Europe as a whole but it, too, effectively ceased to function on the outbreak of WWI and it was formally brought to an end in 1924.

Such efforts to create common currencies during the 19th and 20th Centuries are only the most recent examples of a process that's been going on for almost as long as coinage itself has existed. It's an intriguing historical irony that among the pioneers of these endeavours seem to have been none other than the ancient Greeks.

One of the earliest examples of such a union occurred sometime about 400BC, along the western coast of Asia Minor, where seven Greek states allied themselves and produced a coinage that directly foreshadowed later European monetary unions. On the front of the coins was a common design of the baby Heracles strangling a snake, and the first three letters of the Greek word for alliance. On the reverse, each state placed its own particular image. All these coins were minted to the same weight and formed a unified currency, which was the tangible symbol of the seven members' economic alliance.

No-one quite knows why or when this early effort at a monetary union collapsed but 200 years later, the ancient Greeks had another try, organised through what was known as the Achaean League, an alliance of territories and city states covering the whole of the Peloponnese that had been formed about 280BC.

Once again, their shared currency had a common obverse design, in this case the head of Zeus, and reverse patterns that were specific to the individual issuing authority.

The result, according to the historian Polybius, was that the Greeks "had not only formed an allied and friendly community but they have the same laws, weights, measures and coinage, as well as the same officials, council and courts of justice". Here was a level of integration, which the most ardent and ambitious Eurocrat of today might envy and this may help explain why, unlike the Latin or the Scandinavian monetary unions, the Achaean League lasted for well over 100 years.

Its eventual dissolution, in 146BC, was not because the members of the league fell out with each other, over the currency or anything else but was the result of an external shock in the form of a crushing military defeat by the Romans at the Battle of Corinth. Which leaves us with the following paradox: the ancient Greeks were pioneers of monetary unions and were quite eager to keep them in being.

Modern Greece, by contrast, has been a threat and a danger to any monetary union that it has ever joined.

Thursday, 23 February 2012

Tarek Fatah on the Arab Identity of Pakistan

Popular Lies in Pakistan History

Einstein RIP - Your hunch about the speed of light is still true

Faster-than-light neutrinos could be down to bad wiring

What might have been the biggest physics story of the past century may instead be down to a faulty connection.

In September 2011, the Opera experiment reported it had seen particles called neutrinos evidently travelling faster than the speed of light.

The team has now found two problems that may have affected their test in opposing ways: one in its timing gear and one in an optical fibre connection.

More tests from May will determine just how they affect measured speeds.

The Opera collaboration (an acronym for Oscillation Project with Emulsion-Racking Apparatus) was initially started to study the tiny particles as they travelled through 730km of rock between a particle accelerator at the European Organisation for Nuclear Research (Cern) in Switzerland and the Gran Sasso underground laboratory in Italy.

Its goal was to quantify how often the neutrinos change from one type to another on the journey.
But during the course of the experiments the team found that the neutrinos showed up 60 billionths of a second faster than light would have done over the same distance - a result that runs counter to a century's worth of theoretical and experimental physics.

The team submitted the surprising result to the scientific community in an effort to confirm or refute it, and several other experiments around the world are currently working to replicate the result.
A repeat of the experiment by the Opera team will now address whether the issues they have found affect the ultimate neutrino speed they measure.

The two problems the team has identified would have opposing effects on the apparent speed.
On the one hand, the team said there is a problem in the "oscillator" that provides a ticking clock to the experiment in the intervals between the synchronisations of GPS equipment.

This is used to provide start and stop times for the measurement as well as precise distance information.

That problem would increase the measured time of the neutrinos' flight, in turn reducing the surprising faster-than-light effect.

But the team also said they found a problem in the optical fibre connection between the GPS signal and the experiment's main clock.

In contrast, the team said that effect would increase the neutrinos' apparent speed.

Only repeats of the experiments by Opera and other teams will put the matter to rest.

"These latest developments show how hard the OPERA team is working to understand the results," said Dave Wark, a particle physicist from the Rutherford Appleton Laboratory in the UK and committee member of Japan's principal neutrino facility T2K.

"Just as it would have been unwise to jump to the conclusion that the initial results were the result of an anomaly, it would be unwise to make any assumptions now. It is the nature of science that theories have to be tested, re-tested and then tested again".

In a statement, the Opera collaboration said: "While continuing our investigations, in order to unambiguously quantify the effect on the observed result, the collaboration is looking forward to performing a new measurement of the neutrino velocity as soon as a new bunched beam will be available in 2012."

Meanwhile, the Borexino and Icarus experiments, also at Gran Sasso, the Minos experiment based at the US Fermilab, and Japan's T2K facility are all working on their own neutrino speed measurements, with results expected in the next few months.

It's time to start talking to the City

A radical reform of the financial sector can only be achieved if we know what kind of capitalism we want

Last week I delivered a lecture on my latest book to about 150 people from the financial industry at the London Stock Exchange. The event was not organised or endorsed by the LSE itself, but the venue was quite poignant for me, given that a few months ago I did the same thing on the other side of the barricade, so to speak, at the Occupy London Stock Exchange movement.

At the exchange I made two proposals I knew may not be popular with the audience. My first was that we need to completely change the way we run our corporations, especially in the UK and the US. I started from the observation that financial deregulation since the 1980s has greatly increased the power of shareholders by expanding the options open to them, both geographically and in terms of product choice. Such deregulation was particularly advanced in Britain and America, making them the homes of "shareholder capitalism".

With greater abilities to move around, shareholders have begun to adopt increasingly short time horizons. As Prem Sikka wrote in the Guardian in December 2011, the average shareholding period in UK firms fell from about five years in the mid-1960s to 7.5 months in 2007. The figure for UK banks had fallen to three months by 2008 (although it is up to about two years now).
In order to satisfy impatient shareholders, managers have maximised short-term profits by squeezing other "stakeholders", such as workers and suppliers, and by minimising investments, whose costs are immediate but whose returns are remote. Such strategy does long-term damages by demoralising workers, lowering supplier qualities, and making equipment outmoded. But the managers do not care because their pay is linked to short-term equity prices, whose maximisation is what short term-oriented shareholders want.

That is not all. An increasing proportion of profits are distributed to shareholders through dividends and share buybacks (firms buying their own shares to prop up their prices). According to William Lazonick – a leading authority on this issue – between 2001 and 2010, top UK firms (86 companies that are included in the S&P Europe 350 index) distributed 88% of their profits to shareholders in dividends (62%) and share buybacks (26%).

During the same period, top US companies (459 of those in the S&P 500) paid out an even greater proportion to shareholders: 94% (40% in dividends and 54% in buybacks). The figure used to be just over 50% in the early 80s (about 50% in dividends and less than 5% in buybacks).

The resulting depletion in retained profit, traditionally the biggest source of corporate investments, has dramatically undermined these corporations' abilities to invest, further weakening their long-term competitiveness. Therefore, I concluded, unless we significantly restrict the freedom of movement for shareholders, through financial reregulation, and reward managers according to more long term-oriented performance measures than share prices, companies will continue to be managed in a way that undermines their own viability and weakens the national economy in the long run.

My second proposal was that, in order to improve the stability of our financial system, we need to radically simplify it. I argued that financial deregulation in the last 30 years led to the proliferation of complex financial derivatives. This has created a financial system whose complexity has far outstripped our ability to control it, as dramatically demonstrated by the 2008 financial crisis.
Drawing on the works of Herbert Simon, the 1978 Nobel economics laureate and a founding father of the study of artificial intelligence, I pointed out that often the crucial constraint on good decision-making is not the lack of information but our limited mental capability, or what Simon called "bounded rationality". Given our bounded rationality, I asserted, the only way to increase the stability of our financial system is to make it simpler. And the most important action to take is to restrict, or even ban, complex and risky financial instruments through the financial world equivalent of the drugs approval procedure.

The reactions of my audience were rather surprising. Not only did nobody challenge my proposals, but many agreed with me. Yes, they said, "quarterly capitalism" has been destructive. True, they related, we've seen too many derivative products that few people understood. And, yes, many of those products have been socially harmful.

It seems that, as it is wrong to label the Occupy movement as anti-capitalist, it is misleading to characterise the financial industry as being in denial about the need for reform. I am not naive enough to think that the people who came to my lecture are typical of the financial industry. However, a surprisingly large number of them acknowledged the problems of short-termism and excessive complexity that their industry has generated to the detriment of the rest of the economy – and ultimately to its own detriment, as the financial industry cannot thrive alone.

The rest of us need to have a closer dialogue with reform-minded people in the financial industry. They are the ones who can generate greater political acceptance of reforms among their colleagues and who can also help us devise technically competent reform proposals. After all, without a degree of "changes from within", no reform can be truly durable.

Monday, 20 February 2012

Immigration Song

Immigration Song

by Giffenman

Its immigration say the Tories
The cause of all our worries
So lets shut the door
Keep the peril from our shore
And the BNP can make our curries

The fault may lie with the bankers
Managers, footballers and rich wankers
Yet its the always the brownman
yellowman and other bogeyman
Who will be showered with hard conkers

So lets shut the door
Keep the peril from our shore
And the BNP can make our curries

Why does the UK government struggle to reach its net migration target?

Figures show net migration is at a record high. To understand why, we must break it down into its main components
Home Office break-up plans finalised
Statistics out this week show that 250,000 more people came to the UK than left in the 12 months to June 2011. Photograph: Clara Molden/PA
"Net migration" – total immigration, including both foreign and returning British nationals, who are intending to come for a year or more, minus total emigration – is the metric which ministers have chosen for their overall target.
They have pledged to cut it "from hundreds of thousands to tens of thousands" by 2015. But the latest statistics out this week show net migration remaining at a record high: in the 12 months to last June, 250,000 more people came to the UK than left. In other words, in its first 15 months, the government made no progress towards its target.
Why is cutting net migration so difficult? To answer this question, we need to break it down into its main components.


This may seem like a surprising place to start, but – contrary to the narrative of anti-immigration campaigners, and Conservative ministers – it is emigration not immigration that has driven recent changes in net migration, with immigration remaining stable since 2004. One of the government's problems is that emigration remains low by recent standards.
This week's figures show a small rise in emigration of UK nationals, up 12% to 143,000, but this is offset by a fall in emigration of foreign nationals. Fewer people seem to want to leave the UK for work-related reasons during a time of global economic downturn, and retirement and "lifestyle" emigration by British nationals – highly dependent on UK house prices and pensions – remains lower than before the financial crisis.
The government plans to make it harder for working migrants to stay longer than five years, and for overseas students to stay on and work after graduation: these changes should mean that in future years, more foreign nationals will start returning home, but are unlikely to make enough of a difference to help the government hit its target.

Work migration and the immigration 'cap'

Despite the rhetoric, the only kind of immigration which is actually "capped" is one sub-category of working migrants, those from outside the EU, and excluding those on "intra-company transfers", and certain other exceptions. This covers 20,000 out of total immigration of just under 600,000 – around 3%.


Overseas students are the largest category of migrants coming for a year or more, around 240,000. The government intends to reduce this number, and believes its policies are already starting to have an effect: the number of student visas fell by 4% in 2011. But it will be challenging to reduce the numbers enough to help meet the overall target.
The Department for Business, Innovation and Skills has lobbied internally against more severe restrictions on student visas, concerned about the impact on higher education finances (given the cuts in central government funding) and about the UK's position in this lucrative global market, one of the few areas of potential growth and export revenue over the coming years.


Immigration on the "family route" has been falling over recent years, but ministers need it to fall faster if they are to hit their target. They are planning to introduce a minimum income requirement, which could disqualify around half of the roughly 50,000 who currently come to the UK on this route. But if this goes ahead, it is highly likely that this policy will be challenged in the courts.

European Union migration

The slight fall in the number of work visas granted to foreign nationals from outside the EU (down 7%) appears to be more than offset by an increase in the number of eastern Europeans coming to the UK to work, with eastern Europe continuing to contribute around 50,000 to the overall net migration figure.
The government cannot control migration to and from the EU, and trends here are hard to predict, but if the performance and prospects of the UK economy decline relative to those EU countries which are crucial to migration, such as Poland, this could reduce net migration, as fewer Poles arrive and more return home; however, there could still be more immigration from other struggling economies like Greece.
Overall, the government finds itself in the perverse position that its best chance of hitting its net migration target is if the UK experiences a prolonged economic downturn. If instead, as we all hope, we start returning to growth late this year or early next, ministers will face a more difficult set of choices. The risk is that the net migration target will force them to attempt more drastic reductions in work and especially student migration, simply because those are the easiest categories to control, and despite the fact that they are also the most economically beneficial categories, and the kind of immigration which surveys suggest the public are least bothered about.

India's elite is blinded by a cultish belief in progress

Rather than emulate US swagger, my home country should learn a lesson from America's current jobs crisis
Prosperity for some: a man cycles past offices near New Delhi. Photograph: Manpreet Romana/AFP/Getty Images
From 2007 to 2009, during the process of gathering material for a non-fiction book on India, I often found myself exposed to the aspirations of its upper and middle classes. These people were part of the 150 or 200 million who had done very well materially from the economic changes of the past two decades, and as a group they believed firmly in India as a superpower on a path of infinite growth.

The people I met ranged from extremely wealthy businessmen, part of a super-elite, to the salaried middle classes. When I encountered them as individuals, usually in extended sessions, they often showed themselves capable of nuance and even outright contradiction, from the government official who expressed understanding for ultra-left guerrillas fighting the government and mining corporations in central India to the waitress at an upscale Delhi restaurant who wished, despite her apparent upward mobility, to have her mother's less affluent but stable life as a provincial schoolteacher.

But what was apparent in my long conversations with individuals was hardly ever true in the aggregate. In the public discourse produced by the upper and middle classes in India – in newspapers and talk shows, in tweets and television soaps, in the comments that flood websites should anyone dare make a dissenting note – such contradictions vanish, replaced by an uncomplicated, almost cultish faith in India as a success story. In this version of contemporary India, the material wealth of the upper and middle classes can only keep on increasing. The comfortable will get rich, the rich get richer. As for the poor living on 50 cents a day (perhaps as much as 77% of the entire population, according to one government report), they might see their lot improve. If not, they have only their lack of ability, effort and merit to blame.

In fact, when a series of scandals exploded in 2010, the elite response involved fixating on the corruption of government and politicians. It is true that both government officials and politicians were involved in the scandals, which included the shoddy construction of buildings for the Commonwealth Games and the irregularities involved in auctioning off the mobile phone spectrum that may have cost the public exchequer $39bn. But although corporations and the media were quite complicit in such corruption, as evident from the last of the 2010 scandals, which involved the income tax department's wiretaps on a British-Indian corporate lobbyist called Niira Radia, their role vanished in the anti-corruption movement led by Anna Hazare last year.

Along with the corporations and the media, India's middle and upper classes were particularly eager supporters of Hazare, a former soldier and social reformer whose primary demand was for the creation of a Jan Lokpal, a tribunal that would have policing powers over the government and legislature. When rallying behind Hazare, elite Indians did not raise questions about inequality, in the way their country lags behind other poor countries in many social indicators, including the child mortality rate, underweight children and female youth literacy, or how large sections of the population from Kashmiris in the north to tribal people in the central Indian state of Chhattisgarh feel the state as nothing but an oppressive presence.

Those supporting the Hazare movement seemed unconcerned with such things, instead focusing on government corruption as all that stood between their present wellbeing and future prosperity. If only the corrupt state would step aside in certain areas – obviously not Kashmir, Chhattisgarh or the north-east – the Indian elites could prosper even further.

The Hazare movement has since petered out, but its central idea, of the unique meritoriousness of the middle and upper classes of India, remains. It is an illusion, and it reminds me of the illusion among the middle and upper classes of another society, and that is the US. I live and teach in New York, where I've seen among my students (mostly white, just as elites in India tend to be mostly upper caste) and in the Occupy Wall Street movement an elite that has suddenly been forced to examine its notions of unique meritoriousness and endless prosperity.

The lack of jobs in the US, something that earlier affected only those in manufacturing and the service industry, and therefore had an impact mostly on inner city African Americans, poor immigrants and rural whites, has now worked its way into the lives of the middle and upper classes, towards even people with expensive college degrees.

In the conversations I've had with members of this American middle class, I've been privy to another reality behind their seemingly affluent facades. I teach writing, and so I've read, with surprise, about a student whose past consisted of private school education, a large suburban house, well-paid professional parents, and global travel, but whose parents are now unemployed, their large house caught up in endless mortgage payments, and where, along with attending classes, it is equally important for this student to scrounge for a subway card and food. It's not just the young who are afflicted, either. On New Year's Eve, an old friend of mine showed me around the house he'd fixed up painstakingly over the years. He now plans to sell it off because, in spite of having a steady job, he can no longer keep up with the mortgage payments.

It's painful to see people struggling with such hopelessness. Yet I can't help but note that it's allowed a significant portion of Americans to shed their shell of complacency, their belief that they must continue to prosper because they are deserving and that the world of the marketplace will always deal them a fair hand. In India, the elites shout themselves hoarse about emulating America – in its wealth, its swaggering confidence, its Hummers and parking lots – even as that America ceases to exist. Even in the land of manifest destiny, destiny has run into its limits, and it seems only a matter of time before the same turns out to be true for India's privileged classes.

Friday, 17 February 2012

My Weltanschhaung - 17/02/2012

I am glad to read that the Vatican has at last been forced to cough up some taxes from the income it generates. Though I was shocked that they were exempt from taxes this far.

I am surprised that David Cameron will offer Scots more devolved power if they vote No in the forthcoming referendum. I thought why not devolve more powers before the referendum and therefore give yourself a better chance to win the referendum?

It has taken the energy watchdog so long to realise that energy companies are profiteering. But what have they done - issued a warning, 'Cut prices or else...'.

It now appears that tax avoiding pay deals maybe rife in Whitehall. It appears that 4000 bureaucrats' pay deals will be reviewed.

Thursday, 16 February 2012

EU closer to India trade deal

By Bari Bates in Asia Times Online

BRUSSELS - Behind closed doors, a trade deal affecting a fifth of the world's population has been quietly in the works for years. But while details of the free trade agreement (FTA) between the European Union and India remain ambiguous to the general public, concerns continue to mount over the effects such a deal could have on an unsuspecting third party: the affordable drug market of the developing world.

Negotiations have been underway for five years, with details on issues such as India's generic drug market sending delegates from both the EU and India through multiple rounds of deliberations in the hopes of settling on an FTA that would be "mutually beneficial and sustainable", especially given Europe's current economic climate.

Finally, the five-year ordeal seems to be moving toward a conclusion, according to the European External Action service. The latest EU-India summit took place on February 10 and was hailed by Jose Manuel Durao Barroso, president of the European Commission, as a "significant step forward".

The European Union is already India's primary trade partner and largest source of foreign direct investment (FDI), according to Barroso.

EU-India trade doubled to more than 67.9 billion euros (US$89.5 billion) in 2010 from 28.6 billion euros in 2003, while EU investment has tripled to three billion euros since 2003.

Barroso says the final agreement will be reached this autumn and, if passed, would signal the implementation of the world's largest trade agreement in the world, opening the doors for research and innovation, job creation, and countless business opportunities.

But some experts and activists are fiercely opposed to the deal, which they say will stunt the availability of affordable medicine in the developing world.

'Hands off our medicine'
These concerns aren't new; the issue has been on the radars of several organizations for years, with growing concerns over how the trade agreement is being reached and what it means for organizations who work to supply low-cost medicines to those in need.

As the FTA has evolved, certain measures such as data exclusivity have been taken off the table, though other potentially harmful provisions remain.

Initial opposition to the trade deal centered on issues of intellectual property rights and market access for large European businesses, with the not-for-profit group Corporate Europe Observatory (CEO) at the helm with a petition to halt the trade agreement altogether. The petition had the signatures of over 100 organizations as of December 2010, just prior to the 11th EU-India summit.

One of CEO's biggest concerns is that new trade rules could stall the distribution of generic drugs, thus keeping patented medicine prices high and increasing the overall cost of healthcare for households. According to Oxfam International, generic competition lowers medicine prices by 90-99%.

Most significantly, generic competition in India has lowered prices for first line antiretroviral drugs to US$100 per year for a single patient, down from $10,000 just 10 years ago for the same treatment.

Doctors Without Borders (known in French as Medecins Sans Frontieres, or MSF), an independent international medical humanitarian organization that delivers emergency aid, has also been steering opposition to the FTA's impact on generic drugs.

The organizations's campaign called for Europe to keep its "hands off our medicine" and issued a statement outlining risks associated with the widening net of enforcement provisions, which have serious implications for the availability of medicines.

If certain enforcement provisions related to intellectual property are included in the FTA, they could give large pharmaceutical companies the right to sue not only generic drug manufacturers but also generic drug suppliers and customers, MSF said.

Such measures could deter treatment providers from buying or supplying generic drugs, leaving the far more expensive brand drugs as the only option for people in desperate need.

The organization rallied in New Delhi on February 10 along with HIV-positive community members to call attention to the remaining provisions in the FTA that put the generic drug market in serious jeopardy.

Nearly 2,000 people strong, the protests included remarks from MSF president Unni Karunakara, who said, "We have watched too many people die in places where we work because the medicines they need are too expensive. We cannot allow this trade deal to shut down the pharmacy of the developing world."

Given that Europe posits itself as a world leader in development aid, the potential hypocrisy of the situation isn't lost: if these provisions are, in fact, included in the FTA, the EU stands to undermine its own large-scale aid efforts by limiting access to life-saving medications.

Besides the petition, CEO also launched legal action against the European Commission early last year, claiming that corporate lobby groups were given privileged access to information on the EU-India trade talks.

The organization alleged that 17 documents were released to industrial players but withheld from CEO because it would "undermine the EU's international relations".

CEO requested the documents in order to monitor the trade deal, which the organization believes leans much heavily towards the interests of large corporations at the expense of trade unions, non-governmental organizations and small enterprises.

CEO's Pia Eberhardt said that she expects a hearing within the first half of this year, though no formal date has been set. From that point, it will take roughly six additional months to reach a conclusion. But while the case circles the justice system, the FTA could slip through the cracks.

The callous cruelty of the EU is destroying Greece

Peter Oborne in The Telegraph

For all of my adult life, support for the European Union has been seen as the mark of a civilised, reasonable and above all compassionate politician. It has guaranteed him or her access to leader columns, TV studios, lavish expense accounts and overseas trips.
The reason for this special treatment is that the British establishment has tended to view the EU as perhaps a little incompetent and corrupt, but certainly benign and generally a force for good in a troubled world. This attitude is becoming harder and harder to sustain, as this partnership of nations is suddenly starting to look very nasty indeed: a brutal oppressor that is scornful of democracy, national identity and the livelihoods of ordinary people.

The turning point may have come this week with the latest intervention by Brussels: bureaucrats are threatening to bankrupt an entire country unless opposition parties promise to support the EU-backed austerity plan.

Let’s put the Greek problem in its proper perspective. Britain’s Great Depression in the Thirties has become part of our national myth. It was the era of soup kitchens, mass unemployment and the Jarrow March, immortalised in George Orwell’s wonderful novels and still remembered in Labour Party rhetoric.

Yet the fall in national output during the Depression – from peak to trough – was never more than 10 per cent. In Greece, gross domestic product is already down about 13 per cent since 2008, and according to experts is likely to fall a further 7 per cent by the end of this year. In other words, by this Christmas, Greece’s depression will have been twice as deep as the infamous economic catastrophe that struck Britain 80 years ago.

Yet all the evidence suggests that the European elite could not give a damn. Earlier this week Olli Rehn, the EU’s top economist, warned of “devastating consequences” if Greece defaults. The context of his comments suggests, however, that he was thinking just as much of the devastating consequences that would flow for the rest of Europe, rather than for the Greeks themselves.

Another official was quoted in the Financial Times as saying that Germany, Finland and the Netherlands are “losing patience” with Greece, with apparently not even a passing thought for the real victims of this increasingly horrific saga. Though the euro-elite seems not to care, life in Greece, the home of European civilisation, has become unbearable.

Perhaps 100,000 businesses have folded, and many more are collapsing. Suicides are sharply up, homicides have reportedly doubled, with tens of thousands being made homeless. Life in the rural areas, which are returning to barter, is bearable. In the towns it is harsh and for minorities – above all the Albanians, who have no rights and have long taken the jobs Greeks did not want – it is terrifying.

This is only the start, however. Matters will get much worse over the coming months, and this social and moral disaster has already started to spread to other southern European countries such as Italy, Portugal and Spain. It is not just families that are suffering – Greek institutions are being torn to shreds. Unlike Britain amid the economic devastation of the Thirties, Greece cannot look back towards centuries of more or less stable parliamentary democracy. It is scarcely a generation since the country emerged from a military dictatorship and, with parts of the country now lawless, sinister forces are once again on the rise. Only last autumn, extremist parties accounted for about 30 per cent of the popular vote. Now the hard Left and hard Right stand at about 50 per cent and surging. It must be said that this disenchantment with democracy has been fanned by the EU’s own meddling, and in particular its imposition of Lucas Papademos as a puppet prime minister.

Late last year I was sharply criticised, and indeed removed from a Newsnight studio by a very chilly producer, after I called Amadeu Altafaj-Tardio, a European Union spokesman, “that idiot from Brussels”. Well-intentioned intermediaries have since gone out of their way to assure me that Mr Altafaj-Tardio is an intelligent and also a charming man. I have no powerful reason to doubt this, and it should furthermore be borne in mind that he is simply the mouthpiece and paid hireling for Mr Rehn, the Economic and Monetary Affairs Commissioner I mentioned earlier.

But looking back at that Newsnight appearance, it is clear that my remarks were far too generous, and I would like to explain myself more fully, and with greater force. Idiocy is, of course, an important part of the problem in Brussels, explaining many of the errors of judgment and basic competence over the past few years. But what is more striking by far is the sheer callousness and inhumanity of EU commissioners such as Mr Rehn, as they preside over a Brussels regime that is in the course of destroying what used to be a proud, famous and reasonably well-functioning country.

In these terrible circumstances, how can the British liberal Left, which claims to place such value on compassion and decency, continue to support the EU? I am old enough to recall their rhetoric when Margaret Thatcher was driving through her monetarist policies as a response to the recession of the early Eighties. Many of the attacks were incredibly personal and vicious. The British prime minister (who, of course, was later to warn so presciently against monetary union) was accused of lacking any kind of compassion or humanity. Yet the loss of economic output during the 1979-82 recession was scarcely 6 per cent, less than a third of the scale of the depression now being suffered by the unfortunate Greeks. Unemployment peaked at 10.8 per cent, just over half of where Greece is now.

The reality is that Margaret Thatcher was an infinitely more compassionate and pragmatic figure than Amadeu Altafaj-Tardio’s boss Olli Rehn and his appalling associates. She would never have destroyed an entire nation on the back of an economic dogma.

One of the basic truths of politics is that the Left is far more oblivious to human suffering than the Right. The Left always speaks the language of compassion, but rarely means it. It favours ends over means. The crushing of Greece, and the bankruptcy of her citizens, is of little consequence if it serves the greater good of monetary union.

Nevertheless, for more than a generation, politicians such as Tony Blair, Peter Mandelson, Nick Clegg and David Miliband have used their sympathy for the aims and aspirations of the European Union as a badge of decency. Now it ties them to a bankruptcy machine that is wiping out jobs, wealth and – potentially – democracy itself.

The presence of the Lib Dems, fervent euro supporters, as part of the Coalition, has become a problem. It can no longer be morally right for Britain to support the European single currency, a catastrophic experiment that is inflicting human devastation on such a scale. Britain has historically stood up for the underdog, but shamefully, George Osborne has steadily lent his support to the eurozone.

Thus far only one British political leader, Ukip’s Nigel Farrage, has had the clarity of purpose to state the obvious – that Greece must be allowed to default and devalue. Leaving all other considerations to one side, humanity alone should press David Cameron into splitting with Brussels and belatedly coming to the rescue of Greece.