'Our Economic Delusions on Predictions, Money': Mervyn King former head of the Bank of England

 

'Is Modi a King of Good Times Only?'

 

Ye khel kya hai…. by Javed Akhtar

Mere mukhaalif ne chaal chal di hai
Aur ab
Meri chaal ke intezaar mein hai
Magar main kab se
Safed khaanon
Siyaah khaanon mein rakkhe
Kaale safed mohron ko dekhta hoon
Main sochta hoon
Ye mohre kya hain

Agar main samjhoon
Ki ye jo mohre hain
Sirf lakdi ke hain khilone
To jeetna kya hai haarna kya
Na ye zaroori
Na vo aham hai
Agar khushi hai na jeetne ki
Na haarne ka bhi koi gham hai
To khel kya hai
Main sochta hoon
Jo khelna hai
To apne dil mein yaqeen kar lon
Ye mohre sach-much ke baadshah-o-vazeer
Sach-much ke hain piyaade
Aur in kea age hai
Dushmanon ki vo fauj
Rakhti hai jo mujh ko tabaah karne ke
Saare mansoobe
Sab iraade
Magar main aisa jo maan bhi loon
To sochta hoon
Yeh khel kab hai
Ye jang hai jis ko jeetna hai
Ye jang hai jis mein sab hai jaayaz
Koi ye kehta hai jaise mujh se
Ye jang bhi hai
Ye khel bhi hai
Ye jang hai par khiladiyon ki
Ye khel hai jang ki tarah ka
Main sochta hoon
Jo khel hai
Is mein ir tarah ka usool kyon hai
Ki koi mohra rah eke jaaye
Magar jo hai baadshah
Us par kabhi koi aanch bhi na aaye
Vazeer hi ko hai bas ijaazat
Ke jis taraf bhi vo chaahe jaaye

Main sochta hoon
Jo khel hai
Is mein is tarah ka usool kyon hai
Piyaada jab apne ghar se nikle
Palat ke vaapas na aane paaye
Main sochta hoon
Agar yahoo hai usool
To phir usool kya hai
Agar yahi hai ye khel
To phir ye khel kya hai
Main in savaalon se aane kab se ulajh raha hoon
Mere mukhalif ne chaal chal di hai
Aur ab meri chaal ke intezaar mein hai

The English translation is below:
What Game is It?

My opponent has made a move
And now
Awaits mine.
But for ages
I stare at the black and white pieces
That lie on white and black squares
And I think
What are these pieces?

Were I to assume
That these pieces
Are no more than wooden toys
Then what is a victory or a loss?
If in winnings there are no joys
Nor sorrows in losing
What is the game?
I think
If I must play
Then I must believe
That these pieces are indeed king and minister
Indeed these are foot soldiers
And arrayed before them
Is that enemy army
Which harbours all plans evil
All schemes sinister
To destroy me
But were I to believe this
Then is this a game any longer?
This is a war that must be won
A war in which all is fair
It is as if somebody explains:
This is a war
And a game as well
It is a war, but between players
A game between warriors
I think
If it is a game
Then why does it have a rule
That whether a foot solder stays or goes
The one who is king
Must always be protected?
That only the minster has the freedom
To move any which way?

I think
Why does this game
Have a rule
That once a foot solder leaves home
He can never return?
I think
If this is the rule
Then what is a rule?
If this is the game
Then what is the name of the game?
I have been wrestling for ages with these questions
But my opponent has made a move
And awaits mine.

The age of deference to doctors and elites is over. Good riddance

Mary Dejevsky in The Independent

There was something about the story of five-year-old Ashya King that went beyond the plight of this one small, sick child, wrapped up in his blanket and connected to a drip. It was not just the public relations savvy of his family: the elaborate preparations for their flight, recorded and posted on the internet that drew such all-consuming public interest. Nor was it only the drama of the police chase across Europe, and the nights spent in a Spanish prison. It was much more.

There was a profound clash of principles here at a junction of extremes: a child with a terminal brain tumour, a fixed medical consensus, and parents who hoped, believed, there could be another way.

You probably remember – I certainly do – how forcefully Ashya’s father, Brett, argued his case. He had, he said, set about learning all he could about treatment possibilities for his son’s condition on the internet and in medical journals and concluded that a particular form of therapy was superior to the one being offered by the NHS.

Now, 18 months on, Ashya King’s story has a sequel beyond the so-far happy ending of his recovery announced last March. The sequel is that the treatment his family fought for so hard has indeed been found to be superior to that generally offered by the NHS, and in precisely the ways that the Kings had argued. A study published in The Lancet Oncology – an offshoot of The Lancet – concluded that the proton beam therapy, such as Ashya eventually obtained in Prague, was as effective as conventional radiotherapy, but less likely to cause damage to hearing, brain function and vital organs, especially in children. 

In one way, that should perhaps come as no surprise, given King’s claim to have scoured the literature. There is also room for caution. This was a relatively small study conducted in the US. There was no control group – with children, this is deemed (rightly) to be unethical – and harmful side-effects were reduced, not eliminated. But such is the nature of medical research, and the treatment decisions based on it. Things are rarely cut and dried; it is more a balance of probability.

This may be one reason why the Lancet findings had less resonance than might have been expected, given the original hue and cry about Ashya’s case. But my cynical bet is that if the study had shown there was essentially no difference between the two treatments, or that proton beams were a quack therapy potentially hyped for commercial advantage, sections of the NHS establishment would have been out there day and night, warning parents who might be tempted to follow the Kings’ path how wrong-headed they were, and stressing how the doctors had been vindicated.

Instead, there were low-key interviews with select specialists, who noted that three NHS centres providing the therapy would be open by April 2018. Until then, those (few) children assessed as suitable for proton beam treatment would continue to go to the United States at public expense. (Why the US, rather than Prague or elsewhere in Europe, is not explained.)

It may just be my imagination, but I sensed an attempt to avoid reigniting the passions that had flared over Ashya’s treatment at the time, and especially not to raise other parents’ expectations. But I don’t think the controversy should be allowed to rest so easily. The King family’s experience raised serious questions about the practice of medicine in the UK and the attitudes of the professionals to their patients. And these latest research findings on proton therapy mean that it still does.

When Brett King presented his arguments, he did so not just with understandable emotion, but with enviable lucidity. He patently understood what he was talking about. This treatment was there; he wanted to give it a go, and he was prepared to raise the funds to pay for it. To the medics, he may well have come across as difficult, and there were those who genuinely felt that he was acting against the best interests of his son. In that case, the arguments should have gone to court – as they had done with eight-year-old Neon Roberts and his contested cancer treatment half a year before. That the Kings are Jehovah’s Witnesses may also have cued particular caution.

However, what many, especially in the medical establishment, seem reluctant to recognise is that change is afoot in relations between the professional elite and the rest – and not only because the so-called “age of deference” is dead.

Increasingly, it seems, we lay people are invited to make choices, only to be censured, or worse, for making the “wrong” one. Lawyers, for instance, will repeatedly tell you that they offer only advice; it is up to us to act on it, or not. So it is, increasingly, in the NHS. 

In theory, you can choose your GP, your hospital, your consultant – and, within reason, your treatment. In practice, it is more complicated. You may live too far away, the professionals may try to protect their patch, and the actual consultant is not there.

In the crucial matter of information, however, things have been evening up. The internet-nerd who turns up at the GP surgery convinced he is mortally ill may be a time-consuming nuisance, but such self-interested diligence can also help to point a time-strapped GP in the right direction. Not all are hypochondriacs. Patients may have more time and motive to research new treatments than their doctor. We old-fashioned scribes may have misgivings about the rise of citizen-journalism. But not all challenges to professional expertise are ignorant – or wrong.

In the case of Ashya King, everyone behaved questionably, even as they genuinely believed they were acting in the child’s very best interests.

But the days when the professionals – for all their years of training – had the field to themselves are gone. In medicine, we lay people are getting used to that. Are they?

Who to blame for the Great Recession?

In 2000 it was the $164bn (£103bn) AOL takeover of Time Warner in America. In 2007 it was the-then Sir Fred Goodwin's £49bn acquisition of ABN Amro that signalled that the markets had peaked and were about to crumble.

Every financial crisis has its totemic moment; a decision that even at the time seems to defy logic and in retrospect is seen as an act of gross stupidity. Yet it takes more than one individual banker, no matter how powerful, to make a crisis and when the historians come to chronicle the Great Recession of 2008-09 the list of guilty men and women will include more than one former knight of the realm.
Here, then, is a (far from exhaustive) list of those who might be considered most culpable – who caused, exacerbated or failed to prevent the worst downturn in the global economy since the 1930s.

Alan Greenspan

Laughably given an honorary knighthood in 2002 for his "contribution to global economic stability", Greenspan's responsibility for the crash cannot be underestimated.

A fanatical believer in the self-righting qualities of financial markets, he was the bubble king who allowed the dotcom boom of the late 1990s to get out of hand and then, when plummeting share prices pushed the economy into recession, started the whole process off again, this time in the housing market.

As chairman of the Federal Reserve, he cut interest rates and left them at rock-bottom levels for two years.

Cheap borrowing costs encouraged Americans to load up on debt to buy homes, even when they had no savings, no income and no job prospects.

These so-called sub-prime borrowers were the cannon fodder for the biggest boom-bust in US history. The housing collapse brought the global economy to its knees.

Sir Mervyn King

Britain was mini-me to the US in the days of grand illusion before the crash, having its debt-fuelled party where growth was concentrated in the speculative sectors of housing and finance.

King became Bank of England governor in 2003, and while he has subsequently been one of the most pro-active central bankers with a refreshingly robust approach to the banks, the case against him is that he failed to "lean against the wind" during the economic upswing, leaving interest rates too low, and then waited too long when the economy was nosediving into its most severe postwar recession before cutting bank rate.

Under the government's tripartite system of regulation, the Old Lady was supposed to ensure developments in the City did not pose a systemic risk to the economy. It failed in that task.

Gordon Brown

We have abolished Tory boom and bust, Brown said repeatedly in his 10 years as chancellor of the exchequer. He hadn't.

His last big speech before becoming prime minister, made at the Mansion House in June 2007 just as the financial crisis was about to break, praised the bankers for their remarkable achievements and predicted "the beginning of a new golden age for the City of London". It wasn't.

Brown presided over the loss of a million manufacturing jobs and an ever-widening trade deficit while cosying up to the City. He used to quip that there were two types of chancellors: those who failed and those who got out in time. He got that one right.

Bill Clinton

One Democratic president, Franklin Roosevelt, put a cage round Wall Street after its excesses in the 20s led to the Wall Street crash and the Great Depression. Another Democrat, Bill Clinton, gave Wall Street the cage keys.

After a fierce lobbying campaign, Clinton agreed to repeal the Glass-Steagall Act, which ensured a complete separation between investment and retail banks. The move heralded the coming of superbanks, huge behemoths that took in retail deposits and used them to take highly-leveraged punts in the markets.

To make matters worse, Clinton beefed up Jimmy Carter's 1977 Community Reinvestment Act to force lenders to take a more relaxed approach to disadvantaged borrowers. Liberalised banks plus millions of new sub-prime customers equalled one big problem.

Eugene Fama

The economics profession failed to cover itself in glory in the run-up to 2007. Not only did economists fail to spot that financial institutions were loading themselves up with vast quantities of toxic sub-prime debt, most of them thought it was theoretically impossible for a crisis to happen.
In large part, responsibility for that lies with Fama, a Chicago University economics professor who in the 70s came up with the efficient markets hypothesis (EMH), which stated that financial markets price assets at their true worth based on all the publicly available information, encouraging the belief that the best thing to do was to pile in when prices were rising. Bubble-think, in other words.

Ronald Reagan and Margaret Thatcher

Just as many trends in modern popular music can be traced back to the Beatles, so politics was shaped by the activities of Reagan and Thatcher, the Lennon and McCartney of deregulation, market forces and trickle-down economics.

The changes pushed through in the US and the UK in the 80s removed constraints on bankers, made finance more important at the expense of manufacturing and reduced union power, making it harder for employees to secure as big a share of the national economic cake as they had in previous decades.
The flipside of rising corporate profits and higher rewards for the top 1% of earners was stagnating wages for ordinary Americans and Britons, and a higher propensity to get into debt.

Hank Paulson

The US treasury secretary in 2008, Paulson was the Sir Anthony Eden of the financial crisis. He had all the necessary credentials a Republican president would consider necessary for the job – chief executive of Goldman Sachs with an MBA from Harvard. He was considered the brightest and best of his generation. Like Eden over Suez, he was faced with a monumental challenge. And he blew it.
Paulson's big mistake was to put Freddie Mac and Fannie Mae into conservatorship, wiping out the stakes of those who had invested $20bn in the two government-backed mortgage lenders over the previous 12 months.

Unsurprisingly, there was no great rush among private investors to rescue Lehman Brothers when it ran into trouble the following week, and when the US treasury allowed the investment bank to go bust every financial institution in the world was seen as at risk.

Fred the Shred destroyed a bank; Paulson triggered the biggest economic downturn since the Great Depression.

Kathleen Corbet

No rogues' gallery of the crisis would be complete without a representative of the credit rating agencies. These were the bodies that took fees from the banks while giving the top AAA rating to collateralised debt obligations, the hugely complex financial instruments that bundled together the toxic sub-prime mortgages with the sound home loans.

Corbet was CEO of Standard & Poor's, the biggest of the rating agencies, and she left her post in a "long-planned" move in August 2007 just as the financial markets were shutting down.

The justification for the top-notch ratings was that the poor-quality loans would be lost in the mix, but when the crisis broke the reality was more like a food scare, in which supermarkets know there are a few dodgy ready-made meals on their shelves but must bin the lot as they are not sure which ones they are.

Phil Gramm

"Some people look at sub-prime lending and see evil," said this senator in a debate on Capitol Hill in 2001. "I look at sub-prime lending and I see the American dream in action."

Gramm, who thinks Wall Street a "holy place", was the main cheerleader in Congress for financial deregulation, putting pressure on the Clinton administration to ease restrictions – not that it needed much persuading.

The fact that he had been the biggest recipient of campaign fund donations from commercial banks and in the top five for donations from Wall Street from 1989 to 2002 was, of course, entirely coincidental.

The bankers

Was it Fred Goodwin at RBS or Adam Applegarth at Northern Rock – the first UK high street bank to suffer a full-scale run on its branches since the 1860s? Was it Dick Fuld, the man in charge at Lehman Brothers when it went belly-up? Jimmy Cayne, who spent the first month of the crisis playing bridge rather than running Bear Stearns?

Or Stan O'Neal, whose attempts to rid Merrill Lynch of its fuddy-duddy image saddled the bank with $8bn of bad debts?

How about Andy Hornby, the whizzkid running HBOS? Or perhaps the man chosen by Gordon Brown to be HBOS's white knight – Sir Victor Blank, chairman of Lloyds?

Choose any one from a very long list.