Narendra Modi is a fraud

Markandey Katju - former Indian Supreme Court judge

Jeremy Corbyn’s Labour opponents should accept that their failures created him

Owen Jones in The Guardian

Unless there is a dramatic and unlikely political upset, Jeremy Corbyn will again win the Labour leadership contest. It will be a victory gifted by his opponents. Last year, his triumph was dismissed as a combination of madness, petulance and zealotry. But many commentators lack any understanding or curiosity about political movements outside their comfort zone. Political analysts who scramble over one another to understand, say, the rise of Ukip have precious little interest in a similar treatment of Corbynism, abandoning scholarship for sneers. The likes of Ukip or Donald Trump or the French Front National are understood as manifestations, however unfortunate, of genuine grievances: the movements behind Bernie Sanders, Podemos and Jeremy Corbyn are dismissed as armies of the self-indulgent and the deluded.

A few days ago, I wrote a piece about the Labour leadership’s desperate need to get a handle on strategy, vision and competence, and reach beyond its comfort zone. A failure to do so could mean not just its own eventual demise, but that of Labour and the left for a generation or more. Among some, this piece provoked dismay and even fury. Yet Corbyn’s victory is all but assured, and if the left wishes to govern and transform the country as well as a political party, these are questions that have to be addressed – and a leadership contest that may be swiftly followed by a potentially disastrous snap election is exactly the right time. But that is of limited comfort to Corbyn’s opponents – some of whom are now dragging their own party’s membership through the courts. They often seem incapable of soul-searching or reflection.
Corbyn originally stood not to become leader, but to shift the terms of debate. His leadership campaign believed it was charging at a door made of reinforced steel. It turned out to be made of paper. Corbyn’s rise was facilitated by the abolition of Labour’s electoral college and the introduction of a registered supporters scheme. The biggest cheerleaders included Blairites; much of the left was opposed, regarding it – quite legitimately – as an attempt to dilute Labour’s trade union link. When the reform package was introduced, Tony Blair called it “bold and strong”, adding that he probably “should have done it when I was leader”. Two years ago, arch-Blairite columnist John Rentoul applauded the reforms, believing they helped guarantee Ed Miliband would be succeeded by a Blairite. Whoops.

Here was a semi-open primary in which candidates had an opportunity to enthuse the wider public: Corbyn’s opponents failed to do so. The French Socialists managed to attract 2.5 million people to select their presidential candidate in 2011; a similar number voted in the Italian Democratic party’s primary in 2013. In the early stages of last year’s leadership contest, members of Liz Kendall’s team were briefing that she could end up with a million votes. The hubris. The candidates preaching electability had the least traction with a wider electorate. There are many decent Labour MPs, but it is difficult to think of any with the stature of the party’s past giants: Barbara Castle, Nye Bevan, Ernie Bevin, Herbert Morrison, Margaret Bondfield, Harold Wilson, Stafford Cripps, Ellen Wilkinson. Machine politics hollowed out the party, and at great long-term cost. If, last year, there had been a Labour leadership candidate with a clear shot at winning a general election, Labour members might have compromised on their beliefs: there wasn’t, and so they didn’t.

When a political party faces a catastrophic election defeat, a protracted period of reflection and self-criticism is normally expected. Why were we rejected, and how do we win people back? But in Labour’s internal battle, there has been precious little soul-searching by the defeated. Mirroring those on the left who blame media brainwashing for the Tories’ electoral victories, they simply believe they have been invaded by hordes of far-left zombies assembled by Momentum. The membership are reduced to, at best, petulant children; at worst, sinister hate-filled mobs. Some of those now mustering outrage at Corbynistas for smearing Labour critics as Tories were the same people who applied “Trot” as a blanket term for leftwingers in the Blair era. Although Tom Watson (no Blairite) accepts there are Momentum members “deeply interested in political change”, he has raised the spectre of the shrivelled remnants of British Trotskyism manipulating younger members; but surely he accepts they have agency and are capable of thinking for themselves? Arch critics reduce Corbynism to a personality cult, which is wrong. In any case, when Blair was leader, I recall his staunchest devotees behaving like boy-band groupies. I remember Blair’s final speech to party conference – delegates produced supposedly homemade placards declaring“TB 4 eva” and “We love you Tony”.

Corbynism is assailed for having an authoritarian grip on the party, mostly because it wins victories through internal elections and court judgments: ironic, given that Blairism used to be a byword for “control freakery”. Corbyn’s harshest critics claimed superior political nous, judgment and strategy, then launched a disastrously incompetent coup in the midst of a post-Brexit national crisis, deflecting attention from the Tories, sending Labour’s polling position hurtling from poor to calamitous, and provoking almost all-out war between Labour’s membership and the parliamentary party: all for the sake of possibly gifting their enemy an even greater personal mandate. They denounce Corbyn’s foreign associations, but have little to say about former leader Blair literally having been in the pay of Kazakhstan’s dictator Nursultan Nazarbayev, whose regime stands accused of torture and the killing of opponents. Corbyn’s bitterest enemies preach the need to win over middle-class voters, then sneer at Corbynistas for being too middle class (even though, as a point of fact, polling last year found that Corbyn’s voters were the least middle class). They dismiss Corbynistas as entryists lacking loyalty to the Labour party, then leak plans to the Telegraph – the Tories’ in-house paper – to split the party.

It is the absence of any compelling vision that, above all else, created the vacuum Corbyn filled. Despite New Labour’s many limitations and failings, in its heyday it offered something: a minimum wage, a windfall tax on privatised utilities, LGBT rights, tax credits, devolution, public investment. What do Corbyn’s staunchest opponents within Labour actually stand for? Vision was abandoned in favour of finger-wagging about electability with no evidence to back it up. Owen Smith offers no shortage of policies: but it is last summer’s political insurgency within Labour’s ranks one must thank for putting them on the agenda. Some MPs now back him not because they believe in these policies – they certainly do not, and follow Blair’s line that he would prefer a party on a clearly leftwing programme to lose – but because they believe he is a stop-gap.

Anything other than gratitude for New Labour’s record is regarded as unforgivable self-indulgence. The Iraq war – which took the lives of countless civilians and soldiers, plunged the region into chaos and helped spawn Islamic State – is regarded as a freakish, irrational, leftwing obsession. The left defended New Labour against the monstrously untruthful charge that overspending caused the crash, but the failure to properly regulate the banks (yes, the Tories wanted even less regulation) certainly made it far worse, with dire consequences. On these, two of the biggest judgment calls of our time, the left was right and still seethes with resentment that it wasn’t listened to.

The problems go much deeper, of course. Social democracy is in crisis across Europe: there are many factors responsible, from the changing nature of the modern workforce to the current model of globalisation, to the financial crash, to its support for cuts and privatisation. Still, that is no excuse for a failure to reflect. Corbyn’s opponents have long lacked a compelling vision, a significant support base and a strategy to win. When Labour fails at the ballot box, its cheerleaders are often accused of blaming their opponents rather than examining their own failures.

The same accusation can be levelled now at Corbyn’s opponents. They are, by turns, bewildered, infuriated, aghast, miserable about the rise of Corbynism. But they should take ownership of it, because it is their creation. Unless they reflect on their own failures – rather than spit fury at the success of others – they have no future. Deep down, they know it themselves.

Beware the great 2016 financial crisis, warns leading City pessimist

Larry Elliot in The Guardian

Albert Edwards joins RBS in warning of a new crash, saying oil price plunge and deflation from emerging markets will overwhelm central banks, tip the markets and collapse the eurozone.

 

Are the doommongers right – are we heading for a big global economic fall? Photograph: Dennis M. Sabangan/EPA

The City of London’s most vocal “bear” has warned that the world is heading for a financial crisis as severe as the crash of 2008-09 that could prompt the collapse of the eurozone.


Albert Edwards, strategist at the bank Société Générale, said the west was about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them. His comments came as analysts at Royal Bank of Scotland urged investors to “sell everything” ahead of an imminent stock market crash.

Sell everything ahead of stock market crash, say RBS economists



“Developments in the global economy will push the US back into recession,” Edwards told an investment conference in London. “The financial crisis will reawaken. It will be every bit as bad as in 2008-09 and it will turn very ugly indeed.”


Fears of a second serious financial crisis within a decade have been heightened by the turbulence in markets since the start of the year. Share prices have fallen rapidly and a slump in the cost of oil has left Brent crude trading at barely above $30 a barrel.

“Can it get any worse? Of course it can,” said Edwards, the most prominent of the stock market bears – the terms for analysts who think shares are overvalued and will fall in price. “Emerging market currencies are still in freefall. The US corporate sector is being crushed by the appreciation of the dollar.”

The Soc Gen strategist said the US economy was in far worse shape than the country’s central bank, the US Federal Reserve, realised. “We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks.”

Edwards attacked what he said was the “incredible conceit” of central bankers, who had failed to learn the lessons of the housing bubble that led to the financial crisis and slump of 2008-09.

“They didn’t understand the system then and they don’t understand how they are screwing up again. Deflation is upon us and the central banks can’t see it.”

Edwards said the dollar had risen by as much as the Japanese yen had in the 1990s, an upwards move that pushed Japan into deflation and caused solvency problems for the Asian country’s banks. He added that a sign of the crisis to come was the collapse in demand for credit in China.

“That happens when people lose confidence that policymakers know what they are doing. This is what is going to happen in Europe and the US.”

Europe has shown tentative signs of recovery in the past year, but Edwards said the efforts of the European Central Bank to push the euro lower and growth higher would come to nothing in the event of a fresh downturn. “If the global economy goes back into recession, it is curtains for the eurozone.”

Countries such as France, Spain and Italy would not accept the rising unemployment that would be associated with another recession, he said. “What a disaster the euro has been: it is a doomsday machine in favour of the German economy.”

The warning from Edwards came as stock markets had a respite from the wave of selling seen since the start of the year. The FTSE 100 index rose by 57 points to close at 5,929, while the Dow Jones Industrial Average was up by 10 points in early trading in New York.

The mood in equity markets was helped by intervention by the People’s Bank of China overnight to support the yuan, with the Chinese currency moving higher on foreign exchange markets.

But the slide in the oil price continued, with Brent crude falling a further 3.5% to close in London at $30.45. Oil has not been below $30 a barrel since 2003.

Edwards joked that after years in which he has tended to be a lone voice, other institutions were also becoming a lot gloomier about global prospects.

He was referring to the RBS advice, which warned that investors face a “cataclysmic year” where stock markets could fall by up to 20% and oil could slump to $16 a barrel.

In a note to its clients the bank said: “Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point, RBS said.

What happens in a batting collapse

Ian O'Brien in Cricinfo


The mood inside the dressing room turns sour, and batsmen forget to play the way they normally do. It doesn't have to be like that


Nerves are on edge as wickets tumble and it's your turn to bat next © Getty Images



An old cricketing cliché is proffered flippantly, often in times of despair, a psychological pick-me-up for one team, a reinforcement of the seriousness or severity of the situation for the other: "One brings two, guys. One brings two"

While statistically this adage is flippant, quantitatively it is obvious. You really do need the "one" to have the "two". But it is no more likely that two wickets will fall within 10 to 20 of each other than that one will fall as a singular event.

What happens when one does bring two? And then two brings three. And then…

The ill-fated, most feared and dreaded batting collapse.

What defines a collapse? For me, a basis of three top- to middle-order wickets falling collectively for less than 40 runs, and then concurrent dismissals within 10 and 15 runs of each other from that point forward. A minimum of 40 for 3 to anywhere around 70 for 5 and onwards. A dramatic, game-changing period of play.

What happens in the changing room? What happens to the changing room? How do players and coaches react? Not react? How do you deal with a collapse to limit its effect?

Typically a collapse will happen during a session, not either side of a break. There is no time to pause and reflect, no time to regather and regroup. No opportunity to take a breather in the middle of it to stem the tide. There is no chance to take the moment out of the moment.

It smothers you. All of a sudden there is no oxygen in the changing room, no chat, no communication. All the vibe and positivity, the entire atmosphere gone. Empty. A void.

Like waking in the night to a noise downstairs. The changing room is on edge, anxiety-ridden. You hear everything as if on high alert. Every sound amplified. The empty coffee mug gets put down - it wobbles on its base before settling. It's the noisiest thing ever done. Every movement is stifled. Very little eye contact. Players know they are in the middle of a collapse. The changing room door keeps opening and closing. And opening and closing. The sound of Velcro pulled apart rips through silence. A bat is placed gently down next to your seat. A glove is thrown into a bag, a helmet rolls off a bench and rattles to the floor. Muffled swear words, outward frustrations for personal failures.

The batsmen draw ranks. "Hard luck, mate. That [delivery] was a good one."

The bowlers, waiting to bat, also draw together. "I'm going to have to bat soon. I just f****n bowled. I've just done my job. We've got our wickets. I'm going to have to go out and bat. Show these boys how to bat." Angry bowlers. Aggrieved bowlers. "We'll be bowing again, way too soon. F*** you batsmen." It shouldn't be personal. It's not, but it is. It always is. It always will be.

One of the most deflating things to see is a batsman failing meekly. Apprehension has taken over. They have gone away from their style, their game plan, and their grace. Visibly shaken by the situation. Noticeably nervous and jerky movements have replaced their typically measured and flowing nature. Twitchy. Feeling. Scratchy. Groping. Poking.

And that is the psychology of the situation. Firstly focusing on stopping the crash, the collapse, then the head focuses on avoiding mistakes, somehow preventing failure: what not to do, and not, as on a normal day, on creating a head space where success is consummated.



Captains and coaches can seek to arrest the collapse by talking to the remaining batsmen about their preparation and the importance of playing naturally © Getty Images





I have never been in a changing room that has ever challenged a collapse; a changing room that has found a way of negotiating it and found a way out of the mire.

Can it be done? I think yes. But some batsmen, I think, are not going to like it.

There are a few things you don't do, typically, in a changing room. One of the more important ones is to not talk to the batsman who's next in, unless he initiates the conversation. You leave him in his bubble. Whatever he might be doing, let him do it. Whatever is ticking over in his head, let him be. Preparing in his own way. Some batsmen like to chat, nervously, about anything. Some sit and stew, contemplate. Others, a crossword, newspaper quiz, anything to not watch, not concentrate. Some don't even watch the game.

In the middle of a collapse the batsman next in doesn't get the opportunity to do any of those things. And this is where a coach or captain can step in. Once two wickets have fallen together quickly, things are a bit panicky, rushed. A coach or captain can (they currently usually don't) have a word with the batsmen, remind them of their processes, their preparation, their thought patterns. A good coach or captain should know how each player prepares.

A calming of the situation. Remove the apprehension. "Go and do your thing. Think about your things, your processes. Don't rush. Breathe."

This requires coaches and captains knowing their players and team-mates probably better than they currently do. It means having care and consideration, on both sides, and knowing that individual and team success may have to take a back seat to the player's "normal" preparation. Doing things differently. Teams talk about collapses, but only after they have happened.

Slow things down, add as much time to the preparation time a player has. Take the moment out of the moment.

Risk models must be torn up, says Bank of England's Haldane

Financial risk models that underpin market behaviour, economic theory and bank regulation dangerously underestimate the threat to taxpayers and must be completely redrawn to prevent a repeat of the financial crisis, a leading policymaker has warned.
 

The Bank of England's Andrew Haldane has called for economists to re-think what they mean by "normal" 

 

By Philip Aldrick, Economics Editor

11:46AM BST 08 Jun 2012

57 Comments

 

Andrew Haldane, executive director for financial stability at the Bank of England, said the crisis provided compelling proof that “catastrophe risk” has been totally mis-priced. “That was a key fault-line during the crisis and, as recent experience attests, remains a key fault-line today,” he said in a paper at the University of Edinburgh Business School.

If taxpayers are to be protected in future, financial regulators must put “in place robust fail-safes to stop chaos emerging”, such as UK plans to ringfence banks’ retail operations or US proposals to ban casino-like proprietary trading.

Such “structural safeguards on worst-case outcomes” need to be accompanied by a massive increase in the “array of financial data available to regulators” provided by banks, he added. The extra information would allow regulators to build a “systemic risk map” not unlike a weather forecast that could “provide early warnings to enable defensive actions to be taken”.

“In a complex, uncertain environment, the only fail-safe way of protecting against systemic collapse is to act on the structure of the overall system, rather than the behaviour of each individual within it,” he said. “Until then, normal service is unlikely to resume.”

In a wide-ranging piece of research that sourced evidence not just from economics but from physics, biology and even behaviour on Twitter, Mr Haldane argued that the orthodox models used to measure risk overstate “normality” and underestimate the costs and probability of “catastrophe”.

To make the financial system safer, they need to be torn up, he said in the paper, co-authored with Bank economist Benjamin Nelson.

“The economics profession has for much of the 20th century been bewitched by normality. Real business cycle theory in economics and efficient markets theory in finance bear the tell-tale signs of this intellectual infatuation,” he said. “Over the past five years, the real world has behaved in ways which make a monkey of these theories.”

Changing the dangerous consensus “will require a fairly fundamental re-think of the foundations of modern-day economics, finance and econometrics”, Mr Haldane added.

Popular models that underpin banks’ risk management, such as Value-at-Risk (VaR), Black-Scholes and Vasicek, underprepare directors and regulators for a “fat tail”, or catastrophe event.

Citing studies of actuarial models used in insurance, Mr Haldane said “fat tails... would be expected to occur approximately once every 800 years for GDP and once every 64 years for equities”. “In reality, for GDP it appears to occur roughly once every century, for equities once every eight years.”

Regulatory risk measurements using the Vasicek model underestimate capital requirements by between 20pc and 85pc compared with a proper analysis of the past three centuries, he added. He cited JP Morgan’s recent $2bn trading loss as an example of the failure of VaR.

Changing the accepted wisdom on how to calculate risk is more important now than ever before, he added. “As the world becomes increasingly integrated – financially, economically, socially – interactions among the moving parts may make for potentially fatter tails. Catastrophe risk may be on the rise."

What will happen in the eurozone? Don't ask the experts, they don't have a clue

Simon English: The Independent

Thursday, 7 June 2012
Outlook Shares were up yesterday, theoretically on hope that the eurozone "crisis" will be
resolved. If they are down again today (that's the way to bet) does that mean we are
suddenly back in the mire?

Not really. One thing that happens when economic news gets interesting enough to bother
the front pages is that all sorts of unlikely people, TV presenters for example, suddenly claim
to care about the machinations of this curiosity called markets.

If they've fallen there must be a good reason why – we shall tell people what that reason is.
Sometimes markets are moved by genuine shifts in sentiment or genuine moves in perception
of what the future holds, but it is hard to see that's the case lately. They are moving on
noise and, moreover, on extremely low trading volumes.

The eurozone situation is so hard to call that traders, fund managers, bankers, economists
and the whole rest of the chasing pack of folk pretending they know what's going on from
one day to the next are left floundering even more than usual.
They might like to say "search me, I've no clue", but that could prove to be a seriously
career limiting stance.

Instead, they react to newsflow, rather than relying on the considered analysis on which
their jobs are supposedly based.

That daily tension between greed and fear has always been present and trading on what one
thinks will be in the news is far from a fresh approach, but the trend is lately exacerbated
since the possibilities are so far apart (either we're all doomed to the Third World War, or
we're heading to the end of the banking crisis and a fresh boom in prosperity).

So much so that Matthew Lynn of Strategy Economics argued the following in a paper
yesterday: "Conventional economics is now largely useless in trying to analyse the twists and
turns of the unfolding euro crisis: it has long since left behind any rational calculation of what
is good and bad for the Continent."

If he is right, most economists should pretty much just resign.

By Mr Lynn's telling, the present situation is best understood as a branch of game theory. "The markets take the euro-zone to the brink of collapse. Asset prices plunge. "As they peer over the edge of the abyss, the leaders... take fright and come up with whatever is necessary to keep the system from collapsing," he writes.

This has happened several times already and will keep happening, goes the theory.

He thinks this game of chicken is a trading opportunity, and suggests buying blue-chip
European stocks, French bonds, German property, gold and the Russian stock market. They'll
all go up after the Greek elections and the next big rescue deal, he says, at least for a while.
Even if you aren't in the mood to take such risks, his analysis might be a source of comfort.
His wider point seems to be that, since it is in no one's interests for an entire continent to go
bust, they shall keep figuring out a deal to prevent such a calamity.

Mr Lynn thinks that none of the bailouts can work in the long-term, but he might concede
that until tomorrow comes (it never has yet) we can all live forever, one day at a time.
In the short-term, there are money-making opportunities for those who ignore the gloomy
chat.

So don't look too closely at the stock market. Its daily gyrations really aren't telling you
anything that helpful.

s.english@independent.co.uk

Is the EU taking its over-fishing habits to west African waters?

The UN says EU trawlers are out-muscling 1.5 million fishermen, who themselves warn west Africa could 'become like Somalia'

• 
• • John Vidal aboard the Arctic Sunrise
  • guardian.co.uk, Monday 2 April 2012 14.01 BST

Mauritania's waters are crowded. Twenty-five miles out to sea and in great danger from turbulent seas are small, open pirogues crewed by handfuls of local fishermen, taking pitifully few fish. Also here within 50 miles of us are at least 20 of the biggest EU fishing vessels, along with Chinese, Russian and Icelandic trawlers and unidentifiable pirate ships.

We are closest to the Margaris, a giant 9,499-tonne Lithuanian factory trawler able to catch, process and freeze 250 tonnes of fish a day, and a small Mauritanian vessel, the Bab El Ishajr 3. Here too, in the early mists, its radio identification signal switched off, is Spanish beam trawler the Rojamar. The Arctic Sunrise, Greenpeace's 40-year-old former ice-breaker, is shadowing one of Britain's biggest factory trawlers – the 4,957-tonne Cornelis Vrolijk. Operated by the North Atlantic Fishing Company (NAFC), based in Caterham, Surrey, it is one of 34 giant freezer vessels that regularly work the west African coast as part of the Pelagic Freezer Association (PFA), which represents nine European trawler owners.

The ship, which employs Mauritanian fish processing workers aboard, is five miles away, heading due south at 13 knots out of dirty weather around Cape Blanc on the western Saharan border. By following the continental ledge in search of sardines, sardinella, and mackerel, it hopes to catch 3,000 tonnes of fish in a four- to six-week voyage before it offloads them, possibly in Las Palmas in the Canary Islands.

But, says NAFC managing director Stewart Harper, while most of its fish will end up in Africa, none will go to Mauritania, despite the country facing a famine in parts. "Unfortunately Mauritania does not yet have the infrastructure to handle cargoes of frozen fish or vessels of our size," he says.

The west African coast has some of the world's most abundant fishing grounds, but they are barely monitored or policed, and wide open to legal and illegal plunder. According to the UN's Food and Agriculture Organisation, all west African fishing grounds are fully or over-exploited to the detriment of over 1.5 million local fishermen who cannot compete with them or feed their growing populations.
Heavily subsidised EU-registered fleets catch 235,000 tonnes of small pelagic species from Mauritania and Moroccan waters alone a year, and tens of thousands of tonnes of other species in waters off Sierra Leone, Ghana, Guinea Bissau and elsewhere.

A further unknown amount is caught by other countries' vessels, but the individual agreements made between west African countries and foreign companies are mostly secret.

Despite possible ecological collapse, and growing evidence of declining catches in coastal waters, west African countries are now some of the EU's most-targeted fishing grounds, with 25% of all fish caught by its fleets coming from the waters of developing countries.

Willie MacKenzie, a Greenpeace ocean campaigner, said: "Europe has over-exploited its own waters, and now is exporting the problem to Africa. It is using EU taxpayers' money to subsidise powerful vessels to expand into the fishing grounds of some of the world's poorest countries and undermine the communities who rely on them for work and food. The EU has committed some €477m for agreements with Mauritania over the past 10 years, essentially paying for vessels like the Cornelis Vrolijk to be able to access these waters," he adds.

According to the PFA, about 50 international freezer-trawlers are active in Mauritanian waters at any one time, of which 30 originate from countries such as Russia, China, Korea or Belize. "By targeting fish species that cannot be fished by local fishermen, we avoid disrupting local competition and growth and always fish outside the 12-13 mile fishing limit for our type of vessel," says a spokesman.
"Not all international operators active in Mauritanian waters meet the EU's safety and environmental standards. This threatens our efforts to foster sustainable practices in the region."

Greenpeace says the over-exploitation of African fisheries by rich countries is ecologically unsustainable and also prevents Africans from developing their own fisheries. It takes 56 traditional Mauritanian boats one year to catch the volume of fish that a PFA vessel can capture and process in a single day. Since the 1990s, the once-abundant west African waters have seen a rapid decline of fish stocks. Local fishermen say their catches are shrinking and they are forced to travel further and compete with the industrial trawlers in dangerous waters unsuitable for their boats.

"Our catch is down 75% on 10 years ago. When the foreign boats first arrived there was less competition for resources with local fishermen and fewer people relied on fishing for food and income. Governments have become dependent on the income received by selling fishing rights to foreign corporations and countries," says Samb Ibrahim, manager of Senegal's largest fishing port, Joal.

"Senegal's only resource is the sea. One in five people work in the industry but if you put those people out of work then you can imagine what will happen. Europe is not far away and Senegal could become like Somalia," said Abdou Karim Sall, president of the Fishermen's Association of Joal and the Committee of Marine Reserves in West Africa.

"People are getting desperate. For sure, in 10 years' time, we will carry guns. The society here destabilises as the fishing resource is over-exploited. As the situation become more difficult, so it will become more and more like Somalia," he said.

There is now growing concern that illegal or "pirate" fishing is out of control in some waters. According to the UN, across the whole of sub-Saharan Africa, losses to illegal fishing amount to about $1bn a year – 25% of Africa's total annual fisheries exports.

Guinea is thought to lose $105m of fish to pirate fishing a year, Sierra Leone $29m, and Liberia $12m. An investigation by Greenpeace and the Environmental Justice Foundation in 2006 found that over half of the 104 vessels observed off the coast of Guinea were either engaging in or linked to illegal fishing activities.

Surveillance and monitoring of overfishing is now urgently needed or fish stocks will collapse, leading to humanitarian disasters in many countries, says the UN. Increasingly, ships are transferring their catches to other vessels while at sea, rather than directly off-loading in ports. This conceals any connection between the fish and the vessel by the time the fish arrives on the market, meaning the true origin of the catch is unknown.

However, the PFA says banning EU vessels from African waters would not be sensible.
In a statement it said: "Less regulated, less transparent and less sustainable fishing operators would replace the European vessels. This would be a bad deal for Europe and the African countries we partner with.

"They would see less strategic infrastructure investment, reduced transfer of skills and knowhow, as well as scientific research and more depleted fish stocks. And in Europe we would damage a viable part of EU's fishing economy to the benefit of countries such as China.

"All of the fish caught by the PFA is destined for west-central African communities rather than consumers in developed countries. In fact, the fish caught and distributed by the PFA is often the only source of essential protein for the people in countries such as Nigeria."

• John Vidal's travel costs to Senegal were paid by Greenpeace. The NGO had no say over editorial content.

Conflict - the path to Growth and Renewal

by Pritish Nandy

Call it conflict. Call it confrontation. Or call it simply the dialectic of growth. Whatever you call it, clashes take the world ahead. We may talk endlessly about peace and stability, how crucial continuity is. But what brings about change and opens up new ideas, new markets, new opportunities is always conflict. It breaks the status quo, creates the momentum for change. In the process, the world transforms.

Yes, every time a person, a brand or an institution comes under threat, the world changes. It forces us to think afresh. The classic example is when Pepsi challenged Coke, we all recognised for the first time the amazing elasticity of demand for a fizzy drink. Or when Penthouse challenged Playboy and converted what was till then a niche business into one of the world’s biggest industries. To take a recent example, when Anil and Mukesh fought, it appeared self defeating and long dirges were written about the demise of the great Ambani empire. Two years later, we found just the opposite had happened. The conflict had quadrupled their collective wealth. Similarly, if there is one thing that can resuscitate our moribund politics, it is Anna’s aggressive campaign that has woken up a lazy, corrupt Government to its responsibilities. As indeed it has woken up an equally lazy, corrupt Opposition to its opportunities. 

So, if conflict is the catalyst for change, why do we constantly enshrine the importance of harmony, reconciliation, freedom from strife? Every spiritual guru talks about it. So do political leaders. Even businessmen claim that stability is the only way for the world to progress and prosper. If stability goes, we are warned, the markets would collapse. So would the world. Actually, the contrary is true. Even though it appear to be bloody and unseemly, conflict is good for business, politics and, often, even human rights. The status quo invariably represents exploitation, corruption, the perpetuation of wrong. It also represents the lack of free thought. If we did not have enough conflicts, the world would rot.

Great religions grew from conflict. Every emerging sect and sub sect may have drawn blood during its birth and baptism but eventually they grew the size of the following and gave these faiths their cutting edge, to see them through difficult times. So, even as religions denounce violence, the truth is that it is violence that enlarged their domain. The benign perish, unsung. The gentle leader remains enshrined in our hearts but no longer relevant in a world we have created for ourselves where only strife moves us ahead. If Osama did not exist, we would have had to create him. (And some say we did.)

Godse kept Gandhi alive by assassinating him. Or else, we would have forgotten him even in his lifetime. Like the world forgot Mikhail Gorbachev. Violence, anger, bloodshed are the highpoints we celebrate as history. Our wars are what define us as nations, as the map of the world is being constantly redrawn. Empires are shrinking. New nations are being born.

New instruments of conflict keep being discovered. These are the new change agents. So when Sibal protests against social networking sites he is doing exactly what every Government wants to do: Preserve the status quo. For in the status quo lies their only hope of clinging onto power. That is why every re-election campaign starts with the promise of stability. It is the perpetuation of the myth that what exists is perfect. What could follow may be dangerous. 

But the modern world exists because it flirts with danger. Conflict creates markets. Conflict brings us change. Conflict opens up new opportunities, redefines existing social structures, gives hope to the underprivileged, the trampled upon. It teaches us the importance of constant change. Sun Tzu is the philosopher of our times. He teaches us that we must not run away from conflict but win it artfully and use it to change our lives.

The Tomsk court is not wrong. The Bhagawad Gita teaches us exactly this, and more. It teaches us that it is our moral duty to fight every war and win it instead of whimpering about peace and stability, right and wrong. In that sense, it is indeed extremist literature for our extremist times. It is that rare manual for survival in the age of bloody, bare knuckled fights. To ban it would be stupid. To learn from it would be apt.

Europe's gutless collapse

By Reuven Brenner

The US and European financial crises have this in common: too much credit was advanced at too low prices to households in the United States and to governments in Europe. In the US, the recipients did not have either the collateral or the prospect of revenues to pay back creditors. In Europe, the governments, with their present institutions, cannot create enough taxed wealth to pay back the debt with their current institutions, taxes and regulations.

In both cases, the recipients of the loans either lied through their teeth or deluded themselves (and delusions can be powerful when they serve one's interests). In the case of mortgage recipients in the US, few did any due diligence about their future ability to pay or about the mortgage-backed bonds.

In Europe, the move toward the European Community and the euro started with lies (or delusions of German rescues). Recall that the Italians called 1987 the year of il sorpasso, since suddenly 18% was added to their gross domestic product (GDP). The politicians claimed that this number reflected part of their undeclared, unmeasured incomes.

Why 18%? Because this was the number that allowed Italy to conform to the European Community requirement of debt/GDP ratios. The European bureaucrats were aware of much undeclared incomes in Greece too. Eventually they sued the Greek government for the false national statistics.

The result? To this day in both countries some 30% of incomes are undeclared in a variety of imaginative ways, often hidden by these countries' intricate customs, traditions and systems of patronage.

The national governments will not have an easy time changing such deeply rooted arrangements. Too many complex taxes, too many regulations, and too much corruption "on the top" resulted in ingrained perceptions that governments are wasting the money and that the courts are unreliable, rationalizing the culture of tax evasion. Why should hard-working people pay taxes when politicians and the rich get away with murder?

As it is in private life, start relationships with lies and they are unlikely to last or to end well. No trust, no finance; diminished trust, finance at a higher price. It is not rocket science.

But if all this was known, why were lenders willing to advance massive amounts of loans to these irresponsible, unaccountable entities?

Whereas in the US the case can be made that it took some time until it dawned on some that things were going awry, in Europe's case the issues surrounding Italy and Greece were well known. It was no secret that the continent was divided into "junk countries" and others where the tribe - the German one - could be called on for sacrifices and fulfilling duties, as was the case after the reunification.

Who made the mistakes that led to offering the loans to these profligate entities, aggravating mispricing of credit around the world and failing to correct the errors?

After all, the rationale for capital markets is simple: when all parties are held accountable, they correct mispricing faster than any other institutions that supply capital. There are only two other main entities that supply capital in every society: families and governments. The first is unlikely to correct mistaken allocation faster because of emotions. The second is unlikely to correct mistakes faster than arms-length financial intermediaries because a wide variety of political considerations get in the way.

So what went wrong in the presumably accountable financial institutions? Improper fiscal, regulatory and monetary policies. When combined with political considerations, however, none were considered "mistakes" by large segments of academics, central bankers, and politicians.

China illustrates in an extreme way the main difficulty with the finding solutions, but it is not dissimilar to what now confronts Europe too.

Most people agree that communism, as once practiced in the Soviet Union and China, was a colossal mistake. Tens of millions of people were killed, generations were made miserable, and talents and resources became severely mismatched. How do you correct for such mistakes? What is the path from totalitarian societies to more open ones backed by rule of law and equality?

There are no unique answers. There are no theories, no models, since the countries do not have either the legal precedents or the personnel to create, interpret and enforce them. Governments may emulate a successful country, but that too can take a generation or two.

China bet on a strategy of keeping the monopoly of the communist party, but allowing part of its population to integrate with the West. To achieve this integration, they pegged their currency to the US dollar, thus allowing dollar prices to guide the drastic restructuring. What was the alternative? Since accounting, balance sheets, prices, costs under communism were all fiction, the new government needed an anchor, and dollar prices served as such anchor.

Since wages in China were much lower than in the US, employment and exports expanded quickly. The country rapidly accumulated trillions of dollar assets. The Fed's low interest rate policy from 2004 and on distorted China's massive flow of trade to the US and its purchasing of Treasuries.

One could make the point that if the Chinese Communist Party opened up its domestic financial markets more rapidly, dispersing power and allowing entrepreneurship to thrive, the financing of the housing bubble could have been significantly mitigated, if not avoided, even with the pegged currency. Was the US able to use its negotiating powers at the time to force China to open its domestic markets more quickly? I believe so - though this option wasn't pursued.

The main point though of the above example is not to regret some foregone opportunity but to show that there are no models describing either how exactly countries should correct their political mistakes or how other countries should react while countries go through such transitions. There are no roadmaps and general theories for successful transformation: using negotiating power matters.

The European crisis
The financing of profligate, unaccountable governments, sanctioned by rating agencies and the Bank of International Settlement in Basel as being "riskless", brought us to the present situation. The solution for the eurozone required a drastic change in domestic policies cajoled by the European Union. After all, the EU knew all along about the extensive black and grey markets and the intricate patronage. Solutions were known too: simplified taxes, simplified regulations, more accountable governments.

Note that these solutions have very little to do with financial markets. They are a matter of political leadership. The political and financial institutions of China, Italy, Greece, and so forth shaped intricate institutions and habits and will not be altered because some economist or politician disapproves of it or devises some new technical models. Changing these is a matter of political leadership.

Unfortunately, such leadership is today nowhere in sight. If it does not emerge, bankruptcy, a distant second best, will bring about the changes. It is a distant second best because it could involve an extremely disorganized process, whose political outcome is unpredictable. What could then be done now while we wait for the Club Med countries to put their houses in order?

Since the European banks are at the center of the present crises, the best solution would be to emulate what happened in the US banking system in the 1990s. Namely, let them raise money by selling their loan book.

Banks would be much smaller. Ownership of non-investment grade loans would be much more dispersed. If the US banks could diminish their ownership of such loans from 80% in 1994 of their assets to 20% by 2009 (the balance distributed in a variety of collateralized loan obligations), there is no particular reason why Europe cannot achieve the same in much shorter time.

No need to implement a myriad of regulations. Disgorging debts from the zombie banks would also mitigate the much discussed "too large" or "too interconnected" to fail issue. Pension funds, insurance companies, and sovereign funds could offer the capital for such purchases.

But this takes guts, which are lacking in both Europe and the US. Yet again, I sound like Machiavelli waiting for his prince who never came.

Let's hope that he will emerge in 2012.

Reuven Brenner holds the Repap Chair at McGill University's Desautels Faculty of Management. The article draws on his books Labyrinths of Prosperity and Force of Finance.

The trader who lifted the lid on what the City really thinks

One man reveals how economic disaster would let him and his colleagues profit 

By Tom Peck
Tuesday, 27 September 2011

The world may be teetering again on the precipice of economic disaster but those with any investment in the popularity of Alessio Rastani, a hitherto unknown "independent trader", had a worse day than most after his memorable appearance on television yesterday morning.

"I have a confession, I go to bed every night and I dream of another recession, I dream of another moment like this," he told dumbstruck BBC News presenter Martine Croxall, when asked if the proposed eurozone bailout would work.

The interviewer thanked the trader for his candour but told him that "jaws had dropped" around the BBC newsroom while they listened to his answers shortly after 11am.

"I'm a trader," he said. "We don't really care whether they're going to fix the economy, our job is to make money from it.

"The 1930s depression wasn't just about a market crash," he added. "There were some people who were prepared to make money from that crash. I think anyone can do that. It's an opportunity."

The three-minute clip quickly spread online, provoking outrage. In the interview, Mr Rastani went on to advise "everyone watching this" that, "This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late."

He said it was "wishful thinking" to believe that governments could prevent another recession.

On his Twitter profile Mr Rastani describes himself as an "experienced Stock Market and Forex trader" who is "dedicated to helping others succeed".

Some were as quick to praise him as others were to damn him. Comments on his Facebook page included: "Great interview" and "talk about the truth," while others described Mr Rastani as a hero.

The current crisis bears considerable similarity to that which engulfed the world in 2008, though thus far it lacks the talismanic hate figure generously provided in the form of the former RBS chief Sir Fred Goodwin. The slick-haired, pink-tied and American-accented Mr Rastani may yet fill the void.

Quite how much he personally stands to gain should the financial world collapse again is unclear. The profile on his website, Leadingtrader. com, would suggest he is more reliant on "professional speaking" than his wizardry in the money markets to keep in him in hair gel. But after his performance yesterday it may just be that, like the eurozone, that particular sideline is beyond salvation.

"My belief is that anyone who wants to improve their income and achieve success in life, cannot afford to ignore learning how to trade," he says.

"Based on Alessio's sound advice, I pulled my money out of the markets just before the 2008 stock market crash. He saved me a fortune, not to mention my pension!" claims a client named as Maurice E.

Though Twitter users were quick to pick up on Mr Rastani's outburst, his dire forecast went mysteriously unnoticed by the wider financial markets. Shares in French and German banks rose by as much as 10 per cent, as traders analysed a proposed three trillion euro (£2.6 trillion) rescue package for the single currency.