Mr. Putin's words... and deeds

27th April 2006

"Mr. Putin assured Chancellor Merkel that "Russia will always be a reliable energy supplier". Mr. Putin was speaking as he launced a campaign to be allowed to control all the downstream gas networks in Western Europe.

7th January 2009

Slovakia declares a state of emergency as no gas at all has come through the pipe from Russia.

All of South East Europe reports complete shut-down- no gas at all being shipped. Poland reports 85% fall in supply, Italy, Austria over 90% and Germany "Significant disruption".

Happy Orthodox Christmas.

"Because they are hard"

My brief return to the UK has made me notice a few significant changes. Though possibly the dose of the flu has made me feel bad enough to listen to Quentin Letts and other right-wing blowhards.

The traditional British Christmas over the last forty years has tended to be focused around the television- the nights are dark, and many channels put out special programmes "for the festive season".

This year, I notice what I feel is a certain coarsening of Christmas. The novelty songs of my youth: Slade's "Merry Christmas Everyone", Wizard's "I wish it could be Christmas Everyday", Jona Lewie's "Stop the Cavalry", John Lennon's "Happy Christmas, War is over" were not taken to be serious songs when i was a kid in the 1970s, yet now they seem to be regarded as somehow "classics". Indeed the Slade song is played absolutely everywhere- to the point of massive overkill. Meanwhile the real Christmas songs- the carols- of my childhood seem forgotten. Though the festival of nine lessons and carols broadcast from King's College Cambridge- which I listened to while driving up to visit my family- contained several old favourites, I was struck by the determination of the choirmaster to produce much that was innovative, rather than traditional. While TV or shops bawl out Slade's money spinner, the medieval purity of the Coventry Carol or the Victorian jauntiness of "God rest Ye, Merry Gentlemen" are now a closed book to an ever larger number of our people.

As for the TV programmes themselves- I am very surprised how quickly a programme is repeated on British television- even the interminable soap opera omnibus editions seem to be repeated even on the same evening- and frankly the miserable doings of "EastEnders" and "Emmerdale" bore me blue anyway. Apart from the Soaps, which do not exactly portray role models- I am astonished at the witless vulgarity on every channel. The intellectual aspiration which British television once showcased: "The Ascent of Man", "Civilisation" or "Connections" is replaced by "[insert celebrity name here]'s extreme [insert noun here]". I was astonished to find what in the 1970s would have been a mildly interesting middle brow Horizon documentary on the history of the British National Grid- presented by James May(!)- was actually an Open University broadcast.

Truly this is dumbing down indeed.

It is also very, very boring.

The poverty of aspiration makes for boring and very limited lives: much like those portrayed on EastEnders. The sloppy populism of British television which my TV friends openly admit (or should that be decry) as "a tabloid medium" could hardly be more crass. "Strictly Come Dancing"- or "Strictly" as most seem to refer to it, is a deliberate showcase, not of excellence, but of mediocrity- and perhaps the furore over John Sargeant shows that the British people get the joke. The fact that something so vacuous could be taken so seriously is frankly ridiculous.

Then we get to the News. The blatant manipulation of the current affairs programmes is obvious and dangerous. The independent reporter was once a by-word for integrity- not any more. The practically scripted "interview" by Andrew Marr of his Prime Minister was an insult to the genre. We have grown used to television shows with no understanding of the subtleties of argument, and still less the historical roots of our times. An interview of such banality is an abdication of the responsibilities of the fourth estate.

Television has become a lazy medium- the lowest denominator and the facile and crass are the guiding forms. The excuse of "the ratings" does not even apply- the fragmented nature of today's media market prevents larger ratings, it is true, but what shocks is the extraordinary lack of diversity and choice: "57 Channels and nothings on".

I am already sick of it after a few days.

If we judge from British TV, there is little aspiration in the UK today.

When President Kennedy put forward his great vision of sending man to the moon and returning safely to Earth, he justified it by saying: "We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not only because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too."

If our newspapers are dumbed down, and our television likewise, how can an individual even know where human knowledge stands now, still less about how and where that knowledge can be extended. No wonder so many young people find life pointless: they know so little about it.

The patronising vulgarity of TV has infected much of our society- and I for one will not be buying a digital TV as the analogue systems are shut down over the next five years- I will simply cancel my TV license.

Enough drivel, boredom and poverty of the mind already.

Back to Estonia, where seriousness is not considered a character flaw and knowledgeable is not another word for pretentious

Can the Worm turn in Russia?

Much has been made of the unrest in the Russian Far East. That a relatively minor taxation change could create riots in Vladivostok has come as a surprise to everyone. However, as I have noted in the past, the Putinistas are on increasingly thin ice.

The emergence of a new, more coherent opposition grouping interestingly named "Solidarity" is obviously a welcome step, given how the factionalism of Russian democrats has been their principal downfall. That it comes at a time when the global economic crisis is placing increasing pressure on the post-Soviet government of United Russia and may help to articulate a real reform programme. Yet, we can not underestimate the scale of repression that Putin is able to deploy against his own people. The regime is well prepared for a period of violent discontent.

Yet the extremely rapid depletion of the long hoarded foreign currency reserves indicate that United Russia my run out of money before the bottom of the economic crisis is reached. The ill judged decision to try to defend the Rouble is proving incredibly expensive. As the evaporation of the Russian banking system becomes plainer, the fact is that, despite Putin's denial that there is any crisis, Russia is actually facing an even more serious position than the Western world- with all its major income streams collapsing at once and massive new liabilities to service at a time when it can no longer gain access to international capital.

All of this is matched by a collapse in political confidence inside Russia: according to some polls, the majority no longer trusts the state-run media to tell the truth, and they believe that the country is facing very serious problems. As of yet, these same polls do not detect more than a fairly gentle fall in support for Prime Minister Putin, meanwhile, perhaps underlining the difficulties of polls in Russia, the poll for the "Greatest Russian" showed very high support for the genocidal murderer, J. V. Stalin, who came third over all. Leaving aside the fact that his real name- Djugashvili- clearly betrays his non-Russian nationality, it does underline the large numbers still prepared to defend the vile and violent legacy of the Communist tyrant. Russia remains long way from a civil society.

The failures of Putin's economic policy grow more obvious by the day, but the regime has crushed nearly all alternatives- there is no "loyal opposition". Despite this, what is interesting is that such opposition as there is not coming from the quasi-Fascist groups like "Nashi" that many fear would be the primary beneficiary from the fall of Putinism. The reforming Liberals may yet emerge as the primary opposition - which could lead to a far more optimistic scenario than many, including myself have hitherto been fearing. Perhaps, when we said that these groups were Putin's creatures: created under his patronage to allow him to pose a a defender of the constitutional order, while nonetheless actually subverting it, we were more accurate than we knew.

Meanwhile, rumours swirl in Moscow that there is a real split between the constitutionally powerful President Medvedev and his actually powerful Prime Minister, Vladimir Putin. The next few months will see how genuine these rumours really are.

Russia remains an obvious threat- and the exercises that the Russian navy is conducting in the waters of Greece, a nominal NATO ally, underline the flaccid division of NATO about to how to deal with the challenge of an authoritarian government in Moscow. Yet the braggadocio of these more or less useless naval exercises a least keeps the fleet out of Ukrainian waters- where under the current tension, many Ukrainians would like to see them banished forever. The perennial January gas dispute between Russia and Ukraine is being treated as a bilateral issue, so far. However if the European Union truly wishes to make a statement to Moscow, it could do so, simply by getting involved and insisting on a faster agreement this year.

As "Mother Hubbard" Putin tries to find bones to pay off his greedy supporters and the increasingly alienated Russian population, the EU should make it clear that such bones can not come at the expense of Ukraine. That would be a clear signal that, notwithstanding the Kutznetsov cruising off Crete, the European Union will not be distracted from a growing insistence that Russia must either play by the rules... or get off the pitch.

The British State: the biggest Ponzi scheme in history

Perhaps the oldest fraud in the financial system is the Pyramid scheme, a fraudulent operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. In America, the Pyramid is known a the Ponzi scheme, after the name of one high profile fraudster of the 1920s.

The principle is simple: the scheme usually offers abnormally high returns in order to entice new investors. The perpetuation of the high returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors in order to keep the scheme going. Yet the system is destined to collapse because the earnings, are less than the payments. Normally the authorities intervene, although in the case of the latest pyramid scandal- that of the "funds" run by Bernard Madoff - the scale of the losses is truly vast: an estimated $ 36 billion.

Yet, despite the scale of Mr. Madoff's alleged crimes, there is an even bigger Ponzi scheme, much closer to home, and one that is actually run by the British State. There are over 6 million people employed by the British State and the vast majority are entitled to receive pensions that they have not contributed to. Neither the state as employer, nor the employees have paid for the lucrative pension rights that are on offer, and the vast majority of these pensions are thus paid from the general pool of current taxation. MPs. judges, civil servants, all are entitled to receive large pension rights upon retirement.

Meanwhile, those in the private sector who have contributed to the National Insurance fund for there own pension have found that the fund was never created- that too went into the general pool of taxation. Those who, under the terms of the legislation of the 1980s and 1990s, opted to create private pension funds have found that after Gordon Brown began to tax such funds, over £4 billion a year is paid into the general taxation pool. All in all, more than a third of the general taxation pool is now being used to pay unfunded public sector pension liabilities.

2008 was a year of brutal financial turmoil. The fall of major investment houses lead to the gridlock of the whole financial system. Despite the dramatic cuts in nominal interest rates, the availability of credit in the market has shrunk dramatically, and where such credit is even available, the effective cost has risen substantially. It is clear that 2009 will see a punishing recession, but no one knows how deep or how long the economic plunge will last. The effect on private sector pensions, based on investing in different securities has been appalling. The pension fund deficit of the British Airways employees is so large that it is stopping the firm itself from proceeding with any of its hoped for merger plans with other Airlines.

The British government, however, has taken on some massive liabilities. The nationalisation of much of the banking system is increasing the liabilities owed from general taxation, and the markets are already concluding that British government debt levels are too high.

In Estonia health care is paid for from a genuine insurance fund, as is social welfare payments. Deficits are not permitted, and the overall level of state debt is exceptionally low- in good years the state even records a surplus. Despite he rapid growth of private debt in Estonia over the past five years, the levels of debt are still less than 40% of those of the UK. There is a higher level of net saving, which is the result of a fully funded pension system.

Unless the political class in Britain (which is the greatest beneficiary of the public sector pension scheme) can reduce the burden it imposes on the general pool of taxation, Britain faces a bleak financial future of high tax and rotting public infrastructure leading to declining competitiveness, social discord and increasing international irrelevance.

2009 will be a year of recession.

We do not know how long this will be nor how deep it will be. However, a root and branch reform of public sector finance is critical. Irrespective of party, the need for leadership is clear. Any figure brave enough to articulate the need for revolutionary change will demonstrate their fitness to lead. Yet are there any in what Peter Oborne calls the narrow self serving political elite who have the vision, the will or the courage to end the British Ponzi scheme and return the UK to financial honesty?

At the turn of the year a hope so, but I am not encouraged by what I see.

Gaps in time

Well a periodic return to the UK for Christmas has left me nursing a dose of the flu- hence blogging silence.

When on the mend I shall renew normal service.

Learning the wrong lessons from the Crash

The scale of the financial and economic crisis that we now face, across the globe, is exceptional. It not just the absolute numbers- which, in a growing economy increase anyway- but the relative numbers which now look eye-popping. The scale of capital destruction is now even beyond the levels of the 1930s. There is no measure that we can grasp that means anything.

Many assets- like your house- are unsaleable at any reasonable price, possibly at any price at all. Meanwhile, Britain is choosing to take on the unlimited liabilities of the banking sector, and thus nearly doubling long term government debt and massively increasing state control over the economy. The idea of bank nationalisation- rejected by socialists in the past as too radical- is now embraced across much of the political spectrum. Government investment and even control is regarded as vital.

Er... hang on a minute.

It is not freedom or the free market that got us into this mess.

It was the fervent belief by bankers that they could predict the future and thus accurately price any given risk that got us into this mess. It was the epistemological arrogance of those who wrote endless reports predicting quarterly earnings or economics and continued to do so despite the fact that they were always inaccurate- I mean their inaccuracy was so total that they never got it right even by accident. It was those who chose closed models to represent open ended reality who have made the mistake.

Now we have had the longest boom in history, so sure enough it seems reasonable that we could have the longest bust in history simply to bring the imbalances back to normal.

Of course one of the reasons for this unexpectedly long boom was the repeated bubbles inflated by the policy makers. Therefore it does not make me comfortable that we are now handing over our entire finance system to precisely these same policy makers.

In the end letting banks fail -while protecting deposit holders- may well prove to have been a better option than keeping alive zombie banks. However the "decisive action" of Brown and Darling in "saving the world" now means we are committed to an open ended funding of all of the liabilities of the banks- not just their deposit holders. The state is over riding the creative destruction of the free market. The state is second guessing what market outcomes could, or rather should be.

Bad idea.

I believe that the current policies of the Brown government will, in time, be regarded as a major mistake. The bankers will continue to function as if their sacred cow- the "bell curve" was not an intellectual fallacy, and will delay the implementation of open ended risk control systems.

By which time the British economy will be worth precious little and our financial services sector, which historically employed millions and was the engine room of innovation and wealth in our country, will be dead.

More Migrationwatch twaddle

I have never had much time for Andrew Green - the absurd extrapolations of questionable statistics that his "Migration Watch" group publish periodically serve only to get a few scare story headlines rather than actually contributing to the debate on migration.

Since Mayor Boris Johnson- a figure who increasingly impresses me- mused publicly about the idea of an amnesty for illegal immigrants, it was only a matter of time before Green would publish some swivel-eyed nonsense.

The scare story headline was that "legalising" illegals would cost £4 billion. However even before we start, we find that half of this is somehow attributable to the partners and families of illegals- many of whom are actually already legal British tax payers. So even on Mw's numbers, then the cost falls by half to the still eye-popping £2 billion.

Then you look at the assumptions.

Essentially Migration Watch assume that those who are working would not only not pay tax, but would instead become claimants on the state.

As a former civil servant, Sir Andrew knows more than most about being a cost to the British tax payer. However the vast majority of immigrants to the United Kingdom- illegal and legal alike- would regard it as either pointless or a matter of some shame to claim on the State.

As usual, Migration Watch's numbers are simply meaningless scare tactics to promote a xenophobic and unpleasant agenda.

At a time when the population of the UK is actually falling sharply- with Poles returning home, and the foreign high-rollers in the City of London following them out of the door, we will increasingly struggle to compete as further skill shortages emerge.

In such circumstances, the anti-migration lobby may get what they wish for... and then really wish they hadn't.