The Parallax Brief

A Weaker Pound is a Good Thing

February 8th, 2010 by The Parallax Brief

After egregiously criticizing the Bank of England’s Monetary Policy Committee (MPC), the committee responsible for conducting the United Kingdom’s monetary policy, John Redwood — astonishingly — piles right into an attack on a weakening pound:

“Today the pound opened lower again on the exchanges against the dollar. That means dearer petrol, dearer commodities, dearer imports from dollar related parts of the world including China. We are poorer as a result.

[…]

Months ago I started warning they were overdoing the easy policy which was bound to lead to a lower pound and higher prices… Why can’t they find people who can get it right?”

But in fact, a weaker pound is just what the British economy needs now.

Currently, the country has a large current account deficit, meaning that we currently import – and therefore must pay for – more goods than we export. Or, to put it another way, we spend more than we make.

A weak pound will simultaneously discourage the purchase of foreign made goods, in favour of suddenly relatively cheaper homegrown fare, while making British made goods and services more competitive across the globe.

At one fell swoop, Britain’s current account deficit is helped back toward balance, while our manufacturing sector becomes more competitive at home and abroad, creating jobs.

So while a weak pound might be bad for those who want to buy BMWs, Chinese-made electronics or foreign holidays, it’s good for jobseekers and people who have invested in British factories.

Only if the pound drops precipitously should we worry: at that stage, investors would likely take flight from sterling denominated securities — including gilts — which would have disastrous consequences for the economy.

But we’re nowhere near that yet, and the current state of neglect for the pound really is a benign economic force.

The Parallax Brief suggests that if the Bank of England ever does decide to look for someone who “can get it right”, it will find pretty fallow ground in Wokingham.

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America Gives Succour to Fans of First-Past-the-Post

February 8th, 2010 by The Parallax Brief

There are many faults with the British parliamentary system and the voting procedures which elect its members: the smaller parties are grossly underrepresented in Parliament; the government in power can simply force through any legislation it wants; there is no real separation of the legislative and the executive branches of government, and power has been increasingly centralized with the executive during the ministries of four consecutive prime ministers.

However, one might wonder, looking at the legislative constipation currently clogging the US Congress, whether Britain really wants to abandon a system which so implacably prejudices against minority and coalition governments.

Nobel Laureate Paul Krugman offers some historical context in his New York Times Column today:

A brief history lesson: In the 17th and 18th centuries, the Polish legislature, the Sejm, operated on the unanimity principle: any member could nullify legislation by shouting “I do not allow!” This made the nation largely ungovernable, and neighboring regimes began hacking off pieces of its territory. By 1795 Poland had disappeared, not to re-emerge for more than a century.

Today, the U.S. Senate seems determined to make the Sejm look good by comparison.

Last week, after nine months, the Senate finally approved Martha Johnson to head the General Services Administration, which runs government buildings and purchases supplies. It’s an essentially nonpolitical position, and nobody questioned Ms. Johnson’s qualifications: she was approved by a vote of 94 to 2. But Senator Christopher Bond, Republican of Missouri, had put a “hold” on her appointment to pressure the government into approving a building project in Kansas City.

This dubious achievement may have inspired Senator Richard Shelby, Republican of Alabama. In any case, Mr. Shelby has now placed a hold on all outstanding Obama administration nominations — about 70 high-level government positions — until his state gets a tanker contract and a counterterrorism center.

[…]

In the past, holds were used sparingly. That’s because, as a Congressional Research Service report on the practice says, the Senate used to be ruled by “traditions of comity, courtesy, reciprocity, and accommodation.” But that was then. Rules that used to be workable have become crippling now that one of the nation’s major political parties has descended into nihilism, seeing no harm — in fact, political dividends — in making the nation ungovernable.

How bad is it? It’s so bad that I miss Newt Gingrich.

Readers may recall that in 1995 Mr. Gingrich, then speaker of the House, cut off the federal government’s funding and forced a temporary government shutdown. It was ugly and extreme, but at least Mr. Gingrich had specific demands: he wanted Bill Clinton to agree to sharp cuts in Medicare.

Today, by contrast, the Republican leaders refuse to offer any specific proposals. They inveigh against the deficit — and last month their senators voted in lockstep against any increase in the federal debt limit, a move that would have precipitated another government shutdown if Democrats hadn’t had 60 votes. But they also denounce anything that might actually reduce the deficit, including, ironically, any effort to spend Medicare funds more wisely.

And with the national G.O.P. having abdicated any responsibility for making things work, it’s only natural that individual senators should feel free to take the nation hostage until they get their pet projects funded.

America-watchers will no doubt feel a pang of deja vi writ large: California was last year held hostage by the Republican minority because the state budget had to be voted through the State Congress on a two-thirds majority.

While a country wouldn’t want to become subjugated to the tyranny of the majority, it’s also fair to say that the last thing we need is America’s situation, where parliamentary rules and circumstances allow one minority party — or, worse, individual MPs — to effectively clog the entire legislative system.

Of course, politics here is not as viciously partisan as it is across the Pond — and there is clearly no facsimile of the grossly irresponsible, wantonly contrarian Republican party — but Britain is currently facing a fiscal outlook worse than any since the Winter of Discontent, and even the slightest delay while backroom deals are made, or the merest hint that the bitter medicine Britain needs to swallow to rebalance its books will be watered down to satisfy coalition partners or backbench swing-voters, will be swiftly punished by the bond market, with catastrophic consequences for the economy and the country.

It seems that first-past-the-post might be on the way out just when we need it most.

A Brief History of Quantitative Easing — and Why it is not Inflationary

February 7th, 2010 by The Parallax Brief

Last week, the Bank of England ended it’s quantitative easing (QE) program last week, and the Parallax Brief thought this might be a good time to look at QE, what it’s designed for, and some of the myths spread by those on the conservative right.

QE is a tool available to central banks to further loosen monetary policy beyond zero percent interest rates. Ordinarily, interest rates in Britain are raised when inflation looks as though it will rise above 2%, and are lowered when inflation looks as though it will fall below 2%. Raising rates makes money more scarce, putting the breaks on economic growth and the money in circulation, thus holding down inflation; lowering rates does the opposite, increasing the money in circulation and boosting economic development.

However, during the financial crisis, interest rates reached zero, yet the inflationary situation, and the economic outlook, still demanded looser monetary policy. So, what can the central bank do? It cannot lower interest rates below zero because the one does not accept a fee to take a loan — or, to put it in simpler terms, you wouldn’t expect to get interest from the bank every money to borrow its money! — and yet inflation is still falling. QE is the way around this. What it does, in effect, is further loosen monetary policy by printing money and using that money to purchase government bonds (or other securities), thereby increasing the money in circulation even beyond that which would normally by permitted by zero interest rates and holding down to real cost of borrowing.

Yet the monetary hawks argue that this will inevitably lead to inflation. Print more money, they argue, and more money will be chasing the same amount of goods, and prices will rise, inevitably leading to inflation. Worse, they say ominously, inflationary expectations will rise and the government will have to fight tooth and nail to put the genie of inflation back into the bottle, lest Britain descend into some kind of Weimar-inspired hell hole of hyperinflation.

But is this really the case? No. Britain is in a liquidity trap situation, whereby the extra money does not necessarily find its way back into the real economy, and stays trapped as banks struggle desperately to repair their savaged balance sheets.

The inflation hawks are divorced from reality. Their views are destroyed by one chart. Above is the seasonally adjusted M3 money growth for the last ten years, and we can see it is currently near its ten year low, despite QE.

Being concerned about inflation in a liquidity trap situation is like finding a Mars bar during a famine and worrying about getting fat.

It’s time for the inflation hawks to own up and admit they were wrong.

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Adam Curtis — The Power of Blogs

February 7th, 2010 by The Parallax Brief

Adam Curtis is the finest documentary maker in the world. He picks subjects which look at the broad sweep of intellectual theory and the unintended and awesome consequences they have on society. His documentaries have included The Century of the Self, which examines the influence of Sigmund Freud’s research on controlling and sculpting individuals and society, The Trap, which examines the two concepts of liberty as set out by Isaiah Berlin, and the consequences of pursuing negative freedom in the west, The Power of Nightmares, which chronicled the parallel histories of the Neo-Conservative and Islamists, and The Mayfair Set, which looked at the lives of a small group of industrialists and entrepreneurs connected through the Claremont Club in Mayfair, London and the improbably huge impact they would have on Thatcherite/Reaganomics, western relations with the middle east, and the structure of modern society.

More important than the subject matter, however, his work is a remarkable fusion of spoken word, popular music, film sound effects, and a blizzard of tangentially relevant imagery, film and nerdishly sourced archive footage. It’s clear that he was a huge influence on Michael Moore, but, like Oasis and the Beatles, the original is far superior to the facsimile.

Even if one doesn’t agree with his conclusions or interpretations, one must appreciate the skill of the artist.

If you haven’t seen any of his work before, here’s a four-minute film he made for the BBC recently, about the rise and fall of the television news journalist.

Anyway, the point of this verbose preamble is that Adam Curtis has recently started writing a blog for the BBC. He discusses major historic events and minor curiosities, and accompanies each entry with wonderful rare archive footage — the type of thing which finds its way into his documentaries.

So can the Parallax Brief please recommend the blog, but specifically his latest post, on Afghanistan, and the parallel stories of Benazir Bhutto and Yegor Gaidar, who Curtis argues tried to save their countries from the acute crises caused by Afghanistan, but whose actions had terrible unforeseen consequences.

It’s a familiar theme for those who have watched his documentaries, and like the documentaries, you may not agree with all his points, or his conclusion, but the archive footage and the skill of the storyteller makes the experience addictive.

Enjoy:

ILLUSTRIOUS CORPSES – PART ONE

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Churchill Sums Up the Day

January 29th, 2010 by The Parallax Brief

Anyone can see what the position is. The Government simply cannot make up their mind, or they cannot get the Prime Minister to make up his mind. So they go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all powerful to be impotent. So we go on preparing more months and years – precious, perhaps vital to the greatness of Britian – for the locusts to eat.

Winston Churchill — 1936

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BoJo Cuts Some Rug

January 28th, 2010 by The Parallax Brief

The Parallax Brief falls into that category of males who are embarrassingly leaden and graceless on a dance floor. Ms Parallax Brief is a wonderful dancer, which would be a big positive if she didn’t love it and expect the Parallax Brief to dance with her at every opportunity. Worse, of the Parallax Brief’s drinking buddies, one danced semi-professionally while at university, and another is a regular at salsa evenings, casting the Parallax Brief’s syncopated plodding in an even crueler light.

But at least the Parallax Brief can feel comfortable that he’s not quite as bad or embarrassing as Boris Johnson, who engaged in some awesomely bad dancing at the London Mayor’s Christmas bash. The photo below is suggestive, but please follow the link to the video on the Sun website, because it might actually challenge Mandelson’s and Prescott’s toe-curling swaying to Things Can Only Get Better at the 97 victory party.

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Underestimating Swing in the Marginal Seats

January 27th, 2010 by The Parallax Brief

The Parallax Brief was unwell over the weekend, but one piece of polling data particularly caught his eye, and could have a tremendous effect on the outcome of the election. The consistent gold mine that is the UK Polling Report blog has the goods:

The News of the World has a new ICM poll of marginal seats in tomorrow’s paper. ICM’s sample covered the 97 seats where Labour are in first place and the Conservatives in second place, and where the Conservatives need a swing between 4% and 10%

[…]

The topline voting intention figures in these seats, with changes from the last electon, are CON 40%(+9.2), LAB 37%(-7.4), LDEM 14%(-3.8) – so a swing of 8.3% from Labour to the Conservatives. In contrast the last ICM national poll showed a national swing of 6.5%, so once again we find a slightly larger swing towards the Conservatives in the Con-Lab marginal seats they need to win. This has been pretty consistent in all polls of marginal seats in the last couple of years.

Reading this, the Parallax Brief had one of those head-slapping “of course!” moments.

A safe Labour seat is bound to have a larger number of voters which are immovable than would have a marginal. While large swings can occur in safe seats without the change in MP that would give the swing publicity (gone from a super safe seat to a really safe seat isn’t a headline), it is still necessarily the case that safe seats have a greater percentage of voters who will only ever vote one way irrespective of circumstances.

Therefore, as one moves along the constituency list, from safest to most marginal, one moves further and further away from one’s heartland, and moves into constituencies that have a higher portion of voters who may have recently, or could in the future, swing one way or the other.

Of course, all things are not equal, and local issues can matter, but in general, it follows that marginal seats are not just vulnerable because they only have a small buffer zone, but because they also have a greater volume of swing voters.

And the Parallax Brief suspects that with an unpopular, and long standing government, this may make the marginals more vulnerable than the current national polling might suggest.

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Banning the Burqa Would be an Affront to our Heritage

January 26th, 2010 by The Parallax Brief

Burqa_EnglandA six month-long French Parliamentary report concluded that Muslim dress should be banned schools, hospitals, public transport and government offices.

From the Jakarta Globe:

“The wearing of the full veil is a challenge to our republic. This is unacceptable,” the report said. “We must condemn this excess.” The commission however stopped short of proposing broader legislation to outlaw the burqa in the streets, shopping centres and other public venues after raising doubts about its constitutionality.

…the commission called on parliament to adopt a resolution stating that the burqa was “contrary to the values of the republic” and proclaiming that “all of France is saying ‘no’ to the full veil.” The National Assembly resolution paves the way for legislation making it illegal for anyone to appear with their face covered at state-run institutions and in public transport for reasons of security.

[...]

Women who turn up at the post office or any government building wearing the full veil should be denied services such as a work visa, residency papers or French citizenship, the report recommended. Critics of the “burqa debate” have warned the measures risk stigmatising France’s six million Muslims who are already bristling at the government’s launching of a national identity debate that has exposed fears about Islam.

The Parallax Brief may not know enough about the “values of the Republic” to argue whether the burqa is contrary to them or not, but he does know that the authors of the report have produced a conclusion that is contrary to the values of western-style liberal democracy.

Western democracies are founded on a tiny clutch of magnificently simple and irreducible values, perhaps the primary of which is that a private individual has the right to do just about whatever he pleases as long as he is not infringing on the rights of others. Obviously, that’s something that is permitted to differing levels in different democracies, and which can have a variety of interpretations, but it is a belief which is integral to our way of life.

This belief even extends to activities which we view as damaging or immoral. Having unprotected sex with a great many partners is both dangerous and, many would argue, immoral, but we don’t pass a law to make illegal the activities of the nation’s lotharios.

An example more pertinent to France’s burqa debate is that we allow fascist parties to exist, despite the fact they stand against much of what we believe, and, if they ever gained power, would likely abrogate many of our freedoms: They may stand against our liberal beliefs, but our liberal beliefs lead us to conclude that we must tolerate their existence.

Similarly, in Britain, we believe that people are free to wear what they want, and free to practice their religion, and just because the burqa is a physical manifestation of a culture that is neither western nor liberal, doesn’t mean that we should ban it. Indeed, despite the fact that the Parallax Brief sides with the standard feminist view that forcing the burqa on women — or bringing up girls so they ‘want’ to wear such a thing, whichever way you want to phrase it — is absolutely against western liberal values, he also knows that our western liberal values demand we permit it. There’s no right not to be offended by clothing. A woman has the right to wear what she wants, whether that be a tiny miniskirt and top which covers barely more flesh than a bikini, or a burqa at the other end of the spectrum.

Our culture is not defined by a specific set of clothes, but by the freedom to wear virtually whichever clothes one wants. Within this context, wearing the burqa in a land with a Judeo-Christian heritage is as much a part of Western culture as kids dressed like Sid Vicious.

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Esther Rantzen In Four-Way Marginal Race?

January 22nd, 2010 by The Parallax Brief

In his ten predictions for 2010, the Parallax Brief stuck his neck on the line and backed Esther Rantzen to become MP for Luton South. He felt that while it has been notoriously difficult for independents to win seats in modern day elections, the expenses scandal and the increasingly narrow dividing lines between the main parties might offer independents an opportunity to capture a mood of public protest. Further, Ms. Rantzen has an oven-ready high profile, and an unimpeachable background in charity work and public advocacy, which, combined with her centrist “floating-voter” politics, will enable her to take votes from both sides of the political spectrum.

Mike Smithson, of the brilliant Political Betting website, notes that Ms. Rantzen is already gaining extraordinarily positive publicity, and will likely continue to do so, which, combined with a unique political and demographic situation in the constituency, could turn it into a four-way marginal:

Looking at the 2005 notionals [for the Luton South constituency] LAB 42.8: CON 28.1: LD 22.5 this should fall easily to the Cameron juggernaut even though the incumbent Labour MP who figures so much inn the expenses affair is not standing.

Yet hugely complicating factors are the candidature of Esther Rantzen – the former “That’s Life” presenter and what happens to the very large Muslim vote at a time when Chilcott is putting the Iraq war on the agenda again.

Esther, who has always been a publicity magnet, has been getting some remarkable coverage and the chances are that this will continue until polling day.

The Parallax Brief believes this should be right. With a high profile independent entering the race, a big political defection taking voters from the first to the third placed party, and a swing away from Labour mitigated by the resignation of the tarnished incumbent, the race should be as open as any seat within the country.

Ms. Rantzen last year participated in one of Think Politics’ Twitterviews — interviews on Twitter where the questions and answers must be completed in a single tweet. If you’d like to read a transcript of that, click here.

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The Pinnacles and the Depths of Man

January 22nd, 2010 by The Parallax Brief

The Pinnacle, from the Guardian:

A soldier who joined the French Foreign Legion after he was rejected by the British army on medical grounds is in line to be received into the Légion d’honneur for his bravery.

Alex Rowe, from Gloucestershire, was turned away by British recruiters as a teenager because he had a detached retina but, determined to follow a military career he signed up for the Légion étrangère ,which accepts troops from any country.

Now 43, Rowe has served in the Gulf, the former Yugoslavia and has just returned from Afghanistan, where he earned his award after fierce fighting against the Taliban.

He was previously awarded for bravery while serving in Sarajevo after braving sniper fire to run across a city plaza and shield a mother and daughter from a hail of bullets. In all, his mother said he had already received four awards for bravery.

In Afghanistan he has been fighting alongside Britons, dozens of Russians, and others from as far as Algeria and China. He was involved in a gunbattle recently in which 10 comrades were gunned down.

“We got hit from 360 degrees,” Rowe said. “Two of the Americans we were with were hit by bullets – one in the back plate, two bullets in the helmet and one in the hand.”

His family are set to visit France in the summer to watch as Rowe becomes a member of the Légion d’honneur.

And the depths, from the Augusta Chronicle:

A new professional basketball league will boasting rosters made up exclusively of white Americans has its eyes set on Augusta, but the team isn’t receiving a warm welcome.

The All-American Basketball Alliance announced in a news release Sunday evening that it intends to start its inaugural season in June and hopes Augusta will be one of 12 cities with a team.

“Only players that are natural born United States citizens with both parents of Caucasian race are eligible to play in the league,” the statement said.

[...]

Don “Moose” Lewis, the commissioner of the AABA, said the reasoning behind the league’s roster restrictions is not racism.

“There’s nothing hatred about what we’re doing,” he said. “I don’t hate anyone of color. But people of white, American-born citizens are in the minority now. Here’s a league for white players to play fundamental basketball, which they like.”

Lewis said he wants to emphasize fundamental basketball instead of “street-ball” played by “people of color.” He pointed out recent incidents in the NBA, including Gilbert Arenas’ indefinite suspension after bringing guns into the Washington Wizards locker room, as examples of fans’ dissatisfaction with the way current professional sports are run.

“Would you want to go to the game and worry about a player flipping you off or attacking you in the stands or grabbing their crotch?” he said. “That’s the culture today, and in a free country we should have the right to move ourselves in a better direction.”

The first story is of on a man who ran across a city plaza through a “hail of bullets” to protect a mother and children; who is part of an organization in which skin colour and nationality take second place to bravery, loyalty and comradeship. The second story is about a racist man who is starting an organization because he thinks that blacks are what’s wrong with sport and that America should move in a better direction, away from “their” crotch-grabbing, finger flicking culture.

Amazing what’s on display in the very same day.