Comfort

For the last week or so i’ve been working on something mind-numbingly boring, and yet at the same time painstakingly detailed. At some point this afternoon it all got too much for me, and i sat down, took my camera to pieces, gave it all a good clean, and put it back together.

Horrendous-ness slipped away. Calming… and so clean!

Straw Dogs

For the past couple of weeks i’ve been slowly making my way from John Gray’s Straw Dogs – Thoughts on Human and Other Animals. It has been one of those books that i’ve savoured reading, going back and re-reading pieces, and even putting it down to let sections sink in. 

It’s an ambitious book, attempting to rubbish such sacred cows as humanism (as defined as a believe in progress), man’s unique position on the planet, free will, universal morals… all in a rather didactic style, that often seems to appeal to a sense of having been ‘out read’.

For all that, i found it rather inspiring. Yes, it’s nihilistic, doesn’t leave you feeling good about humanities chances at dealing with it’s issues in relation to the ecosystem, demolishes the idea that technological advances universally provide benefits… but it left me feeling much better about my conviction that we are nothing special, except in our ability to delude ourselves.

Man is simply another animal, but an animal tortured by a need to define some sort of purpose, and justify it’s existence.

Seeing in Colour

Don’t know how it happened, but for some reason my interest in colour has waned. Obviously it’s harder to get right than black and white, but there is also the practical part of this; that as i can’t / don’t develop my own colour stuff it’s harder to get as enthused about it anymore.

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Still glad that i took colour film to Izu at the end of last year – those pictures of Mt. Fuji in the late afternoon light just wouldn’t have worked in b&w… or maybe they would, but i’d have to be much more skilled to realise them. How contradictory.

Useless Intuition

Seems that i’m a couple of months late on the old, ‘this feels dangerous’ business with British banking. 

Lord Myners, the financial services secretary, said the bank system came close to collapse last October, before the government’s £500bn rescue package.

“There were two or three hours when things felt very bad, nervous and fragile,” he said. “Major depositors were trying to withdraw – and willing to pay penalties for early withdrawal – from a number of large banks.”

It appears that the BBC have edited his remarks, as elsewhere the “major depositors” are linked to New York and Tokyo.

Makes you wonder what kind of guarantees they had to be given in order to convince them not to remove their funds. The trouble with this game is that, like a Ponzi scheme (how about that?!) once it starts to unravel it will be fast, furious, and essentially unstoppable. The failure of one UK / US bank will bring down a couple of others, and the collapse of those, five more… if it makes it to ten, the whole system would likely fail.

Interesting time to be in government – essentially held hostage to the whims of capital movements. Lots is being written now about the unique problems of the UK state due to the relative size of the banking system. Can’t see the americans bailing out the UK (remember what happened after WWII?) so it might soon be time for another trip to the IMF.

Interface Hell

After a couple of months of barely contained frustration with the Canon scanning software i’ve finally found the button that stops it trying to make (retarded) guesses at the frame crops. Oh! The fun we’ve had…

Wonder what it is that makes Japanese engineers geniuses at designing hardware interfaces, and yet completely brain dead at software? It must be something to do with being overwhelmed with choices. Every piece of Japanese software can do everything but seemingly goes to immense lengths to then hide it from the user. Wild.

The Big Red Button

I don’t quite recall all the details, but over Christmas i heard tale of crank calling the people running the Large Hadron Collider at CERN, pretending to be representatives of the Japanese Emperor. The punch line escapes me now, but the idea obviously stuck with me…

In the news this morning is this little gem:

A new study of Mini-black holes generated by the Large Hadron Collider suggests they could decay over a period of more than one second, according to Roberto Casadio at the Universita di Bologna and associates, raising concerns with some physicists. 

which suggests that, at the very least, there are still plenty of unknowns out there. Doubt it’ll be enough to make anyone reconsider the judiciousness of eventually getting the thing fired up. Part of me wants to believe that the physicists understand the energy scales well enough to be confident that they aren’t going to tear a hole in the universe. However, another part of me knows that we / they obviously don’t know enough (read that link, it’s good / funny / insightful) about quantum physics to be sure – or why would this experiment be necessary?!

Anyway, all this bought back my (drunken) reaction to all this: perhaps civilisations develop to the point where they are capable of building a Large Hadron Collider, and whether they fire it up determines their true level of advancement. We never really did understand what triggers the big bang process…

The precautionary principle be damned?

[Yes, yes, i know; people will die if they travel faster than 30mph; nobody will ever need more than 640KB; etc. but this is somewhat larger gambit. Are we now powerful enough to mess with the fabric of the universe? How sure are you about that…]

Musings on Default

It occurred to me after posting the piece on collapse that i no longer think there are any good options left for the government / bankers.

If the UK government nationalises the banks, wipes out the shareholders, moves all of the junk into a ‘bad bank’, and attempts to recapitalise the survivors, it’ll destroy confidence in the UK banking system, which is such a huge part of the economy that it’ll crash the pound, eventually causing the government to default on it’s foreign debts, and probably start a cascade of defaults that’ll ripple around the world.

On the other hand, if they attempt to recapitalise the banks with tax payer money, while not nationalising, they’ll get bled dry in the markets, have to borrow more in the debt markets to keep playing the game, until they get to the point where they have to default on the debt… see above.

Putting myself in their shoes… i suspected it’d be close to impossible to take the first route, even if it was the shortest path from disaster to recovery. The second has the pleasant illusion of appearing to be ‘fighting the good fight’… pointless, but at least it’s something… right? Worth remembering that we are dealing with politicians here, not rational at the best of times.

In a way the Icelanders have got the best of it. They’ve taken their lumps, were small enough, isolated enough, to be able to throw their hands up and admit defeat. And while it’s obviously going to be rough for a while, they can at least see a point in the future when they’ll have a clean slate. For the UK the problems just keep on coming, and it’s still getting darker…

[I’m writing ‘the UK’ in these pieces because it’s the basket case that i read most about at the moment – the problems are just as bad, maybe even worse in the PIGS (and Ireland, especially ireland…)]

Kollaps

Perhaps it’s just me, but i reckon we’re going to see a banking collapse in the UK pretty soon. The banks are obviously insolvent, and having been partially nationalised should be sheltered from the storm… but that’s not happening.

The pound is getting hammered, which in the absence of any major action in the bond / gilts markets is surely a proxy for the country as a whole. If there is a huge run on the pound (how huge would huge have to be considering what has already happened?) the UK could easily find itself in the same place as those Icelandic terrorists. Ah, justice.

The impression from what i’ve seen of Messrs Brown & Darling is that they believe that they can borrow their way out of any problem. (Insert joke about trying to dig your way out of a hole…) Which might well be true… for as long as the debt markets think they are good for it. But there is a tension here; interest rates are not divorced from the bond market, and if the cost of government borrowing goes through the roof, interest rates will have to go up. So, they’re going print money, which will put even more pressure on the pound, and drive more people to sell… Unless you have a fiat currency, this is a dangerous game to be playing. 

All this leaves the banks with a guarantor that looks more like a liability than an asset.

As many people are now saying, the only way forward is to force the banks to bring their dirty laundry out into the light of day, declare them bankrupt (which they surely are…) and attempt to reboot the system. This would put an end to the uncertainty, and wipe out huge parts of the investor class – which is exactly what should happen.

As the investor class get the best government their money can buy, it will be the very last thing to be tried. Those that can, will be dumping their holdings as fast as possible at this point, hence the big declines in the bank stocks. With the abyss yawning beneath them it looks like they are running out of time…

Update: In my morning reading is this piece by Willem Buiter on the similarities between Iceland and UK. In it he notes that the Royal Bank of Scotland has a balance sheet of between 1.75 and 2 trillion pounds, and that the GDP of the UK is roughly 1.5 trillion pounds. The point being that potential scale of the losses at just one of the UKs banking giants exceeds the amount of money that the country turns over in a year. The similarity in scale between these two numbers makes it clear just how out of proportion the banking sector is with respect to the UK economy, and consequently why government guarantees don’t, or shouldn’t, really mean very much…

When you then look at the reserves that the banks are holding, compared to their liabilities (on the books liabilities, not the stuff that they can’t value (it’s worthless..) and therefore are allowed to keep as mysterious level 3 assets) you can see why it’s safe to consider them insolvent. The only thing that’s stopping them declaring bankruptcy tomorrow is an accounting trick.

Ah, data!