Left Outside

Tim “Facepalm” Worstall

Tim continues to prove that right wingers really, really love banksters and will abandon all logic and reason to defend them despite them being subsidised, cheating, arrogant wards of the state:

AIG, GM and Chrylser, that’s where the losses are.

The banksters aid, turned a profit.

I think the easiest way to show this to be silly is to compare this bailout ex ante and ex post. Before the bailout the financing cost for banks was through the roof, after the bailout it began to converge with that of the soveriegn government doing the bailing.

In Ireland, a tiny economy with a big banking sector, the government’s interest rate converged up to that of its banks, in the UK, Europe and US banks’ borrowing costs converged down towards that of the government funding them.

This happened because the government assumed all the downside risk and associated financing costs of these banks. It almost bankrupted Ireland and made tidy profits for bankers living in jurisdictions with large tax bases at those large tax bases’ expense.

As Steve Randy Waldman riffs on the same topic:

But who has lost anything from the bailouts? Wasn’t it a win-win? This all sounds very abstract. Where are the transfers?

If the government borrowed or printed a trillion dollars and gave the money to me, would there be any losers? If you don’t think there has been a wealth transfer, if you don’t think ordinary people have lost, please call your Congressperson and ask her to cut me a trillion dollar check.

Indeed, can I have a trillion dollars Tim? If I can, I promise to pay it back in a few years, and if I can’t then we’ll just call it quits.

Rightwingers, please, fall out of love with finance and think a little.

Filed under: Blogging, Economics

Art and Wealth

Once again, Left Outside brings you quality programming. But does it matter that today’s video is sponsored by Nokia or that yesterday’s video was sponsored by Zapata Racing? [1]

I don’t think it really does.

A lot of great art has been sponsored by rich people or by religious powers or by wealthy and powerful statesmen. That art is now produced by private companies isn’t much of a step down. For example, I’d rather be sponsored by Nokia than the pope, or WordPress (hello!) than Henry VIII.

A polarisation in wealth might pose many problems for many things, mental health, macroeconomic stability, cosmopolitan theories of justice, but art? No. I think inequality might be good for art, or at least neutral.

There seem to be two contrasting currents to art, one is very rich people sponsoring art the other is people of reasonable means taking up art for fun. I don’t know which dominates. But I don’t think we’ve really had any significant stagnation in aesthetic life for the last couple of centuries so . [2]

So, art in corporate hands. Not ideal, but probably not any different to anything that has happened before, nor any worse than any other set up that we’ve seen. [3]


[1] Your humble blogger uses a blackberry and I don’t know what the hell Zapata do, so I’ve no horse in this race.

[2] other than that period where we built hundreds of hideous concrete buildings after the war.

[3] Okay, so the analysis on this site has suffered of late, but I’m trying.

Filed under: Politics

Blogging may be slow, but I still bring you quality programming

Filed under: Foreign Affairs

Space race 2.0 time

Astronomers have confirmed the existence of an Earth-like planet in the “habitable zone” around a star not unlike our own. The planet, Kepler 22-b, lies about 600 light-years away and is about 2.4 times the size of Earth, and has a temperature of about 22C.

This is brilliant. Load up a (large) rocket with lots of people and some sort of farm and send them out ASAP. They won’t get there for some time so we best get moving. Tagged under foreign affairs, hmmm…

Filed under: Foreign Affairs

AAA ratings are a beauty contest – someone has to win

Duncan worries that the UK might lose its treble AAA sovereign debt rating. I think this is mistaken, even with David and George in charge I don’t think they can screw the economy fast enough to make us lose our rating.

For the purposes of this post I going to assume that Duncan didn’t really mean “AAA rating” because it is a informationless designation created by corrupt and incompetent rating agencies. However, it is useful short hand for “our borrowing costs increasing and investors thinking UK debt is unsafe” so I understand using it as a proxy.

The Eurozone is a mess, the US is still not adding jobs quickly enough to lift its employment to population ratio and Japan is Japan. The US, Japan, Italy, Germany and France all have debts of over a trillion dollars outstanding. The UK’s total debt is just under a trillion dollars [src, some figures a little out of date, all close enough].

Apart from perhaps Canada, no country comes close in terms of providing a deep, liquid and widely traded market for their bonds. If someone wants to own something which can be easily and quickly sold and about which there is a lot of information available they are going to hold one of these bonds. Similarly, many banks and organisations will be forced to hold some nominally safe bonds too.

The UK doesn’t have be run well or grow strongly (which it looks like it won’t), because so long as Europe remains a mess people will be happy to hold our debt because it is one of the least ugly around. Take that thought as consoling or terrifying as is your preference.

Filed under: Economics

Things that put me off central planning…

Demographic trends for India, the second most populous country in the world, suggest that a million new workers will join the labour force every month for the next two decade.

Plan that? The very thought terrifies me.


But then, a basic modern capitalist mixed economy comes out of this paper well:

The two most consistent factors that predict overall entrepreneurship are local education levels and the quality of local physical infrastructure.

Little grist to the mill for libertarians or socialists here.

Filed under: Economics

When NGDP is Depressed, Employment is Depressed

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