Götterdämmerung

The British Prime Minister has become a desperate man. Whether it be the countless borrowed billions dashed at an economy he has personally supervised in its progress towards ruin; the chainsaw systemic attacks on personal liberty; the arrest of an MP in the House of Commons for the offence of performing his constitutional duty; the tour of foreign countries to "gild o'er" his failures at home; and now the attempt to meddle with the royal succession in order to divert some of his deserved unpopularity onto an institution that gives us continuity with a past he has assiduously sought to obliterate; all combines to show a man floundering, willing to sacrifice all others to maintain his wretched office for a few more miserable years. The Birnam Wood of financial collapse is, however improbably, marching towards Dunsinane; how apt that he should have chosen to domicile his family in Fife.

Divided consciousness

It's a strange feeling. I go about my daily work as though everything is normal - meetings, calls, teaching, memos, make a cuppa for others - and then I remember the financial volcano beneath our feet. One or the other must be a fantasy, yet I neither run away nor stop following the crisis on the Net. I hate the fuzzy-headedness you get from doublethink.

The Federal Reserve is out of control

Here is a very worrisome point:

None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go f*ck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.

For the full horror of the runaway financial train, see the Rolling Stone article here.

Brown's Britain: we can shut down your life

htp: Paddington

"Good time to invest," say fund managers

"The markets are not about to race away but one of these days they will, so don't wait for ever. Eventually, there will be the mother of all rallies." - Mark Dampier, Head of Research, Hargreaves Lansdown

"Safe to go out at night again" - Dr Acula, Transfusion Times.

... but wear a very thick scarf, says Marc Faber.

An immodest proposal

In a forthcoming issue of 'Human Nature' is an article 'Mathematical talent is linked to autism'. It includes discussion of the Viennese pediatrician Hans Asperger, for whom the condition is named. The syndrome, to various degrees, appears to be common in those successful in art and science, including mathematics.

Given that there is a great social need for such talent, and that it appears to be strongly genetic in origin - should we start a breeding program?

When the music stops, a dollar collapse?

Brad Setser's analysis is that Americans have been repatriating their dollars even faster than foreigners have been getting rid of theirs:

"Words cannot really capture the sheer violence of the swings in private capital flows that somehow produced a a rise (net) private demand for US financial assets."

At some point, the balance of these cross-currents will change, and then? Maybe the turning point will come when Americans are forced to sell financial assets to meet living expenses and medical costs.

Meanwhile, Tim Iacono comments on a proposal to substitute the dollar as the world's reserve currency, with drawing rights from the IMF, i.e. a mixed bag of currencies. China's central bank seems terribly keen.

I have a sense of something being held up, but not for ever.