Stinking fish and red herrings

A fish rots from the head down, is the saying, and a truly rotten government we have. Currently they are busy monstering a venal group of auto company directors who did exactly what the Labour (!) government wanted them to do, which was to keep hope alive for MG Rover for just long enough to get through the next General Election. Equally obedient to his master's voice, the mannered and self-regarding Peston now emotes at them ("I feel slightly nauseous").

Those of us who are old enough will remember the history: how venture capitalist Jon Moulton came with a plan to reduce the money-haemorrhaging plant to a smaller, actually-profit-making outfit specialising in sporty cars. The rest of the enormous site would be cleared and developed as a residential and shopping area. Redundant workers would be suitably paid-off and their pensions preserved - and many of them might then have had a chance of employment with other car makers elsewhere in the country.

Oh, no, this would never do. The land was polluted and quite unsuitable for residential development. Rover still had a future. Moulton was a wicked chancer. His twopenny-halfpenny firm had no business meddling with a great bellwether of the British economy.

Now, the site has been cleared for residential and retail development. There is no car making at all. The workers didn't get the compensation they would have had, nor the pensions, nor the alternative employment. A few men have - legally - made about £9 million each, hardly worth mentioning in the same breath as the outrageous booty brought home by bankers and City gamblers.

And the Fourth Estate plays along with the distraction of the public's attention.

Robert Peston is the son of Maurice Peston, Baron Peston of Mile End, a Labour life peerage created for Peston senior on 24 March 1987.

Another collapsist

Last month, Marc Faber used the word "collapse"; now, Max Keiser says the same: the dollar will halve, gold will leap 50 - 100%, import prices will soar. In this interview, Keiser is a bit less gonzo and correspondingly more credible.

The question is, how bad is it for other countries (e.g. the UK) and what will trading partners do to stop their export markets being hit? If all major countries try to devalue their currency, then maybe only certain commodities will be worth holding on to while the winds blow.

And Keiser says the wealthy have been shifting their capital out of America since 9/11. He's been choosing defensive stocks, ones that will survive high unemployment, consumer boycott and anti-American sentiment. One big and possibly vulnerable name he mentions is Coca-Cola (remember Qibla Cola?) - a staple of Warren Buffett's portfolio.

Gold

... is over $1,000 again.

What's Next?

Thanks to the historically unprecedented peace and prosperity in the West since World War II, my life has been blissfully uneventful . Any hardships that I have endured pale in comparison with those of my parents.

My father was a natural scholar, who was pulled out of school at age 14 by my grandmother, on the grounds that 'education would not do him any good'. My mother, raised in Nazi Germany, lost any chance of further education because of the war.

While raising my brother and me, they encouraged us to do our best, and to take advantage of the excellent (at that time) British education system. In doing so, however, they allowed us to find our own paths, and for that I am grateful.

Why do I make these comments?

It is my opinion that, even if we survive the current economic mess, there are cultural movements that threaten to cement in place a caste system worse than the old class system.

On one hand, we have the 'education experts', who have so meddled with schools on the grounds of inclusiveness and diversity, that the education system now produces people qualified on paper, yet unable to do anything useful.

In the US, we have religious extremists on the right trying to kill public education for many reasons, and attacking science and its funding at every turn. In the UK, students now have to pay tuition, leaving them deeply in debt, just like in the US.

We also have a relatively new phenomenon, the 'helicopter Mom' of the middle class, who micro-manage every aspect of their childrens' lives. I have interviewed students for a select medical school program. Full 3/4 are of Indian descent, with both parents in the medical field. They have been groomed from birth to do just the right things to follow their parents.

Just how free will the next generation be?

Compassionate Conservatism

You may call me hopelessly old-fashioned, but I believe in loyalty. One of the ways in which we reward loyalty is a pension plan. In the case of state pensions (professors, teachers, firemen, policemen, etc), the standing argument is that many of these people took the good pension as a trade-off for lower incomes than they could get in industry.

Even the Soviets recognized that this trust was inviolate. Not so the corporate raiders, who started in about 1980 to raid the funds to pay for their purchases, totally destroying many of them in the process.

Today, the conservative US columnist George Will published a piece blaming California's financial ills on over-taxing the rich, and the 'generous' state pension system.

I find it a very odd coincidence that the very same day, conservative Republican lawmakers in Ohio announced that their public pension system is in trouble, and requires a major overhaul, to be done on the backs of the current retirees.

Hi-yo Silver, away!

Jesse alerts us to the fact that the Chinese government is not only investing in precious metals, but actively encouraging its citizens to do the same. Funny that our governments aren't doing this.

And gold briefly cracked the $1,000 ceiling today. Naturally, there'll be a reversal at some point, but I have a hunch that much money and effort have been expended trying to put off this psychologically important event. Once you've made the first crack in the eggshell, it gets a lot easier.

Every little thing's gonna be all right

Dr Mark Perry reckons it's all been on the up-and-up since 1929. Yes, production has become more efficient over time. But can it be quite as rosy as it seems, when the last quarter-century has seen an explosion of debt?