Think of a number. Then think of another one

“Prediction is very difficult, especially about the future.”
(Niels Bohr)

“The uncertainty surrounding the outlook is unusually large.”
(IMF World Economic Update, January 2009)

It’s going to be bad. It’s going to be worse than we thought. You remember a couple of months ago, when we thought it was going to be worse than we had thought a couple of months before that? Well, we were wrong: we now think it’s going to be even worse than that. And in another couple of months we’ll think again.

Let me be a bit clearer. The IMF has just released its latest economic growth forecasts – the sixth set since a year ago (2008’s: January, April, July, October, November).

Six times it has tried to predict growth for 2009. Here is its sequence of efforts for the G7 economies:


Huge changes from one forecast to the next. Clearly, the experts have been radically underestimating how bad an effect the credit crunch would have. The crunch started way back in July 2007, although the real financial carnage – most catastrophically the destruction of Lehman Brothers – was in September 2008. The gap between the July and October forecasts is striking, although not as much as the revisions even since then.

Can we have much confidence in the latest predictions?

Think about it this way: what are the next IMF forecasts, due in April, going to say? Are things going to keep looking worse and worse? Or have the forecasters finally grasped the scale of this mess? Or have they, in their desire to avoid being over-optimistic yet again, erred too much in the other direction? If we can’t predict the next prediction confidently, then what’s the point in crunching numbers about the rest of the year, or even beyond?

I can only shrug. There’s too much uncertainty, particularly about what’s going to happen with the various schemes around the world to support banks and lending. Until this is resolved, there just won’t be any reliable growth forecasts. And without these, other forecasts – unemployment, repossessions, share prices, exchange rates, public finances – will be deeply unreliable too.

I’ve picked on the IMF here only because it’s published a good number of easily accessible forecasts, and because the latest set has got such overwhelmingly uncritical coverage in the media (although Anatole Kaletsky offers a note of scepticism: “no economic forecaster will predict what happens in the next year correctly, except by chance”). Others – businesses, think-tanks, governments, central banks, other international bodies – have also had to keep ripping up their previous worst-case scenarios.

With no disrespect to the doubtless clever and industrious people who calculate these numbers, they are – like the Zimbabwean dollar – not worth the paper they’re printed on.

I Pledge – Because I’m Worth It

Oh. My. Dear. God.



I want to kill them all, and then sell my soul and any number of my internal organs to a necromancer in order to bring them all back to life, just so that I can kill them all again, and then immediately die of acute internal organ loss so that I don’t have to live any longer with the awful memory of seeing this video.

I presume they’re all celebrities; I barely recognise half of them. But who else could possibly combine such casual self-importance with voices that are even less human than their Botoxic faces?

Where’s Charlie Brooker when you need him?

(Via here and here and here.)

Something on the internet about breasts

The BBC website asks: “Why are we suddenly obsessed with ‘man boobs’?” (Caution: Freemania is not responsible for the content of external sites.)

Well, not all of us are. In fact, I suspect that there may still be a little more interest in ‘woman boobs’ – yes, even among men! (I of course am as pure as the driven snow; I’m much more interested in the latest IMF economic forecasts. No, really.)

As ever with stories in this sort of territory, there’s the chuckle to be had at the acronymic British Association of Aesthetic Plastic Surgeons (BAAPS). But there are a couple of novelties worth noting here.

First, a choice of words. The caption “Simon Cowell was mercilessly ribbed for his physique, but has since embarked on a fitness regime” is attached to a photo of Mr C, moobs visible through a tight T-shirt.

“Ribbed” is really not the word.

Second, there’s this statistic:

Surgeons carried out 323 male breast reduction procedures in 2008, up a staggering 44% from 2007.

The over-16 UK population is about 49 million; say that 24 million of these are men. This means that in 2007, a whopping 99.9991% of men didn’t have a breast reduction, whereas in 2008, a mere 99.9987% were able to resist this booming trend. I’m certainly staggered.

Finally, I wondered how far I’d have to scroll down the comments section at the bottom of the page to find something like this:

Why do we find it socially acceptable to put a pair of "man boobs" online without any sort of censoring (or bikini top), but should the BBC ever grace its front page with a pair of female boobs, they'd get fined/in hot water? It's not fair.
James Druce, Tresco, Isles of Scilly

Not far, it turned out. Bravo, Mr Druce; mankind feels your pain. One for spEak You’re bRanes?

Punishing delinquent peers: life means life

This ‘cash-for-amendments’ episode reminds us that while it’s easy (and fair) to get uppity about the fact that members of the Lords are unelected, it’s also an affront to accountability that they’re each there for life.

However ‘great and good’ anyone might deem any of these people when they’re appointed, after that there’s really no effective check on their conduct at all.

There are harder things in the world than kicking a peer out, but not many. Just ask disgraced ex-con the Still Entirely Noble Lord Archer of Weston-Super-Mare.

Linkage

A curious rationale:

The Muslim Council of Britain boycotted yesterday's national Holocaust Memorial Day commemoration in protest at the Israeli offensive in Gaza this month.

Number of Holocaust victims who were Israeli: zero.

‘They are all Hamas’

Norm has posted on an opinion poll that is reported thus:

Sixty percent of Americans in the nationwide survey said they were sympathetic toward the Israelis, compared with 17 percent who supported the Palestinians

And that made me wonder: “the Israelis” and “the Palestinians” is hardly a good way to describe the combatants. What’s more, why should members of foreign publics have to “support” one side rather than the other?

But it turns out that the question was: “In the Middle East situation, are your sympathies more with the Israelis or more with the Palestinians?” So I guess that reporting was fair – although the question itself was clearly designed to spur the picking of sides.

But a more significant finding comes from another poll, conducted about a fortnight ago and reported just down the page from this latest one. People in the USA were asked: “Do you personally make a distinction between Hamas and the Palestinian people, or not?”

37% did and 53% did not.

How to save the financial sector

If only we’d known it was this easy:

Shares in Barclays have jumped by more than 60% after the bank wrote an open letter to reassure investors of its continuing good health.

Could someone fetch Alistair Darling a pen?

On whose behalf do they legislate?

If this is true, it’s a disgrace:

Lord Taylor of Blackburn… allegedly admitted that he had once helped to change the law on behalf of a client. The peer allegedly offered to conduct a "behind the scenes" campaign on behalf of the fictitious businessman to persuade ministers and officials. A £120,000 retainer was discussed. Taylor allegedly said: "I will work within the rules, but the rules are meant to be bent sometimes."
Lord Truscott… allegedly said he had helped an energy client worried about the energy bill. Truscott, who discussed a £72,000 fee, said he had to be a "bit careful" and could not table any amendments himself. He told the undercover reporters: "I can work with you over it ... identifying people and following it ... meeting people, talking to people to facilitate the amendment and making sure the thing is granted."
Lord Moonie… allegedly offered, in return for an annual fee of £30,000, to contact John Healey, the local government minister and to identify people who could amend the legislation;
Lord Snape… allegedly offered to help for a fee of up to £24,000 a year. "Depending on who is on the Commons committee, if I had a chat I could see if I could get them to table an amendment in committee," he said.

Of course the Lords Committee for Privileges will have an inquiry into this, and perhaps the police will too. But what also needs to happen is for the Labour whips to find out from the peers themselves whether these reports are accurate – never mind that it was “entrapment” – and, if so, to withdraw the whip from the four of them (if the reported quotes are accurate, I can’t see what any mitigating context might be). This needs to happen very quickly. Today, please.

What’s more, as Paulie says, we should be taking Lords reform a lot more seriously. Neil Hamilton’s only virtue was that the voters could kick him out.

Degrees of Barackaration

OK, one more not-entirely-serious Obama post.

Over at Comment Central, Alice Fishburn and Danny Finkelstein are running a competition. Whoever has the best (i.e. most amusingly tenuous) personal connection with the new President wins a prize.

My entry was this:

Barack Obama has mixed ethnicity: he is the son of a Kenyan father and an American mother of mainly English ancestry.
Similarly, my father is half Welsh while my mother is quarter Scottish (and - uncannily - of mainly English ancestry).

Although, thinking about it, I can boast another link – one that’s an actual connection as opposed to a mere commonality (however striking):

As a teenager, I was in a young theatre group that put on various shows. I acted in several of these along with a kid called Will Irvine.

Will has since gone into acting and was in a few episodes of EastEnders a couple of years back, in which he appeared with Barbara Windsor.

Babs, of course, has appeared in many other EastEnders episodes alongside Martine McCutcheon.

Martine starred in Love, Actually with Hugh Grant.

Hugh was in Notting Hill with Julia Roberts.

Julia featured in Flatliners with (you knew this was coming) Kevin Bacon.

And Kevin has – several times, in fact – seen Barack Obama on TV.

I expect a White House dinner invitation any day now.

Obama bin Antichrist

Oops:

Barack Obama has been sworn in as US president for the second time in two days, because one word was given out of order during Tuesday's ceremony.
…
In the oath, as set out in the US Constitution, the new incumbent swears to "faithfully execute the office of president of the United States".
But as Chief Justice Roberts read out the oath for Mr Obama to repeat, he moved the word "faithfully" to the end of the phrase.
Mr Obama, apparently noticing the error, hesitated. Mr Roberts repeated the phrase incorrectly, and Mr Obama followed suit, using the erroneous formula.

So, just to be on the constitutionally safe side, Roberts administered the oath again yesterday, at the White House. But:

In contrast to the first oath-taking, Mr Obama did not swear on a Bible

Does the man have any idea what he’s just unleashed?

Update: this is pretty funny. Not often you can say that about a Times editorial...

Ten things that could go horribly wrong with Barack Obama’s inauguration today

1. A throng of foreign political leaders, each desperate to be the first photographed with him, causes the podium to collapse as they rush him.


2. When presented with the Bible to swear his oath on, he asks: “Actually do you have a Qur’an? Or possibly the collected fatwas of Ayatollah Khomeini?”


3. Sarah Palin shoots him.


4. As soon as he’s been sworn in, he grabs at his face, which turns out to be a mask, ripping it off. He’s really Dick Cheney! He laughs maniacally and cries: “Fools! Now I will destroy you all,” before proceeding to destroy us all with an orbiting death ray, built using public funds by a private contractor in which he owns shares. (Well, you never see the two of them photographed together, do you?)


5. The credit crunch proves to be so bad that the US can no longer afford an inauguration ceremony; the presidency is abolished and the White House sold at auction for $240,000 to the parents of a Chinese student who want somewhere to stay when they’re visiting.


6. Jimmy Smits turns up drunk and heckles, then tries to pitch a screenplay he’s written called The Santos Clause, in which neither Aaron Sorkin nor anyone else has any interest whatsoever.


7. George Bush’s final act in his second term is to pardon himself for the crime of seizing a third term, which had been the penultimate act of his second term a couple of minutes earlier.


8. A retired Hawaiian midwife remembers that Obama was actually born on 4 August 1959 and not 1961, as had been mistakenly written on his birth certificate; as Hawaii only became the 50th state on 21 August 1959, he was therefore not born in the US and is not eligible to become president.


9. Obama decides that, for tactical reasons, he should not be sworn in: as he is a Democrat, this could alienate the conservative-leaning independent voters on whose goodwill his re-election campaign will depend. He decides to spend his first term just as president-elect, which he has thus far been very good at, while Joe Biden actually runs the place. Obama gets himself a daytime talk show, called Barack Hussein Obama Talks With Supposedly Ordinary Yet In Fact Theatrically Dysfunctional Americans Regarding Their Personal Problems, In Front Of A Surprisingly Judgmental Studio Audience Who Seem Not To Appreciate Just How Audacious Hope Can Be. It gets cancelled after three episodes.


10. His inauguration speech fails to solve all the problems of the world.

“Oh no, now the damage report machine is broken!”

Our IT department has just added an ‘IT service availability’ section to our intranet home page. At the moment it says “All systems are working”, which for some reason makes me think of the Tube service updates.

But the thing is that the IT service that most often stops working is the intranet updating system.

D’oh!

Bad banks: sin-eaters for the 21st century

Clinical tiredness prevents me from writing anything long and involved, but were I in better shape I’d post about the proposals for setting up a so-called bad bank, likening such a thing to a sin-eater: it takes on the banks’ toxic assets, absolving them from all their irresponsible lending and freeing them (and us) from its consequences.

Thought that was a pretty nice angle. But I’m knackered. So I’ll content myself with a quick, feeble joke:

Bad bank? I’ve just spent the last week and a half trying to explain to Halifax that I’ve changed my address and they still don’t get it. Now there’s a bloody bad bank for you…

‘The Reader’

Surely the film adaptation should be called ‘The Viewer’?

Scientist action figures

From Edmund Scientific:


Curie, Einstein, Newton, Darwin and Tesla (huh?).

Excellent. I always knew science was cool, and now there’s solid plastic proof of it.

(Via David.)

New definitions

Bloody hell. This whole ‘first week back to work’ malarkey is just rotten. If only the economists could dream up some way of letting loads of people have an indefinite amount of time off…

Time for some fun. In memory of dear Humph, let’s play Uxbridge English Dictionary. Last time I tried this it worked very well, so I’m sure you can come up with some good ones.

Just suggest some well-known words for which you have identified brand new meanings. Like these:

Mutilation – quiet satisfaction
Eccentric – obsessed with a former lover
Papabile – the Daily Mail
Totally – five per foot
Antidote – affection from a relative
Unclear – inappropriate affection from a relative
Purposeful – a happy, well-fed cat
Finance – a really top-notch bunch of insects
Humphrey – odourless

Only better. Over to you…

The paradox of thrift and the stable door of credit

‘Shutting the stable door after the horse has bolted’ is generally taken to mean a reaction so late as to be completely ineffective. But it’s worse than that. If you want to get the horse back into the stable, then shutting the door will actually be counterproductive.

And so to David Cameron, who is crusading against debt and spending, because “We're in this mess because of too much debt”.

Well, not quite. We’re in this mess because of the sudden, massive fall in the availability of debt. Certainly, having borrowed a fair old whack over the years up to 2007 has made us more vulnerable to a credit crunch, so ‘less spending fuelled by borrowing’ might have been decent advice back then.

But now the horse has bolted and the credit has crunched.

And Cameron is raging with ever shriller incredulity against Labour’s open-stable-door policies, demanding that the stable door be slammed shut and barricaded now, not held open even wider!!! And if you don’t think too carefully, it can strike a chord. But it’s utterly wrong.

The normal operation of a market economy requires a regular flow of borrowing – by individuals to buy houses, by businesses to embark on new ventures. It’s not an evil. And, given the current drought, increasing it back nearer towards normal (rather than superabundant) levels is a precondition of recovery.

His proposal to use the tax system to motivate more saving should be seen in this light. Just as opposition to more borrowing means opposition to more spending, so support for more saving means support for less spending. Which means even less economic activity. This might be a decent policy for a few years from now – other things being equal, I have nothing against more saving – but in the middle of a recession it’s only going to make things worse.

He might do well to remember what Keynes had to say on the ‘paradox of thrift’, back in 1931:

For take the extreme case: suppose we were to stop spending incomes, and were to save the lot. Why, everyone would be out of work. And before long we should have no incomes to spend and the end would be that we should all starve to death.

Or from a more contemporary observer, Carl Emerson of the Institute for Fiscal Studies:

The issue is that the Conservatives are proposing taking money that definitely would have been spent in the economy on public services and putting it in people's pockets. To the extent that those people save that money, it will be taken away from the economy next year.

This is a terrible policy. I almost can’t believe that it’s actually intended to be implemented; rather, it’s a proposal spewed out to create a certain impression of the Tories (saving good, debt crisis bad) – the details to be swiftly forgotten.

One of the tactical advantages of being in opposition is that you can produce new policies more quickly than the governing party, safe in the knowledge that they’ll get less forensic scrutiny – and it makes you look like you’re ‘leading the debate’. However, when events change quickly, this approach can make you look like you’re all over the place. And so it is.

Compare this new policy with Cameron’s urging, back in November, that lower interest rates – not tax cuts, not public spending – should be the tool to fight the recession. But rate cuts are exactly what hurt the savers that he now seeks to reward.

And what happened to the six-month cut in NI contributions for small employers that they were proposing back in the autumn? That at least had the merit of being likelier to protect some jobs, even if only on a piddling scale.

That the Tories’ policies (at least, today’s) are bad is clearly the more important point; that their strategy has degenerated into sub-Blair ‘initiativitis’ plus moralising is perhaps more interesting.

Cameron’s latest tax madness

Having tried to argue that the solution to the credit crunch is to discourage borrowing even more, the Tories are now proclaiming that the solution to a collapse in consumer spending is to discourage consumer spending even more. Yes, they want you to stick all your money in the banks (remember them?) and leave it there. That’ll really help all those struggling retailers and get the economy moving again.

David Cameron says:

In order to help deal with Labour's Debt Crisis and help turn Britain from a spend, spend, spend society into a save, save, save society it is time to abolish income tax on savings for everyone on the basic rate of tax

I’m in two minds about the merits of the VAT cut (the main effect of which will be to help businesses protect their margins as they cut prices by even more, rather than encouraging much extra consumer spending). But concentrating precious fiscal firepower (paid for by public spending cuts) on motivating people to save rather than spend is just madness.

Too much spending is really not the problem right now. Just ask all those people who used to work at Woolies.

[Update: Yvette Cooper also thinks this is "madness" - but for different reasons.]

Government spending vs the recession

An interesting observation in the Economist: recessions aren’t as bad as they used to be.

Even before the Great Depression, downturns were typically much deeper and longer than they are today [and, conversely, booms were more spectacular – TF]… One reason why recessions have become milder is higher government spending. In recessions governments, unlike firms, do not slash spending and jobs, so they help to stabilise the economy; and income taxes automatically fall and unemployment benefits rise, helping to support incomes.

The article adds:

A recession triggered by tight monetary policy can be cured by lower interest rates, but fiscal policy tends to be less effective because of the lags involved. By contrast, in a depression caused by falling asset prices, a credit crunch and deflation, conventional monetary policy is much less potent than fiscal policy.

All of which suggests that letting public borrowing shoot up over the next year or so is the lesser of two evils. Cant about a “debt crisis”, while satisfyingly moralistic, is beside the point in deciding what to do now.

Inflation no longer exists

Samuel Brittan makes a good point in the FT:

Inflation has now turned down with a vengeance and if we could free ourselves from the bondage of 12-monthly comparisons we would see that it no longer exists.

This graph shows how right he is. The blue line is the headline CPI inflation figure, giving price changes from 12 months earlier; the only reason it was still above 4% in November is the legacy of the surge earlier in the year. If you look at price changes over six months (green line) and especially three months (red), you can see that that when the earlier price rises have dropped out of the figures, inflation is plummeting towards zero.


(I’ve given annualised equivalents for the six- and three-month figures for ease of comparison. Calculated from ONS figures.)

The three-month line certainly went negative in December: even if we assume the price level then was unchanged from November, that would give a three-month fall of 1.4%. In fact, there’s been some very hefty discounting (not to mention the VAT cut and the fact that demand is falling).

Given that deflation is charging at us, the fall in the pound is a blessing.

‘No after-dinner speaker can bind himself’

William Hague has promised that the Tories will defend the pound for all eternity:

We would never join the euro. The jobs and businesses of this country are too important ever to sign away our right to do our utmost to defend them.

This amuses me. Being a political anorak, I remember Hague – as party leader during the 2001 election campaign – doing interview after interview in which he awkwardly dodged making exactly this commitment, not wanting to upset the Europhiles in his party. His stock phrase was “no Parliament can bind its successor”. Here he is being Paxmanned:

JEREMY PAXMAN: Would a party led by you ever vote in favour of the euro?
WILLIAM HAGUE: It will not do so in the next Parliament in the next Government. I set the policy for the next Government. You were accusing me a few minutes ago of changing policies.
JP: You might change your policy on this?
WH: I have been very clear from the beginning of the current Parliament that our approach is for the next Parliament because no Parliament can bind its successor. I am against euro, for keeping the pound. Our policies are for this Parliament.
JP: OK, would you personally ever vote in favour of the euro?
WH: My position is indistinguishable from the party. I am the leader, I set the policy, that is the same question as the previous question.
JP: No it is not.
WH: It is the same.
JP: I am asking a matter of personal conviction here. I understand all this business about a manifesto and you saying you cannot look beyond the next Parliament, but can you personally ever envisage yourself voting for the euro, ever?
WH: I am the leader of the Conservative Party. And it is...
JP: You have a personal view?
WH: The policy is set by the leader.
JP: You don't think more than five years ahead?
WH: I am against the euro and for keeping the pound.
JP: For ever?
WH: One Parliament at a time. Therefore the policy apples to the next Parliament.
JP: You are asking us to believe that after the next Parliament you might vote in favour of the euro?
WH: I am asking people to believe that the future of the pound is at stake. If Labour win they will be hell bent on doing away with it. And if we win we will keep the pound.
JP: Is it you don't know what your view is or you will not tell us?
WH: I will not allow us to be side tracked from a clear policy for this forthcoming Parliament by abstract questions about differing lengths of time.
JP: With the greatest of respect is this is not an abstract question, it is a matter of principle. You have said I oppose the European single currency in principle.
WH: It is an abstract question. Each party sets their policy, the policy of the Labour party is to hold a referendum.
JP: I am not asking about policy for the next Parliament. I am asking about your personal conviction. You are telling me your personal conviction is so easily swayed that you might at some stage vote in favour of the Euro.
WH: My personal conviction is against the euro and for keeping the pound. I am campaigning for keeping the pound and policy of the party which is indistinguishable from my own view, is set one Parliament at a time. And we have pledged to keep the pound in the coming Parliament.
JP: You have conceded that your party comprises many people who have personally strongly-held convictions, your feeling about the euro is not one of those?
WH: Of course it is anybody who sees me campaigning around the country campaigning to keep the pound knows I believe we should keep the pound. But our policy is clear, set at one Parliament at a time. We will keep the pound. The coming Conservative Government elected next week will keep the pound. You cannot get straighter than that.
JP: Let's support that, let's suppose that you lose this election, that there is a referendum, you may say it is a rigged question, let's say we go into the euro, you could find yourself leading a party which would support leadership of the euro, you can imagine that can you?
WH: If there was a referendum under a Labour Government of course we would campaign for a no-vote in that referendum.
JP: You can imagine yourself leading a party which supports the euro?
WH: I am setting the policy for this election.
JP: Your conviction does not set beyond the next Parliament?
WH: We are not having the election of 2005, we are having this election.
JP: Do you understand why some people find this incredible?
WH: I understand why people who are used to the fact that you could pick up the Conservative Party for being divided about Europe at the last election try to draw us in this election to draw us into saying different things from our policy.
JP: I am just asking you your personal conviction?
WH: Keep the pound.
JP: Forever?
WH: I set the policy one Parliament at a time.
JP: Why won't you will be explicit in principle terms. After all, all the polling evidence suggests that the vast majority of people share your beliefs?
WH: They do share my beliefs. Included among those people are some people who think we shouldn't ever join the single currency and some people who think we shouldn't join it now. All of those people are on the same side in supporting my policy.
JP: Which one are you?
WH: I am for keeping the pound.
JP: Forever?
WH: And the policy is set one Parliament at a time.

The fact that this charade is now over shows that, barring the occasional rumble of Ken Clarke’s stomach, the Europhile wing of the party is pretty much dead.

(Actually, I happen to think that the above interview – which ranged across several topics – was one of the worst I’ve ever seen. Paxman managed to be both half-hearted and tenacious in his attempts to trip Hague up and thus generate a headline. There was barely any attempt to challenge him on policy or to elicit new information for the viewing voters, beyond an opening effort to draw him into a ‘compare and contrast’ exercise on every slogan he’d used over the previous few years. Also featured were a tedious string of questions along the lines of ‘you’re not going to win, are you?’ and a deeply odd set about his wife’s role in the campaign. Never, before or since, has my heart gone out to Hague.)