It’s the weekend so, to celebrate, here is a special offer: Two posts for the price of one (i.e. nothing). A Shakespearean Tragedy in the making Last night I stumbled upon the second and final part of the BBC’s Simon Schama’s Shakespeare. Here is the trailer for it: http://www.youtube.com/watch?v=RoB5MSMLllM I think very highly of Schama; and this programme did not disappoint. This second episode (I will have to get the DVD) covered the latter years of Elizabeth the First and the early years of James the First – a time during which Shakespeare was extremely daring in the plays he presented (in many cases premiered) to the Monarch – such as Henry V and Richard II (to Elizabeth) and Hamlet, Macbeth and King Lear (to James). Of all of these, Hamlet was the most astonishing because the only difference between James the First and the fictional Hamlet is that James did not exact revenge upon his uncle for killing his father. However, the reason I mention all this is that, towards the end of the programme, Schama, with the help of an array of fine actors delivering Shakespearean monologues to camera, comes to Macbeth. To my shame, Macbeth is the only Shakespearean play I know well (having studied it for O Level when I was 16). However, although it was fascinating to see how Macbeth was a product of its time (as were all the other plays); the viewer was also invited to re-interpret the plays in a modern context. It is therefore very tempting, for me at least, to identify with the plight of Macbeth; who seems to be stuck on the set of the movie Groundhog Day. To me this is where humanity has got stuck. We (or at least a sizeable proportion of us) know that what we are doing is wrong, but we seem powerless to change the course of history; and must watch the tragedy unfold…
…Tomorrow, and tomorrow, and tomorrow, Creeps in this petty pace from day to day, To the last syllable of recorded time; And all our yesterdays have lighted fools The way to dusty death. Out, out, brief candle! Life’s but a walking shadow, a poor player That struts and frets his hour upon the stage And then is heard no more. It is a tale Told by an idiot, full of sound and fury Signifying nothing. (Macbeth – Act 5, Scene 5, lines 19-28)
——————— A Greek Tragedy we made earlier Last Monday, I missed but, thanks to Paul Handover, have now watched the BBC Panorama programme about Greece, entitled Life and Debt: A Greek Tragedy. This is essential viewing for all those (like me) inclined to blame the Greeks for the mess they are in. Someone has posted the 30-minute programme on You tube (embeddd here) but, if pushed for time, a synopsis is appended below… http://www.youtube.com/watch?v=Nu_cYB60xFY The programme is presented by veteran BBC News anchor, John Humphrys, whose Son has lived in Greece for 20 years and who has himself now got a house in the Peloponnese. In the course of the programme, Humphrys tours Greece interviewing people about how the crisis is affecting them; and how they feel it should be solved. However, before all of that, Humphrys explains the recent history: Nazi occupation, monarchy, civil war, military rule and democracy… It is easy to forget but, by its own standards at least, Greece was quite prosperous before it joined the Euro Zone in 2000. As Humphrys puts it, “Greece cooked the books in order to get in and the EU turned a blind eye… and lent them the money anyway” (paraphrased). Since then, exports have gone down and imports have gone up; the proportion of Greeks involved in fishing or farming has gone from 17% to just 3%; unemployment has risen to 20%; and the proportion of people living in relative poverty is heading towards 40%. In short, the EU has done to Greece what the Common Agricultural Policy has done to Africa – it has made it dependent upon the EU rather than helped it to become self-sustaining. See my If the CAP does not fit we should not wear it (27 January 2012). However, possibly the most revealing interview Humphrys conducts is that with a Greek hero of WW2 (who risked his life in an act of defiance to pull down the swastika on the Acropolis). To many in Greece, like this cultural icon, it seems the EU is nothing more than a cover-story for German Imperialism. Having failed to dominate Europe by military force, Germany is seeking to dominate it by stealth. Does this indeed explain why Germany seems remarkably content to bail-out so many European countries (on its own terms of course)? As the economy of every other nation fails one-by-one, will Germany end up ruling over a United States of Europe? If so, although plenty of shots will have been fired (plastic bullets and tear gas only of course), Germany will achieve what Hitler could not; and will do so without declaring war on anyone or anything. The only casualty will be effective and efficient government; and any illusion of representative democracy.
Anthropocene Reality 
“Those who have brought us to where we are today cannot possibly be expected to be the visionaries of tomorrow”, says a Greek business leader in BBC´s Panorama ‘Life and Debt: A Greek Tragedy’ But a huge responsibility for the excessive public debts of Greece lies on the shoulders of bank regulators. They, with their Basel II regulations approved in June 2004, limited all European banks to leverage their equity to a reasonable 12.5 to 1, when lending to unrated European small businesses and entrepreneurs, but allowed the same banks to leverage a mindboggling 62.5 to 1, when lending to a sovereign rated like Greece was. And those regulators, having shown no understanding or remorse for what they have done, are now in charge of writing up Basel III. How smart is that, Europe?
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Thanks for taking the time to watch the programme, Per. As demonstrated by the experience of the economics advisor sued by the tax authorities (for daring to suggest how they should reform themselves), the main thing Greece lacks is the will to reform itself. However, what is your response to Humphrys’ assertion that the EU chose to lend money to Greece even though it knew it was risky; and/or the Accounts had been “massaged”?
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I have no idea of whether EU knew or not that Greece´s figure were massaged, but it is clear that those allowing the banks to leverage 62.5 to 1 their equity when lending to Greece, must have been naïve enough to believe massaging of figures was an impossibility. But let me put this 62.5 to 1 leverage in some perspective for you. Out there in the real world the markets rarely allow for instance a hedge fund to leverage more than about 10 to 1, no matter what the hedge fund holds it invests in. And so the truth is that, had all European banks been allowed to operate completely freely, without any regulations or support, another type of crisis might have ensued, but none as big and systemic as the current one. This is a case when regulations just made all so much worse!
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With all due respect, Per, I cannot accept that this, or any other mess (financial or environmental), is a consequence of poorly-drafted regulations. That is almost as much an abdication of moral responsibility as I displayed after losing my temper with my sister at the age of 12; throwing a snooker ball at her head; and then complaining – when the ball smashes the window behind her – that she should have stopped it! All our problems (financial and environmental) are the consequence of human greed. It is greed that has driven banks, politicians, and oil companies to make the wrong investment decisions; and it is only greed that stands in the way of them making better decisions now. In his Review of the Economic of Climate Change, Sir Nicholas Stern described climate change as “the greatest market failure in history” and the Australian academic Clive Hamilton has described it as “a failure of modern politics”. To me, these two quotations identify the core of the problem: The belief that we can just leave everything to the market… Humans may be imperfect; but the market has no morals at all; and it has no common sense either. If we leave everything to the market, we invite the fulfillment of the “lovers of money” prophecy of St Paul (quoted previously); and a Tragedy of the Commons outcome for all. However, please don’t think I am attacking you. If I understand you correctly, rather than de-regulation, you seek improved regulation. Perhaps we had just better agree on that much; and move on?
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Of course what I want is for better regulations. I only brought up the case of no regulations because in this case I am 100 percent sure that we would have been better off… so bad were they, are they. And please do not describe a banking system where banks are only allowed to leverage 12.5 times to 1 when lending no an unrated small business but can leverage 62.5 to 1 when lending to a private AAA rated client or a sovereign like Greece, a “market failure”. It has nothing to do with a free market.
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And is it not in the human nature to sometimes want to regulate too much for its own good?
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Point taken, Per. However, because of the nature of this blog, and nothing else, I am seeking to draw attention to what I believe to be the common cause of all our problems (i.e. human nature).
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Yes Per, but a balancing act is required. I am as much opposed to libertarianism as I am opposed to a Nanny State. I think I made this clear in my posts about politics this week. I am someone who believes in what Herman Daley called “ecological economics” but, because I happen to be conservative (with a small ‘c’) I vote Conservative (with a big ‘C’) – despite the moral dilemmas doing so causes.
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In a sense I’m commenting on Rick’s post of yesterday although it seemed just as appropriate to add my thoughts to the above. I didn’t want to say anything until I had watched both the BBC current affairs programmes that Rick referred to yesterday; which I did last night. What struck me, especially in the BBC Question Time programme was the total and absolute condemnation by all the panel, covering a broad political spectrum, and the audience. Sir Paddy Ashdown (former Liberal Democrat leader) voiced it on behalf of all when he said that there had been a clear case of conspiracy to rig the (LIBOR) market. That there was conspiracy at the heart of the banking system and that it amounted to a moral failure by so many. Those themes were echoed on the BBC This Week programme. Thus whatever the technicalities of regulation this or that, something that I know and care so little about, the fact, and it does appear to be a fact beyond any reasonable doubt, that greed drove a significant group of clever people to embrace such selfishness must be seen as the moral failure that it was. All the banks involved, and there are more than 20 of them I gather, should lose their licences and the relevant heads should be sent to prison. That this won’t happen leaves me very sad. On a broader front, the contrast between what those bankers stole as bonuses and the plight of the Greeks victimised by actions beyond their control may just cause sufficient good men and true to rise up and say, “Enough!” We need a global revolution of thought (ergo non-violent) and we need it soon.
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Agree, but the 20 most important bank regulators should equally be forced to parade down 5th Avenue wearing cones of shame and not be allowed to regulate ever again… Now instead we have them, after their extreme box office flop with Basel II, producing Basel III. Hollywood (or Bollywood) would never do a stupid thing like that.
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Per, Yes, of course, all the regulators and indeed the whole apparatus of power, money, greed should be paraded before the world. But, presumably, regulators/legislation is caught between a rock and a hard place. I.e. the business of finance has a legitimate right to operate competitively in a global market but must be restrained by law from conspiracies to defraud. So I return to my fundamental point, scare the banking industry, and the out-of-sight power brokers, to such an extent that it’s clear that open societies will never allow this to happen again. Indeed, I hope that the British Government will launch an official enquiry into what happened which will later be used to frame the sort of legislation we should have had in place now.
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Thanks Paul. I’m glad you got so much out of watching those TV programmes; and thanks for filling in extra detail regarding their content. Very glad also to see you saying much the same as I did just now (before reading this). Update: Hang on a minute, 13:53 GMT is 05:53 in AZ. Were you unable to sleep due the heat, Paul?
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The dogs tend to wake me around 5am and this morning I was sitting outside with them when I realised what it was I wanted to say. Put the dogs back into the bedroom and sneaked upstairs to my computer!
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Well it’s a start! From here http://www.bbc.co.uk/news/uk-18665719 “Marcus Agius is to resign as the chairman of Barclays in the wake of the Libor lending rate scandal. There will be an announcement on Monday morning, BBC business editor Robert Peston says.”
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How does Peston do it; he always seems to be the first to break the big stories…
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