Stories From The Diogenes Club

Closed

2011-09-04T09:36:00.000+01:00

Unfortunately the Diogenes Club is now closed. There has been no activity at the club for over a year and the members have ceased to meet.

The Diogenes Film Club

2010-07-24T11:20:00.002+01:00

The Diogenes Club is well known for its film evenings which are held monthly. Films are chosen by members in turn and we all enjoy a good meal and a selection of the finest ales as an accompaniment to the main event. The Club Secretary thought it wise to record the choice of films for posterity and will keep it updated with any future events.

25 Europa

(Pridian July 10)
A dark, surreal film-noir take on the political thriller: a young American deserter trying to find a place in postwar Germany is torn between idealism and love when pressed by a terrorist group to blow up the train he is on. Danish 1991, dir. Lars von Trier

24 Burn After Reading

(Beachhut Man June 10)
Black comedy by the Cohen Bros. Ex CIA operative decides to write a memoir which gets lost. Two naive people try to sell it to the russians with dire consequences for all. At the end we are all left asking, what did we learn? The answer, as is true of life's lessons in general, is nothing.

23 LA Confidential

(Dr Phil May 10)
Corruption in the LA Police leads young rooky detective to rise to the top of this profession by being more ruthless than the corrupt officers he exposes. Set in the 1950's this has all the glamour of a Bogart movie with added colour.

22 I Know Where I'm Going

(Zeno April 10)
Determined lady who thinks she knows her own mind persues happiness in the shape of a rich industry tychoon who can provide her with all the essentials of a happy life. On her way to marriage on a scottish island she is side-tracked by the genuine article. More Powell and Pressburger magic.

21 The Whole Wide World

(Pridian April 10)
The author of Conan the Barbarian meets sassy Texan school teacher on the road of discovery. Does romance win out or will love be sacrificed on the sword of fantasy fiction to divide them forever?

20 The Lives of Others
(Beachhut Man Mar 10)
East German movie (sub-titled) about the Stasi and their intrusion into the minutiae of everyone's lives with its appalling and obvious consequences.

19 Conflict
(Dr Phil February 10)
Bogart movie that has become a lost classic, in which Bogart plays the disenchanted husband who murders his wife and leaves her body under a pile of logs. Sidney Greenstreet plays the psychologist who brings him to justice.

18 Still Crazy
(Zeno Jan 10)
Aging rock group reform for one last gig and find that age is inescapable

17 The Wind and the Lion
(Pridian Dec 09)
The irresistible force of Connery meets the immovable resistance of Candice Bergan

16 In My Father's Den
(Beachhut Man Nov 09)
A movie about paternal loss.

15 The Magnet
(Dr Phil Oct 09)
A young boy tricks another into giving him his magnet. Plagued by a guilty conscience he stumbles from one narrow escape to another until at the end of the adventure he finds his deception has resulted in him being awarded the civic medal of honour, which he passes back to the original and rightful owner.

14 Melody
(Zeno Sep 09)
Charming 70s movie of teenage love set to irresistible BeeGees music. Mark Lester falls in love and reaches that point when girls mean more than friends.

13 Much ado about Nothing
(Pridian August 09)
Shakespeare courtesy of Kenneth Bragnan and co. A salutary tale about how the smallest of mistakes can lead the the greatest of tragedies and as the title says a great deal about very little.

12 Charlie Chaplin in Limelight
(Beachhut ManSep 09)
A piquant farewell from a tortured genius with aspirations and responsibilities in conflict.

11 To Kill a Mockingbird
(Dr Phil June 09)
Powerful drama seen through the eyes of children. Scout learns that "you never get to understand another person unless you walk around in his shoes a little"

10 The Dish
(Zeno May 09)A gentle story about Australia's involvement in the Apollo 11 moon landing as it tracks the astronauts with its big dish in the middle of a sheep farm. A cross between Contact and Local Hero.

9 Morgan: A Suitable Case for Treatment
(Pridian Apr 09)
Artist son of Marxist parents abandons traditional class-struggle ideology to indulge in fantasy - based largely on scenes from King Kong and Tarzan movies - of Natural Man living outside social convention, and pays the price.

8 The Lake House
(Dr Phil Mar 09)
Dismissed by some as a "rom-com", hailed by others as ground-breaking paradigm-shifting science-fiction. The truth is probably neither: Two people meet and fall in love with only the barrier of time to overcome.

7 Park Row
(Beachhut Man Feb 09)
Hard gritty newspaper story about the hard and gritty life of newspapermen. The Diogenarian maxim is, "Don't ever let anyone tell you what to write".

6 V for Vendetta
(Zeno Nov 08)
Guy Fawkes resurrected in a dystopian future, strikes a blow for freedom and blows up the government to the general acclamation of all.

5 A Midsummer Night's Sex Comedy
(Pridian Oct 08)
A light and breezy understated comedy from the stable of Woody Allen who manages to produce a mixture of Brian Rix and William Shakespere with just a dash of New England.

4 Thank you for Smoking
(Beachhut Man Sep 08: )
Big tobacco's spokesperson twists the truth for smoking to prevail. Katie Holmes is as an amoral journalist who gets on top of an amoral pro-tobacco spin doctor in this satire.

3 Hobson's Choice
(Dr Phil Jul 08)
The poor but honest cobbler, with the help of a good wife, shakes off the shackles of class oppression and sets up on his own shop eventually buying out the boss.

2 Catch us if you can

(Zeno Jun 08)
The mad cap adventures of a famous pop group (no, not the Beatles...) the Dave Clarke Five who through a wistful tour of 60s nostalgia have a zany time. But don't ask what it is all about.

1 Closely Observed Trains
(Pridian May 08)
A group of Czech railway station porters learn how to keep themselves sane under the new Nazi occupation but don't always succeed.

A Manifesto for Change

2010-07-11T10:13:00.011+01:00

One of our members received a personal email the other day from Nick Clegg, Deputy Primeminister, asking how to run the country. It went something like this.

Dear ...........,

We've already scrapped ID cards. Now I'd like to ask you - which other laws do you want to scrap?

Well, from the comfort of my club armchair I have a few suggestions that the new regime might like to take on board.

Personal liberty
Let's start with dismantelling the new authoritarianism. It's been the Dark Ages as far as personal freedom goes. Restore our freedom to let our children play outside or cycle to school or smack them if they need it. Everyone should be free to smoke, free to drink, adopt a child or walk down a street without hitting a minefield of regulations, restrictions and surveillance measures. Smoking should not be banned in pubs. There should be no laws against hate or thinking the wrong thoughts. People should be free to say anything they like without worrying about offending anyone.

Sex
The government should cease its intervention into the private lives of people and pronouncing on what is allowed and what is not in intimate relations. Sex offenders should not be singled out and demonised by society. Childen aged 10 and 11 should not be brought to the Old Baily and accused of adult crimes for playing doctors and nurses.

Free speech
No speech should be constrained by bans, libel laws or well-meaning self-censorship. The internet should not be regulated in any way. "Hate speech" should not be a crime. Nazis, anti-semites, racists or the Womens Institute should not be censored. Everyone has the same rights as everyone else to express their views. There should be no crimes against stating your views or holding opinions. Holocaust denial should no more be a crime than God denial should be a crime. There should be no laws against blasphemy or outraging public opinion. The right to be able to offend other people should be an inalienable human right.

Risk and Fear
Society has become obsessed with risk and peril. Governements are experts at doom-mongering. Stop trying to create zero risk for everything. Stop trying to regulate all human activity. Health and safety should not be the number one priority. Common Sense should be restored to test all things. The precautionary principle which governments are signed up and paralyses innovation should be dumped.

Transport
Stop penalizing drivers and treating them as an income source. Remove all speed cameras. Remove all speed limits from motorways as in Germany - if they have better road saftely statistics than we have, let's try it the way they do. Reset police priorities to focus on criminals and not motorists. If you want to get people out of their cars then provive a first rate public transport system that is completely free for everyone and paid for by everyone out of taxes.

Poor countries
Governement humanitarian aid is largely bogus. It makes weaker nations more permeable to western domination and is a means of exerting political control. Stop governement aid and encourage individual aid. Put money where it is needed and not in the hands of corrupt government officials.

There's a start. I await with interest Nick's reply.

The Lesson of History

2010-05-21T13:00:00.002+01:00

"Hello chaps." I said, as I walked into the warmth of the library. Henry appeared at my elbow as I lowered myself into my chair, with my drink on a silver salver.

Travis motioned at me to keep quiet as there was a fairly heated discussion going on about the recent general election. I had been looking forward to this evening. One of the advantages of being a member of a club where the main membership requirement is an attitude of cynicism, is that a good evening's conversation is guaranteed after watching our mighty democracy being unable to make up it's mind.

Treworthy seemed quite agitated about the stories that a considerable number of people had been unable to vote due to there being a late rush toward the end of the evening.

"I can't see why they couldn't just keep the polling offices open until they had collected everyone's vote."

"It's because the rules stated that all polling stations should close at ten o'clock." said Abrahams.

"Well the rules clearly need changing. I mean the whole system is practically Victorian anyway." countered Treworthy.

"That's as maybe - I'm sure that after the enquiry changes will be made, but until that time, the current rules stand."

"Oh I know, I know, but it is a bit embarrassing, isn't it. I mean the election in Iraq seemed to be better organised. Maybe they should look into the possibility of on-line voting."

"God help us," said Manton, as he gestured furiously at Henry for another drink. "The introduction of postal voting has been responsible for some of the biggest abuses of the system in my lifetime. Can you imagine the chaos if all the votes were just collected in a huge database without any paper trail to back it up? The government's record on databases isn't particularly good."

"But it would be a very simple database, technically." said Abrahams.

"Yes, but it's not the technical aspects that doom these projects to failure, it's the human aspects. 50% of the people that they get working on these things seem to be completely useless, adding nothing of value."

"Oh come on, Manton, next you'll be saying that 50% of all people's jobs are useless too."

"I do, my dear fellow, I do. I'm thinking of writing a short monograph on the subject."

"Well what about the result itself?" said Treworthy. "A hung parliament. It's not good for the country."

"I don't see why not," I said. "I can see why the parties don't like it, but it is clearly the will of the people."

"Yes, they will have to actually keep talking to each other, rather than blindly following the party line. I wonder how long the coalition will last?" said Abrahams.

"I can't believe any of them actually want power." said Travis. "I mean, you do realise what sort of spending cuts are going to be introduced soon, don't you? Any manifesto promises are going to have to go out of the window. It's going to make the 1970s look like a picnic in comparison."

"I've always considered people who seek out power to be fairly deluded anyway." said Manton.

"Why do you say that?"

"Because they are. Who in their right mind would wish to shoulder the burdens of high office, especially at the moment?"

"Ah Manton, ever the misanthrope." I said.

"Not at all. I would put it to you that in the vast majority of cases, lust for power over others is the sign of a highly dysfunctional personality. Stalin, Hitler, Pol Pot - how many names do you want?"

"Yes but you are picking the biggest monsters in history. There are exceptions."

"Of course. There are always exceptions but not many."

"Nonsense. There have been some good rulers."

"Yes, but how many of them actually wanted the power? There have been some who extremely reluctantly took on he mantle of responsibility, remained full of doubts as to what was the right thing to do, and shed the responsibility as soon as they were able to, but I'm not talking about them. I'm talking about the ones who can't wait to start ordering people about, and design nice uniforms for them, and who want to make the trains run on time."

"Funny you should say that Manton," I said, "but just last night I watched the film 'Downfall', about the final days of the third Reich. I found it fascinating. You see Hitler admiring his wonderful model of the new Berlin, whilst outside the city is being reduced to rubble as the Russians advance from the East and the Allies from the West. The officers in charge of the final remnants of the defence force are summoned to the bunker and they find themselves in a mad hatter's tea party. Their senior officers are all constantly drunk, or on drugs, and Hitler is completely losing touch with reality. You can see him turning in on himself, being forced for the first time to look within, and finding nothing but a gaping void. When his generals tell him that he is condemning his own people to death, he simply screams at them that it is their own fault, and that if they are not strongly enough to withstand the invaders, they all deserve to die. It's rivetting stuff."

"That's exactly what I mean. In the end, the only thing he can do is either admit to himself that he has made hideous mistake, and that he has lead the entire nation into the abyss, or commit suicide. And of course, he chooses the latter. He's got nowhere left to go. Typical case of someone who thinks that power can fill the inner void."

"I've heard of that film." said Travis, excitedly pulling out his smartphone. "There are lots of clips of it on Youtube, where people have put satiric subtitles onto it. Here, I can show you some." Having just bought it, he would try to demonstrate its features to anyone and everyone at the slightest opportunity.

A look of infinite pain flickered across Manton's face, as he waved the gadget away with a feeble paw.

"The point is, it is this gaping void within that actually creates the desire for power. The thing that makes them least suitable for the role is the thing that makes them most want to do it. It's the lesson of history."

"Oh come on Manton, you can't condemn all those that seek to improve the lot of their fellow man?" said Treworthy.

"You know full well my feelings towards my fellow man, Treworthy. We all live lives of brain-numbing banality, blind to the consequences of our actions, refusing to think about the social dysfunction, environmental impact and appalling suffering that our society has created."

"Well, thank god that not all are as nihilistic as you Manton, that is all I can say. I, for one, intend to give the new coalition my full support."

"Treworthy, did you know that the last government spent £163 billion more, per annum, than they raised in taxes? Even by slashing public spending to levels not seen since the 1970s, we cannot hope to bridge that gap. Every country in the Western world is living way beyond its means. California is in a far worse financial state than even Greece is at the moment."

"Oh come on Manton."

"I'm serious. Why is this so difficult to understand? I don't know if the world is blind, deaf or just stupid. We've given billions to these people .... did you know that each of the big hedge fund managers is getting about $3 billion in bonuses EACH. $3 billion!"

"They are saying that the recession is over." said Abrahams.

"Well it certainly is for them. For the rest of us, it is just beginning. Our money has been stolen from us, forcing us to pay, against our will, for the lifestyle of the super-rich, while our health services, transport services, education services and just about every other pathetic attempt to make our lives more livable is going to be effectively destroyed in the attempt to pay off the debts they've created. And do you know the best bit? We are going to be told by these same people that we must become more efficient, that it is all caused by the inefficient practices of all these public services. We are going to be a third-world country in all but name."

"You can't really believe that."

"Why not? I don't understand why people aren't more angry. In the past, the super-rich tended to be a bit more discreet, but maybe they feel that they don't need to be any more. They will probably pretend to be surprised and horrified when the cities finally erupt into violence, like they have in Greece, and refuse to see any connection between their inconceivable levels of wealth and everyone else's suffering."

"Well what would you do about it?"

"I'd pass laws to restore the separation between high street banks and merchant banks. I'd pass laws to institute a maximum wage, or a maximum differential between the lowest and highest paid. I'd outlaw derivatives and all the other insane methods of setting up fictitious markets. That would be a start."

"Manton, the city would never wear it. You would cripple their ability to make money."

"They aren't making money, they are making debt. What do you think caused this latest crisis? All these financial tricks are simply ways of enabling money to generate more money without any useful work being done. The world can support a certain amount of that, but not if everyone is trying to do it. You can't have economic growth forever. They've attempted to keep it going by finding new markets, but there are only so many manufacturing companies that you can invest in. So what happens is that they start to invest in more abstract things, that don't necessarily provide employment for others. Stocks, shares, intellectual property rights, land, water, housing and other property. They make money out of them by trying to ensure that they always increase in value."

"Well, I'm not complaining," said Treworthy, "my house is worth twice what is was when I bought it."

"Yes, but it has the side effect that, eventually, most people can't afford those assets - how can the price of something keep rising if no one can afford it? So what do they do? They create totally fictitious markets, like Carbon Trading. And they make the idea of personal debt completely normal - something that would have been anathema to my Father's generation. They draw us into their mess by telling us how we must all have a mortgage. You can't go on strike if you have a mortgage. Better still, have a credit card. In fact, why not have both?"

"But that's a good thing, Manton." said Travis. "You can't deny that everyone's living standards have gone up."

"Yes, but that could have been achieved by increasing everyone's wages. Why do it by placing everyone into debt? Simply because it turns us all into an investment opportunity for the rich. They will give us credit - at a rate of interest, of course. And so we get turned into cannon fodder for whatever their next great scheme is for transferring our money into their pockets." Manton paused, and then said quitely, as if to himself, "It's all wrong."

The room was silent, as it usually was after one of Manton's tirades. The only sound was the ticking of the Grandfather clock in the corner.

"Sorry about that chaps." said Manton, after a while. "You know what I'm like once I get the bit between my teeth. Henry! Drinks for everyone - put them on my account."

"Oh, that's alright Manton, it would be a dull evening without you holding forth on some topic or other." said Travis.

"It sounds to me like you might be turning into a Marxist." added Abrahams, jokingly.

"Do you know, it's funny you should say that. I've always fancied having a crack at Das Kapital, to see if I could get my head round it. Just to see if it makes any sense purely as an economic theory."

"Didn't he write it at your place of work, Manton?" said Treworthy.

"Yes. Well, I don't know if he wrote it there, but it's true that he did most of his research at the British Library. I quite like the idea, for some reason."

"If my memory serves, sir," said Henry, "there is a copy of the first volume of Das Kapital in the club library. Would you like me to get it for you?"

"No, no, you see to the drinks. I'll get it."

"Very good sir."

By the time Henry had brought our drinks, Manton had located the book and was leafing through it.

"Good Lord", he said, in a stunned voice.

"What is it?" I asked.

"It's a first edition. Signed by the author."

"Signed? Isn't it a club tradition that members who have written a book..."

"Henry," interrupted Manton, "does this mean that Karl Marx was a member of the Diogenes Club?"

"I would have to consult the membership ledgers before I could say for certain, sir. However, if I may be permitted to make an observation...."

"Of course, Henry."

"A person who stated in 1867 that capitalism would inevitably collapse under the weight of its own contradictions, would probably be considered to be enough of a cynic to be eligible for membership."

"I think I had better start reading," said Manton. "I've got some catching up to do."

An Englishman's Home is his Castle

2010-03-28T21:11:00.002+01:00

As I was relaxing at the club the other day, Manton came in swearing under his breath.

"Bloody snoopers," he muttered flopping down in the chair next to me.

"Another brush with GCHQ?" I asked with a sly grin.

"Nothing so quixotic," he said, his smile returning. "It's the bloody TV detector vans round again. That's the third time this year."

"I thought you didn't have a TV?"

"Wouldn't have one in the house! Utter rubbish and governement propaganda. But do they believe you? No they have to come in and look around for themselves."

"Why do you let them?"

"Can't stop them old chap!"

"Don't they need a search warrant or something?"

"Pardon me for butting in." It was Montague Hyde our resident barrister. "I couldn't help overhearing you gentlemen talking about warrants. Things have changed a great deal over the last 13 years. There are now over a thousand different officials who have complete access to your home any time they please. And they don't need a warrant."

I was incredulous. "You must be joking!"

"Not at all my dear fellow. Most people don't realize it but the TV detector man is the least of your worries these days."

"But an Englishman's Home is his Castle!"

"That may well have been true in 1629 when Sir Edward Coke issued his well known declaration and the Petition of Rights was created, but alas it is true no more," added Montague Hyde. "Government and local officials can force their way into your home not just to pursue criminals and terrorists but for the most trivial of reasons."

"Such as?" I queried.

"To check health and safety standards, for instance. Or height of your hedges, or to check whether you are profiting from the plunder of shipwrecks, or conduct rabbit control..."

"You're kidding me!"

"...checking babysitting credentials.... inspecting potted plants... monitoring the environmental credentials of refrigerators.... the list goes on and on. The proliferation of the grounds of entry coupled with the wide discretion granted has left individuals wide open to arbitrary abuse by the state."

"Goodness, I had no idea...."

"Very few people do, until its their door that is being knocked on in the middle of the night. I'm afraid that an Englishman's home is no more impregnable than an aging ruin now.

Officialeze

2010-03-19T17:31:00.000Z

Dearest Manton
In plodding my weary way across the internet I seem to frequently come across documents such as the enclosed. You will no doubt have seen thousands of similar examples. Everyone from Government departments, schools colleges local authorities use this kind of thing to try to specify levels of ability/skills.

Now I don't know about you but every time I come across these things I cant help feeling these documents are fundamentally flawed in almost every respect. One example. To reach level 2 ICT you need to be able to, quote, review the effectiveness of IT tools to meet needs in order to inform future judgments. Now is it just me or is that utter gobbledygook, meaningless twaddle and total crap? Or have I missed something? Either I need to be enlightened or every government educational department/quango is talking utter rubbish. Does anyone else see this? How is it perpetuated? Why has no-one claimed that the emperor has no clothes?

Can you advise? Or better still, with your unusually enlightened mind pinpoint where the exact error lies? Is it not time to expose this fraud?

Your humble and grateful servant.
Carruthers

Dear Carruthers
On the contrary, I think the brave men and women who toil selflessly in these quangos should be congratulated! They have managed to list all of the skills that were once implicit in the traditional GCSE syllabuses (syllabi?), so that they can be taught separately, despite complaints from hide-bound traditionalists (so unlike yourself) about why these skills are no longer being learned by default during standard lessons in our nation's schools.

You will, I am sure, be as delighted as I am to learn that basic/key/functional skills will be tested in an as yet undetermined way and assessed with a simple pass/fail, thus making them easy, and above all cheap, to mark.

There are whole armies of teaching assistants out there who may not be qualified to teach, but who can now be given some concrete way in which they can improve the CVs of their students, thus leaving the teachers free with the far more essential work of improving their schools rankings int he league tables, and therefore making the Government's education policies look good.
Yours Ever
Manton

Dear Manton
Every government quango out there just seems to thrive on writing piles of reports that mean nothing, setting standards that have no value, and undertaking extensive work that accomplishes nothing? Call me old fashioned if you like but isn't it all rather pointless?
Your obedient and submissive servant
Carruthers

Dear Carruthers

If it weren't for these massive bureaucratic quangos doing this important work, how would the Government be able to claim that they are putting more into education than ever before? Where would the money go? Apart from the bankers bonuses, obviously. Oh sure, they could pay it to the teachers, so that they have got the time and the resources to teach maths and English properly in the schools, but would that really be in the best interests of our children?

The children of today will become the captains of industry of tomorrow - or at least they would if we still had any industries. They need to be prepared for a world in which huge corporations pay huge sums of money to their top employees whilst contributing absolutely nothing of any value to society and at the same time poisoning the air, water and food chain in an ever accelerating rush towards ... something or other.

Surely it behoves us to run education in exactly the same way, to prepare them for the broad sunlit uplands of the modern industrialised society that are awaiting them as they mature into adults.
Toodle Pip
Manton

My Dear Manton
How can you talk about education when the curriculum has replaced the real learning of History, Science, Maths, English, Latin.... with the vacuous modern learning of how to avoid drug addition, obesity, teenage pregancy, green issues, relationships.... where has all the real knowledge gone? Education doesn't exist any more, at least not in any form I recognise.
You obedient, humble and servile servant
Carruthers

Dear Carruthers
If we actually start to teach them properly, imparting real knowledge for it's own sake, rather than a simple list of skills that will enable them to become good consumers and allow them to participate in this great sacred quest towards .... something or other, is there not a danger that they will start to think for themselves, and start to question the nature of progress, and why our race towards ... something or other is important enough to justify such senseless waste, declining moral standards and global economic incompetence?

What is the point of filling their heads with these grand visions of some mythic golden age which never existed, when they have to live in the real world, the one that we are working so hard to create for them.

I'm sure that you will agree with me that the document that you sent me is vital to the forward march of education towards ... something or other. I for one am glad that someone is working out the precise difference between key skills and functional skills.

I did at first think that it would probably have been easier to make key skills and functional skills identical, so that no comparison was needed, but one visit to the QCDA website soon put me right.

I did look for a listing of the actual functional skills that they were comparing, but other than a video from the CEO of Toyota UK about how functional skills would have prevented Toyota cars from crashing all the time, there seemed to be very little in the way of detail on precisely what functional skills actually are.

I did find out though, that they have been piloted somewhere and are about to be rolled out nationally. Clearly they were a huge success. It makes you wonder why they ever bothered with basic skills or key skills. I am sure that functional skills will be much better.

Anyway, I hope I have set your mind at rest

Toodle pip

Manton

Dear Manton

Yes, yes.... that is all very well but what about the language they are using to describe these things? Look at the terms they write in. Here is the standard you have to reach: "review the effectiveness of IT tools to meet needs in order to inform future judgements" I mean how do you do that? What does it mean?

"Review the effectiveness of IT tools?" What kind of review, just a quick 'look again' or a hundred page report or a set up a government quango? A review can be anything.

And the "effectiveness of IT tools" - how do you measure that? Effective in what way? How effective does it need to be? 100% or will 18% do? (the same as the pass mark for A level maths?)

"To meet needs" Did we read that right? "To meet needs" Yes. How vague is that? Who's needs? an expert? a beginner? for what? Writing a letter?, designing a nuclear sub? Playing Doom? How do you define needs. Needs of one are not needs of another.

"In order to inform future judgement." About what? How far in the future? Tomorrow? Next century? To scan compulsory ID card? To lock critical thinking people up? Or just to buy a new printer?

How can anyone draft something so vague that it becomes totally meaningless and not see it? And not just a phrase but a standard, presumably something that needs to be measured by someone to ensure that they have reached the right level? How can anyone ever measure something like that?

Your humble grovelling and most servile servant
Carruthers
Dear Carruthers
You reaslly should not get too involved in these matters. It certainly won't help your blood pressure. These quangos are keeping the country running. What more do we want?
Toodle Pip
Manton

Dear Manton

It's the language that bothers me. The vague imprecision of it all. They are surely fooling themselves and perpetuating a huge fraud on the whole of education if they think this means something and they have defined what it means to have an IT functional skill. It can mean anything anyone wants. Can't it? Have I missed something?

And it is not one isolated document, almost everything that comes from local government or a quango has built its structural edifice on language like this. It is the common language of the bureaucrat. The lingua franca of the pseudo-educationalist the world over. Is it not time to send the whole house of cards tumbling? I call on all of sound mind to join the revolution...

Your obedient, humble, grovelling and sycophantic servant
Carruthers

Dear Cartruthers
I once met someone who was high up in the civil service took your point of view. If I remember I have a clipping from one of his letters which I reproduce here:
"I seek to do away with obscurantist jargon (although I think I might just have invented some there) in both my own subject and others. Language is there to communicate meaning, not hide it. If someone can only make themselves important by withholding something, and forcing others to be complicit in this by creating an academic discipline out of it, they are a pretty sorry sort of person. They also tend not to have much of a sense of humour, presumably because they are too scared of being found out. I've read too many academic papers which use academic sounding language to hide the fact that they don't contain anything worth saying and are a complete waste of paper. This is why Orwell is one of my heroes."

He took his own life, if I remember correctly as he couldn't face the world any more.
Let that be a lesson to us all
Toodle Pip
Manton

On Tyranny

2010-03-07T11:50:00.001Z

"I couldn't help overhearing your conversation the other day on liberty," said Scoobles approaching me with a glass in his hand. "Can I get you a drink old chap?"

Scoobles was one of the newer members of the club and I hadn't really spoken to him much. I guessed he was looking to make a new friend. "No, I'm fine thanks."

"I bet most of the old crones round here have never heard of John Stuart Mills, never mind read him, eh?" He gave me an encouraging wink.

"Mill," I said.

"Pardon?"

"It's John Stuart Mill. Not Mills." I smiled.

"Yeah, well, whatever. I agreed with everything you said about liberty. But of course you can only take it so far."

"How do you mean?"

"Well not all crimes have victims, do they?" He sipped his drink and leaned forward, "I mean what about vandalism or fly-tipping or arson? And there's drug dealing and racial hatred...not to mention downloading porn. It would be a horrible, dirty, scary world if all crimes had to have victims."

"Well I think you will find there are victims if you think about it. Aren't the victims of vandalism the property owners? And with fly-tipping, the council tax payers? Drug dealers have plenty of victims I would have thought with the addicts they are making. But I admit that race hatred is a little more difficult. Hatred is an emotion, not an action and I don't believe that anyone should be criminalized for their emotions any more than people should be criminalized for their thoughts."

"Well I do, if they are the wrong thoughts!"

I looked at him surprised. "Wasn't it Orwell who first foresaw a day when people would be arrested just for thinking the wrong things? He called it "Thought Crimes". We already have thought crimes in this country - and I am not so sure that race hated isn't one - where the authorities want to lock people up just for what they think, even though they may not have actually done anything wrong. I think you will find that is the real horrible scary world we are sleepwalking into."

"And what about dowloading pornography? You can't justify that."

"The basic rule is still the same - Principle of Harm. If any anyone is harmed in any way then there should be a law to prevent it. But equally there should be no laws against what happens in peoples minds. Our thoughts are our own and there should be no such thing as an Orwellian thought crime in a free country. If no one is hurt, there should be no law against it."

"I fail to see how you can sensibly apply Mill's Harm Principle to this type of obscenity because there is no way that any aspect of it can be described as a 'victimless crime'."

"What people do in their own heads, with their own thoughts is their own business - as long as no one else is harmed. The state has no right to dictate to anyone what they do in their own minds. And whether you or I approve or disapprove makes no difference. Everyone has the liberty to think what they like, feel what they like, reason how they like. That is what makes us human beings. As long as they are not harming anyone, I support their freedom to do as they please. That is what liberty means. Liberty does not mean others are only free to do what I approve or what you approve. That is just another name for tyranny."

"Well, Ok, downloading and looking at something isn't directly hurting anyone but you're forgetting that I don't agree with you that there should only be laws against things that directly hurt other people. There totally should be a law against it, And the state completely has a right to enforce a law on downloading all indecent images. Call it tyranny if you like but I would rather the country be tyrannical than full of dirty scumbags."

I put my paper down. "That is exactly what tyranny is - the imposition of one persons view, or even the view of the majority, on others.

"There have always been bogey men throughout the ages, who society have singled out as the 'dirty scumbags' of their time. In the 17th century it was witches, in the mid 20 century it was communists, in the mid 30s it was the Jews and in the early 21 century it has been those who download indecent images. What these groups have in common is they didn't harm anyone but they were persecuted because society set its face against them because it didn't agree with them. Every age has its own demons.

"Once you have identified your 'scumbag' group you can then denigrate them to any extent, deprive them of their rights, liberty or even their life. And no one will come to their defence because they are afraid they will be associated too.

"All persecution starts this way - we label a certain group as 'scumbags' because they are different from us and we don't approve of what they do. And before we know it there are a whole new bunch of witchfinders, or McCarthyites or Nazis who would be quite happy to turn the country into a tyranny provided they can get rid of the 'dirty scumbags'.

"And down that road my friend, I cannot follow you." And with that I got up a left.

On Liberty

2010-02-27T21:37:00.005Z

As I was sitting in my favourite armchair in the club library perusing one of the books I had picked off the shelves at random, in walked Squires muttering to himself. I'd not seen the old bird for 6 months and he looked to be in a foul mood now.

"What's up Squires, lost a £10 note and found a penny?"

"Worse, " he said looking up with a rue smile on his face. "I've lost £60 and 3 penalty points."

"Speeding ticket?"

He nodded and sat down in the chair next to me. "And not just me, paper says the police have blitzed 1700 drivers this week."

That was something I could sympathise with. I've had a ticket myself, I think most drivers have. And I never really felt any of this was right. "Why this crackdown on 1700 drivers?" I asked.

"Police have to keep busy I suppose."

"What I object to is, where are all the victims in these 1700 crimes?"

"What victims? There aren't any."

"Exactly my point. Why don't the police concentrate on real crimes where there are victims? You shouldn't have a crime without a victim."

"You are quite right," interjected Hawkwind. He had been a professor of some high level subject at the university, philosophy I think it was, and he was commonly referred to by everyone as The Prof. "Your view corresponds quite accurately with that of John Stuart Mill. He said that liberty means having the freedom to do what you want as long as it doesn't hurt another person. Consequently if there is no victim, you are at liberty to go about your business and do what you want. And these kinds of 'crackdowns' on victimless crimes undermine that very liberty we prize to go about unmolested by government officials."

"Here, Here," said Squires. "Let's stop harassing ordinary people who have not hurt anyone. And let's get rid of all victimless laws."

That was when Manton butted in. "So you think Drink Driving,using a mobile phone while driving and not wearing a belt are victimless crimes do you? Doesn't sound too bright to me."

"Well Manton old chap," I added, "perhaps if you can identify who the victim is in the case you quote, you might then be able to shed some light on the matter. But maybe you don't understand the term victimless crime?"

"Of course I do."

"We have been so brainwashed," added The Prof, "into thinking that any new law that curtails our liberty is a good thing. It is not. This government has created 33 new crimes a month - many thousands of new crimes which have no victims at all. Who is the victim when someone speeds? No one. Who is the victim when I use a mobile phone? No one."

"Yes but you might crash, dear fellow," said Flaxbone who had been listening in.

"True, any one might crash - but you shouldn't turn people into criminals for what they might do, only for what they have done," I replied. "Going over a recommended speed should no more be a crime here than it is on the Autobahn in Germany. We have confused driving fast with driving unsafely. That is simply an error of logic. You can drive fast and you can drive safely. Let's not penalize the first because we have confused it with the second."

"I'm with you," added The Prof. "Laws should not restrict peoples liberty unless you are harming someone. That was the tenor of John Stuart Mills great idea which has governed our freedoms in the western world for the last 200 years. It is only recently we have moved into the world of the nanny state and the big brother who controls our lives."

"What stupid remarks, I rest my case," said Manton, rather rudely I thought.

"Well I don't think you made much of your case, but I can rest it for you if you like, " added Rook who was a well known barrister around town and who had also been listening in. We were gathering quite a crowd by now.

"Be my guest," said Manton and then went off to find himself a drink.

"The thought that lack of insurance is victimless is plainly ridiculous," continued Rook. "Whenever an accident happens which insurance is paid out on, all people with insurance have contributed to the pot it's paid from and the fact that some people (usually the worst drivers) don't have it, means the rest of us have to pay more. Everyone's a victim."

"Well, I can't see there are any victims when I was caught in the speed trap." said Squires

"What a ridiculous thing to say," shouted Rook. "Of course there are victims! When someone dies because of phones, speed, distraction or any other offence it creates many victims when you look at the impact on families. And by the way, speeding is not a crime, it does not get recorded as a criminal record...get the facts right! People always use the liberty argument when in fact what they mean is they want to do what they want without being challenged!"

I had to interupt. "Rook, you are quite right, there is a victim when someone dies. But there are no victims when someone is caught on a speed camera. And there were no victims when 1700 people were stopped and fined recently. Let's have laws that only penalize you for hurting people. Let's not have laws that penalize people when they haven't hurt anyone."

"Maybe," he said grudingly.

"And there seems to be some confusion," I added, "about the difference between a criminal offence and a criminal record. All motoring offences (except parking violations in areas where enforcement has been handed over to local councils, rather than traffic wardens) come under criminal law. So there can be no doubt that speeding is a criminal offence. The fact that some crimes are not recorded means it is quite possible to commit a criminal offence (speeding) without acquiring a criminal record.

"Last year 1.92 million speeding tickets were issued. Over the last 10 years around one third of all the drivers in the country have been fined. What I object to is that millions of ordinary good law abiding citizens who have never broken any other laws in their lives have been criminalized by a bad system. Any law which turns a third of its citizens into criminals is plainly wrong and I have no confidence in it." And with that I got up myself, replaced my copy of John Stuart Mill and went to the bar. Orwell was wrong, I thought to myself, but only by 26 years.

The View From The Cave

2010-01-15T23:43:00.002Z

There was a distinct chill in the air, and for some reason I felt a tinge of melancholia as I pushed open the door and walked into the lobby of the Diogenes club, on the first day of the new year. Henry popped out of nowhere, and was at my elbow as I shrugged off my overcoat and scarf.

"Happy New Year, Henry."

"Thank you Sir. And seasonal felicitations to you. Your usual drink, Sir?"

"Yes please, Henry. Are the others here?"

At that moment I was hit by a blast of icy air as the front door was pushed open again.

"Oh, Hello Travis." I said, as Henry took my hat and gloves.

"Afternoon, old man. Hello Henry. Happy New Year and all that."

"Thank you Sir."

"What do you want to drink, Travis?"

He handed his coat to Henry, and then said "Oh, a glass of Ardbeg for me, I think. Cheers."

Henry headed towards the cloakroom and we walked into the warmth of the library.

For once, Manton was sipping his drink quietly, and it was Abrahams, our resident academic, who was holding forth.

"It's getting very difficult to understand the governmental directives these days."

"In what way?" asked Treworthy.

"Well, if we take on too few students, and don't meet our targets, we will be penalised. If we take on too many students and exceed our targets, we will be fined several thousand per student. It is a most ... unsystematic approach."

This was clearly a cardinal sin, in Abrahams' well-ordered world.

"It makes perfect sense to me." replied Treworthy, somewhat unsympathetically.

"Yes, but the trouble is that we always take on a few more students than our targets, because we know that some of them will drop out."

"Well, clearly you must ensure that they don't."

"But they always do. Every year. You always lose a couple of students, whether it be for personal reasons, financial reasons or something else."

"Hang on a sec," interjected Travis, "what you are saying is that you are being fined by the government for meeting targets that were set by that same government."

"Yes, that's precisely the problem."

"Oh it just sounds like the usual rubbish." I said. "Ignore it and it will go away eventually."

"Yes, but the other problem is that we are going to get our funding cut by DIUS."

This finally roused Manton out of his reverie.

"DIUS? What in the name of insanity is that?"

"The Department of Innovation, Universities and Skills." said Treworthy, helpfully.

"As ever, Treworthy, your insider knowledge of Her Majesty's Home Civil Service has proved invaluable. What happened to the DES?"

"The Department for Education and Skills has been demerged."

"Is that even a word?"

"Some of its functions have been taken over by the Department for Children, Schools and Families, whereas the oversight of Universities became the responsiblitiy of the Department of Innovation, Universities and Skills."

"Oh God." Manton sank deeper into the black depression from which he had briefly emerged. "Anything with the word 'Innovation' in the title is doomed to failure. I don't know how you put up with it, Treworthy."

"I find it fascinating, actually. As a matter of fact, the DIUS has since merged with the Department for Business, Enterprise and Regulatory Reform, and is now called the 'Department for Business, Innovation and Skills', so Abrahams wasn't entirely accurate."

"You're starting to scare me now, Treworthy." warned Manton, as he took a huge gulp from his glass.

"It does seem ominous that the word 'Universities' does not even appear in the name anymore." said Abrahams.

I leaned over and said "Are you alright, Manton? You seem a little under the weather."

"You would be feeling under the weather if you had spent Christmas with the venomous hell-spawn that I was once married to."

"What on earth possessed you to spend Christmas with her?"

"It is a story too complex and, frankly, too embarrasing to relate here. Suffice to say that rather than repeat the episode, I would rather be stranded on a particularly small asteroid and be left to experience the heat-death of the universe totally alone."

"Never mind about all that," interrupted Treworthy, "what about Abrahams's problem?"

"I've lost track." said Travis, "what is his problem?"

"Well, in essence, the DIUS, or the DBIS or whatever it is called, is going to cut university funding by 400 million, next year." said Abrahams.

"We live in uncertain times, Abrahams," said Manton. "Don't forget, there are a lot of bankers out there who need their bonuses paid. That 90 million that we gave them has to come from somewhere. Money doesn't just grow on trees you know."

"It doesn't need to. We can just print more of it. It's called quantitive easing. Do keep up Manton." said Travis.

"Yes - how exactly does that work Travis? On the one hand, we can just print more money, but on the other, we still have to make cuts in education?"

"Well lets face it, if you are going to print more money, you aren't just going to give it the education sector are you." I had decided to stir things up a bit. "You know what they are like."

"Yes, no doubt we would start to pay each other huge bonuses." said Abrahams dryly. "Mind you, Mr Mandelson did write us a nice letter asking us to protect quality and continue widening access to higher education, during this difficult time."

"Hah," shouted Manton, "marvellous isn't it. I don't suppose he gave any pointers as to how you could go about doing that, within a framework of budgetary cuts?"

"He was slightly vague on that point."

"Not so fast, Manton." exclaimed Treworthy. "I read something about this in the paper this morning. Quite a few MP's have got an exciting new idea which might help in this regard."

"I'm all ears, old boy."

"Well, degree courses. Do they really need to be 3 years long? Couldn't we fit them into 2 years?"

"I thought that was what these Foundation degree things were for?"

"No, no, a full BSc or BA. After just 2 years. Think of the possibilities."

"Oh I am, Treworthy. A generation of youth who are even more illiterate and innumerate than the current one. A complete inability to even maintain our current technological infrastructure, let alone improve it. The removal of yet more challenging content from courses in pursuit of an easy qualification that we can label as a 'degree'. The possilities are clearly endless."

"I afraid this is the sort of attitude that restricts reform in the public sector, Manton. Thank God you are not involved in implementing these policies."

"Something that I give thanks to our Lord for on a daily basis, Treworthy. Or at least I would if I believed in Him. And if you want to start reforming something, I feel you should start with the Civil Service itself."

"That is a completely different case, Manton. Not comparable at all." blustered Treworthy, as he got up and headed to the bar.

"Yes, I rather thought it might be. Put your own house in order first, Treworthy." called out Manton, at his departing back.

"But surely the politicians don't really believe all this rubbish they are spouting, do they?" asked Travis.

"There is a very easy way to determine that. If Oxford or Cambridge are made to reduce their degree courses to two years, I think we can take that as a sign that the politicians are sincere." said Manton.

"It's all rather depressing really, isn't it." I said, my melancholia suddenly resurfacing. "Why is it always a struggle to keep sight of what should be self-evident truths. It's like we have constructed a society which is deliberately designed to obscure the view, and distract us with trivialities."

We all sat, pondering this thought whilst watching the flames dance in the fireplace. Treworthy returned from the bar with a fresh drink.

"I think it's a rather deeper problem actually," said Manton, after a few minutes reflection. "It puts me in mind of something that I learned from an old fakir in a temple in Amritsar during my days on the hippy trail."

Travis started choking as he tried not to spray his mouthful of whiskey all over the carpet, and I glanced at Abrahams, who looked as stunned as I'm sure I did. Only Henry showed absolutely no sign of surprise.

Manton sipped meditatively on his drink in silence, allowing us time to compose ourselves. Treworthy was the first to recover the power of speech.

"Manton, you don't seriously expect us to believe...."

"I expect nothing, my dear fellow. I only offer up this piece of wisdom in the same spirit that it was imparted to me. I have not always been a merely sedentary seeker of truths."

"I didn't think that you had ever been outside of the British Isles, Manton." I said.

Manton shrugged and gestured to Henry for another drink.

"Or even outside the M25 for that matter." muttered Travis. If Manton heard him, he gave no sign.

"It may interest you all to know that in my youth, having read Hesse, Marcuse and similar tracts, I embarked on a journey to the East, an essentially spiritual search, seeking out those wise and holy men that could help me in my quest for enlightenment.
It was whilst I was in the aforementioned city that I learned of the concept of Maya. It is the name that certain philosophers give to the limited, physical and mental reality in which our consciousness has become entangled. It is held to be an illusion, a veiling of the true unitary self. Many religions and philosophies seek to 'pierce the veil' of Maya in order to glimpse the transcendent truth, from which the illusion of physical reality springs."

I ordered another drink from Henry. This new side to Manton was a somewhat alarming one, and I was going to need more than one glass of finest Malt to get used to it.

"So what you are saying," said Abrahams, "is that mankind always has trouble seeing the truth - that it is in our nature to look no further than the surface, be distracted by the superficial."

"It is an ancient idea. I think our modern industrialised society is just the latest manifestation of it. We are becoming more and more dependent on technology, because it enables us to pay less attention to the constraints of nature, and even gives us the illusion that we can ignore them all together. We think we are free, but in fact we have built incarcerated ourselves inside a prison of our own making."

"Wait a minute Manton," exclaimed Treworthy, "I distinctly remember arguing with you about this very matter some years ago. You were pouring scorn on my environmental concerns."

"No, Treworthy, I was pouring scorn on the solutions that you were offering. If people want to recycle their bottles, or buy a carrier bag with a Greenpeace logo on, then so be it. I just don't think that they will have the slightest effect on the welfare of the planet. We have locked ourselves in our prison and are currently bricking up the doorway from the inside to stop ourselves from escaping. Not only that, we are also poisoning the air, food and water supply, into the bargain. I said it then and I will say it again now. We are all doomed and it is no better than we deserve. All that technology does, is allow us to hold reality at bay for a while. Until it goes wrong. Which it always does, sooner or later."

At that moment, the lights all went out. The room was dark, save for the flickering firelight.

I don't mind admitting, I was quite rattled, and I wasn't the only one.

"What do you think about all this, Henry?" I said, in a attempt to break the silence.

"I am reminded of a passage from Plato's Republic, sir."

"Ah yes indeed," whispered Manton, staring trance-like into the flames. "We are all still stuck in the cave, watching the shadows on the wall."

"Quite so, Sir. I shall endeavour to procure a candelabra, in an attempt to dispel some of the shadows, in here at least."

"Thank you Henry. Unlike most of the people in the cave, we would be most grateful."

American Boycott

2009-09-01T20:28:00.002+01:00

It’s astonishing the things you hear around the Diogenes Club these days. I know you will say that it is my own fault, but sometimes you can’t help eavesdropping on certain individuals who have loud voices. I just caught part of the conversation as I was perusing the library shelves. From the other side came two voices;

"You know I think I'm going to start a boycott of American goods."

"I agree with you. In my view the US is the worlds most dangerous entity."

"Absolutely right! They have disrupted more elected democracies than any regime in history. They have bombed and invaded other countries. They supported the IRA terrorists during its bombing campaign. They have run roughshod over the peoples of a dozen different countries: Nicaragua, Vietnam, Palestine, Cambodia, Iraq, Diego Garcia in the Chagos Islands, Palestine, Chile, Panama, El Salvador... They don't obey International Law. They don't observe the Geneva Conventions. They detain thousands without trial in Guantanamo and elsewhere. They have tortured many more in Abu Ghraib. They use extraordinary rendition. They use waterboading. They operate over 800 military bases worldwide. They hold the most powerful WMDs ever created... and they are the only country to have actually used them. And no one dares stand up to them because they dominate all the world financial markets and hold the U.N. hostage with their monetary and military support. "

"You're right. Nobody should apologise for being anti-American . . . wear the badge with pride."

Well of course I walked away at that point. I just can't believe what the club is coming to.

Lockerbie: The Flight from Justice

2009-08-30T17:09:00.004+01:00

News at the moment is all about the release of the Lockerbie Bomber Abdel Baset Ali Mohmed Ali Megrahi. One of our club members who works in a rather hush hush government department has often claimed to know more about the Megrahi incident than has ever been told in newspapers. "Of course Megrahi had nothing whatsoever to do with the bombing," he has told us many times. "Our government and the US government know exactly what happened at Lockerbie. But they are not going to tell you."

After plying him with a few brandies he was happy to reveal all, provided we did not reveal his name I can give you a more complete picture.

The story he said started in June 1988 when an Airbus civilian airliner was shot down with the loss of all 290 lives on board. This happened 6 months before Lockerbie.

The fact that the airbus was Iranian, that people on board were Iranian, and they were shot down over the Gulf by a US warship the USS Vincennes, meant that there was no court hearing, that the captain of the Vincennes and to his gunnery crew were awarded medals, and that slaughter was blamed on Iran for not accepting a UN ceasefire in the war with Iraq in which we were backing our old friend Saddam Hussein (yes, the same!).

Iran plotted a tit-for-tat revenge and hired a Palestinian terrorist group supported by Syria to execute the plan. The security services got wind of the plan and on 5 December warnings were sent to the US embassy in Helsinki that a bomb would be planted on a Pan Am flight from Frankfurt in the next two weeks. Eighty percent of the staff in American embassies who had reserved seats on Pan Am flights out of Frankfurt cancelled their bookings. There were 159 empty seats on the plane. The bereaved families are still trying to find out why they never heard about the warning. All they have been told is the warning 'was a hoax' and it was a mistake posting it.

On 21 December 1988 Pan Am flight 103 was blown out of the sky over Lockerbie. Apparently 270 people died because the UK government didn't make the same mistake. This time there would be no medals.

The bomb in the plane was fitted into a Toshiba radio-cassette player, wrapped in clothing bought in Malta and hidden in a brown Samsonite suitcase.

According to the Washington Post the intelligence services had reported that it was 'beyond doubt' that the Lockerbie bomb had been planted by a Palestinian terrorist group led by Ahmed Jibril. The group had been hired by Iran and had the protection of the Syrian government. The Sunday Times had more detail. Jibril was supported by one Nidal, the leader of the Syrian-backed terrorist outfit. A third man, Talb, was identified as travelling to Malta to buy the clothes to put in the suitcase. The whole thing was a reprisal for the shooting down of the Iran civil airline six months before.

Thatcher and Bush spoke about Lockerbie and agreed to 'low-key' the disaster because neither could do anything about it, nor could they bring the Syrian protected terrorist to trial. And all would have been quietly forgotten had not the political climate changed in 1991 with the outbreak of the Gulf war and the dramatically shifting political scene of the middle east.

It suddenly became expedient to get Syria and Iran on board as allies and to isolate any supporters of Saddam's Iraq. And this included Libya. Quite suddenly and without any previous suggestions to the contrary, the Lockerbie evidence that pointed towards Syria and Iran was quietly abandoned and the US government now claimed that that Libya was responsible for the bombing. The press were happy to switch from one to the other and a political fury was whipped up against Libya. With public backing, the US was able to engage freely in 'revenge air strikes' on Libya. This was now marketed as 'a blow for justice' in retaliation for those killed on Pam Am flight 103, and bought by the public.

Information from US security services now implicated two Libyans, one of whom was Megrahi. They had planted the bomb on a plane in Malta. The bomb had been flown to Frankfurt where it was transferred to a plane for London. The bomb was then tranfered at London to Pan Am flight 103.

What was the evidence for this wholly new story? The CIA had a 'witness'.

Abdul Majid Giaka, a garage mechanic who once claimed to be related to King Idris of Libya, had come forward and implicated Megrahi. He saw them place the bomb and was prepared to testify in court. For this evidence the CIA paid Giaka $4 million - provided there was a conviction.

Without boring you with the tedious trial details, Paul Foot who sat through the full proceedings summed it up by saying that "the entire expensive trial of the Libyans was an intelligence frame-up; and that among the most comprehensively hoodwinked were Lord Sutherland, Lord Coulsfield and Lord Maclean" the presiding judges. The verdict was a triumph for the CIA, but does nothing to satisfy justice. Megrahi was convicted on circumstantial evidence and the hearsay of discredited witnesses. According to John Pilger this is just another case that can be added to the increasing catalogue of cases of British miscarriages of justice.

Of course after the war, the sanctions were lifted against Libya and Gaddafi agreed to pay £1.7 billion out of his oil revenue in compensation. And all was sweetness and light until Megrahi was released last week, to the baying of the press and the anger of outraged Americans.

A recent ICM Research poll for BBC News said 60% of those questioned thought it was wrong to release Megrahi, and such an evil man should have been left to die in jail . Finding myself among the 40% I believe that releasing him to die at home is not about what kind of man he is, but what kind of people we are. And if you though that the UK had released a dying man on grounds of compassion alone, today's Sunday Times headline makes it clear that even that was done as part of a deal for Libyan oil.

Diogenes the Hells Angel

2009-07-19T10:47:00.001+01:00

Diogenes was a rebel against authority who lived the simple life. He would have shunned gangs or other combinations that protect the individual at some loss of liberty. Were motorcycles around in his time he would have had nothing to do with being a gang member, he was not that type of “outlaw” but maybe he would have valued the independence and mobility achieved by a single machine, and of living life “on the edge”.

Yet even in his rebellion he would have been aware that that very quality, of outstripping the herd, is a manufactured image, a line designed to sell motorcycles as a commodity.

You may remember the VeloSolex lightweight bicycle that Frenchmen ride with a small motor above the front wheel. It was a post World War Two vehicle that young and old could ride without any formality offering both fun and freedom. But that was about the limit of its possibilities. It could hardly be seen as a fetish commodity.

If you go to YouTube and enter Mr Bean and VeloSolex you will get a sketch that embraces this stereotype with affection. Yet the advertising for the VeloSolex for those who wish to search google images is an extraordinary mismatch of sexy long legged models astride this bicycle. The reason is that sex, like rebellion, sells products like no other motif can.

The long legs give a clue, for elongating the leg of a model by artifice or unconscious selection of the longest legged candidate is a deliberate evocation of a female’s sudden spurt of growth a purbety…something that is hard wired into the perceptions of both male and female alike. The 50’s artist Vargas made a good living exaggerating the legs of the models he painted for this very good reason.

Now Diogenes was famous for ‘accentuating the negative’, for cynicism is nearer the end of the continuum named “hostility” than the opposite one, “friendliness”. But here we have a product and an industry, ‘accentuating the positive’ as if life itself was dependent upon this perception. And that is the clue, for the life of the product, its conception, its existence, its survival depends upon it falling upon that continuum nearer the end of ‘friendliness’. And what better proponent for “friendliness” is there than the powerful and emotive syncretism that is sex. So powerful is this motif that the alternate “handle” of rebelliousness has by and large failed to survive as well as a meme.

We all remember motorcycle rebel Marlon Brando in the film “The Wild One” which worried our mentors so much that it was banned for 15 years in the UK. Or we may have enjoyed the bad boy image of the anti-hero in Richard Thompson’s song the 1952 Vincent Black Lightning (listen to the Reina Collin’s version). More likely though we will have remembered then for their positive associations. In the case of the song it would be the combination of a red haired girl and her black leathers. You can find a version in the podcast section of http://web.mac.com/beachhutman/motorcycle

What endures here is a manufactured lack of restraint in ‘positive’ matters such as celebrating friendliness, attraction (and by association sex), rather than remembering the ‘negative’ also there in some rebellion or hostility to other social norms.

In other words, a life affirming film, song or story will usually triumph over anything that casts a shadow over our or others passing. Diogenes the cynic would have found this association with motorcycles, if such existed in his day, as problematic.

But in advertising appealing to one emotion is never enough. A tension if it can be created between opposites will get twice as much attention. So we as spectators, as consumers, have the same problem as Diogenes would have had.

What was his answer? To carry a big stick. Would he have thrown it into the spokes of any passing motorcycle that annoyed him? I do not think so. He would not have been angry at some insouisiant youth vacillating between a faux rebellion and some manufactured attraction. Diogenes would have instead lamented that the youth of his day could so easily be sold someone else’s dream instead of doing something significant.

The answer may not be to be cynical, as Diogenes was, shunning the complexities of his time. That continuum, from hostility to, shall we say, friendliness is also one from the conservation of energy to one of expending it. A doctor would recognise this is the world of the bi-polar or manic-depressive.

Nearly a couple of years ago after reading a book called The Hypomanic Edge I suggested Diogenes may have been a hypomanic. See it here (cut and paste)

http://storiesfromthediogenesclub.blogspot.com/2007/09/diogenes-with-first-aid-kit.html

Now I am beginning to wonder if he was a manic-depressive. Strangely this cynical perspective of hostility and negativity seems to be an evolutionary survival. Why is this? One would expect the likes of Diogenes to die out in evolutionary terms, never mind in terms of their ideas. Just as you might expect the motorcycle industry to ‘loose’ the negative bad boy associations of motorcycling. For the price of that is marginalisation and legislation to outlaw a threat to civilised society. Certainly the author of The Hypomanic Edge regards the manic or ‘positive’ behaviours at that end of the continuum to be the reason that condition persists in the world. Such people have energy and can succeed when others at the hostile pole conserve rather than express their anger in a barrel.

So do we need Diogenes? Well, next time some manic motorcyclist cuts you up imagining himself some angel of darkness or lusty rebel, think that there needs to be a counterbalance. And that is the legislators, the policemen and the cynics that refuse to fall for the line the motorcyclist is taking. Society is a spectacle. We cannot all go around in rose tinted glasses. A Diogenes has a duty not to retreat from the world but to point out the myths the rest of us slavishly follow. And that includes himself.

I Just Don't Believe it.

2009-05-29T07:16:00.006+01:00

I was sitting in my favourite armchair with a warm brandy musing on the origins of cynicsm when I was interrupted from my reverie by Frith, our faithful retainer, who inquired if I would like another brandy.

"I think I'm happy with this one, Frith."

"Pardon my saying so, sir, but my young nephew mentioned he might be interested in joining the Diogenes club."

"Is he suitable Frith?"

"Oh I am sure I couldn't say sir, but he does have strong views and passionately believes in a number of causes, sir."

"Then he won't do for here Frith," I answered with some conviction. What makes a person a true Diogenarians is not strong views. The true cynic is defined, not by what they believe in, but by what they don't believe in."

"I see, sir"

"That's why young people are hardly suited to the Diogenarian cause. You see when you are young and wild you believe all sorts of things. But as you get older, one by one, those beliefs drop away until you are more defined by the things you don't believe than the things you do. That Frith is the definition of a true cynic.

"I see sir," said Frith and departed

Relaxing back in my armchair I picked up a pen and paper and started to jot down, just as a matter of interest the first things that came to mind of the many that I realised after a mature reflection I no longer believe in and I thought I would share will you for the record my own personal anti-creed for the age. (Other Diogenarians will no doubt have their own and are free to add to the list)

1. I don't believe we are over the worst of the crash
More money has been spent on bailing out the banks from this crash than all the money spent on World war II, the entire NASA space programme and the great crash of 1929 - put together. And that took ten years to get over.

2. I don't believe we live in a democracy.
Democracy has to be more than just being able to choose between two or three very similar things once every five years.

3. I don't believe there should be laws against offending people.
The right penalty for offending people is repudiation, not 3 years in prison.

4. I don't believe diversity is a good thing in and of itself.
Diversity without competence is useless.

5. I don't believe in dyslexia (or discalcula or dispraxia or dis....)
Giving something a name doesn't mean you can be excused from spelling, or adding up - or that you are not responsible for it, just like everyone else.

6. I don't believe in different learning styles.
Visual, auditory, kinesthetic - we all learn in each of these ways and it muddled thinking that focuses on just one

7. I don't believe we are responsible for the errors of our fathers
We are not responsible for the slavery of 200 year ago, and I don't believe we need to apologise or be made to feel guilty about things that others have done.

8. I don't believe freedom of speech is only for those who we agree with.
Freedom of speech must be for everyone or it is not true freedom.

A History Lesson - Part 3 - Things Get Worse

2009-05-17T18:01:00.000+01:00

More extracts from Professor Galbraith's classic work: The Great Crash 1929. A more accessible and witty summary of what happened in that year I have yet to read.

These extracts come from the chapter in his book entitled: 'Things Become More Serious'. I would urge anyone who is interested in such things, and who wishes to understand more of what is going on today, to invest in this modest volume.

A common feature of all these earlier troubles was that, having happened, they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a recorded 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.

Tuesday, 29 October, was the most devastating day in the history of the New York stock market, and it may have been the most devastating day in the history of markets. It combined all of the bad features of all of the bad days before. Volume was immensely greater than on Black Thursday; the drop in prices was almost as great as on Monday. Uncertainty and alarm were as great as on either.

Selling began as soon as the market opened and in huge volume. Great blocks of stock were offered for what they would bring; in the first half-hour sales were at a 33,000,000-a-day rate. The air holes, which the bankers were to close, opened wide. Repeatedly and in many issues there was a plethora of selling orders and no buyers at all.

Once again, of course, the ticker lagged - at the close it was two and a half hours behind. By then, 16,410,030 sales had been recorded on the New York Stock Exchange - some certainly went unrecorded - or more than three times the number that was once considered a fabulously big day. The Times industrial averages were down 43 points, cancelling all of the gains of the twelve wonderful months preceding.

But the worst thing that happened on this terrible day was to the investment trusts. Not only did they go down, but it became apparent that they could go practically to nothing. Goldman Sachs Trading Corporation had closed at 60 the night before. During the day it dropped to 35 and closed at that level, off by not far short of half. Blue Ridge, its offspring once removed, on which the magic of leverage was now working in reverse, did much worse. Early in September it had sold at 24. By 24 October it was down to 12, but it resisted rather well the misfortunes of that day and the day following. On the morning of 29 October it opened at 10 and promptly slipped to 3, giving up more than two-thirds of its value. It recovered later but other investment trusts did less well; their stock couldn't be sold at all.

The worst day on Wall Street came eventually to an end. Once again the lights blazed all night. Members of the Exchange, their employees, and the employees of the Stock Exchange by now were reaching the breaking point from strain and fatigue. In this condition they faced the task of recording and handling the greatest volume of transactions ever. All of this was without the previous certainty that things might get better. They might go on getting worse. In one house an employee fainted from exhaustion, was revived, and put back to work again.

In the first week the slaughter had been of the innocents. During this second week there is some evidence that it was the well-to-do and the wealthy who were being subjected to a levelling process comparable in magnitude and suddenness to that presided over a decade before by Lenin. The size of the blocks of stock which were offered suggested that big speculators were selling or being sold. Another indication came from the boardrooms. A week before they were crowded, now they were nearly empty. Those now in trouble had facilities for suffering in private.

The bankers met twice on the 29th - at noon and again in the evening. There was no suggestion that they were philosophical. This was hardly remarkable because, during the day, an appalling rumour had swept the Exchange. It was that the bankers' pool, so far from stabilizing the market, was actually selling stocks! The prestige of the bankers had in truth been falling even more rapidly than the market. After the evening session, Mr Lament met the press with the disenchanting task of denying that they had been liquidating securities - or participating in a bear raid. After explaining again, somewhat redundantly in view of the day's events, that it was not the purpose of the bankers to maintain a particular level of prices, he concluded: 'The group has continued and will continue in a cooperative way to support the market and has not been a seller of stocks.' In fact, as later intelligence revealed, Albert H. Wiggin of the Chase was personally short at the time to the tune of some millions. His cooperative support, which if successful would have cost him heavily, must have had an interesting element of ambivalence.

The rumour recurred that the 'organized support' was selling stocks, and Mr Lament, on meeting the press [again], added a minor footnote to this now completed story. He said he didn't know - the organized support was really not that well organized. The most plausible explanation is that everyone was feeling cheerful but the public. As before and later, the weekend had been a time of thought, and out of thought had come pessimism and a decision to sell. So, as on other Mondays, no matter how cheerful the superficial portents, the selling orders poured in in volume.

By now it was also evident that the investment trusts, once considered a buttress of the high plateau and a built-in defence against collapse, were really a profound source of weakness. The leverage, of which people only a fortnight before had spoken so knowledgeably and even affectionately, was now fully in reverse. With remarkable celerity it removed all of the value from the common stock of a trust. As before, the case of a typical trust, a small one, is worth contemplating. Let it be supposed that it had securities in the hands of the public which had a market value of $10,000,000 in early October. Of this, half was in common stock, half in bonds and preferred stock. These securities were fully covered by the current market value of the securities owned. In other words, the trust's portfolio contained securities with a market value also of $10,000,000.

A representative portfolio of securities owned by such a trust would, in the early days of November, have declined in value by perhaps half. (Values of many of these securities by later standards would still be handsome; on 4 November, the low for Tel and Tel was still 233, for General Electric it was 234, and for Steel 183.) The new portfolio value, $5,000,000, would be only enough to cover the prior claim on assets of the bonds and preferred stock. The common stock would have nothing behind it. Apart from expectations, which were by no means bright, it was now worthless.

This geometrical ruthlessness was not exceptional. On the contrary, it was everywhere at work on the stock of the leverage trusts. By early November, the stock of most of them had become virtually unsaleable. To make matters worse, many of them were traded on the Curb or the out-of-town exchanges where buyers were few and the markets thin.

Never was there a time when more people wanted more money more urgently than in those days. The word that a man had 'got caught' by the markets was the signal for his creditors to descend on him like locusts. Many who were having trouble meeting their margin calls wanted to sell some stocks so they could hold the rest and thus salvage something from their misfortunes. But such people now found that their investment trust securities could not be sold for any appreciable sum and perhaps not at all. They were forced, as a result, to realize on their good securities. Standard stocks like Steel, General Motors, Tel and Tel were thus dumped on the market in abnormal volume, with the effect on prices that had already been fully revealed. The great investment trust boom had ended in a unique manifestation of Gresham's Law in which the bad stocks were driving out the good. The stabilizing effects of the huge cash resources of the investment trusts had also proved a mirage. In the early autumn the cash and liquid resources of the investment trusts were large. Many trusts had been attracted by the handsome returns in the call market. (The speculative circle had been closed. People who speculated in the stock of investment trusts were in effect investing in companies which provided the funds to finance their own speculation.) But now, as reverse leverage did its work, investment trust managements were much more concerned over the collapse in the value of their own stock than over the adverse movements in the stock list as a whole. The investment trusts had invested heavily in each other. As a result the fall in Blue Ridge hit Shenandoah, and the resulting collapse in Shenandoah was even more horrible for the Goldman Sachs Trading Corporation.

Under these circumstances, many of the trusts used their available cash in a desperate effort to support their own stock. However, there was a vast difference between buying one's stock now when the public wanted to sell and buying during the previous spring - as Goldman Sachs Trading Corporation had done - when the public wanted to buy and the resulting competition had sent prices higher and higher. Now the cash went out and the stock came in, and prices were either not perceptibly affected or not for long. What six months before had been a brilliant financial manoeuvre was now a form of fiscal self-immolation. In the last analysis, the purchase by a firm of its own stock is the exact opposite of the sale of stocks. It is by the sale of stock that firms ordinarily grow.

However, none of this was immediately apparent. If one has been a financial genius, faith in one's genius does not dissolve at once. To the battered but unbowed genius, support of the stock of one's own company still seemed a bold, imaginative, and effective course. Indeed, it seemed the only alternative to slow but certain death. So to the extent that their cash resources allowed, the managements of the trusts chose faster, though equally certain death. They bought their own worthless stock.

Men have been swindled by other men on many occasions. The autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves.

A Small Difference

2009-04-03T14:41:00.001+01:00

The others were already ensconced in the library when I arrived at the Diogenes club last week. Manton was holding forth with such force that I could hear him from the lobby, as Henry took my coat and briefcase.

"I'll have a glass of Ardbeg, Henry, when you have a free moment."

"Certainly, sir."

"What's set Manton off today?"

"I believe Mr Manton is somewhat distressed by the news of Sir John Stafford's pension arrangements, sir."

"Ah, of course." Sir John Stafford had, until recently, been the managing director of the Royal Hibernian Bank, and had attracted much adverse comment in the press due to his recently publicised pension arrangements. I opened the door to the library, and flinched as the full force of Manton's invective caught me square in the face.

"....pearl-handled revolver, but I doubt if he would have the guts to use it. Are you seriously trying to defend him, Treworthy?"

"Not at all, Manton, I share your opinion of the man."

"Well what in blazes are you blathering on about?"

"Simply that, no matter what you say, the fact remains that his pension was contractually agreed. There is nothing that anyone can do about it now."

"But he led his company to destruction. He expanded the company so far beyond what it could afford, it collapsed in on itself. He has actually destroyed the entity that was paying him the pension. If it wasn't for the fact that the government - us taxpayers - bailed them out, he wouldn't have a penny."

"That's not actually true, old boy," said Travis. "The money was set aside during his tenure."

"Well it's a pity that he didn't take the same amount of care over his employee's welfare as he clearly did over his own. I mean..... dammit all, he was using a private jet for corporate travel. Since when have bank managers used private jets?"

"There speaks a man who knows little of modern finance." I said, as I joined the group and sat in my chair. The others nodded their greetings as Manton drained his glass and motioned to Henry for another.

"Sorry about that," he said, "was I audible from the lobby?"

"You were probably audible from the end of the street. I take it that you are less than impressed with the recent news."

"Don't set him off again, please." said Abrahams, who had long since given up trying to do the crossword. "We are all of the same opinion, Manton. There just doesn't seem to be much that anyone can do about it."

"I know, that's the bloody annoying thing." snarled Manton.

"Yes, it's not like you to react this way to the news, Manton." said Travis. "If anyone is going to lose their rag, it should be me, given that I lost my job last month."

"I didn't know that, Travis." I said, turning to him in surprise. I could see by the looks on their faces that this was news to the others as well.

"No one did. That's why I haven't been in for a while. With the current situation, I'm amazed that I managed to hang on at the firm as long as I did, but the axe has finally fallen."

"I'm sorry to hear that, old boy." I said. "If there is anything that I can do..."

"The same goes for all of us," said Treworthy, as the others mumbled commiserations, "how are you going to manage?"

"Oh, no need to worry about me. They gave us all a fairly hefty golden handshake, so I should be ok for a while."

He was putting a good face on it, but none of us were fooled.

"Still, I'm going to have to start tightening my belt. This will probably be my last visit to the Club for a while. The annual subscriptions are due soon, and as we all know, they aren't cheap."

That dampened the atmosphere quite a bit. Manton seemed to have suddenly become tired, as if the anger that had been sustaining him had gone. We spent a few minutes silently meditating on the brave new world that seemed to be unfolding, and then Manton spoke, his voice unusually quiet.

"This sort of thing has always bothered me really, but I've always tucked it away in the back of my head, like we all do, and tried to forget about it, so that I could get on with life. But all this has put me in mind of old Kropotkin."

"The Russian anarchist?" asked Abrahams.

"No, no, a chap I knew at University. Joe Kropotkin. That was what we called him. I can't remember his real name. He was a real class warrior. Hated the rich with a passion - he actually argued that they were a different species."

"What, on a genetic level?" I asked. "Surely he wasn't serious?"

"Oh, deadly serious. He got sent down after a particularly lively sit-in when we occupied the Vice-Chancellor's office back in the Seventies."

"Manton, you never fail to surprise me." said Treworthy. "I've never seen you as a political activist."

"It was a long time ago, Treworthy. The cynic that currently sits before you didn't spring out of the ether fully formed."

"So what happened to him? Kropotkin, I mean." I said.

"He ended up living on an commune up in the Pennines, somewhere. You know, the sort of place where all property is held in common. We stayed in touch for a while."

"What brought him to mind?"

"Well, we used to have conversations about society, and our place in it, long into the night, as one does at that age. As I say, he always had a thing about the rich. He said that they really did regard ordinary people as dirt, beneath contempt. They were simply there to be exploited, used to generate wealth that the rich could then steal, so that they could stay rich."

"That's a bit strong."

"Oh, he absolutely believed it. He was the only person I have ever met who has actually read all three volumes of Das Kapital - and that includes all the academics who really should have read it but who made do with 'Marx for dummies' when they thought no one was looking."

"What evidence did he offer to support his hypothesis, Manton?" said Abrahams, ever the scientist.

"Well, one of the distinguishing features of the rich is that they show no shame whatsoever. They are not in the slightest bit embarrassed to possess grotesquely greater amounts of money than most other people, or embarrassed about the way that they have to treat those people in order to get their money. Indeed, their great masterstroke was to remake the world into a place where they are the normal ones, and it is the ordinary people who are at fault because they are so poor."

"It all sounds a bit far-fetched."

"Well yes, but we don't really complain about this stuff, do we? Unless something goes wrong, like it has recently. Why aren't people out on the streets? These idiot money men have brought the global economy to the point of collapse and it is only in the last couple of weeks that people have started to protest. There ought to have been riots on the streets by now."

"Well, there still might be. Things are going to get a lot worse before they get better." said Travis.

"One of Kropotkin's notions was that there ought to be, not only a minimum wage, but also a maximum wage."

"Don't be ridiculous, that would never work." said Treworthy.

"That's what I used to say," replied Manton, "I would point out to him that a company has to be free to pay whatever wages it wants, so that it can attract the right calibre of people."

"Yes, it must be difficult to find people who are able to bring the global economy to the point of meltdown. They don't just grow on trees, you know." I commented.

"Perhaps we could apply this idea to teachers and nurses? There are shortages in many areas. Maybe we ought to pay them the wages that the market demands." said Abrahams.

"Don't be ridiculous, old boy," said Travis, getting in the spirit of the thing, "that would cost a bloody fortune. Maybe as much as much as one percent of what the Government spent on bailing out the banks."

"And yet no one complains. They just accept it. That was what Kropotkin was getting at," said Manton. "Let's say that we set the maximum wage at £500,000 .. no, make it £1,000,000 a year. Now you can understand rich people complaining about that, because they get more, but why do any of us? None of us, in our wildest dreams, will ever be able to earn that sort of money in a year. And yet we disagree with the very idea of a maximum wage."

"Ah, but there is just the smallest chance that we might be able to earn it." said Treworthy. "That's why."

"And that's how they do it, according to Joe. That's how they make themselves the normal ones, and shape society accordingly. We are all complicit in it. Why do you think the national lottery is so lucrative?"

"Well, because people like the idea that they can get huge amounts of money by doing nothing."

"Exactly. That's also why they have tried really hard to promote the idea of everyone being able to own shares. A nation of small investors. To the extent that they turned building societies into banks and gave shares to people whether they wanted them or not. That really used to get Joe frothing at the mouth. 'Can't they see that they are just turning themselves into cannon fodder for the big investors?' It's like the lottery - it's just another way of harvesting money from the masses. He used to get really wound up about it. He always said that making money without actually contributing anything useful to society had always been the province of the rich, and you expect them to do that, but he couldn't understand why everyone else bought into that dream - especially as the rich would never allow more than a few people to ever actually achieve it."

"But hang on Manton," I interjected, "surely if someone has started up a company, and provided employment, they have a right to a decent wage."

"Yes, but he wasn't talking about entrepreneurs with a few paltry millions, he was talking about the sort of people who can spend £30,000 a night on drinks or £20,000 a night on a hotel room. Even if I was able to get Joe to agree that they should earn more than the workers, he could never agree on the proportions. Even a managing director isn't worth 1,000 times more than the workers, he'd say. There are always ambitious, up and coming managing directors out there who are willing to do the job for less. We had some great arguments about that. But we did agree on one thing - that it isn't a sustainable way of doing things."

"What, the idea that anyone can do it? - that we should all aspire to becoming rich ourselves?"

"Exactly. That scheme only works for the few at the top of the pyramid. They can get away with it as long as most people are putting in the effort at the bottom. But if everyone tries to make money by doing nothing, then nothing will get done, and the money stops being generated."

"As Bernard Madoff's investors have discovered." added Treworthy.

"It's like my place", said Abrahams, "we have hundreds of managers and employment liason officers, and equality administrators, and openness focus groups, but they don't seem to have enough money to pay us lecturers."

"Well, at least you've got a decent pension scheme." said Travis, rather morosely.

"True, but for how much longer?" replied Abrahams.

"Yes, you'll never guess what I heard on the radio the other day." I said, "A banker complaining about how unfair the public sector pensions are, and how we were all in this together and how we all ought to be sharing the pain."

"I don't seem to remember 'us all being in it all together' when they were all earning about ten times what I do." said Abrahams, somewhat sharply.

"Exactly what Kropotkin used to say. And what do we do about it? Do we make it illegal to make money by doing nothing? No, of course not. How are the rich and powerful supposed to maintain their position at the top of the heap if we do something like that? They trot out the old line about how their money-making abilities are what keeps our country at the forefront of world trade, and if we upset them too much, they will up sticks and take their expertise elsewhere."

"I think if you asked the man on the street at the moment, the message would be 'Goodbye and good riddance'," I said, "and I would be inclined to agree with them. Why should I wish to share my planet with these people? What do they contribute to society - to any of our lives?"

"Oh come now, it's easy to say that now that they have messed everything up..." started Treworthy.

"Ah but old Kropotkin went further. He said it's actually true all the time, no matter what the economy is doing. In fact it is more true when the economy is booming, but no one cares then."

"That's all well and good, Manton," said Treworthy, "but as I said before, there are no legal obstacles to this man Stafford's pension. It was all arranged perfectly properly - no matter how distasteful we find it, and even if it does throw a rather shaming light onto how these things tend to be arranged amongst the great and the good - there is little that the government or anyone else can do about it."

"Oh I agree. What makes me angry is that he feels no moral impulse to do so himself. Joe was right: they have no shame. Absolutely none. If I had been responsible for managing a company so badly that I had destroyed it, thrown thousands of my own employees out of work and been part of bringing the global economy to the point of collapse, resulting in lots of other people being thrown out of work, I'd be too embarassed to keep my state pension, let alone a private one worth half a million."

"Oh come off it, Manton. That's easy to say, but I bet you would hold onto that money if you were in his place. It's just human nature." said Treworthy.

"I'm sorry Treworthy," said Manton, a tightness in his voice that wasn't normally there, "but you clearly don't know me as well as you think you do. I would be too ashamed to show my face in public, never mind siphoning off half a million a year of what is effectively taxpayer's money."

"Well, that's why you will never be a leader of industry, Manton." I said, trying to relieve the tension.

"Stafford wasn't a leader of industry. He was in charge of a bank. Not that he had any formal banking qualifications, from what I can gather." added Travis.

Manton gulped down the last of his drink and banged his glass down.

"Well I'm sick of the idea that these people are movers and shakers, that can generate wealth from nothing, and that we are supposed to revere them, and pay them obscene amounts of money just in case they decide to take their so-called 'expertise' elsewhere. I didn't believe it before the crash and I certainly don't now. As far as I'm concerned, they can all f..."

"Steady on, Manton, remember what your doctor said about your heart." I said, genuinely worried, as his face seemed to be turning an even more worrying shade of crimson than normal. He paused and took a few deep breaths.

"In fact it's not just that. I'll tell you what makes it even worse. It's the politicians that buy in to the myth, instead of regulating the money men properly. I'm sick of them, and I'm sick of all the people who vote for the politicians, who also buy into the myth. Especially as it's the tax money of those same voters that is now being used to pay for all the greed and incompetence. We don't bloody deserve an economic recovery. Everyone trying to get something for nothing, treating their fellows with contempt. No one seems to want to do what's right. It's a shambles. It's a bloody shambles, the whole thing."

"Come now, Manton, calm down. This isn't like you." said Travis.

After a few seconds Manton got up.

"No, you're right. I'm sorry Gentlemen, I'm not fit company at the moment. My cynicism seems to have temporarily deserted me. Please forgive me." and with that he left.

The room was silent for a moment, while we recovered. None of us had seen Manton let things get the better of him before.

"Well I wasn't expecting that." said Treworthy.

"I don't think any of us were."

We carried on talking for a while, but our hearts weren't in it. As the clock struck eleven, Travis said:

"Well, I'd better go and settle up my accounts and resign my membership. I hope you'll allow me to buy you all one last round of drinks, gentlemen? Where's Henry?"

"This is a sad day, Travis." said Abrahams

"Won't be the same without you, old boy." added Treworthy.

Henry glided over. "Yes, sir?"

"I'd like to buy one more round of drinks for my friends, Henry, and then it is my sad duty to resign my membership."

"Resign, sir?"

"I'm afraid so. Financial constraints have placed me in an impossible position, and I simply cannot afford next year's subscription. I have become a victim of the recession."

"If you will forgive me, sir, I'm afraid I can't accept."

"I beg your pardon?"

"What on earth do you mean, Henry?" I asked. "Have you taken leave of your senses?"

"I hope not, sir. I simply mean that Mr Travis's membership subscription for next year has already been paid, in full."

"What? This isn't some sort of joke, is it Henry?" exclaimed Travis.

"I am not normally given to impromptu witticism, sir."

"Well ... explain yourself then."

"It is quite simple sir. Mr Manton paid your subscription as he was leaving."

"Manton?"

"Yes, sir. And he instructed me to give you all a message."

"What did he say?"

"Simply that he apologised once more for his outburst, and that he hoped this small gesture would be some small comfort in the difficult times ahead. He also said that even if men like Sir John Stafford did not know how to behave decently, knighthood notwithstanding, someone needed to start setting a better example."

"Good Lord." exclaimed Abrahams.

"He's not such a cynic after all." said Treworthy.

"Well I for one won't complain. I'm very grateful to him." said Travis.

"I must admit that I had always viewed Manton as the first man among us. The cynic's cynic. What about you, Henry? Have you ever seen this side to him?"

"It's not for me to say, sir. Although I do know that he does not regard himself as a cynic."

"Really?"

"Yes, sir. He once described himself to me as 'a constantly disappointed optimist', which I have always found to be a more appropriate description than 'cynic'. It is a small difference, but one which I suspect will serve him well during the financial difficulties ahead."

"Well, he's certainly cheered me up." said Travis. "Now what about that drink?"

Contrary En-djinns of war

2009-01-25T09:11:00.002Z

Most of us can trace our existence back through time.

We may even come to know the strange vicissitudes, narrow escapes or long wanderings of our fore-fathers. If we are lucky they may relate something of their adventures to us.

That is, if they have not fallen in the former holocausts of war or suffered some tragic or premature fate. When that happens we have not just lost some enlightenment, we have lost our past.

Letting slip the dogs of war invites all sorts of consequences.

War is a particularly cruel sieve that scatters or sorts the genes from which we may derive.

My father was a pilot and intelligence officer in WW2 for 454 squadron and would not have been my father if he had not sidestepped an unfortunate fuel starvation fault in the Baltimore bomber. This was no random shrapnel event (one that he also survived) but a design fault that was only exposed in the necessary extreme manoevers of war. See:

http://454-459squadrons.org.au/454 History.htm

So for me war, the architecture of war, the design of the engines of destruction, was personal before I became or could become a sentient being. It was going on when I was innocent. It goes on today…and for my name if not in my name.

What then of a design fault that condemned others to an early sudden death if they were brave, or left the survivors facing the charge of lack of moral fibre for excusing themselves from the fray when they knew the odds were so bad it was best to run and fight another day. This is not a cynicism about wartime exploits or a judgement on cowardice in the face of the enemy, but a warning against any overconfidence by the architects of war.

Now, I know the best equipped troops can come a cropper. I know that the new President’s new limousine, as fully armoured as it is, is vulnerable to a simple disc of copper in an improvised explosive.

Google: …concave copper armour pierce Obama….

No one is safe from ‘the dog-whip’s reach’ now. And we all have microwave ovens which can easily be modified to take out our neighbour’s if we have that intent.

But I also know that we (and the children we might have had) can be wiped from the ledgers of life by the stroke of a designers pen, with a complete absence of intent on their part. More so in the scrabble of total war when an unfortunate design oversight can be made unnecessary by a simple improvement in technology by the enemy.

All the more reason for intelligent design, anticipating your enemy, or outwitting him, rather than a negative cynicism.
Even Diogenes carried a big stick for when argument or example failed. But neither might have been enough if his enemies were more determined than him.

Then anything, any means, becomes a device, a design, a construction erected in our name. Otherwise there might be no one to erect anything in our memory.

I have just been reading the papers of a recently deceased uncle, an ex-Halton boy who joined the RAF in the days of string-bag aircraft and worked as an engineer on radial engines, then the Vulcan bomber and the Concorde, seeing the best of design and at least hearing about some of the worst designs that cost many lives.

Also he was stationed with some of our then 40 national nuclear strike Vulcan aircraft, assisting the crews who were in their cockpits at one point (on October the 27th, 1962). They were on 15 minute standby for a whole weekend waiting to see if they were required to unleash nuclear bombs at the heart of the Soviet Union. This has only recently become public knowledge.

That would have cost many lives more than the assassination of a President or the engineering faults of a few aircraft.

He was a patriot who nevertheless passed another story down to me, about the WW2 “Brewster Buffalo” aircraft.

Here are a few excerpts from a book he mentioned:

A Captain Phillip R White said in the book ” that any commander who orders pilots out for combat in a Brewster should consider the pilot as lost before leaving the ground”….

…it seems the Americans had made the awful mistake of believing their own PR…. Aided no doubt by early models, one ton lighter having some success with the Finnish Air Force against enemy biplanes.

In comparing the ‘Brewster Buffalo’ to its then Japanese opponent, the Mitsubishi Zero, ….the Brewster was a big barge, full of armour plate but with rotten little guns; while the Zero was extremely light, with fantastic range, and two big cannons firing explosive shells. A Zero could out turn a Brewster without even trying….

As if that wasn’t enough, there were reports of sabotage in the American factory…drilling holes in a life saving arrester hook to weaken it. One flight of three buffaloes intercepted some bombers only to find that out of their combined total of twelve guns only one was working. In three months 154 Buffaloes were destroyed by Japanese enemy action, one entire squadron was wiped out to a man. Only one Buffalo survived the fall of Singapore.

The above was published in a book “ the World’s Worst Aircraft” found in Nelson Public Library, New Zealand, but my late uncle appended this note which as far as I know has never been published about a Far East incident regarding the 27th Squadron.

…”21 Squadron RAAF were with them and were supposed to be an escort for 27 on the way out to their target and to rendevous half way on 27’s return from their mission. On the last 27 mission there was no escort awaiting them at the halfway mark and when they got back to Sungi Patani airfield they found the base deserted with Buffaloes all over the place and fuel tankers belching out fuel unattended, the stores ransacked and all the Aussies vanished off the base.
The only ‘erks’ or ground staff were 27’s and they were stationed on the opposite side of the airfield to 21 Squadron. Apparently there was a fifth column report that the ‘Japs’ were five miles away in the rubber advancing and the Aussies just up and skidaddled leaving 27 to cope with the situation. …but there is no doubt that they had to fly with an aircraft which they knew was useless against the ‘Japs’ who bombed Singapore from 27,000 feet and the Buffaloes could only reach 17,000 feet . Not that they could have done much good against the Zero escorts”.

From the book again, “one pilot , ‘Pappy’ Boyington, speaking from a mess bar that was understandably riddled with machine gun bullet holes, was told as a newcomer that “Long before the RAF gets around to announcing an alert, you will see two Brewster Buffaloes take off in a Westerly direction regardless of the wind sock. That’s the signal”, he was told, The Japanese were flying in from the East.”

So much for distant events.

Also passed down to me, this time, from my Grandfather, I have a rare Tissot gold hunter stopwatch that he had been given to him by a wartime ‘test’ pilot, Walter Handley.

They flew together as civilians before the war. Walter was a famous TT rider, motor-car racer and a test pilot. Once in practice he found himself going in the wrong direction but often won races and once managed to set the fastest lap record.

He broke every bone in his body apparently and was helped by my Grandfather from time to time according to family testimony. He would have been an unfortunate choice of pilot if the aircraft he flew failed on him, being a celebrity much admired by his peers. This is exactly what happened

He died flying an RAF Bell P-39 Airacobra in Scotland in 1941. Whilst later models had some success, apparently RAF fighter pilots soon dismissed the heavy fighter as a “widowmaker” and simply refused to fly it. Internet forums have noticed USAF pilots in the Pacific joking saying “they would have preferred to fly trucks, as they had “better speed and a higher service ceiling”.

It was mid-engined and with a propshaft leading forward to the propeller, accidents were best avoided. I am a veteran of a propshaft failing beneath my feet and the complex mathematics of physical force usually prevails over the supposed easy arithmetic of flight.

But for me, the architecture of war, even the failure or near failure of the design of the engines of war has touched my life in benevolent ways. But not for the millions who have died. Some unnecessarily.

And we are right to be cynical if it will save lives.

It is all about the survival of the fittest normally. Normally those with the most flexibility are those who will prevail.
But that flexibility must also allow for cynicism, dissent, and insisting on safety. It is not all about Heros and Zeros.

I am grateful that my father survived the design flaw of the Baltimore. Because he survived and reported the fuel starvation in a particular manoever, others lives were probably saved. Walter Handley’s sacrifice early on probably saved many more lives. But war insists on sacrifice, and
The organisation of war does not allow for pilots to refuse to fly, for a squadron to run away or to fly in the opposite direction when ordered to engage an enemy. Yet it happens.

Much truth is lost in war, morale has to be kept up, Defeatism has to be kept in check. I hope this account some 60 years after events, offers some hope that lives will today not be wasted at either end of the barrel of a gun, and that other methods are employed so that some good might prevail. We should learn from history that the only ‘sin’ is unnecessary cruelty. Lest We Forget.

Otherwise we might all become cynics. And then we could not prevail. We might as well hole up in a barrel complaining about people stealing our light.

And the inspiration for this piece:

Books, like men, have their fates. Some meet solitary and tragic ends, some fall in holocausts; and some, after strange vicissitudes, narrow escapes, and long wandering, find peaceful asylums where, nursing their scars and mellowed by experience, they will relate something of their adventures to the curious.

James Westfall Thompson,
The Medieval Library.

A History Lesson - Part 2 - The Crash

2009-01-19T22:54:00.014Z

More extracts from Professor Galbraith's classic work: The Great Crash 1929. A more accessible and witty summary of what happened in that year I have yet to read.

I hope the ghost of the Professor will forgive me for inserting the occasional Diogenerian comment here and there, especially as we currently seem to be living through a similar period in our history.

Most of these extracts come from the chapters in his book that are entitled: 'The Twilight of Illusion' and 'The Crash'. I would urge anyone who is interested in such things, and who wishes to understand more of what is going on today, to invest in this modest volume.

Without doubt, the most striking feature of the financial era which ended in the autumn of 1929 was the desire of people to buy securities and the effect of this on values. But the increase in the number of securities to buy was hardly less striking. And the ingenuity and zeal with which companies were devised in which securities might be sold was as remarkable as anything.

The most notable piece of speculative architecture of the late twenties, and the one by which, more than any other device, the public demand for common stocks was satisfied, was the investment trust or company. The investment trust did not promote new enterprises or enlarge old ones. It merely arranged that people could own stock in old companies through the medium of new ones. Even in the United States, in the twenties, there were limits to the amount of real capital which existing enterprises could use or new ones could be created to employ. The virtue of the investment trust was that it brought about an almost complete divorce of the volume of corporate securities outstanding from the volume of corporate assets in existence. The former could be twice, thrice, or any multiple of the latter. The volume of underwriting business and of securities available for trading on the exchanges all expanded accordingly. So did the securities to own, for the investment trusts sold more securities than they bought. The difference went into the call market, real estate, or the pockets of the promoters. It is hard to imagine an invention better suited to the time or one better designed to eliminate the anxiety about the possible shortage of common stocks.

Things like investment trusts are the holy grail to the financial markets. They don't want to be held back by trivial things like 'How much is the company worth?' or 'How many things have we got to sell to people?'. They want to be able to generate huge profits, out of all proportion to their own size. Imagine if a bank could only lend out the equivalent of how much gold it had in it's vaults? How is it meant to grow into a world beating company that can afford to pay it's executives huge bonuses?

The trouble with selling real things is that once you have sold them all, you have to spend money making or buying more of them. You are limited by your assets - what you have in stock. You are never going to get rich that way.

If you want to get rich, it is vital that you come up with some way - be it investment trusts, consolidated debt obligations, securities or derivatives - that enables you to separate your ability to generate money, from any aspect of reality. Reality is far too limiting. You are interested in unlimited growth. Things in the real world don't grow without limit.

The idea of the investment trust is an old one, although, oddly enough, it came late to the United States. Since the eighties in England and Scotland, investors, mostly smaller ones, had pooled their resources by buying stock in an investment company. The latter, in turn, invested the funds so secured. A typical trust held securities in from five hundred to a thousand operating companies. As a result, the man with a few pounds, or even a few hundred, was able to spread his risk far more widely than were he himself to invest. And the management of the trusts could be expected to have a far better knowledge of companies and prospects in Singapore, Madras, Capetown, and the Argentine, places to which British funds regularly found their way, than the widow in Bristol or the doctor in Glasgow. The smaller risk and better information well justified the modest compensation of those who managed the enterprise. Despite some early misadventures, the investment trusts soon became an established part of the British scene.

The managers of the British trusts normally enjoy the greatest of discretion in investing the funds placed at their disposal. At first the American promoters were wary of asking for such a vote of confidence. Many of the early trusts were [literally] trusts - the investor bought an interest in a specified assortment of securities which were then deposited with a trust company. At the least the promoters committed themselves to a rigorous set of rules on the kinds of securities to be purchased and the way they were to be held and managed. But as the twenties wore along, such niceties disappeared. The investment trust became, in fact, an investment corporation. It sold its securities to the public - sometimes just common stock, more often common and preferred stock, debenture and mortgage bonds - and the proceeds were then invested as the management saw fit. Any possible tendency of the common stockholder to interfere with the management was prevented by selling him non-voting stock or having him assign his voting rights to a management-controlled voting trust.

Brilliant! Use their money, but don't allow them to have any say over how it is used. Which is fine as long as the interest keeps rolling in, of course - no one cares too much. It's when it stops and people realise that their money isn't actually their money any more, that things get interesting.

Historians have told with wonder of one of the promotions at the time of the South Sea Bubble. It was 'For an Undertaking which shall in due time be revealed'. The stock is said to have sold exceedingly well. As promotions the investment trusts were, on the record, more wonderful. They were undertakings the nature of which was never to be revealed, and their stock also sold exceedingly well.

I'm sure that no one would be this stupid today! Fancy buying something without knowing or understanding what it was.

During 1928 an estimated 186 investment trusts were organized; by the early months of 1929 they were being promoted at the rate of approximately one each business day, and a total of 265 made their appearance during the course of the year. In 1927 the trusts sold to the public about $400,000,000 worth of securities; in 1929 they marketed an estimated three billions worth. This was at least a third of all the new capital issues in that year; by the autumn of 1929 the total assets of the investment trusts were estimated to exceed eight billions of dollars. They had increased approximately elevenfold since the beginning of I927.

The parthenogenesis of an investment trust differed from that of an ordinary corporation. In nearly all cases it was sponsored by another company, and by 1929 a surprising number of different kinds of concerns were bringing the trusts into being. Investment banking houses, commercial banks, brokerage firms, securities dealers, and, most important, other investment trusts were busy giving birth to other trusts.

So a company that has no assets is able to borrow enough money to create other companies, none of which have any assets, and they in turn can borrow money to set up yet more companies, none of which have any assets, and so on, and on.

Yet, had these securities all been sold on the market, the proceeds would invariably have been less, and often much less, than the current value of the outstanding securities of the investment company. The latter, obviously, had some claim to value which went well beyond the assets behind them.

That premium was, in effect, the value an admiring community placed on professional financial knowledge, skill, and manipulative ability. To value a portfolio of stocks 'at the market' was to regard it only as inert property. But as the property of an investment trust it was much more, for the portfolio was then combined with the precious ingredient of financial genius. Such special ability could invoke a whole strategy for increasing the value of securities.

Consider by way of illustration, the case of an investment trust organised in 1920 with a capital of $150 million - a plausible size by then. Let it be assumed, further, that a third of the capital was realised from the sale of bonds, a third from preferred stock , and the rest from the sale of common stock. If this $150 million were invested, and if the securities so purchased showed a normal appreciation, the portfolio value would have increased by midsummer by about fifty percent. The assets would be worth $225 million. The bonds and preferred stock would still be worth only $100 million; their earnings would not have increased, and they could claim no greater share of the assets in the hypothetical event of a liquidation of the company. The remaining $125 million, therefore, would underlie the value of the common stock of the trust. The latter, in other words, would have increased in asset value from $50 million to $125 million, or by a hundred and fifty per cent, and as the result of an increase of only fifty per cent in the value of the assets of the trust as a whole.

This was the magic of leverage, but this was not all of it. Were the common stock of the trust, which had so miraculously increased in value, held by still another trust with similar leverage, the common stock of that trust would get an increase of between seven hundred and eight hundred per cent from the original fifty per cent advance. And so forth.

In 1929 the discovery of the wonders of the geometric series struck Wall Street with a force comparable to the invention of the wheel.

There was a rush to sponsor investment trusts which would sponsor investment trusts, which would, in turn, sponsor investment trusts. The miracle of leverage, moreover, made this a relatively costless operation to the ultimate man behind all of the trusts. Having launched one trust and retained a share of the common stock, the capital gains from leverage made it relatively easy to swing a second and larger one which enhanced the gains and made possible a third and still bigger trust.

Ah, leverage. I learned about this magic when I first read Galbraith's book. It seems to be inherent in the way that all financial markets work, at least nowadays. It is what caused the problems then, and it is what has caused many of the problems now. All the laws and regulations that were put in place after 1929, to stop it happening again, have been slowly removed and repealed.

The thing that immediately occurred to me, the first time I read Galbraith's book, was: 'Well that's ok when things are going well, but what happens when things are not going well?'

Galbraith addresses this very point later on in the chapter.

Leverage, it was later to develop, works both ways. Not all of the securities held by the Founders were of a kind calculated to rise indefinitely, much less to resist depression. Some years later the portfolio was found to have contained 5,000 shares of Kreuger and Toll, 20,000 shares of Kolo Products Corporation, an adventuresome new company which was to make soap out of banana oil, and $295,000 in the bonds of the Kingdom of Yugoslavia. As Kreuger and Toll moved down to its ultimate value of nothing, leverage was also at work - geometric series are equally dramatic in reverse. But this aspect of the mathematics of leverage was still unrevealed in early 1929, and notice must first be taken of the most dramatic of all the investment company promotions of that remarkable year, those of Goldman, Sachs.

That's the trouble with financial genius - good on calculating consolidated debt obligations, bad at remembering their school maths lessons.

In the two months after its formation, the new company sold some more stock to the public, and on 21 February it merged with another investment trust, the Financial and Industrial Securities Corporation. The assets of the resulting company were valued at $235 million, reflecting a gain of well over a hundred per cent in under three months. By 2 February, roughly three weeks before the merger, the stock for which the original investors had paid $104 was selling for $136.50. Five days later, on 7 February, it reached $222.50. At this latter figure it had a value approximately twice that of the current total worth of the securities, cash, and other assets owned by the Trading Corporation.

This remarkable premium was not the undiluted result of public enthusiasm for the financial genius of Goldman, Sachs. Goldman, Sachs had considerable enthusiasm for itself, and the Trading Corporation was buying heavily of its own securities. By 14 March it had bought 560,724 shares of its own stock for a total outlay of $57,021,936. This, in turn, had boomed their value. However, perhaps foreseeing the exiguous character of an investment company which had its investments all in its own common stock, the Trading Corporation stopped buying itself in March. Then it resold part of the stock to William Crapo Durant, who re-resold it to the public as opportunity allowed.

That's clever. I don't know if it's legal, but it's very clever.

The spring and early summer were relatively quiet for Goldman, Sachs, but it was a period of preparation. By 26 July it was ready. On that date the Trading Corporation, jointly with Harrison Williams, launched the Shenandoah Corporation, the first of two remarkable trusts. The initial securities issue by Shenandoah was $102,500,000 (there was an additional issue a couple of months later) and it was reported to have been oversubscribed some sevenfold. There were both preferred and common stock, for by now Goldman, Sachs knew the advantages of leverage. Of the five million shares of common stock in the initial offering, two million were taken by the Trading Corporation, and two million by Central States Electric Corporation on behalf of the co-sponsor, Harrison Williams. Williams was a member of the small board along with partners in Goldman, Sachs. Another board member was a prominent New York attorney whose lack of discrimination in this instance may perhaps be attributed to youthful optimism. It was Mr John Foster Dulles. The stock of Shenandoah was issued at $17.50. There was brisk trading on a 'when issued' basis. It opened at 30, reached a high of 36 and closed at 36, or 18.5 above the issue price.

Meanwhile Goldman, Sachs was already preparing its second tribute to the countryside of Thomas Jefferson, the prophet of small and simple enterprises. This was the even mightier Blue Ridge Corporation, which made its appearance on 20 August. Blue Ridge had a capital of $142,000,000, and nothing about it was more remarkable than the fact that it was sponsored by Shenandoah, its precursor by precisely twenty-five days. Blue Ridge had the same board of directors as Shenandoah, including the still optimistic Mr Dulles, and of its 7,250,000 shares of common stock (there was also a substantial issue of preferred) Shenandoah subscribed a total of 6,250,000. Goldman, Sachs by now was applying leverage with a vengeance.

This is all starting to sound a bit incestuous. I don't usually subscribe to the idea of a small clique of rich, powerful people running things behind the scenes, but I am starting to wonder - although this happened in 1929 - I'm sure it's different now.

Having issued more than a quarter of a billion dollars' worth of securities in less than a month - an operation that would not then have been unimpressive for the United States Treasury -activity at Goldman, Sachs subsided somewhat.

Thus, on 1 August the papers announced the formation of Anglo-American Shares, Inc., a company which, with a soigné touch not often seen in a Delaware corporation, had among its directors the Marquess of Carisbrooke, G.C.B., G.C.V.O., and Colonel the Master of Sempill, A.F.C., otherwise identified as the President of the Royal Aeronautical Society, London.

American Insuranstocks Corporation was launched the same day, though boasting no more glamorous a director than William Gibbs McAdoo. On succeeding days came Gude Winmill Trading Corporation, National Republic Investment Trust, Insull Utility Investments, Inc., International Carriers, Ltd, Tri-Continental Allied Corporation, and Solvay American Investment Corporation.

On 13 August the papers also announced that an Assistant U.S. Attorney had visited the offices of the Cosmopolitan Fiscal Corporation and also an investment service called the Financial Counsellor. In both cases the principals were absent. The offices of the Financial Counsellor were equipped with a peephole like a speakeasy.

Do you know, I'm starting to wonder if these were real companies. I think they were just making them up as they went along.

More investment trust securities were offered in September of 1929 even than in August - the total was above $600 million. However, the nearly simultaneous promotion of Shenandoah and Blue Ridge was to stand as the pinnacle of new era finance. It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale.

I'm shocked that a respected economist like Professor Galbraith should describe this behaviour as gargantuan insanity. Clearly he does not understand the complexities of the financial markets, and how they can provide continuous growth and ever-increasing wealth. Forever.

More than the prices of common stocks were rising. So, at an appalling rate, was the volume of speculation.

Brokers' loans during the summer increased at a rate of about $400,000,000 a month. By the end of the summer, the total exceeded seven billions. Of that more than half was being supplied by corporations and individuals, at home and abroad, who were taking advantage of the excellent rate of return which New York was providing on money. Only rarely did the rate on call loans during that summer get as low as six per cent. The normal range was seven to twelve. On one ocasion the rate touched fifteen. Since, as earlier observed, these loans provided all but total safety, liquidity, and ease of administration, the interest would not have seemed unattractive to a usurious moneylender in Bombay. To a few alarmed observers it seemed as though Wall Street were by way of devouring all the money of the entire world. However, in accordance with the cultural practice, as the summer passed, the sound and responsible spokesmen decried not the increase in brokers' loans, but those who insisted on attaching significance to this trend. There was a sharp criticism of the prophets of doom.

There were two sources of intelligence on brokers' loans. One was the monthly tabulation of the New York Stock Exchange, which in general is used here. The other was the slightly less complete return of the Federal Reserve System which was published weekly. Each Friday this report showed a large increase in loans; each Friday it was firmly stated that it didn't mean a thing, and anyone who suggested otherwise was administered a stern rebuke. It seems probable that only a minority of the people in the market related the volume of the brokers' loans to the volume of purchases on margin and thence to the amount of speculation. Accordingly, an expression of concern over these loans was easily attacked as a gratuitous effort to undermine confidence. Thus, in Barren's on 8 July, Sheldon Sinclair Wells explained that those who worried about brokers' loans, and about the influx of funds from corporations, simply did not know what was going on. The call market had become a great new investment outlet for corporate reserves, he argued. The critics did not appreciate this change.

The bankers were also a source of encouragement to those who wished to believe in the permanence of the boom. A great many of them abandoned their historic role as the guardians of the nation's fiscal pessimism and enjoyed a brief respite of optimism. They had reasons for doing so. In the years preceding, a considerable number of the commercial banks, including the largest of the New York houses, had organized securities affiliates. These affiliates sold stocks and bonds to the public, and this business had become important. It was a business that compelled a rosy view of the future. In addition, individual bankers, perhaps taking a cue from the heads of the National City and Chase in New York, were speculating vigorously on their own behalf. They were unlikely to say, much less advocate, anything that would jar the market..

However, there were exceptions. One was Paul M. Warburg of the International Acceptance Bank, whose predictions must be accorded the same prominence as the forecasts of Irving Fisher. They were remarkably prescient. In March 1929, he called for a stronger Federal Reserve policy and argued that if the present orgy of 'unrestrained speculation' were not brought promptly to a halt there would ultimately be a disastrous collapse. This, he suggested, would be unfortunate not alone for the speculators. It would 'bring about a general depression involving the entire country'.

He was clearly a troublemaker - best to ignore him.

Only Wall Street spokesmen who took the most charitable view of Warburg contented themselves with describing him as obsolete. One said he was 'sandbagging American prosperity'. Others hinted that he had a motive - presumably a short position. As the market went up and up, his warnings were recalled only with contempt.

The most notable sceptics were provided by the press. They were a great minority to be sure. Most magazines and most newspapers in 1929 reported the upward sweep of the market with admiration and awe and without alarm. They viewed both the present and the future with exuberance. Moreover, by 1929 numerous journalists were sternly resisting the more subtle blandishments and flattery to which they have been thought susceptible.

Thank goodness - at least they could rely on the gentlemen of the press for fair and objective reporting.

Instead they were demanding cold cash for news favourable to the market. A financial columnist of the Daily News, who signed himself 'The Trader', received some $19,000 in 1929 and early 1930 from a free-lance operator named John J. Levenson. 'The Trader' repeatedly spoke well of stocks in which Mr Levenson was interested. Mr Levenson later insisted, howeyer, that this was a coincidence and the payment reflected his more or less habitual generosity.

Main Street had always had one citizen who could speak knowingly about buying or selling stocks. Now he became an oracle. In New York, on the edge of any gathering of significantly interesting people there had long been a literate broker or investment counsellor who was abreast of current plans for pools, syndicates, and mergers, and was aware of attractive possibilities. He helpfully advised his friends on investments, and pressed, he would always tell what he knew of the market and much that he didn't. Now these men, even in the company of artists, playwrights, poets, and beautiful concubines, suddenly shone forth. Their words, more or less literally, became golden. Their audience listened not with the casual heed of people who are collecting quotable epigrams, but with the truly rapt attention of those who expect to make money by what they hear.

That much of what was repeated about the market - then as now - bore no relation to reality is important, but not remarkable. Between human beings there is a type of intercourse which proceeds not from knowledge, or even from lack of knowledge, but from failure to know what isn't known. This was true of much of the discourse on the market. At luncheon in downtown Scranton, the knowledgeable physician spoke of the impending split-up in the stock of Western Utility Investors and the effect on prices. Neither the doctor nor his listeners knew why there should be a split-up, why it should increase values, or even why Western Utility Investors should have any value. But neither the doctor nor his audience knew that he did not know. Wisdom, itself, is often an abstraction associated not with fact or reality but with the man who asserts it and the manner of its assertion.

In later years, a Senate committee investigating the securities markets undertook to ascertain the number of people who were involved in securities speculation in 1929. The member firms of twenty-nine exchanges in that year reported themselves as having accounts with a total of 1,548,707 customers. (Of these, 1,371,920 were customers of member firms of the New York Stock Exchange.) Thus only one and a half million people, out of a population of approximately 120 million and of between 29 and 30 million families, had an active association of any sort with the stock market. And not all of these were speculators. Brokerage firms estimated for the Senate committee that only about 600,000 of the accounts just mentioned were for margin trading, as compared with roughly 950,000 in which trading was for cash.

The striking thing about the stock market speculation of 1929 was not the massiveness of the participation. Rather it was the way it became central to the culture.

By the end of the summer of 1929, brokers' bulletins and letters no longer contented themselves with saying what stocks would rise that day and by how much. They went on to say that at 2 p.m. Radio or General Motors would be 'taken in hand'. The conviction that the market had become the personal instrument of mysterious but omnipotent men was never stronger. And, indeed, this was a period of exceedingly active pool and syndicate operations - in short, of manipulation.

During 1929 more than a hundred issues on the New York Stock Exchange were subject to manipulative operations, in which members of the Exchange or their partners had participated. The nature of these operations varied somewhat but, in a typical operation, a number of traders pooled their resources to boom a particular stock. They appointed a pool manager, promised not to double-cross each other by private operations, and the pool manager then took a position in the stock which might also include shares contributed by the participants. This buying would increase prices and attract the interest of people watching the tape across the country. The interest of the latter would then be further stimulated by active selling and buying, all of which gave the impression that something big was afloat. Tipsheets and market commentators would tell of exciting developments in the offing. If all went well, the public would come in to buy, and prices would rise on their own. The pool manager would then sell out, pay himself a percentage of the profits, and divide the rest with his investors.

While it lasted, there was never a more agreeable way of making money.

Of course, no party can go on forever. In the end, you always have to pay the piper.

On 3 September, by common consent, the great bull market of the nineteen-twenties came to an end. Economics, as always, vouchsafes us few dramatic turning points. Its events are invariably fuzzy or even indeterminate. On some days that followed - a few only - some averages were actually higher. However, never again did the market manifest its old confidence. The later peaks were not peaks but brief interruptions of a downward trend.

There were some who said, cause and effect run from the economy to the stock market, never the reverse. In 1929 the economy was headed for trouble. Eventually, that trouble was reflected in Wall Street.

In 1929 there were good, or at least strategic, reasons for this view, and it is easy to understand why it has become high doctrine. In Wall Street, as elsewhere in 1929, few people wanted a bad depression. In Wall Street, as elsewhere, there is deep faith in the power of incantation. When the market fell many Wall Street citizens immediately sensed the real danger, which was that income and employment - prosperity in general - would be adversely affected. This had to be prevented.

Preventive incantation required that as many important people as possible repeat as firmly as they could that it wouldn't happen. This they did. They explained how the stock market was merely the froth and that the real substance of economic life rested in production, employment, and spending, all of which would remain unaffected. No one knew for sure that this was so. As an instrument of economic policy, incantation does not permit of minor doubts or scruples.

No one seemed to want to admit that the tail had started to wag the dog. That far from the stock market being the speculative froth on top of the solid, sound and, above all, real economy, the sheer amount of speculation was instead capable of overturning and possibly sinking the real economy. A bit like someone in a tree sawing off the very branch they are sitting on.

I'm not sure how that affects us now, here in dear old Blighty, because for many years we haven't really had much production, so most of our wealth seems to be of the more 'frothy' kind anyway.

In the later years of depression it was important to continue emphasizing the unimportance of the stock market. The depression was an exceptionally disagreeable experience. Wall Street has not always been a cherished symbol in our national life. In some of the devout regions of the nation, those who speculate in stocks - the even more opprobrious term gamblers is used - are not counted the greatest moral adornments of our society. Any explanation of the depression which attributed importance to the market collapse would accordingly have been taken very seriously, and it would have meant serious trouble for Wall Street.

Wall Street, no doubt, would have survived, but there would have been scars. We should be clear that no deliberate conspiracy existed to minimize the consequences of the Wall Street crash for the economy. Rather, it merely appeared to everyone with an instinct for conservative survival that Wall Street had better be kept out of it. It was vulnerable.

Professor Galbraith shows himself to have a truely Diogenerian turn of phrase.

It is in the nature of a speculative boom that almost anything can collapse it. Any serious shock to confidence can cause sales by those speculators who have always hoped to get out before the final collapse, but after all possible gains from rising prices have been reaped. Their pessimism will infect those simpler souls who had thought the market might go up forever but who will now change their minds and sell. Soon there will be margin calls, and still others will be forced to sell. So the bubble breaks.

Along with the downturn of the indexes Wall Street has always attributed importance to two other events in the pricking of the bubble. In England on 20 September 1929 the enterprises of Clarence Hatry suddenly collapsed. Hatry was one of those curiously un-English figures with whom the English periodically find themselves unable to cope. Although his earlier financial history had been anything but reassuring, Hatry in the twenties had built up an industrial and financial empire of truly impressive proportions. The nucleus, all the more remarkably, was a line of coin-in-the-slot vending and automatic photograph machines. From these unprepossessing enterprises he had marched on into investment trusts and high finance. His expansion owed much to the issuance of unauthorized stock, the increase of assets by the forging of stock certificates, and other equally informal financing. In the lore of 1929, the unmasking of Hatry in London is supposed to have struck a sharp blow to confidence in New York.

A bit like Northern Rock asking for help from the Bank of England.

Ranking with Hatry in this lore was the refusal on 11 October of the Massachusetts Department of Public Utilities to allow Boston Edison to split its stocks four to one. As the company argued, such split-ups were much in fashion. To avoid going along was to risk being considered back in the corporate gaslight era. The refusal was unprecedented. Moreover, the Department added insult to injury by announcing an investigation of the company's rates and by suggesting that the present value of the stock, 'due to the action of speculators', had reached a level where 'no one, in our judgement ... on the basis of its earnings, would find it to his advantage to buy it'.

Confidence did not disintegrate at once. As noted, through September and into October, although the trend of the market was generally down, good days came with the bad. Volume was high. On the New York Stock Exchange sales were nearly always above four million, and frequently above five. In September new issues appeared in even greater volume than in August, and they regularly commanded a premium over the offering price. On 20 September the Times noted that the stock of the recently launched Lehman Corporation which had been offered at $104 had sold the day before at $136. (In the case of this well-managed investment trust the public enthusiasm was not entirely misguided.) During September brokers' loans increased by nearly $670 million, by far the largest increase of any month to date. This showed that speculative zeal had not diminished.

Ah, Lehmans - whatever happened to them?

Other signs indicated that the gods of the New Era were still in their temples. In its 12 October issue, The Saturday Evening Post had a lead story by Isaac F. Marcosson on Ivar Kreuger. This was a scoop, for Kreuger had previously been inaccessible to journalists. 'Kreuger,' Marcosson observed, 'like Hoover, is an engineer. He has consistently applied engineer precision to the welding of his far-flung industry.' And this was not the only resemblance. 'Like Hoover,' the author added, 'Kreuger rules through pure reason.'

In the interview Kreuger was remarkably candid on one point. He told Mr Marcosson: 'Whatever success I have had may perhaps be attributable to three things: one is silence, the second is more silence, while the third is still more silence.' This was so. Two and a half years later Kreuger committed suicide in his Paris apartment, and shortly thereafter it was discovered that his aversion to divulging information, especially if accurate, had kept even his most intimate acquaintances in ignorance of the greatest fraud in history. His American underwriters, the eminently respectable firm of Lee, Higginson and Company of Boston, had heard nothing and knew nothing. One of the members of the firm, Donald Durant, was a member of the board of directors of the Kreuger enterprises. He had never attended a directors' meeting, and it is certain that he would have been no wiser had he done so.

Well, the greatest fraud in history until Bernard Madoff hit the headlines.

On Sunday the market was front-page news - the Times headline read, 'Stocks driven down as wave of selling engulfs the market', and the financial editor next day reported for perhaps the tenth time that the end had come. (He had learned, however, to hedge. 'For the time at any rate', he said, 'Wall Street seemed to see the reality of things.') No immediate explanation of the break was forthcoming. The Federal Reserve had long been quiet. Babson had said nothing new. Hatry and the Massachusetts Department of Public Utilities were from a week to a month in the past. They became explanations only later.

The papers that Sunday carried three comments which were to become familiar in the days that followed. After Saturday's trading, it was noted, quite a few margin calls went out. This meant that the value of stock which the recipients held on margin had declined to the point where it was no longer sufficient collateral for the loan that had paid for it. The speculator was being asked for more cash.

The other two observations were more reassuring. The papers agreed, and this was also the informed view on Wall Street, that the worst was over. And it was predicted that on the following day the market would begin to receive organized support. Weakness, should it appear, would be tolerated no longer.

Never was there a phrase with more magic than 'organized support'. Almost immediately it was on every tongue and in every news story about the market. Organized support meant that powerful people would organize to keep prices of stocks at a reasonable level. Opinions differed as to who would organize this support. Some had in mind the big operators like Cutten, Durant, and Raskob. They, of all people, couldn't afford a collapse. Some thought of the bankers - Charles Mitchell had acted once before, and certainly if things got bad he would act again. Some had in mind the investment trusts. They held huge portfolios of common stocks, and obviously they could not afford to have them become cheap. Also, they had cash. So if stocks did become cheap the investment trusts would be in the market picking up bargains. This would mean that the bargains wouldn't last. With so many people wanting to avoid a further fall, a further fall would clearly be avoided.

In the ensuing weeks the Sabbath pause had a marked tendency to breed uneasiness and doubts and pessimism and a decision to get out on Monday. This, it seems certain, was what happened on Sunday, 20 October.

Monday, 21 October, was a very poor day. Sales totalled 6,091,870, the third greatest volume in history, and some tens of thousands who were watching the market throughout the country made a disturbing discovery. There was no way of telling what was happening.

Previously on big days of the bull market the ticker had often fallen behind, and one didn't discover until well after the market closed how much richer he had become. But the experience with a falling market had been much more limited. Not since March had the ticker fallen seriously behind on declining values. Many now learned for the first time that they could be ruined, totally and forever, and not even know it. And if they were not ruined there was a strong tendency to imagine it. From the opening on the 21st the ticker lagged, and by noon it was an hour late. Not till an hour and forty minutes after the close of the market did it record the last transaction. Every ten minutes prices of selected bonds were printed on the bond ticker, but the wide divergence between these and the prices on the tape only added to the uneasiness - and to the growing conviction that it might be best to sell.

Of course that could never happen today, with modern technology. Provided that the computer's don't crash. Or a particularly virulent computer virus infests the computer networks used by the financial centres. Or a ship's anchor slices through an undersea cable. Or the country becomes the victim of a cyberattack from a hostile nation.

On Tuesday, Charles M. Mitchell dropped anchor in New York with the observation that 'the decline had gone too far'. (Time and sundry congressional and court proceedings were to show that Mr Mitchell had strong personal reasons for feeling that way.) He added that conditions were 'fundamentally sound', said again that too much attention had been paid to the large volume of brokers' loans, and concluded that the situation was one which would correct itself if left alone.

However, another jarring suggestion came from Babson. He recommended selling stocks and buying gold.

That afternoon and evening thousands of speculators decided to get out while - as they mistakenly supposed - the getting was good. Other thousands were told they had no choice but to get out unless they posted more collateral, for as the day's business came to an end an unprecedented volume of margin calls went out.

Thursday, 24 October, is the first of the days which history - such as it is on the subject - identifies with the panic of 1929. Measured by disorder, fright, and confusion, it deserves to be so regarded. That day 12,894,650 shares changed hands, many of them at prices which shattered the dreams and the hopes of those who had owned them. Of all the mysteries of the Stock Exchange there is none so impenetrable as why there should be a buyer for everyone who seeks to sell. 24 October 1929, showed that what is mysterious is not inevitable. Often there were no buyers, and only after wide vertical declines could anyone be induced to bid.

The panic did not last all day. It was a phenomenon of the morning hours. The market opening itself was unspectacular, and for a while prices were firm. Volume, however, was very large, and soon prices began to sag. Once again the ticker dropped behind. Prices fell further and faster, and the ticker lagged more and more. By eleven o'clock the market had degenerated into a wild, mad scramble to sell. In the crowded boardrooms across the country the ticker told of a frightful collapse. But the selected quotations coming in over the bond ticker also showed that current values were far below the ancient history of the tape. The uncertainty led more and more people to try to sell. Others, no longer able to respond to margin calls, were sold out.

By eleven-thirty the market had surrendered to blind, relentless fear. This, indeed, was panic.

Outside the Exchange in Broad Street a weird roar could be heard. A crowd gathered. Police Commissioner Grover Whalen became aware that something was happening and dispatched a special police detail to Wall Street to ensure the peace. More people came and waited, though apparently no one knew for what. A workman appeared atop one of the high buildings to accomplish some repairs, and the multitude assumed he was a would-be suicide and waited impatiently for him to jump.

In New York at least the panic was over by noon. At noon the organised support appeared.

A bit like our Government pumping £37 billion into our banking system. They are about to do it again, presumably because it worked so well the first time. Get banks lending. Get people spending. Get back to normal.

Or maybe we are starting to get a glimpse of just how little real money we have really got, and see just how successful - or unsuccessful - some companies, including banks, really are. That is, when you take away the make-believe money that the financial markets seem to work with.

At twelve o'clock reporters learned that a meeting [of the chief executives of the major banks] was convened at 23 Wall Street at the offices of JP Morgan and Company. A decision was quickly reached to pool resources to support the market. Prices firmed at once and started to rise.

Then at one thirty Richard Whitney appeared on the trading floor and went to the post where steel was traded. [...] He bid 205 for 10,000 shares. This was the price of the last sale, and the current bids were several points lower.

This was it. The bankers, obviously, had moved in. The effect was electric. Fear vanished and gave way to concern lest the new advance be missed. Prices boomed upwards.

On Friday and Saturday trading continued heavy - just under six million on Friday and over two million at the short session on Saturday. Prices, on the whole, were steady - the averages were a trifle up on Friday but slid off on Saturday. It was thought that the bankers were able to dispose of most of the securities they had acquired while shoring up the market on Thursday. Not only were things better, but everyone was clear as to who had made them so. The bankers had shown both their courage and their power, and the people applauded warmly and generously. The financial community, the Times said, now felt 'secure in the knowledge that the most powerful banks in the country stood ready to prevent a recurrence [of panic]'. As a result it had 'relaxed its anxiety'.

Almost everyone believed that the heavenly knuckle-rapping was over and that speculation could be now resumed in earnest. The papers were full of the prospects for next week's market.

Stocks, it was agreed, were again cheap and accordingly there would be a heavy rush to buy. Numerous stories from the brokerage houses, some of them possibly inspired, told of a fabulous volume of buying orders which was piling up in anticipation of the opening of the market. In a concerted advertising campaign in Monday's papers, stock market firms urged the wisdom of picking up these bargains promptly. 'We believe', said one house, 'that the investor who purchases securities at this time with the discrimination that is always a condition of prudent investing, may do so with utmost confidence.

On Monday the real disaster began.

Coming soon: Things become more serious - The Aftermath

So It Was, So Shall It Ever Be

2009-01-09T12:00:00.001Z

I've just come across this article from the Telegraph:

Definitive proof that the Bank of England saw the financial crisis coming

All the warning signs were there but nobody did anything....

Do you know, that reminds me of something that I have recently read in a book .... now what was it called again.....

A History Lesson - Part 1

2009-01-08T18:58:00.022Z

The Great Crash 1929
John Kenneth Galbraith

978-0-14-013609-8

This is a book that made a profound impact on me when I read it as a student, more than two decades ago. I wanted to understand the world of stocks and shares, and in order to understand a system, I have always found that one learns more by studying it when it is at its most atypical.

If, to be considered a Diogenerian, one must view the world with, what some might call, a cynical gaze, then this book is, in no small way, responsible for my being able to be so considered.

If you wish to understand something of the current economic crisis, I can think of no guide who is more clear, more witty and more readable than Professor Galbraith. It is with this in mind that I humbly present these extracts from his classic study.

Galbraith starts off by explaining why he spent the Summer of 1954 writing his book.

A good knowledge of what happened in 1929 remains our best safeguard against the recurrence of the more unhappy events of those days. Since 1929 we have enacted numerous laws designed to make securities speculation more honest and, it is hoped, more readily restrained. None of these is a perfect safeguard. The signal feature of the mass escape from reality that occurred in 1929 and before - and which has characterized every previous speculative outburst from the South Sea Bubble to the Florida land boom - was that it carried Authority with it. Governments were either bemused as were the speculators or they deemed it unwise to be sane at a time when sanity exposed one to ridicule, condemnation for spoiling the game, or the threat of severe political retribution.

Until the beginning of 1928, even a man of conservative mind could believe that the prices of common stock were catching up with the increase in corporation earnings, [...] and the certainty that the Administration, then firmly in power in Washington, would take no more than necessary of any earnings in taxes.

Early in 1928, [however,] the nature of the boom changed. The mass escape into make-believe, so much a part of the true speculative orgy, started in earnest. It was still necessary to reassure those who required some tie, however tenuous, to reality. And, as will be seen presently, this process of reassurance ... eventually achieved the status of a profession. However, the time had come, as in all periods of speculation, when men sought not to be persuaded of the reality of things but to find excuses for escaping into the new world of fantasy.

During the same month reassurance came from still higher authority. Andrew W. Mellon [the Secretary to the Treasury] said, 'There is no cause for worry. The high tide of prosperity will continue.'

Mr Mellon did not know. Neither did any of the other public figures who then, as since, made similar statements. These are not forecasts; it is not to be supposed that the men who make them are privileged to look further into the future than the rest. Mr Mellon was participating in a ritual which, in our society, is thought to be of great value for influencing the course of the business cycle. By affirming solemnly that prosperity will continue, it is believed, one can help insure that prosperity will in fact continue. Especially among businessmen the faith in the efficiency of such incantation is very great.

You see, being a cynic, I've always been bothered by this notion that house prices always go up. People would keep telling me that, even after I pointed out to them that I could remember two occasions in my lifetime (not counting the present one) when they had gone down, quite dramatically. Of course, what I didn't understand, until I read Galbraith, was that, for these clever people in the money markets of the world, the last thing that they want to do is actually own something.

As noted, at some point in the growth of a boom all aspects of property ownership become irrelevant except the prospect for an early rise in price.

It follows that the only reward to ownership in which the boomtime owner has an interest is the increase in values. Could the right to the increased value be somehow divorced from the other and now unimportant fruits of possession and also from as many as possible of the burdens of ownership, this would be much welcomed by the speculator. Such an arrangement would enable him to concentrate on speculation which, after all, is the business of a speculator.

Such is the genius of capitalism that where a real demand exists it does not go long unfilled. In all great speculative orgies devices have appeared to enable the speculator so to concentrate on his business. In the Florida boom the trading was in 'binders'. Not the land itself but the right to buy the land at a stated price was traded. This right to buy - which was obtained by a down payment of ten per cent of the purchase price - could be sold. It thus conferred on the speculators the full benefit of the increase in values. After the value of the lot had risen he could resell the binder for what he had paid plus the full amount of the increase in price.

The worst of the burdens of ownership, whether of land or any other asset, is the need to put up the cash represented by the purchase price. The use of the binder cut this burden by ninety per cent - or it multiplied tenfold the amount of acreage from which the speculator could harvest an increase in value. The buyer happily gave up the other advantages of ownership. These included the current income of which, invariably, there was none and the prospect of permanent use in which he had not the slightest interest.

The machinery by which Wall Street separates the opportunity to speculate from the unwanted returns and burdens of ownership is ingenious, precise, and almost beautiful. Banks supply funds to brokers, brokers to customers, and the collateral goes back to banks in a smooth and all but automatic flow.

It's marvellous, isn't it. And such is the genius of the markets that it is only a small step to apply this idea - separation of the opportunity to speculate, from the unwanted burdens of ownership - not only to physical assets such as land or buildings, but to the stocks and shares themselves!

People were swarming to buy stocks on margin - in other words, to have the increase in price without the cost of ownership.

One of the paradoxes of speculation in securities is that the loans that underwrite it are among the safest of all investments. They are protected by stocks which under all ordinary circumstances are instantly saleable, and by a cash margin as well. The money ... can be retrieved on demand. At the beginning of 1928 this admirably liquid and exceptionally secure outlet for non-risk capital was paying around five percent. The rate rose steadily through 1928, and during the last week of the year it reached twelve per cent. This was still with complete safety.

In Montreal, London, Shanghai, and Hong Kong there was talk of these rates. A great river of gold began to converge on Wall Street.

Corporations also found these rates attractive. At twelve per cent Wall Street might even provide a more profitable use for the working capital of a company than additional production. A few firms made this decision: instead of trying to produce goods with its manifold headaches and inconveniences, they confined themselves to financing speculation. Many more companies started lending their surplus funds on Wall Street.

Thank heavens for the regulators, who stop abuses of the system. Otherwise you might get someone setting up a hedge fund which turns out to be no more than a glorified pyramid scheme, which eventually collapses leaving debts of 50 billion.

All this being so, the position of the people who had at least nominal responsibility for what was going on was a complex one. One of the oldest puzzles of politics is who is to regulate the regulators. But an equally baffling problem, which has never received the attention it deserves, is who is to make wise those who are required to have wisdom.

Some of those in positions of authority wanted the boom to continue. They were making money out of it, and they may have had an intimation of the personal disaster which awaited them when the boom came to an end. But there were also some who saw, however dimly, that a wild speculation was in progress and that something should be done. For these people, however, every proposal to act raised the same intractable problem. The consequences of successful action seemed almost as terrible as the consequences of inaction, and they could be more horrible for those who took the action.

A bubble can be easily punctured. But to incise it with a needle so that it subsides gradually is a task of no small delicacy. The real choice was between an immediate and deliberately engineered collapse and a more serious disaster later on. Someone would certainly be blamed for the ultimate collapse when it came. There was no question whatever as to who would be blamed should the boom be deliberately deflated. The Federal Reserve Authorities. One may doubt if at any time in early 1929 the problem was ever framed in terms of quite such stark alternatives. But however disguised or evaded, these were the choices which haunted every serious conference on what to do about the market.

The men who had responsibility for these ineluctable choices were the President of the United States, the Secretary of the Treasury, the Federal Reserve Board in Washington, and the Governor of the Federal Reserve Bank of New York.

President Coolidge neither knew nor cared what was going on. A few days before leaving office in 1929, he cheerily observed that things were 'absolutely sound' and that stocks were 'cheap at current prices'.

So unlike our own Tony Blair, or even George W Bush.

These men do not issue orders; at most they suggest. Chiefly they move interest rates, buy or sell securities and, in doing so, nudge the economy here and restrain it there. Because the meanings of their actions are not understood by the great majority of the people, they can reasonably be assumed to have superior wisdom. Their actions will on occasion be criticized. More often they will be scrutinized for hidden meanings.

Such is the mystique of central banking. Such was the awe-inspiring role in 1929 of the Federal Reserve Board in Washington, the policy-making body which guided and directed the twelve Federal Reserve Banks. However, there was a jarring difficulty. The Federal Reserve Board in those times was a body of startling incompetence.

The New York Federal Reserve Bank, under Governor Strong's leadership, may not have been sufficiently perturbed by the speculation. Nor was it after Governor Strong died in October 1928 and was replaced by George L. Harrison. A reason, no doubt, was the reassurance provided by people in high places who were themselves speculating heavily. One such was Charles E. Mitchell, the Chairman of the Board of the National City Bank, who on 1 January 1929 became a class A director of the Federal Reserve Bank of New York. The end of the boom would mean the end of Mitchell. He was not a man to expedite his own demise.

Actually, not even new legislation, or the threat of it, was needed. In 1929, a robust denunciation of speculators and speculation by someone in high authority and a warning that the market was too high would almost certainly have broken the spell. It would have brought some people back from the world of make-believe. Those who were planning to stay in the market as long as possible but still get out (or go short) in time would have got out or gone short. Their occupational nervousness could readily have been translated into an acute desire to sell. Once the selling started, some more vigorously voiced pessimism could easily have kept it going.

The very effectiveness of such a measure was the problem. Of all the weapons in the Federal Reserve arsenal, words were the most unpredictable in their consequences. Their effect might be sudden and terrible. Moreover, these consequences could be attributed with the greatest of precision to the person or persons who uttered the words. Retribution would follow. To the more cautious of the Federal Reserve officials in the early part of 1929 silence seemed literally golden.

Then toward the end of the month disquieting news reached Wall Street. The Federal Reserve Board was meeting daily in Washington. It issued no statements. Newspapermen pressed the members after the sessions and were met with what then, as now, was known as tight-lipped silence. There was not a hint as to what the meetings were about, although everyone knew they concerned the market. The meetings continued day after day, and there was also an unprecedented Saturday session.

Soon it was too much. On Monday, 25 March, the first market day following the unseemly Saturday meeting, the tension became unbearable. Although, or rather because, Washington was still silent, people began to sell. Speculative favourites - Commercial Solvents, Wright Aero, American Railway Express - dropped 10 or 12 points or more; the Times industrial average was off 9.5 points for the day. More important, some banks decided that, in the event of a Federal Reserve crackdown, virtue might have a reward above revenue. They began curtailing their loans in the call market, and the rate on brokers' loans went to fourteen per cent.

On the next day, Tuesday, 26 March, everything was much worse. The Federal Reserve Board was still maintaining its by now demoralizing silence. A wave of fear swept the market. More people decided to sell, and they sold in astonishing volume. An amazing 8,246,740 shares changed hands on the New York Stock Exchange, far above every previous record. Prices seemed to drop vertically.

To avoid confusion, I should say at this point that this was not, in fact, the Great Crash. This was simply a minor dip in the apparently ever-rising tide of prosperity. What was soon to come would make this look like the calm before the storm.

26 March 1929 could have been the end. Money could have remained tight. The authorities might have remained firm in their intention to keep it so. The panic might have continued. Each fall in prices would have forced a new echelon of speculators to sell, and so forced prices down still more. It did not happen, and if any man can be credited with this, the credit belongs to Charles E. Mitchell. The Federal Reserve authorities were ambivalent, but Mitchell was not. He was for the boom. Moreover, his prestige as head of one of the two largest and most influential commercial banks, his reputation as an aggressive and highly successful investment banker, and his position as a director of the New York Federal Reserve Bank meant that he spoke with at least as much authority as anyone in Washington. During the day, as money tightened, rates rose, and the market fell, Mitchell decided to take a hand. He told the press, 'We feel that we have an obligation which is paramount to any Federal Reserve warning, or anything else, to avert any dangerous crisis in the money market.' The National City, he said, would loan money as necessary to prevent liquidation. It would also (and did) borrow money from the New York Federal Reserve Bank to do what the Federal Reserve Bank had warned against doing. Disguised only slightly by the prose form of finance, Mitchell issued the Wall Street counterpart of Mayor Hague's famous manifesto, *I am the law in Jersey City.*

I'm sure that no on in a position of power would behave in this way today! Pumping huge sums of borrowed money into the system to prevent collapse. How silly can you get!

Mitchell's words were like magic. By the end of trading on the 26th money rates had eased, and the market had rallied. The Federal Reserve remained silent, but now its silence was reassuring. It meant that it conceded Mitchell's mastery. The next day the National City regularized its commitment to the boom: it announced that it would insure reasonable interest rates by putting $25 million into the call market - $5 million when the rate was sixteen per cent, and $5 million additional for each percentage point.

Of course, Wall Street doesn't like regulators interfering with it's running, even if it is to their benefit. To try and illustrate this, let's say, hypothetically, that our banks have been forced to accept a bailout package from the Government because they are in danger of going bankrupt. It couldn't possibly happen, of course, but I am speaking hypothetically. Would they be grateful? Or would they complain that the Government wanted too much control over the way that they are run? Would they still refuse to lend money, displaying what some might call a lack of gratitude? Surely only the most cynical would wonder if all of the taxpayer's money that had been pumped into the banks had actually been wasted? Perhaps the only lesson that we can draw is that, seemingly, men who are used to power don't like being told what to do - even if they are being told to get into a lifeboat.

The Federal Reserve was criticized [for interfering in the running of the markets] even more than Mitchell - even though it could hardly have done less than it did. Arthur Brisbane said judiciously: 'If buying and selling stocks is wrong the government should close the Stock Exchange. If not, the Federal Reserve should mind its own business.' In a leading article in Barron's, a Mr Seth Axley was less even-handed:' For the Federal Reserve Board to deny investors the means of recognizing economies which are now proved, skill which is now learned, and inventions which are almost unbelievable seems to justify doubt whether it is adequately interpreting the times.' Since the principal action which the Federal Reserve had taken against investors had been to hold meetings and maintain silence, this was doubtless a trifle harsh.

After the defeat by Mitchell in March, the Federal Reserve retired from the field. There continued to be some slight anxiety [from Wall Street that they might still try to regulate the market]. In April, William Crapo Durant is supposed to have paid a secret night visit to the White House to warn President Hoover that if the Board were not called off it would precipate a terrible crash. The President was noncommittal, and Durant is said to have reduced his holdings before leaving on a trip to Europe. In June from Princeton Mr Lawrence said that the Board was still 'doing its utmost to cast the proverbial monkey wrench into the machinery of prosperity'. He warned the Board that it had 'aroused the enmity of an honest, intelligent, and public-spirited community'. (Some hardened Wall Streeters may have been surprised when they realized that this meant them.) But the Board, in fact, had decided to leave that honest, intelligent, and public-spirited community strictly to its own devices.

If there is one thing that Wall Street demands from it's regulators, it is that they should not try to regulate - only appear to do so. After all, what's a 50 billion hedge fund between friends?

Governor Young said subsequently, that 'while the hysteria might be somewhat restrained', it would have to run its course, and the Reserve Banks could only brace themselves for the 'inevitable collapse'. More accurately, the Federal Reserve authorities had decided not to be responsible for the collapse.

In August the Board finally agreed to an increase in the rediscount rate to six per cent. The market weakened only for a day. Any conceivable consequence of the action was nullified by a simultaneous easing of the buying rate on acceptances.

In fact, from the end of March on, the market had nothing further to fear from authority. President Hoover did ask Henry M. Robinson, a Los Angeles banker, to proceed as his emissary to New York and talk to the bankers there about the boom. According to Mr Hoover, Robinson was assured that things were sound. Richard Whitney, the Vice-President of the Exchange, was also summoned to the White House and told that something should be done about speculation. Nothing was done, and Mr Hoover was able to find some solace in the thought that primary responsibility for regulating the Stock Exchange rested with the Governor of New York, Franklin D. Roosevelt.

Roosevelt, too, was following a laissez-faire policy, at least on the matter of the stock market.

For now, free at last from all threat of government reaction or retribution, the market sailed off into the wild blue yonder. Especially after 1 June all hesitation disappeared. Never before or since have so many become so wondrously, so effortlessly, and so quickly rich. Perhaps Messrs Hoover and Mellon and the Federal Reserve were right in keeping their hands off. Perhaps it was worth being poor for a long time to be so rich for just a little while.

Coming soon: The Twilight of Illusion - The Crash.

Followed by: Things Become More Serious - The Aftermath

Get the Abbey Habit

2009-01-08T09:33:00.002Z

It's a relief to know that most reputable Building Societies are protecting their director's salaries ... er .. I mean, shareholder's interests ... by ensuring that their flexible mortgage products aren't quite as flexible as they seemed to be.

If you own such a mortgage, I would strongly suggest that you do not watch this video, as it will lead to a lack of confidence, and possibly panic, which, I am sure you will agree, we all wish to avoid in these uncertain times.

I'm sure you won't let me down.

THE ADVENTURE OF THE EDGWARE PHANTOM (Part 1)

2009-01-06T23:05:00.007Z

It was Manton who out of boredom first asked our faithful retainer Sibbes to go down into the club archives and fetch up something interesting. Sibbes returned presently pulling a large tin box behind him. This he placed in the middle of the floor. “This was the best I could find sir.”

“What is in it?”

“I have no idea sir”

Squatting down upon a stool in front of it, Manton looked it over. The box was dusty and rusted in parts and was marked with the initials MH. He unfastened the leather strapping and threw back the lid. I could see that it was a third full with bundles of paper tied up with red tape into separate packages.

He lifted bundle after bundle glancing at the handwritten wording on each. One said “The Tarleton Murders” and other “The Case of Vamberry”, “The Adventure of the Old Russian Woman”, “The Singular Affair of the Aluminium Crutch”, “Ricoletti”.

“What on earth’s this little lot do you think?”

“I’m sure I couldn’t say, Sir,” said Sibbes.

“Where did you get it from?”

"When I was cleaning out the basement some months ago, after we had that leaking pipe you remember, sir?"

“Yes I recall.”

“...Well I saw the box then and thought it very curious. And when you asked me to bring you something interesting I recalled it to mind.”

"Very good. Well leave it here for now and I will have a look through it more carefully.”

After Sibbes left, I picked out a bundle at random and relaxed back into an armchair with a glass of The Macallan for company and began to read.

THE ADVENTURE OF THE EDGWARE PHANTOM

I had called upon my friend Mr Sherlock Holmes early in January in order to wish him the compliments of the new year. He was sitting upright at his desk, dressed in an old dun-coloured dressing-gown, a glowing meerschaum pipe in one hand and a lens in the other. A silver pair of spectacles lay in front of him and was the evident study that took up his full attention.

"You are busy," said I; "I shall call another time."

"Not at all, Watson. Come in, come in. I should be glad of your company and in any case you might be able to shed some light on this little problem here. The matter is of course quite trivial, but there are one or two points of interest. What do you make of these?” He held out the spectacles then tossed them to me.

I seated myself in front of his fire. The flames danced and gave out a welcomed glow. "Are you working on some case?" I asked, "and are these the clue to some clever crime?”

"No, nothing so ordinary," said Sherlock Holmes, smiling. "What you hold in your hand is the memento of a ghostly visitation upon one of our local shopkeepers Watson. It is said that there are more things in heaven and earth than are dreamt of – well here is the evidence of it in your own hand.” He sat back in his own chair and smiled at the puzzled look upon my face. “You know Jennings, the constable who walks our particular patch of Baker Street?"

“Yes.”

"He dropped those by for me yesterday."

"And why did he do that?"

"He found them and thought they might interest me. But let me tell you the story. Jennings, who as you know is a most diligent law officer, was making his way down the Edgware Road two nights ago on his usual beat. As was his practice Jennings spent some time looking into premises and trying the door handles. But one door he looked into gave him a start. As he tried the handle, it flew open and out shot a man screaming as he went. He pushed passed Jennings and ran out into the street yelling “Lord God Save me! Don’t let it get me.”

“Jennings was in two minds, whether to follow after the man or enter the building to see what caused the fellow to take to his heels in such terror. As the man was halfway up the street by this time, he decided to enter the building which was Mr Comfrey’s patent shoe shop. Making his way through the shop found nothing out of the usual and decided to ascend the stairs to the upper floors. Halfway up, in front of him he saw, in the dim gaslight, a luminous shape, gliding across the landing.”

“A luminous shape?”

“That is how he describes it. But that is not all. Jennings says that the glowing spectre glided right past him and then headed straight though the wall. Jennings made a thorough search of the upper floor but could find nothing.”

"But surely you don’t accept that?"

“If it were anyone other than Jennings I would certainly have my doubts, but you know him as well as I do and he does not strike me as one who would easily be deceived. He is certainly one of the best of our flat-footed friends. No, my dear fellow, I think we have to take the evidence as it presents itself. However, the one thing that Jennings did find was those spectacles you are holding. They were on the floor by the wall at the very place the spectre vanished.

"I presume they belong to the owner of the shop”

"Ah well there lies the problem. He has not been seen these last two days and cannot be traced. Jennings believes that the man who passed him was already wearing glasses which suggests that these belong to another, does it not? Either way they are the only tangible evidence that Jennings was able to recover that might shed any light on the disappearance of the shoe seller.”

"What, then, did Jennings do?"

"He brought the spectacles round to me, knowing how interested I am in such puzzles.

“And what can you gather from these?"

"Only as much as we can deduce."

"Huh! What can you gather from these old things?"

"Here is my lens. You know my methods. What can you gather?”

I turned the spectacles over in my hands rather indifferently. They were handsomely constructed, gold-rimmed spectacles of the sort that were much in fashion a few years ago. They had clearly become worn through constant use. One of the arms had lost its returning spring and one of the lenses was a good deal scratched. The nose pads were also missing and some attempt had been made to replace them rather crudely with cork. For the rest it there was very little remarkable about them. "Beyond the obvious fact that the owner is long-sighted, I can see nothing," said I, handing them back to my friend.

"My dear Watson, you see everything, but discover nothing.”

“Then, pray tell me, what significance do you see in them?"

He picked them up and held them languidly in that peculiar fashion of his that told me his mind was alive with activity. "It is perhaps less suggestive than it might have been," he remarked, "but there are some clear and certain inferences which can be made and one or two guesses which must hold at least a strong balance of probability. That the man has a thin narrow face with an unusually broad nose is of course obvious. He is, as you pointed out, long-sighted with slight astigmatism in his right eye though his left eye has deteriorated to the state where he can see almost nothing out of it. He is around 50 years of age and he has been well off financially until quite recently when he has lost all his money – perhaps through gambling or some other hardship.”

"I don’t see how you see all that in these spectacles.”

“Furthermore, he has a poor memory to the point of being habitually forgetful,” he continued ignoring my interruption, “and since he has no other pair of spectacles than these, their loss will no doubt be much missed. He is a solitary man without wife or friends and spends much of his time alone. He also suffers from low morale.”

“Holmes!”

“Also, by-the-way, it is extremely likely that he has recently redecorated his house and painted his woodwork white within the last month."

“You are certainly joking."

“Not at all." Sherlock Homes sat back and smiled. "I am surprised that after all these years of following my methods you are still unable to see how they are attained?"

"No doubt you think me very simple, but I confess I am still unable to follow you.”

“Well, the shape of his head is plain is it not? The width of these frames is quite narrow, yet the nose rests are unusually broad, thus we have a narrow faced man with a broad nose.”

“Well that is clear enough. What about his age?”

Any optician will tell you that presbyopia is the most common cause of long-sightedness and is the natural result of aging. The ability to focus on near objects declines throughout life and follows a set pattern. The strength of these lenses indicates an age around 50 years when he bought them. The astigmatism is clear from the cylindrical lenses which are evident when you rotate them.

“And his left eye?”

There are deep scratches on the left lens, which you have yourself noted. But they are so deep as to obscure the vision almost totally. I doubt if anyone with half reasonable eyesight could bear to have it obscured to this degree. It is my guess that it has deteriorated to the point where he can see nothing from it.

“Well that is plain enough. And the loss of his fortune?"

"If this man could afford to buy so expensive a pair of glasses three years ago, yet cannot afford to have them repaired now he has surely had a change in fortune. These spectacles are gold rimmed and would have cost a tidy sum.”

“You said they were his only spectacles. How do you know he doesn’t have another pair?”

“My dear Watson, when you see nose pads which have been cut out from cork so roughly as this, it suggests that the man who cut them could not see clearly what he was doing which means that he had no spare pair of glasses to use. For the same reason it is unlikely that he had any friend or close relative who he could have called upon to help him. No, we have here a solitary man who is friendless."

"Well, that is clear enough, certainly. But how about the habitual forgetfulness?"

“The ends of the spectacle arms show small marks that indicate they have been attached to a neck strap. When a man is reduced to wearing his glasses around his neck then one can conclude that he not only misplaces his glasses but does so habitually. And since the neck strap is missing and he has not troubled to replace it, it is also obvious that he has become more careless and indifferent to loss, which is distinct evidence of a lowering of morale, probably linked to his financial losses.”

"You have an answer to everything. And how do you deduce that he has recently been painting his woodwork?”

Sherlock Holmes laughed. "Observe closely how the left lens has some very fine spots of paint which are clearly clean and fresh. You may have seen them through the lens. They are flecks of a glossy white paint, the sort which is used on woodwork and the angle of the droplets indicates that he was painting above head height; hence decorating must come to mind. Satisfied?"

"Well, it is quite obvious now that you explain it.”

Sherlock Holmes had opened his mouth to reply, when there was a sharp rap on the door. It then flew open and Jennings the constable, rushed into the apartment.

"Mr. Holmes! Please come at once, sir!" he gasped.

....to be continued.

The Non-Transitive Voting Paradox

2009-01-03T10:39:00.009Z

It was around this time of the year that we used to hold the elections for the club president. There are many who scoff at the need for such things and it is true that today most members prefer a much more egalitarian approach to membership and would shy away from any suggestion of a club hierarchy. But it was not always so. There have been 29 successive presidents of the Diogenes Club as indicated on the plaque on the library wall. But that all came to an end the year the elections took a strange turn.

Three people stood for president that year, Anstruther, Baldwin and Caldwell. A poll showed that there was almost equal support for each of the three candidates. One third of the members rated the candidates in order of preference A, B then C. Another third of the members rated the candidates in order of preference B, C then A. The last third of the members rated the candidates in order of preference C, A then B.

ORDER OF PREFERENCE
1/3 A, B, C
1/3 B, C, A
1/3 C, A, B

As a consequence Anstruthers quite rightly claimed that 2/3 of members preferred him to Baldwin. Baldwin claimed that 2/3 of members preferred him to Caldwell. And Caldwell claimed that 2/3 of members preferred him to Anstruthers. And the truth is they were all absolutely correct.

And there in a nutshell was the problem. The more deep thinking amongst us then realised that a clever committee could decide who would get the post by simply deciding the order of the voting. If they decided to vote first between A and B, then A would win, and the final run off vote between A and C would mean that C would win overall. But if we started off with a first vote between B and C, then B would win and the final runoff vote with A would see A winning. It didn't depend on the members wishes but on who was put forward first.

Well, when the members realised this, then they understood that it meant that the whole democratic voting system was faulty. It was not a problem with the three candidates, but a problem with the system itself. How often has a candidate come in first with less than half of the vote, which meant that more people didn't want him than did.

Every voting system was faulty and the members decided to have nothing more to do with it. So we did what any logical club would do. We did away with voting and with presidents altogether. And much better we have all been for it.

2.7182... and the meaning of e

2009-01-03T01:03:00.009Z

The year 2009 promises to be a very interesting one as far as banks and credit are concerned. The banks have been bailed out by government but they have not been so keen to pass on their good fortune to other less powerful industries. On Monday of this coming week the last Woolies shop will close its doors and others such as Adams have gone into receivership. How many more before the end of the this year?... well only time will tell.

Entwhistle, or "The Prof" as one of our more distinguished club members is known, was muttering about 'exponential increases' and other mathematical terms that had some members hot under the collar. "what is all this exponential stuff about?" asked Carruthers blithely.

The Prof looked at him as though he were addressing an ignorant student. "There are two mysterious numbers. One is pi and the other is e. Pi = 3.14159... and e = 2.7182... Most people know about the first but have not heard much about the second.

"Look has this got anything to do with banking?" asked Carruthers.

"Oh quite a bit," said the Prof, "if you will just give me a moment of your time.

"Is it going to affect my savings?" interjected Manton.

"Well if will affect how you understand them. For instance suppose you borrow £1 and suppose the interest rate is 100% per annum."

"Bit steep isn't it?"

"You wait until next year!" shouted someone from the back. "It won't be far off that!"

"Anyway," said the Prof, ignoring the interruptions. "After one year you owe £1 borrowed plus £1 interest making £2 in all."

"That clear enough," said Carruthers.

"Yes but the bank wants to get more than that. And it can do it by not putting up the interest rate."

"How can it do that?"

"Simply by spreading the interest out over a number of payments and making it compound." People looked perplexed so he continued. "Look, if they split the interest to two payments of 50% every six months what would you pay then?"

"The same."

"No. You would owe £1 borrowed plus £0.50 first interest plus £0.75 second interest equals £2.25 total. Which is the same as (1+1/2)² It compounds because you owe £1.50 after the first six months and so interest is more. Not a bad way to earn even more."

"The banks know all the tricks," said someone.

"And if you make the interest monthly, then that becomes (1+1/12)¹² = 2.6130 which you end up owing."

"It gets more every time."

"Exactly. and if they could make it daily interest you would be paying (1+1/365)³⁶⁵ = 2.71457. Of course if you paid interest at smaller and smaller intervals you would pay more, but there is a limit and that limit is 2.7182 which is exponential number that is given the symbol e. If you take 1000 intervals you get 2.7169, and if you take an infinte number you end up with e. Strange isn't it? It is one of those special beautiful numbers that are always turning up in mathematics. It can't be expressed as an exact fraction, just like pi, but it is important never the less."

"Is it going to help us with the credit crunch Prof?"

"I doubt it very much. But it will help you with your calculus problems." The Prof looked very pleased with himself. But no one else did. He always did go off on a tangent.

"Happy new year, Prof!"

A Ghost Story for Christmas

2008-12-31T20:21:00.003Z

I was sitting in a comfortable armchair by the log fire and had a warming brandy in my glass to keep out the cold weather when Charters came over and dropped himself into the chair next to me. I could see he was a little troubled and he started poking the fire. Eventually he spoke.

“Do you believe in ghosts?” he asked without even looking up.

"Well there are a lot of queer things around," I ventured.

He poked the fire a bit more and then put down the poker and stared vacantly into the flames.

“Are you alright Charters?" I asked.

He looked up at me. There was an expression of consternation across his face.

“Look you had better tell me all about it old man." He slumped back in his chair and looked exhausted. “Here let me get you something to drink.” I summoned our retainer. “Davenport! Get me another double brandy.”

“Yes sir.”

Charters went on, "You know I used to have a brother?"

"Lived somewhere out in the country didn’t he?"

That’s right. It’s over Shillingstone way. It was an isolated spot. His was the only house for miles, and I think that sometimes it got on his nerves, especially when the weather was bad like it has been recently with all the snow about. He often used to get blocked in and then he could be cut off for days.”

The brandy arrived and Charters held it pensively in his hands for a moment then took a large swig.

"He was on his own wasn’t he?" I asked.

“That’s right. Well last year...to this very day in fact, he rang me up. He was very distraught. He thought he’d had prowlers around the house. It was late evening, the snow was still falling and he had gone outside to put out some rubbish. And that’s when he realise someone had been sneaking around.”

I raised an eyebrow.

“He saw footprints.”

“What kind of foot prints?”

“A man’s. They were clear as anything in the snow. He looked around but couldn’t see anyone. He thought they must have been made by a passerby. But they went round the side of the house. So he followed them until he came back to the front again. They went all around the house.” He took another gulp of brandy and finished it off. “And there wasn’t a trace of anyone and no idea where they came from. There was just him and the trees and the snow and empty silence. He rang me up and told me. He wasn’t too worried though, not the first day.”

“The first day?”

“Yes, next day there was more snow and more footprints. There wasn’t a soul. And that’s what got to him. That really shook him that did. One set of footprints you can put down to an over curious person just looking round. But the second time... well that’s something else. And he wasn’t going to put with that. He rang me again and told me he was going to make damn sure that there would be no more prints the next day. Any more brandy?”

“What did he do?”

He set up a mantrap. Yes, I know it’s not the done thing. And I tried to talk him out of it, but he was adamant. I said I’d come over and see him but he would have none of it. I wish I’d gone over there now.” He stared back at the fire then to his glass. “Davenport, another brandy!”

“Right away, sir”

“He’d had a trap in the barn for goodness knows how long... inherited it with the place. Well he was always good with his hands was Frank. He’d cleaned it up and stuck it on the wall as a souvenir of the bad old days. But it was working. Oh yes he had tried it out and it nearly snapped his hand off.

“Isn’t that illegal old chap, mantraps and things?”

What I’ve found out is that when a man is driven to the end of his tether he doesn’t think about things like that. He doesn’t think straight. Anyway my brother was always one for acting first and thinking afterwards. But I’ll give him this; he first went and put up a sign at the front gate warning people not to trespass. “Danger, trespassers do so at their own risk.” Then he took the trap and he set it up round the side of the house, right where the footprints had gone. It was where the footpath narrows. There are bushes there, jutting out and there’s one point so narrow you could not avoid it. That’s where he would put it. He sprung it back and it took some force I can tell you, I’ve seen it working and it takes two men normally to do it, but my brother had fashioned up some leverage device that meant that he could just about manage it alone. Have you ever seen one of them? It’s a vicious thing, break your leg and leave you trapped in agony until the person who set it came to release you, or if he didn’t, you’d die from exposure and pain.”

Davenport arrived with the brandy and refilled the glass. “I have to remind you sir that Club rules do not permit any further refills sir.”

“Are you suggesting I can’t hold my liquor Davenport?” he asked.

“It’s not me sir, club policy sir,“ and he politely withdrew.

Charters just stared at him and then continued. “Where was I? ...Oh yes, so he set this thing up in the snow and covered it with leaves and waited. It was the first time he slept easy that night knowing his defences were up and he had the upper hand at last.” He drained his brandy in one. “He didn’t know what to expect in the morning – nothing really because there had been no noise, no disturbance, no snap of the iron jaws and no screams in the night. It was what he found later that had scared him and now more than ever.”

He put his glass down and I waited patiently for him to continue.

“Anyways, he got up early and decided to go out and check the trap before breakfast. There had been another fall of fresh snow during the night and the previous footprints were almost obliterated. But when he got to his garden path, there they were – new footprints wandering around the house in the same way. Someone had been here again and been to the trap. Well it was time to see what he had caught, but not before he had gone back for his shot gun. There was no knowing what he would find. “

“But why hadn’t he heard anything? Nothing could have got round that path without being caught. He loaded the gun and tucked it under his arm and followed the footprints round the house. They were perfectly clear in the crisp snow. He felt like he was stalking some elusive prey. Gun at the ready he turned the corner and approached the trap. The footprints went right to the trap and then right through it and then on round the house. He stopped where he knew the trap should be. The leaves that covered it were themselves covered in snow and the footprints lay right through the centre as though some ghostly phantom had passed that way.”

“At first he thought the trap had failed. There must be something faulty with the mechanism. No one could leave a trail like that and not trip the lever. He bent down closer to examine it. He could just make out the edges of the trap. They were there, unmarked. He couldn’t understand it. How could the trap not be sprung? If he walked through it, there’s no doubt it would have caught him and any other person too. He kicked out pushing the trap along with his foot. Nothing happened. It’s broken, he thought, that must be it. He could just discern the pressure plate though the leaves. The trap had failed to spring. He stood back and pushed the shoulder of his gun on the pressure plate.”

“With a violence that completely took him unawares the steel jaws sprang to life and snapped shut on the gun. It was a miracle the gun did not go off. If it had it would have been nasty as it was pointed upwards and directly towards him. He sat down in the snow with a bump, the shock echoed through his bones.”

“Back in the house he took stock. Whatever this prowler was, he was lucky. He had come round the house for the third time and had walked right though the man trap and been very, very lucky. Well he was going to make darn sure that he didn’t escape again. Luck was about to run out for this phantom.”

“That evening he set to work rigging up his contraption. It didn’t take him long and when he had finished he went back inside and thought he had solved his problems and was in for a good night’s sleep.”

“But that night he didn’t sleep well. Half awake and half asleep he heard a noise coming from outside. A plaintive noise more a weeping than a yelling. He peered through the windows but could nothing but swirling snow in the dark night air. And yet there it was again like the soulful whimpering of a trapped dog. The sound was caught on the air and sinewed its way through the open window and echoed round the house. The sound seemed to amplify in his head till he could stand it no longer and he clapped his hands to his ears to blot it out rocking back and forth on the bed. In desperation he rang me about and told me he was going out to get it. I pleaded with him to wait until morning. But he put the phone down and that was the last I heard of him.”

Charters was about to call out for another brandy but thought better of it. If someone looked like they needed a brandy then it was him. “Here old man, have mine.” And I offered him my glass.

“Thanks,” he took another sip. “They had found him the next morning outside. He was caught in the mantrap and the side of his face had been blown off by a shot gun. The police came round and investigated everything of course. Their forensic pathologists went over it all with a fine tooth comb. They said he had set up a booby trap with his own shotgun. There was some tripwire thing apparently. He had constructed it in the garden out of wooden stakes and thin twine. They couldn’t understand what made him do it. The inquest said it was probably suicide.”

“Did they check out the footprints? Did you tell them about the footprints?” I asked.

“Yes. Oh yes, they looked at them most carefully. And they came up with nothing. They were quite adamant about one thing though. All the footprints, all of them mind you; they were all the same, made by the same person.... They were all made by my brother.”

“Are they sure?”

“Absolutely – they matched only his shoes. He was his own phantom.”

The Top Ten Christmas Movies of all Time

2008-12-28T21:08:00.008Z

The Diogenes Club met for its annual festive gathering in a little out of the way pub in a quaint Dorset village - which shall remain nameless - if only because we want to keep it as a quite retreat and wouldn't like it to become too popular. During our evening conversation over a glass or two of mulled wine the vexed topic of which were the best movies to watch over Christmas came up. And as usual no two members could agree.

So in the absence of any definitive list, I humbly offer here my own top ten of Christmas movies, and make no apologies if they seem set in a "certain age". I confess to you now that modern movies are rather lacking from my list. They may have the action and the Computer Generated Watsits but sadly lack the character and the atmosphere of what I consider to be a good movie. So in reverse order:

10 The Bishop’s Wife (1947)
Cary Grant, David Niven
The bishop (David Niven) is preoccupied with the plans for a new cathedral, while his wife is struggling to make Christmas for the family. An Angel called Dudley (Carey Grant) is sent to help but the bishop becomes jealous of Dudley’s popularity , especially with his wife and daughter. A parable on what is truly important in life. Nominated for 5 Academy Awards in 1948.

9 Bell, Book and Candle (1958)
James Stewart, Kim Novak, Jack Lemon
Kim Novak is a witch who falls in love with a mortal (James Stewart) and starts to lose her powers, all over Christmas.

8 Going My Way (1944)
Bing Crosby, Barry Fitzgerald
Parish life at his first "assignment" includes gossip, youth mischief, and a rather shady landlord, but young Father O'Malley (Crosby) seems to land on his feet. As older Father Fitzgibbon (Fitzgerald) watches Father O'Malley in action, he feels his days as pastor of his flock may be numbered.

7 The Bells of St. Mary's (1945)
Bing Crosby, Ingrid Bergman
Father O'Malley (Bing Crosby) is sent to St. Mary's to revitalize the school and finds himself at odds with Sister Benedict (Ingrid Bergman), but the skinflint Horace P. Bogardus is going to have the school condemned. Sequel to Going my Way. Nominated for 8 Oscars in 1946.

6 It’s a Wonderful Life (1946)
James Stewart
George Bailey (James Stewart) has lost $8000 and feels that his life has made no difference to anyone and so he is about to end it. So Clarence the angel is sent to take George back in time, to show George the tremendous difference he made in the lives of the people around him. Some say it is the most popular Christmas movie ever made, but in my opinion not quite.

5 A Christmas Carol (1951)
Alastair Sim
The classic Christmas story by Charles Dickens, in which the miserly Scrooge learns that amassing money is not the ultimate goal of life; Without doubt the 1951 version is head and shoulders above every other.

4 We’re no Angels (1955)
Humphrey Bogart, Aldo Ray, Peter Ustinov, Basil Rathbone
Three convicts escape from Devil’s Island and stay with kindly Leo G Carroll and his family over Christmas and help him deal with his difficult and pompous cousin (Rathbone). The humorous conflict between Rathbone and Bogart is a sight to be seen.

3 White Christmas (1954)
Bing Crosby, Danny Kay
Bob Wallace (Bing Crosby) and Phil Davis (Danny Kaye) get together after the war as the top variety entertainers. They perform their Christmas show in Vermont in the inn owned by their former general, who has fallen on hard times. Romance ensues as the foursome tries to put together the perfect show to help the general.

2 The Man Who Came to Dinner(1941)
Bette Davis, Monty Woolley, Jimmy Durante, Anne Sheridan.
Sheridan Whiteside (Monty Woolley) the rudest author and broadcaster in the world (and the prototype for Gregory House) slips on the front porch of his hosts home and has to stay over Christmas where he does what he does best – interfering in other lives to great hilarity

1 Miracle on 34th Street (1947)
Edmund Gwen
A nice old man (Edmund Gwen) is institutionalized for claiming that he really is Santa Claus. Fred believes the old man, and arranges the legal hearing to let Kris prove himself. An undisputed Christmas classic nominated for four Academy Awards and two Golden Globes in 1948, and miles better than the Richard Attenborough remake.

And Justice for All...re-stated to kill the last story and reinstate this one

2008-12-19T17:36:00.002Z

The Diogenes Club does not exist in a vacuumn and members are encouraged to make intelligence gathering forays into the world. We are supposed to bring back how things are or might be to our table for our mutual consideration.

We are not simple consumers of the news, in fact as you will have read, sometimes we make the news, or are or have been a part of it. However this experience has bought us close to the manufacture of the news, and it is perhaps time to contemplate the truth or otherwise of the possible orchestration of our discriminations.

The London School of Economics conference, “Under Siege: Islam, war and the media” combined a concern for better reporting with the diet of news and impressions we actually do get. So I attended.

Sceptical news gatherers and intelligent readers have long debated if we are being misled by the news machine over important matters of our time. I saw a documentary soon after the hue and cry over 9/11 that argued Al Queida didn’t actually exist. Not only that it didn’t exist in the wild, then anyway, but it was originally a data-base of sponsored anti communist freedom fighters bent to the mast of the US’s initially covert foreign policies. This is nothing new in history, by the way. But it might be misinformation.

My own library bought “Unholy Wars” by J K Cooley as a corrective to this view, indicating the threat was palpable, and real. Terrorism had adopted or created a self-perpetuating quality in our time whatever the name, that many on the ground had not for seen cascading from the Afghan adventure..

Yet the suspicion lingers here and there outside the mainstream press that the actus rea of handing a loaded gun to freedom fighters might have been a mens rea conspiracy all along. Or become a kite of convenience to fly when the time was ripe.

The neo-con adoption of this idea being allegedly to engineer a dissent that would coalesce the rest of the world against a common enemy…. via terrorism....with said terrorism becoming a scapegoat that would occasion perpetual measures to contain any sort of as it happens anti-western (read anti-capitalist) freedoms.

At the level of geo-politics it was a genie that was deliberately let out of the bottle. Or so the conspiracy theorists argue.

This assumes some cabal is orchestrating events, as historians know has happened in the past. Think of the murmurings about the Red Brigades and the Italian secret state. Think of the Italian film Illustrious Corpses. Think especially of
Romanzo Criminale. And think of the decades between those films. It is an idea that has considerable persistence, outside of the mainstream media at least.

Not surprisingly one speaker from the floor I think argued the scape-goating of the Jews in the last century under Nazi rule was clearly orchestrated for military and strategic ends.

It is a fact, borne of academia, that in the tabloids 96% of coverage since 2001 of Muslim affairs has been negative, and the LSE conference speakers claimed this carefully measured distortion of the real world is not just ‘ambient’ racism. It is orchestrated by the industry…the media industry for whatever reasons.

As one (not so dumb) blonde student argued, “we need to go higher.....”

Inayat Bunglawala, (present) of the Muslim Council of Britain, claimed this practice betrays a process clearly designed to marginalise Muslims, and was a recipe for driving people to extremes.

A representative of Indymedia from the floor asked an apparently rhetorical question, “was this orchestrated and if so, by whom?”

I should perhaps state at this point that I have seen the documentary “The Century of the Self” i.e. “The Engineering of Consent” about the history of the Public Relations industry and how it has been bent to the mast of American foreign policy in orchestrating popular conceptions. Perhaps you had better see it now. Here it is:

http://uk.youtube.com/results?search_query=Edward+Bernays&search_type=&aq=f

http://uk.youtube.com/results?orig_query=Edward+Bernays&search_query=century+of+the+self&orig_query_src=2

That was something I suggested everyone in a workshop on “Journalists and the “terror” laws” should see.

Jeremy Dear, the president of the National Union of Journalists (NUJ) was chairing the debate, and he argued that the consequence of this coverage, of having a “war” on “terror” had come to mean that our freedoms, our civil liberties, our human rights, our privacy even was under threat.

Our emotions over extremism was dictating the discourse and was being driven by major media groups. At least , Jeremy Dear suggested, this directing our attention was for what he saw as “being for military and strategic ends”.

This is something other speakers debated, saying evidence for this was difficult to find.

At the end of the day, our blonde student went against this measured orthodoxy of the other speakers and argued that such orchestration did exist, and suggested the reason was that Islam was in a significant way a threat to Western capitalism, and the fight to suppress Communism so well documented by serious historians, could apply to secret state moves against Islam through state orchestrated Islamaphobia. Apparently some Muslims at least may not observe Western values and interests observed in ‘interest rates’, for example.

By the way, apparently the reactionary (?) Taliban have banned Teddy bears. This I do find easier to understand as a symbol of a different world-view.

It is hard not to be ethno-centric in finding such moves difficult to countenance. . It is just I have yet to hear an actual justification why Teddy Bears were added to the list of banned items, even if a BBC journalist was there when it was decided.

I for one would like to know why teddy bears are banned, even if I accept that the gift of a teddy bear can indicate a possible inappropriate love between two people?

It was not all plain speaking at the conference however.

Or do I mean conspiratorial thoughts writ large?

Nick Davies, BBC trainer of journalists and author of the devastating recent Flat Earth News, thought that this ideology of marginalising Muslim world views was the usual commercial news filter to do with meeting readers’ expectations. He saw no proof it was orchestrated by a minority group. Even if the result is that of maintaining a dominant ideology.

A leading Irish journalist, Eamonn McCann was speaking on the same platform, advised those present that whilst there undoubtedly was an ideology hostile to Islam, he saw no cabal directing it. However, he did remember Tony Blair saying once that his invasion of the Middle East was more to do with supporting moderate Islam against reactionary Islam, rather than the whole debate over weapons of Mass Destruction or Regime Change. This was an emphatic point of Eamon’s testimony.

From the floor someone from Global Vision 2000 said that especially now there was a financial meltdown in the West, his organisation was going to focus on there being a “usurious” military, industrial and financial cabal directing events, even if the speakers were playing this down.

A point was made about the oil price being fixed to the dollar having some influence or effect in all this, but I started to lose it at this point.

Nevertheless, dear reader, I am trying to bring you some of the flavour of the debate. To avoid otherwise inevitable parochialism. I do not intend to become a slave to Rupert Murdoch’s world view, if indeed he has one, and neither do I wish you to be tied to his mastheads which industry speakers felt beat to a different drum

There was considerable support for the view that the media has been reduced to a ‘slave’ status, of an anti-intellectual or anti-investigative culture in our media-houses and an inevitable recycling of uncritical second hand information supplied by an Edward Bernay’s like Public Relations Industry. At least the Diogenes club forgives the errors of high debate for the sake of what it might provoke. For The Diogenes Club is a kaleidoscope of experience before the world of opinions and ideas.

For journalists, it was pointed out, are victims to a terrible weakness in the experience they have of their editor’s or their reader’s world-views, never mind journalist’s own contracts, conditions of service and job security.

Sinister developments were suggested by workshop chair photojournalist Marc Vallee who specialises in photographing political protests. He produced a colleague (present) who had been stopped and searched about 28 times this year despite having spotless press credentials. And the cause, Sections 43 and 24 of the recent Terrorism Act.

It would be a little like a member of the Diogenes Club being shunned for his or her ignorance at a meeting. The Diogenes Club follows the principle of “instructive sympathy” not intimidation.

A man in the check shirt present was political photographer Marc Vallee, next to him was Mr Hicham Yezza, an Algerian-born researcher and downloader of the Al Queida training manual. (This is something he and I have both done, but he spent 6 days in jail for it until his liberty was recovered) The Guantanamo Human Rghts lawyer Louise Christian sat at the end next to Hicham Yezza’s own moderate magazine on political discourse.

This de facto harassment limiting research and news coverage happens regularly, said Marc, despite his own carrying around a letter from the Home Secretary that “there are no legal restrictions on photography in a public place…” with a plausible caveat currently disputed that some restrictions “may be justified in reasonable circumstances”

See for how crazy this can become:

http://web.mac.com/beachhutman/Beachhutman/Blog/Entries/2008/7/15_community_of_secrets.html

Secret state researcher Tony Gosling (left) attended and interviewed one of the audience. See his website: www.bilderberg.org

He recently demonstrated his grasp of world affairs on Sky’s Channel 200.

Tony has another website www.public-interest.co.uk and maintains a constant presence in the world of intrigue as an independent public interest journalist. I must ask him about a man formerly from the CIA and a book on circuses in the USA that never got published. He has touched on many stories like that, but may not have been aware of his connections connections?

Various clear victims of state suspicion were present. Our researcher imprisoned for 6 days and questioned for 20 hours continuously (Hicham Yezza) had only looked at the Al Queida training manual online. Also there was a (7 year) former inmate of Guantanamo Bay speaking, (Inayat Bunglawala).

Your author himself has been a “victim” of state suspicion in the past, but thankfully ‘This is England’ and it has never come to anything.

Anyway a refreshing argument came to the fore. It was claimed that any repression, any over-reaction by the state or its organs, is likely to be counter productive, and exacerbate the situation. In fact this is a stated aim of the PPOG anti –terror group of the American state for solely military reasons. Please see

http://en.wikipedia.org/wiki/Proactive,_Preemptive_Operations_Group

I wrote this up before at the end of this article:

http://web.mac.com/beachhutman/Beachhutman/Blog/Entries/2006/12/17_SHOOTING_STARS.html

I hope you agree with my sentiments. My point is that the US government is seeking to provoke or at least monitor reactions from extreme events to mop up dissent and establish presumably consent for the war on terror. This is as close I get to the charge of the state orchestrating negative news coverage, by the way.

But my perceptions are not those are not those of “the ‘Lyrical’ terrorist” who got into hot water for her poetry allowing for violence...in arguably a disproportionate way.

http://www.google.co.uk/search?hl=en&sa=X&oi=spell&resnum=0&ct=result&cd=1&q=the+lyrical+terrorist&spell=1

I might even sympathise with the non-violent but anti prevailing existing world order perspective as outlined by Global Vision 2000, if it is viable or vaiid.

http://www.globalvision2000.com/

Please note, I know nothing about this, it is an offer for you to pursue this link for the sake of completeness. My time is short and a lot of this is new to me. I am but a beach-hut man.

Anyway, why am I writing all this stuff about terrorism, Islam and the media? I have no monopoly on the truth, even if I am starting to see the coinage of our dissent and consent to be policed in this way.

The answer is that my freedom, to wander into London to listen to academics, activists, journalists and previously suspected terrorists on matters of topical concern, is only possible at a massive cost in surveillance and covert state supervision.

What do I mean by that? Well, I am no stranger to counter surveillance training, ( I downloaded that part of the Al Queida manual a few years ago, remember ~ before it was illegal presumably) The video cameras trained on the speakers on the platform periodically turned on the audience. I hope I am not betraying a practice that might be useful for terrorists to know ~ for that might be an offence. Some of the “usual suspects” I recognised from other media meetings seemed to clock the fact i clocked the roaming camera work, and as you can see from this article, I publish what I see. It is all on You Tube, by the way.

In a public place you might remember this is quite lawful. But we must get used to this. The price of freedom is eternal vigilance. And hopefully exposure of anything untoward. For we live in a democracy where ideally debate is open, transparent and accountable. We need to be on top of events, and not permit abuses of our awareness of threats or our trust in the organs of the state.

The important thing is that if we now live in a global village, we do not want to be the ‘village idiot’, nor do we want our guardians to be idiots either. Nor do we want our organs of news to be missing anything …which currently, according to the BBC’s Nick Davies, they are, despite whatever honesty under his tutelage they can muster.

The lesson from the participants…all of them… was that the only defence for our liberties is to challenge, comment, report and if necessary expose abuses of our human rights.

And, for necessary balance, I should add that everyone in the conference hall at the LSE was reminded by one speaker that “whilst some of these powers are disproportionate to the risks, inciting, influencing, grooming or brainwashing a generation must be kept under review.

(But it is not just terrorists that would influence or brainwash us, as we have seen).

The speaker added the caveat no one wants to glorify terrorism or provide anything likely to be useful to terrorists”. Who was that speaker?
It was Louise Christian, lawyer to many (state legitimated) forced detainees at Guantanamo Bay. She was most concerned that laws are being passed where the perpetrator may not know that they are offending the new often disproportionate terror laws.

By way of example, after seeing an Algerian born researcher arrested for downloading the Al Queida manual, something I have done in part, I am a bit cautious about setting foot on foreign soil. In England I feel reassured our checks and balances remain proportionate. But I am hopeful to travel to Woodland Hills in Hollywood to authorise a screenplay for a film of the “World of Tim”

(my idea for a working title for my adventurous past).

Yet I fear that thanks to my touching on so many sensitive subjects in the last decade… and downloading the bit of the Al Queida manual .. just the bit on counter surveillance (thanks to my seeking any meaning or uses of the words “two blue seeds” and “twig” after these strange objects were prominently left in my beach hut after a break in after a bizzare episode in my life ) …my freedom to travel might be compromised in a hostile world.

As it is when I travel abroad a message flashes up on the (Condor Ferries) booking computer if I change my plans, saying “Inform UK CID”.

Not that I mind, it is better to be “looked over” and “known” than to be “overlooked” and then possibly maltreated through some misapprehension in the heat of a moment. I still regard the police as my friend and am anxious that I do not waste their time with my Quixotic researches.

If you think none of this matters, just listen to the world’s real news on the magazine programme Outlook on the BBC’s World Service at 3am and compare it with the diet you get for popular consumption in the more popular media. It is a dangerous world beyond my trivial orbit, limited influence and supposed understanding

I am proud to pay my licence fee, just for the World Service. It may be my only contribution to achieving some real mediation of the real world to us all. For I am limited in what I can see, hear and understand.

We all need an antidote, a corrective, to parochialism.

The BBC can and does provide it, you just need to be awake in the wee small hours, or make time to listen again when you can…for the sake of your own education, for ignorance is no defence against terrorism…from any source.

My money is on the blonde in the audience. Ironically, as the conference drew to a close, I heard one academic claim a certain student …”was not a particularly good student”…

I suspect they were referring to her negatively for in their view oversimplifying a subject for which they as lecturers had an absolute monopoly.

But she was no Dumb Blonde, and maybe, she was not a Muslim either, for as such (judging by a 96% negative press in the unthinking tabloids) she would almost certainly have been marginalised even further by those guardians of the truth that seemed to me to be talking of this forward creature only to dismiss her as a “poor student” .

I hate discrimination, I hate ignorance. I hate slavery. I hate racism I hate sexism, well, pretty much.
See:
http://storiesfromthediogenesclub.blogspot.com/2008/09/why-i-hate-slavery.html

Did I say I hate violence.

But if you are a pantomime star, or maybe the heroine who fights for the downtrodden, Xena: Warrior Princess, please get in touch. Some female interest is apparently just the thing for the pipe-dream biography “The World of Tim”.

Even if for Xena” Warrior Princess, the quickest way to a man’s heart was through his ribcage. Ignoring that violence, we need to remember that for peace we should plan for war. But here I mean the war of ideas, for hearts and minds, or we will all be driven to extremes.

I like people who can put their finger on the nub of a problem. A sword, even a pantomime sword, is a very useful pointer in any theatre. Our blonde student, for me was only saying what the President of the National Union of Journalists had said. It was just that her point came at a lull in our thinking...we had been lulled into complacency and lazy thinking through advice the evidence for a cabal was not there. And other activists from the floor had been saying the same thing...we have had our views orchestrated for us by a dominant ideology.

Everything is a meme, struggling for survival.

So many academics have become apologists or consultants to the secret state there is currently a debate as to how far the LSE can be trusted to maintain academic freedoms. This is healthy. This is normal. For we must guard the good as well as the bad.

For a little diversion here look at what one determined researcher has discovered about the well-respected Columbia University in America.
http://www.namebase.org/tour1.html

My apologies to academe, the Taliban, and the Security Services I am an ignorant hut dweller, but happy to oblige anyone in discourse and not I hope compound any discourtesy if I have caused offence.

When I return to my tiny circumscribed world, beach hut or barrel, , I will be a bit happier that I can see behind the sensationalist headlines about radical Muslims. For they have a case.

The Diogenes Club has rarely intervened in the world, we have had a hundred years of secret state influence in the political agenda with, for example, communism. Witness P2 in Italy, P25 and was it P26 in Switzerland, never mind all the conventional history supporting this dominance where better documented or more transparent. The Diogenes Club may have had something to do in all of this, but certainly it has had little to say “on the record”. For we are not it would seem a “results driven” organisation with the urgency and agenda of, for example, the P organisations, and now the PPOG or the original (?) CIA.

But then that is the practice of diplomacy, is being a little like a politician, that is: sitting on the fence but keeping an ear to the ground on both sides at the same time. I prefer talking to fighting. Even if it is talking about fighting. In a pre-emptive sense perhaps.

For you can learn more about the world by the light of a candle than the intervention of a flash gun. Oh! that everyone thought so. And Oh! that we could settle our differences without fighting or committing any violence on the truths we encounter. The trouble is we keep encountering or maybe keep creating falsehoods.

Maybe the world should be run by truth seeking and truth establishing monks, not quite of this world, but for it.

For I like a little discipline. Discipline of thought that is. Of action sometimes. Of restraint., maybe. Or do we already have it? And if so, where?

Perhaps I should draw a veil over these bovine machinations. Or seek some leadership from famous figures or a movement of some kind. Yup. There has recently been a programme on The Universal Declaration of Human Rights . A shame the MediaWars people sought to ban one Revisionist Historian from speaking? What he said needed hearing.

Shilly or Chalet Man?

2008-12-19T08:23:00.003Z

The Diogenes Club is a strange collection of enquiring minds and often encourages its members to follow their noses wherever their occupations or interests take them. Stories from the Diogenes Club otherwise would be merely coffee table affairs. We are drawn to the world of intriguing phenomena and one arm of our collective enquiries is trying to piece together what has happened, from the traces that are left for those with eyes to see them.

A few years ago a reader of my own newspaper, a Mr Derek Stuart, prevailed upon me to investigate injustices he claimed to have suffered, and this led to this guarded publication here, following a couple of months activity:

http://web.mac.com/beachhutman/Beachhutman/Blog/Entries/2007/7/23_THIS_IS_ENGLAND!.html

The matter has never been resolved to my or his satisfaction, but it involved a steep learning curve, that has had Diogenes Club members open mouthed in disbelief.

Mr Stuart has since been accused of various misdeeds but my take on events is that whilst he has found himself in hot water for fighting the system and taking on extraordinary challenges, the required element of mens rea is not there to justify the claims of his accusers. Long may I be Sancho Panza to his adventures, for if only a tenth of what he claims is true, he is a hero of sorts. The clue, the thread, is Don Quixote, yet the reality is nearer “The Trial” by Franz Kafka. Maybe.

In the process of getting to this pass I have undergone training in investigative journalism, given evidence in court, seen a protagonist go to jail (twice) yet seen an innocent dupe go to prison too.

I have met some very interesting people and earned and actually enjoy a ‘certain’ reputation with the United Kingdom’s Police CID (amongst other agencies of the state no doubt).

All this without any detriments, arrests or convictions for myself, but possibly at the expense of the loss of a few civil liberties and a naiive confidence in the system one might expect to enjoy in a less threatening world.

I have come to realise there is a pecking order in the security world, and one’s span of activity is closely watched by others higher up the ‘chain’. Thank God this is England, and it is possible for a Quixotic animal like myself to learn what I have learned in safety and whilst ‘under the eye’ of a sympathetic
state that allows you a rope long enough to hang yourself if you do not act appropriately. Similarly the Diogenes Club, for they have kept a safe distance from events, looking for the clear blue sky others seek to preserve their thresholds for comfort and their reputations for fair dealing.

I may even have gained a certain reputation for fair dealing in certain quarters. At least three people think I work for the Security Services nowadays. So perhaps I was doing something right?

Anyway, here is a published example of the so called evidence gleaned from my enquiries using my (Chartered) Librarianship skills. I even hazarded a court appearance as a kind of expert witness, at least in the eyes of the litigant Mr Derek Stuart even if the noble judge could not restrain himself from a moment of astonishment. Otherwise, the Judge, Lord Meston, showed admirable restraint as I gave my evidence, and I hope he would not add a new sentence of his own (for contempt of court ) to my sentences repeated here. t I had furnished the court with my reportage both before the hearing in a “bundle” of evidence and after the hearing because the official record became lost.

My research was published contemporaneously yet has disappeared from its previous location without explanation. At least I can now publish it here, I believe, quite legally: on my own site.

For the avoidance of any doubt the reader of my Mudeford Sandbank Newspaper was Derek Stuart, former owner of one of the best houses overlooking Christchurch harbour, and Mr A L R (Bob) Morton was the buyer of said house, Mulberry Cottage.

I was paid £400 for this research. Which covered the expenses at the time.

Mr Stuart had been impressed by my grasp of another story, which happily remains in print here:

http://www.msbnews.co.uk/archives/msn7p1.html

...this was about a beach hut story involving in passing a couple of local estate agents he felt some irritation towards in his own world.

Anyway, enough about that minor story, here is something upon which I cut my journalistic teeth:... or so I thought...

Bournemouth County Court Claim No: BH303238

Background information on defendant Mr ("Bob") A L R Morton from public sources....(or why claimant Derek Graham Stuart is not paranoid).

Author Tim Baber, editor: www.msbnews.co.uk 26.08.2003

Arthur Leonard Robert (Bob) Morton, born February 11, 1942 and now aged 61, has as his main residence Wappenbury Hall, Wappenbury, Near Royal Leamington Spa, Warwickshire CV33 9DW. This mansion (a "stately pile" according to the Times on 30/07/02) was formerly the residence of Sir William Lyons, founder of Jaguar Motor Cars. Mr Morton is regarded as a successful serial entrepreneur, having at least a score of directorships (including several as Chairman) in areas involving and including computer security, physical security, military technology and nuclear contracting .

Notwithstanding Mr Morton's access to private security measures or other affiliations, including allegedly Masonic ones, that Mr Stuart believes have obstructed justice, I should at this early stage perhaps state I now personally believe that Mr Morton, is of sufficient importance to the national interest to be considered a "national asset" worthy of appropriate protection by the state. A far as I am aware Mr Stuart has done nothing illegal and my concerns extend to his alleged persecution being for inappropriate reasons connected with a cover up of an alleged fraud.

I also can legitimately ask whether he has adequate motives, means or opportunities to protect his own interests at the expense of the claimant, through his "empire"; or even suggest he is likely to be similarly protected by others, including even the state.
When the claimant argues he has been frustrated in seeking justice in the matter of Mulberry Cottage I see this as possible evidence for others conspiring on behalf of Mr Morton resulting in Mr Stuart finding at the very least evidence stolen, his human rights threatened and his reputation slandered leaving Mr Morton appearing to be "untouchable".

Mr Morton's companies often service blue-chip clients. He is a chartered accountant (FCA) and is regarded as an expert in mergers, acquisitions, consolidations and take-overs in the new technology sector.

His personal fortune was estimated to be some £175 to £200 millions at the height of the dotcom boom, and although public sources -
[on 07/06/2002 The Evening Standard had noted ..."collapsing share prices in Morton's portfolio have savaged his reputation as a sharp investor..."]
have suggested his fortune may now be a fraction of that;
["all of his Chairmanships have seen their share price go through some pretty chilling plunges over the past couple of weeks"...Accountancy Age March 6th, 2003...]
his son, Andrew Morton, reportedly stated to the claimant D G Stuart at a chance meeting on 15/08/2003 that his father had earned £200 million in the previous week.

Whilst company information, directorships and Chairmanships may change, most of the following is probably still current and is indicative, in any case, of Mr Morton's span of control, influence and connections over recent years. Financial matters are not really considered relevant, it is the functions of these companies that have been selected which are felt relevant.

Let us first look at an exception to his usual software stable, the company MacLellan Group PLC, formerly Morton's Jordec Group PLC and before that Baris Holdings PLC, also formed from the pedigree of Haden MacLellan. Morton became chairman on August 5th, 1996. Trade comment at the time was "Mr Morton, the Chairman, has a good business record, and has sunk plenty of his own money into the company" [source: companynews.co.uk] notwithstanding the writing off of a disputed 1996 decontamination contract on take-over.
According to the Independent (02/05/2001) MacLellan has facilities management responsibility (including opening the mail, security equipment and guards) for 700 buildings owned by the Customs and Excise and the Inland Revenue. There has also been in the past a contract with British Nuclear Fuels including the decommissioning of nuclear power plants. Devenport, Sellafield, Harwell, Dungeness and Trawsfynydd have been cited. New contracts worth £30billion pounds are anticipated for the nuclear clean-up at Sellafield according to the lead story in the Guardian 26/08/03. Airport baggage handling, at Gatwick and Heathrow, are another area of operations. (Peter Simonis, a non-executive director of MacLellan since 1992, died suddenly on 14 February 2000).

Then there is Harrier Group PLC, established in 1987. Mr Morton was appointed Chairman on 28/06/1996 owning through his British Virgin Islands trust (Southwind) some 8.5million shares. This company specialises in "high-end internet, networking and data security solutions" [source: Fame company Report]. Harrier Group specialises in authentication, encryption, secure data storage and public key infrastructure. All of these are highly valued and sensitive areas.
Its clients have included the BBC, BAA, Prudential, National Power and Vodaphone, amongst many other blue-chip clients. The Evening Standard noted on 7/06/2002 that ..."Chaired and 29.9% owned by legendary investor Bob Morton, Harrier has seen its shares plunge by 99% since the top of the dot com boom in February 2000."

Mr Morton is a stakeholder, through his British Virgin Islands family trust, in Cryptic Software which markets a "breakthrough computer anti-hacking system" to protect information from previously unknown "computer fraud, hacking and espionage".

BSoftB is perhaps the most interesting company that Mr Morton has chaired, although it was recently wound-up. BSoftB provided computer services or cabling services to, amongst others, the following clients: BAe Systems Marine, Devonport Naval Dockyard, First Hydro Ltd, French naval industries, British Nuclear Fuels PLC, The RAF (Joint Air Transport Evaluation Unit) Spanish naval industries, Vosper Thornycroft, the Computer Sciences Corporation and the Clarity Group.
Of these clients of BSoft B, a few facts or comments from public sources may help. Bae systems has world-wide military contracts producing annual sales of some £12 billion. Some 50 of the world's navies use their systems.
The privatised Devonport Royal Dockyard has an annual turnover of some £260 million. For Mr Morton and his clients, the need for commercial confidentiality, confidence and national security interests are, hopefully, obvious.
First Hydro Ltd is a hydro-electric company with 16km of underground tunnels in a Welsh mountain.
The RAF connection refers back to RAF Brize Norton, the RAF strike command and the RAF Air Warfare Centre with responsibilities for Defence Electronic Warfare and evaluation.
Vosper Thornycroft is a prime contractor for major warships world-wide.
The Computer Sciences Corporation are computer systems integration specialists with blue chip clients across all major industry sectors, including clients in aerospace and defence at home and abroad. They have a data outsourcing contract with the Royal Mail group valued at 2.4 billion pounds over 10 years. They also hold or have held contracts with BT and the US federal government and the US Defense Communications Agency.
In a vignette of the computer industry appearing on the web, Bob Bemer referring to a business alliance between computer giant UNIVAC and the Computer Sciences Corporation over which he presided as being..."in the smoke and mirrors period" and that "about the shenanigans, Roy Nutt or Bob Patrick would never have been involved. Very straight shooters. Patrick had probably left by that time, anyway...."

Incepta Group PLC was another company Bob Morton directed from 04/11/1992 to 31.03.2001. He stepped down as chairman in October 2000. It specialises in advertising, marketing and public relations for international clients with a subsidiary, Citigate, specialising in crisis management and global intelligence and security. Mr Morton was especially responsible for steering the Citigate acquisition which was completed by March 3rd 1997.

Citigate, with 78 offices world-wide and scores of subdivisions, rank competitor intelligence, hostile take-over defence, litigation intelligence, fraud investigation, threat assessment, security auditing, counterintelligence, asset searching, high tech investigations, executive protection, crisis management, media relations and employee vetting amongst its strengths.

Silvermines Group PLC is an Engineering and technology group of Mr Morton's former chairmanships which supplied the closed circuit TV for the extended Jubilee underground line. It's aerospace division (now sold off to Esterline Technologies in the US, had a contract in 1998 with GEC Marconi for project Siren, a missile decoy system. The Birmingham Post for 11/08/1998 indicated the company had won £2.5 million in orders in the Far East for its security division.

In a similar field is Future Integrated Telephony although Mr Morton's 14.6% investment in the troubled company and Chairmanship was overshadowed by a Department of Trade and Industry investigation [according to the Birmingham Post for 28/10/1999] into a number of current and former directors. Mr Morton was also noted to be Chairman of Just Results, a private company in the same sector from whom Morton had bought the shares.

Also in this field is Vislink PLC . Mr Morton was appointed to the board 09/10/2000 which specialises in broadcast technology, image processing, security solutions and satellite communications.

One software industry take-over involving Mr Morton, between Oneview.net by Freecom.net (Morton: at the time had a 16%stake in Freecom which today is Systems Union Group PLC- where he is Chairman - see below) reportedly descended into chaos [in the Birmingham Post 01/06/2000] where a spokesman for Mr Morton said" there was no question of fraud, but Oneview became a tainted company after what happened and Bob decided the best thing to do was to find a buyer for the whole group". [The upshot was that Oneview's directors agreed to hand back nine million Freecom shares].

The Systems Union Group has had Mr Morton as a director since 06/05/1995 and is a global software vendor, with offices or partners in 76 countries, having grown from Morton's Freecom.net, above. It has SunSystems, Pegasus and REDtechnology as its operating businesses. SunSystems software is available in 30 languages, being the eighth largest in the UK.

He is also the Chairman of Clarity Commerce Solutions which deals with sports and leisure management software for private and public (e.g.council) clients. Electronic Fund Transfer technology at Point of Sale (EFTPOS), i.e. electronic money, is a speciality. Here, again, there is a strong link with Sun Microsystems.

Mr Morton also has, or has had interests in Golf Club computing facilities and the Chairmanship of Interclubnet which supplies technology for a "total administrative solution" to football governing bodies globally...communicating at the highest level with the football industry.
Note: Andrew Jennings, investigative author formerly with the BBC and Granada's World in Action series, is an expert in sports, politics and international organised crime and has testified to the US senate in 1999 on Olympic scandals. He regards international sports bodies such as FIFA and the International Olympic Committee as suspect in facilitating international money laundering.

Mr Morton has had other interests, such as being formerly part of Vantis Morton Thornton...accountancy consultants specialising in networking and business clubs. Mr Morton purchased in February 2003, 15% of Tenon, a competitor in the consolidation field. On a city website www.financialdirector.co.uk, Morton is reported as saying he played no part in the management or investment decisions of Southwind, his family investment vehicle, [a trust registered in the British Virgin Islands to benefit his infant children, which bought 23 million shares at then an all time low price] Mr Morton is now 61 years old.

There are several other companies in which Mr Morton is either a director or past director, some of which have disappeared, changed name or been wound up. This research has been done as desk research only, and undoubtedly has some errors or omissions, which a proper search at Companies House could rectify.

Those featured above have been selected as arguably demonstrating he has both the means and the opportunity to protect his interests, or that others may do so on his behalf. This action may be irrespective of any so-called Masonic collusion for which I may have other comments to make in evidence, if required.
The required element of motive to protect his interests in a conspiracy might appear if Mr Stuart were to pursue and embarrass Mr Morton through the courts regarding the Mulberry Cottage alleged fraud.
Mr Stuart claims a subsequent comprehensive cover-up by various means has obstructed him and, ultimately, justice. I may have comments to make regarding this in evidence, if required.

Tim Baber 26/08/2003

UPDATE: On background information on defendant Mr “Bob” ALR Morton from public sources to be read in conjunction with witness statement of 26.08.2003 also by Tim Baber in case Bmth County Court .:. BH303238

Mr Stuart has asked me to relate any new developments since the previous statement which was contemporary to his claim.

I am happy to assist from ambient sources, although a professional would be able to improve upon this in particular in collating his many Chairmanships, directorships and shareholdings.

Looking over my files I am able to offer the following, some expressly at Mr Stuart’s request:

As I mentioned in the evidence I gave at Bournemouth Crown Court before Lord Meston, in London Lord Justice Hart previously disposed of two cases involving Mr Morton’s companies on the same day. Although I could draw no inference, Mr Stuart found this possibly significant.

Southwind Limited (BVI) is a family investment vehicle set up to benefit Mr Morton’s children and registered in the British Virgin Isles. On a city website Mr Morton is reported as saying he played no part in the management or investment decisions of Southwind. [www.financial director.co.uk] [5th August 2003]

Notwithstanding this in court evidence against Mr Stuart (who was persuaded to secretly transfer Mulberry Cottage to Southwind Limited…that is under a confidentiality agreement that I have discovered through familiarity with Mr Stuart’s paperwork), Mr Morton asserted in his statement that he has at all material times acted as it’s investment advisor“.

Accountancy Age has noted “have a look at some of the companies where Southwind invests and you can’t help but spot that Morton fills the role of non executive chairman.
“
Jersey
I expressed concerns about the apparent contradictions over Mr Morton’s role with Southwind (on the 16/02/04 by letter) to the UK Revenue and Customs.

I note Mr Morton has reportedly moved lock stock and Rolls Royce to Hawk House, (named after Westmead Hawk, his superb greyhound), in Jersey, Channel Islands in 2005 (source Pat Lay, This is Money 7 April 2005) .
I am unsure if these two events are unrelated.
(I was aware that Mr Morton’s company had at the time the facilities management/letter opening role at every Customs and Revenue office in the country, but proceeded undeterred!)
A Bahamas connection?
Mr Stuart informed me that he had telephoned Mr Morton apparently in the Bahamas to offer him back his deposit at the time of the auction of Mulberry Cottage.
A transcript of a Queens Bench Division trial between the discredited Bahamian company Guardian Trust Co Ltd v Davidson of 12/03/1991 refers to Southwind shares. This possible aspect, if any, of Southwind having any wider application is frankly beyond me, but is included for completeness.

Royal Armouries/Tower of London
Mr Morton is a director of the Royal Armouries (and a trustee of the Tower Of London), alongside a representative of HM the Queen.

MacLellan Group PLC: Mi5 connection/Interserve takeover scandal

Mr Morton’s former company MacLellan which in additiion to its secret state role mentioned before also provides industrial services/facilities management services to the Security Services, including Mi5.

But MacLellan has recently been sold to Interserve PLC for £118million in cash and shares. A dispute arose over a £25.9 million false accounting scandal by Interserve costing the vendors an anticipated £7million. Reuters reported Mr Morton said he was seeking compensation on an amicable basis, but if it can’t be done amicably we will try other means.

Morton’s reported interest in Silvermines should now read Vislink PLC which owns Active Imaging and is associated with the Bewator Group and has reported contracts with the British Army.

The £3.5 billion Jubilee line project in which one of Mr Morton’s companies was a security video contractor was noted (most recently according to the Shadow Attorney General at a fringe meeting I and Mr Stuart attended of the Conservative party) for a longshore fraud scandal that implicated many of the contracts awarded to contractors. I have notes on this but following the collapse of much of the case I would refer to Judge Anne Goddard, or Britain’s then most senior judge, Lord Woolf, or the Britsh Transport Police or Inspector Stephen Wooler or the CPS as the matter is complex. See the Guardian for 24/03/2005.

Whilst I could list all Mr Morton’s chairmanships, directorships and take a stab at his recorded share dealings I have not done this as his stable is complicated and changing. However, the following may be noted:

Lynx Group PLC
Provides financial software and data solutions for banks. Bob Morton is a shareholder. Also provides offshore finance solutions and operates for the emergency services etc. Not mentioned before but offshore finance expertise may be relevant in the following connection:

Interclub Net
My statement about international fraud and money laundering at the highest level of the Football industy, (where Mr Morton’s company provides software) has since been exposed within FIFA by investigative journalist Mr Andrew Jennings on Panorama. I predicted this following my attending an Investigative Reporting summer school in 2003 (and again in 2004) where I first heard and taped Mr Jennings on this subject.

Further comment:
Assisting Mr Stuart over the last four years I have become aware he has been removed from his evidence (against Mr Morton and his co-defendants) and vice versa. Also his access to witnesses has been frustrated and his chances of obtaining confessions has been circumvented.
The means used to cool him out or provoke him unwisely in his seeking justice and the persons concerned that have been discovered by me I have seperately reported to the courts and the CPS where I have personally become aware of them.
I name Roy Pack and Steven Hamilton and have similar concerns over Philip Moroney and Gerald Coulter, amongst others, in this regard.
This concern over the use of undue extra-legal influence on proceedings may possibly include Paul Goldin, (who is a stepfather of Steven Hamilton) giving rise to concerns of possible obstructions to justice at the level of a head of state with concerns in the direction of and in the person of Bertie Ahern. I have passed on my concerns in this matter to the CPS, here in the UK and the courts in Ireland, amongst others, as this is beyond my knowledge or competence.
When the opportunity has been taken I have public documents and private recordings I can offer in support of this assertion. I believe convictions have already resulted in this area with regard to Mr Hamilton at least. Matters are proceeding further so I regard the matter as sub judice.
Accordingly Mr Stuart and I latterly have become aware of a mini-industry of extra legal activity practiced in his and other cases, (leading far and wide), threatening in our view to obstruct the administration of justice and threaten the Queens peace in this and other cases Mr Stuart has tried to understand, at least.

Author: Tim Baber
Draft (2) of 31st October, 2006

For balance, I include this: I offered it to the judge when the official record of the case was “lost”. It was sent with the notes made in the courtroom to indicate any embellishments.

BOURNEMOUTH COUNTY COURT Date 21 October 2003

Claim Number BH303238
Claimant Derek Graham Stuart
Defendant Arthur Leonard Robert Morton Ref. TE/KF/E1137
Before His Honour JUDGE MESTON QC (Judgement made 23/10/03)

The following is from casual notes made by Tim Baber (of msbnews.co.uk) made in his notebook on the day of the hearing.

11.30am.

The judge asked if legal aid was available. On being told none was forthcoming Roy Pack asked to speak and said that if legal aid were to be forthcoming he would like to assist as a Mackenzie partner. The judge said there was no legal aid in this case. Mr Pack said "I think he (Stuart) needs some help, his best proposition is for postponement as he is not in a fit state to proceed".

Some debate ensued over the issue of a public funding certificate (Legal Aid) with Mr Stuart observing a solicitor (Coles Miller) had fabricated a debt against him to frustrate getting a certificate in the past and that , amongst others Letchers (solicitors) had recently refused to help Stuart with legal aid or to assist him to pursue some 150 people who Mr Stuart alleges have defrauded or conspred to defraud him.

Despite Mr Stuart citing Legal Aid officer Alan Edwards suggesting a certificate would be forthcoming the judge said Mr Suart was "highly unlikely to get legal aid" and earlier "you can't get legal aid". The judge agreed Mr Stuart would qualify in terms of means but would fail the merit argument. Mr Stuart said he should get legal aid because he "was entitled to it".

The judge said the claimant had not explained the case in detail to which Mr Stuart replied he had no legal representation, his documents had been stolen, witnesses had been threatened and that he had medical grounds. Mr Stuart said that one witness to how the fraud takes place...(disembowelling you of your property and being left homeless and penniless)...had just had his house burnt down. He also charged that the judge had (according to a lady court official) personally asked for the case. The judge replied "I have not in any way asked that this case be put in front of me" and that he had merely observed "it ought to remain down for me as I had read so much of the file".

At this point Mr Stuart said that since 1987 it was well known he had dealt with and investigated organised crime in Dorset, running a group which assists people which makes him an enemy of Freemasons and causes him lots of problems and that the judgements made by the judge had been unfair.

The judge replied that for the record he was not and have not ever been a Freemason., and that he had not made any judgements yet. Mr Stuart said that the judges requirement for a medical report and a police report had not been complied with in time and that he (Stuart) "was never going to get it". He said what he had had been obtained by by-passing the system. and requested an adjournment.

The judge then looked at the medical evidence. An appointment with Dr Chainey was not until the following Thursday - too late. A letter from Dr Gemmell mentioned Mr Stuarts "lack of concentration" Mr Mark Hardy, RMN was to offer evidence on Mr Stuarts medication regime and a Senior Practitioner reported on a recent change of medication.

The judge then referred to Mr Stuarts behaviour sending 74 Xmas cards in mid December 2000 (one copied in the Defendants bundle). Mr Stuart argued that the words "Goodbye for now" on the card was not a threat but he had been tipped off by a "Mr Smith" who "deals in the underworld" and earlier in August by a police officer that he (Stuart) was expected to be murdered, sectioned, kidnapped or imprisoned on false charges. The police officer suggested he "secrete his documents and lie low for a while".

Mr Stuart was subsequently sectioned under the Mental Health Act on 14/12/2000, then again on 26/07/2001 and February 2002. Mr Stuart alleged some unecessary medical interventions had been made as well. The alleged mistaken murder of Mr Calder on 26 July 2001 ( in mistake for MR Stuart) was also mentioned in support of this testimony. This, Mr Stuart said explained his behaviour in asking friends to look after some hair samples to assist in identifying his body with DNA at a later date. Attempts to obtain the Coroners report (an open verdict) on Mr Calders death have so far proved futile. Copies formerly in the posession of the Press have on enquiry subsequently dissapeared according to Mr Stuart. (Mr Stuart was sectioned at the time of the inquest so could not attend as an interested person).

Mr Stuart added four of his witnesses have been threatened and had withdrawn their support.

Mr Stuarts behaviour in alleging surveillance by Helicopters was enquired into by the judge. Mr Stuart claimed inciddents were to harrass and intimidate him and could be supported by two witnesses present, his daughter and a Mr Graham. Mr Staurt had sent cards to some officers he discovered were involved.

Mr Stuart then said he had not had a chance to read the court proceedings from the London hearing, as they had not been recieved in the post and had only just been given to him that morning. The judge replied he "hadn't read it either so we are in the same boat" Mr Stuart repeated his request for an adjournment for 3 months based on the medical evidence. Mr Hardy RMN gave evidence of recent events that Mr Stuart had been more sleepy of late and that his medication was to be reviewed...possibly with the aim of gradually reducing it. The Defendant (Mr Morton's) barrister noted that the medical argument had not been used in the recent London court hearing, although Mr Stuart had appeared to be agitated. Mr Staurt responded that for him London had meant two attempts to stab him in the past whilst visiting the bank at Harrods which had required assistance from their security staff.

Mr Stuart further alleged that his documentary evidence had been stolen on numerous occasions including even the recorded delivery slips from his posession numbering some 1,200 records. He alleged that Mr Morton had the means to organise this, citing Citigate as an example of Mr Morton's connections.

Mr Baber then gave evidence, citing a bundle document of 4 pages, of research he had made on computer databases outlining Mr Morton's interests in companies in the fields of military and nuclear contracting, corporate, physical and computer security. He was of the opinion that such connections gave Mr Morton the means and opportunity for a cover up, the element of alleged motive being to defray the embarassment Mr Stuart presented over the alleged Mulberry Cottage fraud.
Mr Baber also stated that some 3 or 4 days after meeting Mr Stuart and hearing (and taping his story) his "office" was burgled and what he believed was a death threat was left behind. He said for him the discovery of an allegedly tampered letter in which a paragraph involving Mr Mortons name had been deleted was the impetus for his enquiry into why this might be so.
He was asked by the judge about the supposed coincidence he, Mr Baber, had discovered of another of Mr Mortons companies having their case heard by the same judge in London (that dealt with theStuart case) on the same day. Mr Baber was unable to futher assist the court .

The judge concluded the morning session at 1.20pm by insisting Mr Stuart present some firm evidence on resumption after lunch.

After lunch, at 14.15, Mr Stuart began by saying in the past 3 years every angle of finance has been blocked by very strange, peculiar circumstances and yet he (Stuart) was being accused of abusing the system. He asked that proceedings be adjourned until after a proper medical report had been ordered..the one the judge had requested. The judge said he took the point about the medication but said "never mind" about the medical report. Mr Stuart asked for the police report on his stolen documents to be forthcoming which he believed was being blocked by the police...and that he did not expect to get anything from them. The judge said "allright" but also he was not going to get one if they are not going to produce one". Mr Stuart also asked for a report on his dyslexia to be prepared. As far as evidence was concerned Mr Stuart observed that on of the documents of his [to !0 Downing Street} that had been stolen now appeared in the defendants bundle as evidence of his acting vexatiously. Then he offered the evidence of an allegedly forged letter "a ten year old could understand" the judge had asked to see which centered on a change of font and deleted date suggesting, Mr Stuart said, proof of another substitution by the other side.
The judge said the significance was not obvious, that he simply did not understand what Mr Stuart was saying and the barrister for Mr Morton indicated the alleged substitution was not as Mr Stuart suggested.
Mr Stuart responded it was not obvious because it had been tampered with.

At this stage the barrister for Mr Morton argued there was no point in giving an adjournment for three months and that no advantage consistent with the overriding duty or objective is apparent. Mr Stuart asked for the new Doctors report on the following Thursday to be taken into consideration but the judge replied he couldn't overrule something he hasn't seen.

The judge then concluded in the case D G Stuart v Morton a claim for in excess of 6 millions pounds had been issued essentially claiming a conspiracy to purchase Mulberry Cottage through it being undervalued, the stealing of documents , tha attempted murder of Mr Stuart and the apparent murder of another man. Mr Morton is one of many people he intends to sue in prceedings yet to be started - up to 140 people in all.
The defendant Mr Morton seeks to strike out the claim as vexatious and an abuse of the court with an injunction . Today the defendant served some written statements (a few days late) .
The claim by Mr Stuart is simply fantasy. The direction in August was not formally filed with evidence in support to help me understand his claim and his application for a 3 month adjournment is not clear.
His grounds are that documents have been stolen or substituted, he is under medication and has limited ability to concentrate, his office has been closed by police harrassment and he is unable to obtain legal representation.
To be considered today was a further medical report and a police report.. After a further application on the 9 th October he has been able to obtain either. The order failed to mention no legal representation and the statement I asked to handle the case personally I have dealt with. The Masonic element I have also dealt with. On his application for adjournment based on an abscence of legal representation he has had some form of legal advice in the past on different matters. There is no question he would qualify on the grounds of a means test. The obvious problem is assessment of the merits of his claim. None of the solicitors he has consulted are prepared to support him on the basis of this recent application. Mr Kidd of Letchers states he intends to sue 140 people. I have no reason to believe he would recieve assistance from the Legal Assistance Commission.
He has had ample time to bring action, events have been triggered by the sale of the property in the year 2000. If there was any merit in them he would have been able to obtain legal assistance,
As far as his health is concerned from documentation, what he has said and what others have said there is a very unhappy history of mental health problems. He was sectioned in 2001 and 2002. A letter from his GP of 17.10.03 refers to a persistent delusional disorder. His medication (including amisulpride) has been doubled and he has found it more difficult to think. Mr Hardy RMN says he is more sleepy and his medication will be reviewed.
It is not entirely clear what could happen in 3 months time. Mr Stuart is highly suspicious a report has not been produced in time. Although I have been reminded by Mr Stuart I am not a doctor he has been able to argue his case with some force. I simply do not know. On the 25/09/03 Mr Stuart acted without apparent difficulty and the mental capacity argument was not used then. I have no reason to say that an adjournment today would present any appreciable benefit than today or that Mr Stuart would be more lucid. I do not think he has been sufficiently disadvantaged today.

With respect to police harrassment, Mr Stuart suspects Mr Morton has arranged for the surveillance etc to provoke and intimidate him. I really have no evidence one way or another. As regards his documents being solen he claims some 80% of his documents have been stolen. Frankly I am unclear as to why the abscence of those documents prevent him from articulating his case against the defendant as required, The claimant believes the theft was arranged by the defendant or his accomplices but he cannot identify them.He wishes to keep this evidence in hand for a major case to proceed. The fact is that the police have not provided anyting to support that there was a genuine theft of the documents, They have blocked him and he does not expect any help. He wants a court order (to obtain them) because he knows who has got them. I simply have no means of knowing this. His claim is not with sufficient particularity. I do not grant him application for adjournment.

END

Sytories from the Diogenes Club are all very well as a hobby or pastime, but if ever I am to combine my librarianship skills with a retirees life I might have to face up to more sleuthing type work, provided it is understood this is only from published sources! I am no rubber soled nosey parker.

I believe I have removed myself (and Mr Stuart) from any danger of contempt of court proceedings because this was all submitted to the open court or the judge in the early absence of any court recording...(it became ‘lost’)...and my evidence has been published contemporaneously before now( and also become unpublished or at least unindexed).

NB
A brief official record based on the Court officers notes and Mr Morton’s solicitor or Barrister does exist and should be consulted for completeness.

I have not included my copy from Mr Stuart here because it tends to detract from rather than add to my independent record ...in my opinion.

But I can make a copy available to anyone seeking ‘a check or charge of partisanship.

This is really to restore to the record these publicly available musings and especially also as they fit in with a possible investigative role for the Diogenes Club.

To be honest I think I will shrink away from this kind of thing in future, especially as I get older, but readers may wonder what motivates me and what has formed my character.

It is this. All of this, above.

I should perhaps add that there is no evidence that Mr ALR Morton has done anything wrong as far as I have been able to tell.

I did discover some anomalies but no-one seemed interested on this field of play.

I hope Mr Morton will see the humour in an amateur blundering about, as Mr Rupp, Munkel and Klawitter seem to have done in my other foray into investigative reporting,

Part 1, here:

http://www.msbnews.co.uk/archives/msn8p6.html

Part 2, here,

http://www.msbnews.co.uk/archives/hht3p7.html

Part 3, here,

http://www.msbnews.co.uk/archives/chc2p7.html

and the necessary consequences of publication, here,

http://www.msbnews.co.uk/archives/chc3p9.html

Don’t ask me why I investigate this stuff. It seems attracted to me, not I to it.

But I owe to Mr Stuart his day in court having some reportage, so that he at least might not feel that I might have been working for MI5 all along.

I cannot change the world. I can barely report it.

I hope this account will be allowed to stand, such as it is. A right of reply exists, as should be the case.

If you want some similar investigative work please bear in mind I have less stomach for a fight these days, and now hope I can tell the difference between a noble Kafkaesque cause such as this hopefully was and the risk of an error of a possible Quixotic adventure which this could always have been.

What have I learned from this?

Thank God this is England!

We usually manage to achieve a happy ending (for someone) at least.
I have read Kafka, there are dangers abrioad, But so far the damage has been contained.

A person, I have learned, will sacrifice everything for his reputation, even his health....and in the end that reputation can be destroyed through ill health. But the “man” persists.

Mr Stuart told me he knew he would never win his case, it is to his credit he tried nontheless, in so far as he believed and believes he was right to try.

I hope the state, his family and his connections who might have been disadvantaged in this battle continue to have broad shoulders to support the load he places upon them. I for one would be the less if I had not stood for a while by his side in a sea of troubles.

It is hard to know anything with any certainty. Harder to prove it. But we live in a Panopticon.

Someone will know. Mr Stuart got his money’s worth from me. I have his gratitude at least for that. Some stories tell more about us than we tell about them.

For no man is an island. Someone is, or should be, watching. That is the point of the Diogenes Club, and the idea of the Panopticon.

( See “Panopticon Security” on the web.)

Beachhutman

What Do You Get A Diogenarian For Xmas?

2008-12-10T23:36:00.004Z

“Xmas is a time for being surrounded by all your loved ones,” said Blenkinsop.
“All expecting expensive presents,” interjected Millhouse.
“As if,” said Ferraby, “there wasn’t enough getting and spending already. As the poet Wordsworth said. Or was it Dickens?”
“You just feel pressured the whole time,” commented Millhouse.
Blenkinsop cited the Credit Crunch as the reason he would not be buying anything but the cheapest gifts this year. Millhouse pointed out he had been buying cheap gifts for years before the Crunch was heard of.
“Well, I can remember the time when –“ joined in old Lambert.
“Here we go,” muttered Millhouse sotte voce.
… For you can hear the same conversation every year at this time. The problem is, you see, that Diogenarians are meant to be above all this getting and spending. The debate always kicks off as we plan the Club Xmas Dinner outing.
Someone always argues, as Blenkinsop put it, “Xmas is a precious, sacred time that should be spent entirely with one’s family.”
“That’s how Boxing Day Sales were invented,” retorts Millhouse with typical cynicism, “After two days of family togetherness, people will seize any excuse to get out the house away from their relations. The rest of the time you just sit there on the sofa staring catatonically at the box, showing wall-to-wall repeats, garish Xmas specials and endless flashy trailers and loud commercials.”
The conversation turns inevitably to the Christmases of old black-and-white films – A Xmas Carol with Alastair Sim as Uncle Scrooge, The Holly And The Ivy with Ralph Richardson as the out-of-touch vicar, and so on. Those were the days when there was only one TV channel, just called BBC-TV, and they only ever showed one feature film per year, on Xmas Day - something distinguished and worthy like High Noon or that Swedish nature film about a year on a farm, The Great Adventure.
Today, we are surrounded by electronic media, or “digital choice” as they call it – meaning we are spoilt for choice, with almost nothing we want to watch. But the coming of the age of electronic media also means you can retain one aspect of personal choice: you can watch films with no commercials, without staying up late, or queuing at the cinema, on DVD. In this, many of us are in favour of modern development, and we now have a regular Club film evening, with films viewed via an overhead projector casting a large image on the wall above the lounge fireplace.
Watching a memorable film creates an occasion that can be enjoyed in a group, whether family or friends. For the same reason, it makes for a natural present, for regardless of who gives it or gets it, the whole group can enjoy it together. It becomes a shared narrative, a winter rite going back to the practice of tales told around the campfire.
Last year, for the benefit of those who like to spend Xmas in solitary contemplation with a good book or two, we put up a list with some suggested Xmas holiday reading of suitably Diogenarian works, accounts of being stranded on a desert island with only a few possessions, and so on. This year, we can consider some twenty suggestions, made around the Club over the year, of films which reflect the pervasive nature of the Diogenarian view. That is, this year they are not the Robinson-Crusoe survival adventures whose narratives are far removed from the lives of most people, but reflect the Diogenarian theme in ways that are closer to home, and to contemporary life.
Some of course, still prefer the austere black-and-white films they grew up with, and several titles were suggested here. One was My Man Godfrey, a Depression-Era screwball comedy, categorised by the US Library of Congress as "culturally significant." A Bostonian living as a down-and-out, picked up during a socialite’s scavenger hunt and hired as a butler, proceeds to show up the thoughtlessness of the idle rich. Another such, with more of a club-versus-family theme, is the 1930s Laurel & Hardy comedy called Sons Of The Desert in America and Fraternally Yours in Britain, where the boys’ wives refuse to let them go to a fraternal-lodge convention they have sworn to attend. Black-and-white was also used extensively for documentary, and a recent DVD set, Land Of Promise, covers 40 years of the British Documentary Movement, showing how industrial shorts portrayed modern industrial society with all its problems on-screen for the first time, at the same time looking beyond material considerations towards a more enlightened view.
Unlike US cinema during WWII, British films did not promote jingoism, but an appreciation of more mystical values linked to the landscape. In I Know Where I’m Going, a wilful young woman has her resolve to marry into money melt away during an enforced wartime sojourn in the Celtic twilight of a Hebridean island. Much later, in the Thatcherite 80s, a similar setting would seduce an American businessman, sent in to buy up a village for an oil company, away from his monetary values in Local Hero.
British postwar films also took a wryly cynical view of success, and of patriotism, for example in two black comedies with Alec Guinness: Last Holiday, from an original JB Priestley script, and Our Man In Havana, from the Graham Greene novel. (To say more might spoil plot surprises.) Even that staple of postwar British cinema, the war drama, took a more cynical view in films like Ice Cold In Alex, where it is not the idea of Queen and Country that keeps the hero going across the Sahara so much as the prospect of an ice-cold lager in Alexandria. A Burmese jungle-trek survival experience also brings the emotionally dead and suicidal hero back to life in The Purple Plain, an early colour location-made war film.
Black-and-white was also used by lower-budget European films right through the 1960s. Examples of these include the final part of Antonioni’s trilogy of studies in contemporary urban alienation, Eclipse. Made just before he made Blow-Up, it ends with five minutes of footage of modern Rome cityscape shots from which the characters have eerily vanished. Another European example is the 1969 Ma Nuit Chez Maud (My Night At Maud's), set over Xmas in a bleak French provincial town. It has no music score, only the type of philosophical conversation French cinema is famous for, here about trying to live your life around the idea of resolving Catholic moral dilemmas using Pascal’s Wager.
The tradition of philosophical conversation continued into the colour era with films such as Louis Malle’s My Dinner With Andre. Here, a theatre director relates how he stepped outside his middle-class comfort zone after being buried alive in a Polish forest encounter-therapy session, and tries to convince his dinner companion to give up his electric blanket, to appreciate life all the more keenly.
Experiencing the Great Outdoors via a camping trip of some sort as a character-testing mechanism is in fact a part of American culture long satirised in films such as the US independent-cinema anarchic spoof Hallelujah The Hills!, and Hollywood romantic comedies like Man’s Favorite Sport? and A New Leaf. Similarly, though Woody Allen is a confirmed urbanite, the psychological impact of Nature is part of his A Midsummer Night’s Sex Comedy, where animal primitivism rears its head amidst the civilised philosophical discussion during a 1900s country weekend in upper New York State. Coming to terms with the North American wilderness is given a more realistic and complex treatment in fact-based dramas such as Jeremiah Johnson and Never Cry Wolf.
There are still many who prefer colourful tales set in remote locations, and there are several works which nevertheless reflect a more Diogenarian worldview where other values are shown to be more eternal and significant than any stock colonialist ideas. First is Black Narcissus, about the psychological effects that a posting to a derelict Himalayan monastery has on a group of British and Irish nuns. Then there are a pair of 1970s modern, slightly satiric, adventure dramas: The Man Who Would Be King, from the Kipling story, has a pair of cast-off British adventurers in a similar setting, discovering the dangers of colonialist assumptions, and the vaguely fact-based hostage-crisis story The Wind And The Lion, about the appeal of an older and wilder way of life to an increasingly buttoned-down and politicized society.
Finally, Xmas being a family time, there is My Family & Other Animals, turned into a feature film by the BBC in 2005, from Gerald Durrell’s memoir of his family’s retreat from Bournemouth to idyllic natural surroundings in Corfu, where the eccentric family pursued the bohemian life each in their way, until WWII forced them home again.
That’s over twenty, and if you can’t find something there, a Merry Xmas anyway.

I'm Sure There's Nothing To Worry About...

2008-11-13T18:55:00.004Z

Gentlemen! More appalling cynicism about this mighty nation of ours has been brought to my attention!

Surely it is time for every right-thinking Englishman to petition the Government to outlaw this 'interweb' thing, as it is clearly responsible for spreading dangerous seditious nonsense, such as the following outpourings from someone who freely confesses that he has no formal training as an economist:

I have, for a long time, been pointing out that the UK is structurally bankrupt. Back in July I wrote the following:

As I have mentioned, government will need to either borrow more, which will destroy confidence in the UK economy, or will require massive cuts in state spending. If it is the former, then the result will be destruction of confidence in the UK government's ability to manage the finances of the UK and the UK economy. If it is the latter, then there will be a strong downward lever on the economy (at least in the short to medium term).

I have been giving this some thought, and I am coming to a conclusion that it is going to become increasingly difficult for the government to borrow at all. I have detailed elsewhere that the £GB will continue to fall in value. I have argued that depression is looming. The government deficit it going to balloon. This makes lending to the UK government a very, very high risk venture.

My question is this; Will anyone want to continue to lend to the UK government under such circumstances?

I think that the answer, in the coming months, will be 'no'. I am not sure at what point this will occur, but I would guess that the turning point will come in the next six months or so. It is at this point that the government will really fall to pieces. The reason will be that, in the near future, the UK will be calling on the International Monetary Fund. Quite simply, with the huge risks in the UK economy, I simply do not believe that it is creditworthy, and others are going to come to the same conclusion.

As a note, since that post, I have pointed out that the IMF may not be an option, on the basis of the question; who will be funding the IMF?
As the government sought to 'fix' the crisis through the banking bailout, and then chose to spend its way out of recession, it became ever more apparent that the overseas investors, who have been financing the defecit, would gag on such proligacy. I explained the nature of the problem in a previous post at the start of September, and will also quote this at some length:
The reason why confidence is so important is best explained through an analogy. The analogy is an 18th century aristocrat who is living beyond his means. He gambles, he entertains, and he has a wonderful time. All of the tradesmen extend to him long lines of credit, and he continues with his profligate lifestyle, all the time feeling that he is above the petty business of managing finance. After all, his family has been wealthy for generations, and it is his right to enjoy the good life. However, he is actually spending his family wealth, and the earnings from his estate are no longer covering the costs.

His creditors also know that his family have a long history of wealth, they see his fine house, they see his expensive furniture, his lavish lifestyle, and can not believe that he will not repay the credit that they are extending.

Then a rumour starts that he is in financial trouble. One or two of his creditors start to press for payment, and restrict his access to new credit. He is unable to make the payments. The word starts to go around that maybe he is not as solid a credit risk as everyone first thought. Creditors start to refuse to extend his credit further, and the aristocrat starts to realise that he has no money. The entertaining, the lavish clothes, all become beyond his means. He can no longer make repayments. His estate does not generate enough cash, and now that the credit has stopped, he can no longer afford anything at all. He is bankrupt.

The UK has long lived on such confidence but, like the aristocrat, it is a misplaced confidence. It is a confidence built upon an idea that wealth is a birthright. However, as the UK is about to learn, it is not a birthright, but something that requires effort and energy. You can only live so long on your inherited wealth before it is squandered away, and you can only live so long on credit before the creditors start to ask questions of your ability to make payments.

Don't let yourselves be fooled by the fact that most of things that he predicted, at the start of the summer, have actually come true.

The man is quite clearly deluded, and determined to bring this great nation of ours to its knees, with his poisonous drivel.

I don't need to tell you to avoid his blog, which is here, at all costs.

I know you won't let me down.

That Sinking Feeling

2008-11-09T00:45:00.010Z

Around the Club, there has been little talk of The Crunch. Because of the Club ethos, no-one will admit to personal loss from market speculation. But last week, HM the Queen, until the previous week the wealthiest woman in Europe, set tongues a-wagging by asking, How could this happen? She herself had lost around £25 million - money she was going to use to fix up the Palace bedrooms one day. Why did no-one say anything, asked the dear lady - warn the others of the fact the Crunch had been predicted? The answer she was given is that each was relying on the others to provide such warnings. It’s part of a system of delegated and distributed responsibility that was set up in the wake of the South Sea Bubble scandal, when government set up the so-called Sinking Fund to ensure future stability and manage the national debt.
... It was indeed for that very reason, the management of national debt, that the government of the day were drawn into the Bubble. The South Sea Company was really a bank masquerading as a stock company, set up in 1711 by Harley, the Earl of Oxford, who was the Lord Treasurer and prime minister in the new Tory government, to underwrite a national debt which had grown to £30 million since the Act of Union, when Scotland’s debts had been added. An Act of Parliament awarded the South Sea Company a trade monopoly with South America, in exchange for a £7 million loan.
The official prospect presented to investors, of lucrative trading rights to Spanish slave colonies in South America (over which in reality England had no control), was a shell game talked up by insiders to lure the greedy. It was so successful that even servants began investing, borrowing money to finance the share purchase, and as the share price rose, acquiring luxury goods such as fine carriages and livery. Others sunk their entire family fortunes into the scheme. Nearly a hundred other “joint stock” companies started up, some with even less realistic aims – to buy up the Irish Bogs, manufacture square cannon balls, and so on. Speculators included the Royal family, and King George I outlawed brokers selling shares in rival offerings.
Inevitably, what goes up on the market must come down, but even the discoverer of the Law Of Gravity, Sir Isaac Newton, didn’t see that coming, and reportedly lost £20,000. He later explained 'that he could not calculate the madness of people'. “The Madness of Crowds” would become a popular phrase to explain such collective delusions. MP Robert Walpole decried "the dangerous practice of stockjobbing’ which would decoy the unwary to their ruin, ‘for a prospect of imaginary wealth.’
The dangers of jobbing stock salesman manipulating the market had already been demonstrated across the Channel the previous century, when Holland had been caught up in buying and selling shares in tulip growing enterprises. The facts that it took 7 years to grow a prize tulip from seed, and that supply soon outstripped demand, did not halt the tulip bulb futures trading mania until the price of a tulip had reached 5,000 guilders. But the Dutch economy survived the bursting of the Tulip Bulb bubble because the Amsterdam Stock Exchange had declined to trade in tulip futures. Walpole also warned the Company directors would become masters of the government, controlling the legislative process.
His warning was in vain, for over 460 MPs and 112 Peers invested. The main private backer, Blunt, Chairman of the Sword Blade Company (which had diversified into official managing forfeited estates), also publicly spoke out against greed and corruption. But behind the scenes he set up a £1 million fund to convert government debt into company stock and drive up share prices, plus a slush fund of £500,000 to bribe government officials. (He was elevated to the Lords within the month.)
European and American interests were also involved, with a Scotsman pulling the strings. Scotland had been forced to subjugate itself to England under the Act Of Union 1707 due to its facing bankruptcy over the Darien Scheme. Promoted by the Scots co-founder of the Bank Of England, the scheme had been backed by the new Bank Of Scotland, which invested a fifth of the nation’s fortune. It was meant to open up trade with China and Japan by setting up a colony on the isthmus of Panama, where a canal would be dug.
The idea was ships from China and Japan would arrive on the Pacific side to trade, offering finest Cathay silks, etc. in exchange for Scots staples. In the event, there were no ships from Cathay and the colonists couldn’t even interest the local Indians in their baubles and bibles. Though guided by a former castaway (a surgeon on one of Dampier’s vessels who had been marooned for 4 years among the local Indians on the isthmus), the colonists were largely young aristocrats with unrealistic expectations. All their ships but one sank, and over 2,000 colonists perished on land. Scotland had to petition England to pay off its national debt to stabilise their paper currency.
A Scots economist, the so-called “father of finance,” John Law, set up a similar French operation, the Mississippi Scheme. Law was a Scots banker who helped broker the 1707 Act Of Union bail-out, but had fled to France after escaping prison following a duel over a woman. He was the exponent of two economic theories, 'The Scarcity Theory Of Value', and the 'Real Bills Doctrine'. He is credited with the notion each country should have a national bank which could issue its own paper money.
He proposed what he termed a Land bank (which wits of the time called a Sand Bank, suggesting it would sink the ship of state), whereby currency was issued according to crown land-holdings, rather than gold and silver hoards. This appealed to a nearly-bankrupt France, which had exhausted most of its coinage in a series of wars, and Law was appointed Controller-General of Finance by the French regent. Law and his brother set up Law & Co, a bank in all but name, which was awarded exclusive trading rights to the French colonies in the Indies.
To expand this empire, Law set up the Mississippi Scheme to exploit a trading monopoly with the French interests in the Mississippi basin lands. Inspired by the tales of Conquistador gold, the Mississippi stock offer was at first a runaway success. Law and associates talked up the colonies’s potential wealth, leading to massive speculation. Shares rose to over 10,000 livres apiece, and became almost a negotiable currency in themselves. To maintain public confidence, an army of over five thousand beggars was conscripted, equipped with miners’ picks and shovels and marched through the Paris streets towards the ports, supposedly bound for the gold mines of Louisiana – though it was observed most just sold their gear in taverns and returned to begging.
In 1720 Law’s scheme, like all pyramid schemes, became over-inflated. The company was re-organised as the Banque Royale, a mechanism to ease the French exchequer by issuing its own currency. But the Regent could not grasp why he should not keep on issuing paper notes far beyond any tangible assets. To prevent a run on the bank, he had to pass laws to stop people trying to cash in their paper notes for coins. It became illegal to own more than a modest amount of coin, jewellery, precious stones, or even plate, and bounties were paid for servants to turn in their masters for hoarding. Anyone suspected had their homes raided and their assets seized, even for being seen with a single louis d'or coin. Everyday trade collapsed as there was no coin for small purchases. Those with assets remaining who tried to flee were arrested at the border, stripped of any coin or plate, and imprisoned as speculators. Anyone who did escape abroad was sentenced to death in absentia.
Law’s carriage was stoned by the mob, and he fled to England while his brother was put in the Bastille for malversation. (Law would end his life in exile in Venice, where he squandered his personal fortune on his lifelong addiction, gambling, dying impoverished.) The Regent’s attempt to blame Law for his own recklessness did not solve the matter, and many others were charged by a commission of enquiry with malversation. The inflated paper currency was publicly burned, and the Paris treasury issued a new paper currency of modest denomination which was redeemable against gold, silver, or copper coin, leading to a crush in which 15 people died trapped in the bank doors.
The initial success of Law’s scheme had helped inspire England’s Bubble, but the French collapse did not prompt English official action at home. In mid-1720, South Sea Company stocks began to slide from their peak price of £1000 a share. The Sword Blade Company, who acted as chief cashiers of the Company, stopped paying out, and it became known that Sir John Blunt and others had sold out. Other bankers also closed up shop. The ruin of thousands of people followed, beginning with the working class speculators who had bought on credit. Middle-class investors were next, their life savings gone in a week.
Finally even the wealthy suffered, from bankers to bishops. Angry crowds gathered at Westminster, till the Riot Act was proclaimed. The King, George I, lost over £50,000, and his German mistresses, a Countess and a Duchess who had promoted the scheme, were booed in public. There were suicides almost daily as financial ruin spread throughout the country. The Bank of England was called upon to help by subscribing to company bonds, but declined. The South Sea Bubble had burst.
Company directors were spat at in the street and threatened. The treasurer fled in disguise to Calais, and an extradition warrant was issued for his person, but he escaped Belgian custody. A parliamentary ‘Committee of Secrecy’ was formed to investigate, and informed the House they had “discovered a train of the deepest villany and fraud that Hell had ever contrived to ruin a nation.” The Commons ordered the doors locked, and 5 MPs were placed in the custody of Black Rod, including Sir John Blunt. Blunt testified that he couldn’t remember details.
An Act was passed to prevent directors fleeing or sending assets abroad, and to seize the papers of what Tatler co-founder Sir Richard Steele called these "cyphering cits", whose arrogance led to their downfall. The Committee of Secrecy reported the company books, where they were not entirely missing, had pages torn out, contained many fictitious entries, blanks and erasures.
All the directors were arrested and their estates seized to finance a compensatory fund. Blunt alone had £178,000 seized. The Chancellor of the Exchequer was impeached for corruption and put in the Tower for a time. The Secretary of State died after bursting a blood vessel in the Lords defending himself against corruption charges. The Postmaster General died suddenly, poison being suspected. The official Parliamentary History concluded that the Company had amazed all Europe, "but whose foundation, being fraud, illusion, credulity, and infatuation, fell to the ground as soon as the artful management of its directors was discovered."
Walpole, the new Chancellor, divided assignment of the debt between the Bank of England, the Treasury, and the South Sea Company (now effectively nationalised), along with something aptly known as the Sinking Fund. This was a reserve of savings out of the annual Budget to stabilize the currency. Legislation then had to be passed (by Pitt) to stop successive Ministers raiding the fund, and it was decades before The South Sea Company and the Sinking Fund could be safely abandoned, for other economic crises continued to appear, as part of the natural boom-and-bust cycle of capital investment.
... Today of course, things are quite different. Money can be moved electronically, added or subtracted in an instant, with no need for coins or even paper. Plastic is the new gold standard. Collateral such as real estate can be re-mortgaged, the debts repackaged, sold and re-sold abroad. To maintain confidence in the stock market, the Chancellor will quickly intervene to save any bank that gets itself into a mess through mismanagement, no matter how huge the public cost and scandal. The Prevention Of Terrorism Act can be used to seize foreign assets, where there is a perceived danger to British interests.
As to the lessons of the past, many would conclude there is nothing to be learned – or rather, nothing that will be learned.

Who Could Have Known....

2008-11-07T10:44:00.001Z

I was chatting to Manton the other day over a drink, and I said something about how it was a pity that no one could have forseen the collapse in the markets, because if they had, something could have been done to avoid the worst effects of the crash.

He astonished me by pointing out that there were some that had predicted it. He drew my attention to the following article:

Ten People Who Predicted the Financial Meltdown

Of course, as I don't need to tell you, it is troublemakers like these that are actually responsible for talking us into a recession, and that if only they would keep their mouths shut, everything would be fine.

I am relying on you to ensure that their poisonous, seditious nonsense goes no further. Under no circumstances should you allow others to be exposed to such negative thinking.

I know you won't let me down.

In The Heart Of The World

2008-11-01T00:19:00.006Z

We were sitting around the fire in the club lounge the other evening, and the talk turned, inevitably, to exploring, in particular what we used to call the Mysterious East. It has a special appeal for many even today, when the maps have no more blank spaces. For its ancient ways offer a counterpoint to Western capitalism and materialism which is particular appealing when these Western philosophies are shown to be hollow and manipulative in times of economic crisis. In the old days, when Asia’s vast mountainous interior was largely unexplored, its mystery, its lure, stirred many to go off exploring, excited at the prospect of discovering who knows what – Shangri-La, or perhaps the Abominable Snowman. A few were simply drawn to its mysteries like moths to a flame, for reasons they themselves could scarcely articulate, and often either never returned, or returned forever changed.
One of these was a British explorer who came to be called by his biographer “the last great imperial adventurer”. His brash early geographic explorations through the heart of Asia led to him later exploring his own heart for the lessons that might be learned from the ancient wisdom of the East.
Although born in India, he was packed off back to England to be raised by two religious aunts. After attending Clifton College in Bristol, Francis Younghusband joined the Army for the same reason many did at that time – the opportunity for adventure abroad. Inspired by his uncle, a noted explorer of Central Asia, Younghusband became in 1886-7 the first European since Marco Polo to cross China and Asia. The young subaltern travelled through Manchuria to Peking and into Mongolia, crossing the Gobi Desert and the Himalayas to India. For this remarkable feat, the Royal Geographic Society not only gave him a gold medal but elected him as their youngest member, age 24.
He transferred to the Political Service and got involved in what Kipling in his novel Kim would call "The Great Game." This was the contest between Britain and Russia for political control over the lands beyond India’s North-West Frontier. After discovering the source of the river after which India is named and nearly having war with Russia break out when he was reported killed, Younghusband was despatched to Tibet at the head of British military mission.
In 1904, his friend Lord Curzon, Viceroy of India, sent him in to show the flag as part of the political Great Game. There in his zeal, Younghusband exceeded his instructions, leading to the massacre of a Tibetan militia army. In the capital Lhasa, he intimidated the Dalai Lama into signing an impromptu anti-Russian alliance treaty with Britain (later repudiated by an embarrassed Whitehall, which was pretending neutrality). But while his men looted the Potala Palace and the monasteries, his own time in Tibet became the turning point of his life. In the mountains he had a spiritual experience, a mystical revelation about the oneness of humanity and religion, which would change his formerly evangelical-Christian outlook into an Oriental mystical one. (In Whitehall parlance, they called this ‘going native.’)
Although invested with the title of Knight Commander for his “conquest” of Tibet, Sir Francis turned from the sword to the pen, becoming a writer and propagandist for his beliefs. Instead of serving the cause of Empire, he felt he would instead serve the cause of humanity’s spiritual development. During the First World War, he sailed to America with Bertrand Russell to lecture in philosophy. He then commissioned the song which would become Britain’s popular “alternative” anthem, Jerusalem, based on Blake’s mystical verse, but refused to let it be used to promote wartime jingoism. (He even thought the Boy Scouts too militaristic.)
After the war, he became President of the Royal Geographic Society, and organised several reconnaissance expeditions following his 1904 Tibet route, this time right across Tiber to the Chinese border to explore Mt Everest, named after a British official, but known more reverently by Tibetans as Chomo-Lungma, the ‘Mother Goddess Of The World.’ It was on one of these expeditions to the “roof of the world” that two famous colleagues of his failed to return, their fates a mystery, when Mallory and Irvine vanished near the summit in 1924. He himself turned to inner exploration, and became a mystic admired by Bertrand Russell and HG Wells. He explored esoteric ideas like telepathy and the existence of superior extraterrestrial life forms, writing a score of books on spiritualist beliefs which anticipated those of the 1960s, with titles like The Heart Of Nature (1921), Mother World (1924), Life In The Stars (1927), and The Living Universe (1933).
In 1936, he attempted to reduce religious differences by establishing the World Congress of Faiths as war clouds again gathered over Europe and Asia. (His former house-maid Gladys Aylward was caught up in this, she having become a missionary in China just before the Japanese invasion, an event depicted in her filmed biography, The Inn Of the 6th Happiness.) The American aviator Lindbergh, an antiwar activist also interested in matters spiritual after the kidnapping and death of his baby, personally flew him across India, whose independence he long supported. But though he admired Gandhi, he was not entirely ascetic. In fact, he also preached free love, criticizing marriage as an outdated custom. Until his death, he lived with Lady Madeline Lees, who with her husband had co-founded a Christian commune at South Lytchett Manor in Dorset. Having forsaken his wife, he spent part of his last few years with his much younger companion at her manor house on the north side of Poole Harbour. He died at the Manor during WW2, of a stroke.
You can visit his grave in the quiet country churchyard of Lytchett Minster, across the fields from the Manor, next to an ancient yew tree and under a headstone with a carved image of the Dalai Lama’s palace in Lhasa.

Manton's Seppuku Puzzle

2008-10-12T19:40:00.005+01:00

The Diogenes Club was strangely quiet when I walked into the grand entrance hall. As I shrugged off my coat, I noticed through the open doorway that there were far fewer members in the dining room than was normal, and what conversations there were, were somewhat muted. The first chill of winter was in the air, but I didn't think that was the reason for the poor turn out.

"It's quiet today, Henry." I said, as he took my scarf and gloves.

"Indeed, sir."

"Are any of the others here yet?"

"Just Mr Manton, sir. Mr Abrahams and Mr Treworthy have telephoned to say that they may be a little late."

"Did they say why?"

"In Mr Treworthy's case, an emergency board meeting - he indicated that due to some innovative corporate investments in certain European banks, some question marks had arisen over the company's short term cash-flow."

"Hmm. I don't know about you, Henry, but I always get worried when the words 'innovative' and 'investment' crop up in the same sentence."

"Quite so, sir."

"And Mr Abrahams?"

"He didn't say, sir. Your usual drink, sir?"

"Yes please, Henry. And one for Mr Manton."

"Yes sir."

I walked into the warmth of the library. It was just the same, one fixed point in these uncertain times. A warm fire, the walls lined with books, and large armchairs with side tables.

"Hello Manton." I said, as I eased myself into the chair next to him.

"Thank God you're here," said Manton, throwing his newspaper aside with unnecessary venom. "that bloody thing was driving me mad."

"You don't usually have that much trouble with the Times Crossword."

"Oh, I finished that in about fifteen minutes. I was so bored that I was reduced to having a go at one of those bloody Seppuku puzzles."

"I think you mean Sudoku. Seppuku is an act of ritual suicide by cutting open one's stomach, otherwise known as hari-kari."

"I know exactly what I mean. The damn things could be solved by a computer. At least a good crossword has a bit of wit, some...some soul. And you might end up learning a few new words."

Henry arrived with our drinks.

"Cheers, old man." said Manton, gulping down the remains of his existing glass before taking the one that I had bought for him. "No word from Abrahams, Henry?"

"Nothing further, sir."

"Oh well, it looks like it's just you and me today, old boy."

"What about Travis?"

"I don't we'll be seeing him for a while. I suspect that global economic meltdown and the possible end of capitalism might be occupying his time at the moment. Mind you, it's something that will affect us all."

"Yes - it all seems a bit abstract to me, to be honest. I haven't really got any money to speak of. I manage to pay my mortgage and taxes and have a bit left over to buy the occasional book or shiny disk, but that's about all. You don't seem too bothered by it, Manton."

"Oh, it bothers me alright. I'm just not very surprised. I've been waiting for this to happen for the last thirty years."

"What do you mean?"

"Ever since I read one of Galbraith's books. Didn't you have a look at that film that I told you about?"

"The money as debt thing? No, not yet. Been a bit busy."

"Well, it essentially explains what a bank is, and how it creates money."

"I thought Government's created money, in the mint."

"Only a small amount. Most money is created by banks, which, don't forget, are private corporations."

"Yes, but it's backed up by the deposits of the customers, isn't it?"

"No, they just create it out of thin air."

"You're kidding." I laughed, but Manton's face was deadly serious.

"Not at all. The film uses the story of the Goldsmith's Tale, to try and explain how banking got started.
       For a long while, people used all sorts of things as money. Shells, stones, bushels of wheat, pieces of gold. As long as everyone had faith that it could be exchanged for things that people wanted, like food, there was no problem."

"Of course. We learned that sort of thing at school."

"Really - the British education system has clearly improved since my day.
       Anyway, once upon a time, around the fifteenth century, in place like Venice, or Amsterdam or London, there lived a goldsmith. As well as jewellery, he made coins, which people liked because they were a convenient way of carrying around their wealth. Of course, he needed to keep his wares safe, so he built himself a vault.
       Pretty soon. other townspeople were knocking on his door, because they wanted to rent space in his vault so that they could keep their own valuables safe as well.
       The goldsmith was soon renting out all the space in his vault, and making a nice little profit into the bargain. After a few years the goldsmith realised something quite important. People rarely came in to take their gold out of the vault - and if they did, they didn't all do it at the same time. Any idea why?"

I took a sip from my whisky. "No, not really."

"It was because every time someone deposited some gold in his vault, the goldsmith had given them a receipt. A paper claim note that they could use to claim back their gold."

"And the paper claim notes were being used in the market place to buy and sell things, as if they were the gold itself." I exclaimed, triumphantly.

"Exactly. Bank notes. Paper money. It was quite a radical idea."

"And so that is why a bank note 'promises to pay the bearer on demand'."

"Yes - notice that it doesn't say what they will pay you in, though."

I got a fiver out of my wallet, and studied it carefully. "No, you're right. I suppose I had always assumed they would give you... I don't know, gold coins, or something."

"I'm afraid things have moved on since then. You see, the goldsmith decided to start up a new business. He decided to lend out his gold to people who needed it, in return for a payment, which he called interest. The longer you wanted to borrow some of his gold for, the more interest you had to pay. Because his paper claim notes were in such widespread use, people asked for their loans to be paid to them in claim notes, instead of the actual gold."

"Well, that doesn't seem to bad."

"No, I agree. But, as the country got richer, and industry expanded, more and more people started to ask the goldsmith for loans, and this is when he had another brainwave. Because hardly any of his depositors ever asked for their gold back, he decided to make loans based on their gold, as well as his own."

"Hang on, that's a bit cheeky. Did he ask for their permission?"

"Well, not as such. After all, as long as the loans were always repaid, the depositors would be none the wiser, and no worse off. And he would make a much larger profit than he would otherwise be able to with just his own gold."

"I know, but he's taking a bit of a risk."

"Well, as they are always saying on the news, the economy grows because of risk takers. The spirit of the entrepreneur and all that." Manton took a mouthful from his glass. "At least, they used to. You only get the occasional hedge fund manager with a death wish saying it now."

"So what happened next?"

"The goldsmith grew hugely wealthy, far more than his fellow townsmen. You know the sort of thing. Several villas, each with their own retinue of servants, and a holiday home at the coast. His own private yacht. A huge collection of carriages, and horses to pull them. The finest clothes."

"But... he wasn't really doing anything, was he. Not really."

"Funnily enough, that's what the other townspeople thought. Rumours grew that he was actually spending his depositors' gold. One day, they turned up at his vault and threatened to withdraw their gold unless he told them where his wealth was coming from.
       He showed them the vault and they could see that their gold was still safe - but they still weren't satisfied, so he told them that he had been making loans based on their gold as well as his own. They demanded a cut of the action, and so the goldsmith agreed to pay them a share of the interest that he was earning on the loans based on their gold."

"Well, that does seem fairer. After all it's their gold."

"Indeed. And that was how banks started. The bank would make loans which were guaranteed by the depositors' gold that was held in the vaults, and charge a high interest to the lender. Instead of being able to pocket all of that interest, the goldsmith now had to pay some of it on to the depositors whose gold he was looking after, but he paid them a lower rate of interest, and used the difference to pay for the costs of running his bank - which obviously included his own salary. And the occasional bonus."

"Well, villas in the south of France don't pay for themselves, Manton."

"How true, how true. Those are very wise words." He looked at his empty glass. "I think it's my round isn't it? HENRY!"

As Henry brought the drinks over, I thought about what Manton had said.

"That's all very well, but none of this really explains what is going on at the moment."

"Well, I haven't finished yet. You see, most people think that this is how the banks operate today. That they make loans, based on their depositors' money, for which they charge high interest rates, and pass on some of the interest to their depositors. But the goldsmith - actually, I think we had better start calling him a banker now - the banker had another brainwave."

"I'm starting to get a bad feeling every time that happens."

"You see, the banker wasn't content with the amount of interest that was left after he had paid off his depositors - and the need for credit was growing - great expeditions were being sent out to explore the recently discovered continent of America, and there was much growth in new industries. There wasn't enough money available for everyone that wanted some."

"Why not?"

"Because it was tied to the amount of gold in the banker's vaults. Whether it was his gold or his depositors gold, there was still only a fixed amount."

"So what did he do?"

"It was a stroke of genius. Because he was the only person who knew how much gold was actually inside the vault, and because he knew that his depositors would never want to withdraw all of the gold at the same time, he realised that he could issue claim notes on gold that didn't even exist!
       So long as he didn't get too many people wishing to claim back their gold at any one time, how would anyone ever find out?"

"What!?" I spluttered, whisky spilling over my waistcoat as I tried to stop choking.

"I know, it's breathtaking isn't it."

"He can't do that! It's illegal. It's .... it's..... how can he do that? It's outrageous!"

"That's precisely why the scheme worked - and rather well, as it turned out. Needless to say, the banker became even more incredibly wealthy than he already was."

"I'm not surprised. It's one thing to get interest for loaning out his own gold, or even his depositors gold, but making interest for loaning out gold that doesn't actually exist.... of course, he doesn't have to pass on any of that interest to despositors, does he. Because the gold doesn't exist, the depositors don't exist."

"Precisely."

"It's a damn sight more risky now, though. Not only might he have to pay out his own gold, or even his depositors gold - he might have to pay out gold that he doesn't have. That he has never had."

"But people hardly ever want to claim their gold - certainly not at the same time. Well, not usually."

"Well, if I had been him, I would have been bloody careful not to draw attention to myself. He'd have to scale back on his ostentatious spending - if anyone suspected foul play and called his bluff, the whole thing would come crashing down."

"Yes, you'd think so. For a long time the idea that the banker was creating money out of nothing was so outrageous, it did not occur to people that this might be what was going on.
       Of course, the power to just invent money went to the bankers head, as you can well imagine. He just bought more 500 room mansions, art collections and so on. He would spend, on one suit of clothes, what another person might spend on food in an entire year."

"But didn't he see how dangerous that was - if only out of a sense of self-preservation?"

"It seems not. Of course, the inevitable happened, and in time, the bankers ostentatious wealth triggered suspicions amongst the townspeople once again.
       Some borrowers started to demand real gold, instead of paper claim notes, when they took out their loans. More rumours spread.
       Suddenly, several wealthy depositors turned up to withdraw their gold. The game was up. A sea of claim cheque holders surrounded the bank, all wanting to get their gold out. The banker had to close the bank because, of course, he didn't have enough gold in his vaults to redeem all of the paper claim notes that he had put into circulation."

"And people realised that their paper claim notes were worthless."

"It was the first run on a bank. It is what every banker dreads. Not just because it can ruin an individual bank, but more importantly, because it shakes confidence in the very idea of a bank."

"Yes, but after this run happened, everyone could see how dangerous it was. I mean, the government must have outlawed the practice of creating money out of absolutely nothing. It's just plain madness. It's never a good idea to live beyond your means."

"Well the government could have done that. Unfortunately, the large amounts of credit that the banks were offering had become essential to the success of European commercial expansion - and also essential to the political success of whoever was running the country at the time. You wouldn't last long in power if your opponents could promise to make the country more wealthy than you.
       So instead, the practice was legalised, and regulated. Bankers agreed to abide by limits on the amount of fictional loan money that could be lent out. The limit would still be much larger than the amount of actual gold and silver in the vault though. Usually the limit was 9 to 1. The bank agreed to only lend out 9 dollars for every 1 dollar of gold that they had in their vault."

"And the government trusted them?"

"No, the rules were enforced by having surprise inspections of banks. It was also arranged that every country would have a central bank. If a local bank experienced a bank run, the central bank would support it by sending it extra consignments of gold to enable them to pay their depositors."

"And that's what the Bank of England does here, and the Federal Reserve Bank in America?"

"Got it in one. The central bank is the lender of last resort.
       As I've said, it was very unlikely that all the depositors would wish to withdraw all of their funds at the same time, unless the bankers did something incredibly stupid, like accumulating enough wealth to make even King Midas himself blush.
       And it was even more unlikely that all of the local banks would need extra reserves from the central bank at the same time, unless they did something even more incredibly moronic like spending lots of money on 'financial packages' based on the American mortgage market when they have no idea of how much risk is tied up in them."

"That wouldn't just bring one bank down, would it - that would bring all the banks down. Including the central bank."

"That's right."

I sat quietly and thought for a while. The logs crackled in the grate, interrupted only by the slow, regular sound of the Grandfather clock.

"I think I'll get very, very drunk tonight."

"Capital idea, old man. I usually end up thinking I'll get very, very drunk every night, but that's mostly due to my ex-wife. Mind if I join you?"

"The more the merrier." I finished off my glass, flinching as it hit the back of my throat. "So is that how the system operates now?"

"No, not quite. It's even more terrifyingly divorced from reality now, but I think we need to have considerably more pure malt whisky inside us before I go on, or you'll never believe me."

At that moment, Abrahams came into the room waving a newspaper. "Have you heard?"

"My God, Abrahams, where did you spring from?" said Manton, trying to not to spill any more of his whisky.

"It's completely unprecedented. Unheard of."

"What is? What the devil are you talking about?" said Manton.

"It says here, the US Treasury Department, for the first time in its history, is to begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs. Treasury officials said the action did not mean that the Fed was running short of cash, but simply was a way for the government to better manage its financing needs."

"Manton," I said, "you said the central bank is the lender of last resort. That's what is stopping the whole thing from collapsing. If they need to borrow from someone else...."

"HENRY! Bring the bottle. It's going to be a long night."

What is Money?

2008-10-03T18:44:00.002+01:00

The other day, a fellow Diogenerian, a wise and learned man, asked me a question:

What is money?

It is a question that has arisen amongst fellow members before, as detailed here.

Like all good questions, it is very simple.

The answer, it would appear, is also simple.

Money is debt. And more importantly, debt is money.

And before you ask, that isn't one of the quotes that George Orwell attached to the walls of the Ministry of Truth - it is the message put forward by this film, which has been split up into 5 ten minute clips.

http://www.youtube.com/watch?v=ThXpjmfyiMQ
http://www.youtube.com/watch?v=sanOXoWl0kc
http://www.youtube.com/watch?v=kTv1fo6sKmo
http://www.youtube.com/watch?v=3qicabStQkc
http://www.youtube.com/watch?v=7kpSbkaD4tM

I should warn you that it has clearly been made by some left-wing lunatic - witness the cheap, cartoon-like graphics - and furthermore, someone who doesn't understand the extremely complex nature of the global economic system, which is monitored and controlled by extremely intelligent men and women, who deserve every penny of the extremely large salaries and bonuses that they receive.

I will say that it summarises my understanding of the global money markets, arrived at after many years of thought.

I don't really want it to be true, so if anyone who is more knowledgeable in these matters can point out the logical flaws in the arguments put forward, I would be extremely grateful.

Going, Going, Gone!

2008-10-02T18:18:00.002+01:00

Another extract from Robert Peston's blog on the BBC website:

And now for the complicated and scary stuff. Today is the beginning of "auction season", when the International Swaps and Derivatives Association starts a series of auctions to settle who pays what to whom on a plethora of credit derivative contracts relating to businesses that have gone into default.

It's settlement time on those humungous insurance policies for corporate debt, called credit default swaps. [...]

In the coming three weeks, payouts of hundreds of billions of dollars may be made - or at least demanded - to cover losses arising from the defaults on the debt of Fannie Mae, Freddie Mac, Lehman and Washington Mutual. [...]

Now the problem here is that for every beneficiary of these payments, there's an underwriter - those who provided the CDS insurance - which has to find the cash.

I'm sure that there is no need to worry about the fact that this was a largely unregulated market.

Regulators just get in the way, with their fussing around, needlessly checking up on trivial things like: "Has the underwriter actually got enough money to pay out on all the claims that may be made upon it?"

And if those companies should find out that their insurance policies are worthless, well, it's not the end of the world.

Indeed, the really clever ones will not only have an insurance policy to protect them from their customers defaulting on their debts, they will have another insurance policy to compensate them in the unlikely event that their first insurance policy proves to be worthless.

And the really, REALLY clever ones will have yet another insurance policy to protect them from the even more unlikely event that THAT insurance policy should fail.

And so on. And on.

So the chances of actually having to pay out on THOSE insurance policies are so incredibly remote, it makes perfect sense to take on as much of that business as you can, because you will never have to pay out on it. There's no need to have any capital in reserve, because it will never be needed. You could, instead, pay it as bonuses to your executives. It's a licence to make money. People just pay you to do nothing.

Of course, you are in trouble if there IS a claim, because you can't pay it - which means that the next company won't be able to pay out on their (bigger) claim, which means that the next company won't be able to pay out on their (even bigger) claim.

And so on. And on.

Which means that a lot of companies might find out they have got less money than they think they have.

But that's ok.

They should be getting used to that by now.

What Was The Derivatives Market, Daddy?

2008-10-01T08:11:00.004+01:00

As I have mentioned in previous entries, it is important, in these times of financial crisis, that we don't give in to gloom and despondency.

An article has come to my attention that starts with the following paragraph:

While it may look superficially similar to the recent implosions of such investment giants as Fannie Mae, Freddie Mac and Lehman, the takeover and bailout of AIG is quite different, and means that the market is entering the next and even more dangerous phase. What is driving the fall of AIG – and potential government losses that may far, far exceed the $85 billion bailout announced late on September 16th - is not mortgages or real estate (directly), but fears that AIG’s huge, global credit-default swap positions will unravel. The $62 trillion dollar credit derivatives market is 50 times the size of the subprime mortgage derivatives market, and is indeed larger than the entire global economy.

I feel that the last sentence is unnecessarily inflamatory, and I would urge everyone to make sure that they do not read the article

http://www.financialsense.com/fsu/editorials/amerman/2008/0917.html

under any circumstances, as it provides a clear explanation of the derivatives market, and so could create panic and despondency amongst the general populace.

And whatever you do, don't let your wives, children or servants read it either. These things are far to complex for them to understand, and there is no need to worry them unnecessarily.

I know you won't let me down.

A Case Of ‘Bloggins’

2008-09-28T01:57:00.004+01:00

We were sitting around discussing Britain’s chances in the next Olympics when young Pinker suddenly asked, “I say, whatever happened to H--- , haven’t seen him for ages.”
“Went gallivanting off abroad. Said he wasn’t allowed to tell anyone where he was going. Probably too embarrassed to come back now, or banged up in some hellhole. Another case of ‘Bloggins,’ I’m afraid,” said Moreton.
“Bloggins? What’s that? Is it like Parkinson’s?” asked Pinker.
There was a slightly embarrassed silence, then finally Moreton explained, “Not exactly, more a type of mania I suppose. Well, I better tell you the story. For a start, ‘Fred Bloggins’ wasn’t his real name. It was a matter of “pas devant les domestiques.” We used a – what do you call it – a pseudonym when talking about it to spare the feelings of his mother, who worked here in the kitchen for many years after her husband died young, prematurely worn out from his time in trade. You may recall her duck a l’orange at Christmas. And of course her plum puddings were magnificent.”
“Hear hear!” said old Ferraby, but Moreton, who didn’t suffer fools gladly, just gave him one of his looks.
“Bloggins’s undoing was reading too many spy stories, for he had an overactive imagination, and he would sit up half the night, convinced they were based on fact, and that everyone was either one of our agents, or a foreign spy. He said he just knew the Club had been set up as a front for the Secret Service. It simply didn’t register with him that it would be overly obvious, and unnecessary (there being already many other clubs with members involved with foreign travel and exploration). He had joined because he had heard nobody was allowed to talk on Club premises, and he thought, Aha, that must be to stop anyone revealing secrets!
“He soon found out the silence rule had only applied to the front lounge when it became an extension to the Club library, holding the latest periodicals. But he would sidle up to some group having a quiet conversation in one of the back rooms, and try to insinuate himself into it. When that got him nothing but the cold shoulder, he decided everyone was talking in a secret code he hadn’t been initiated into yet. The fact that to preserve confidentiality, every member has a Club name taken from myth or literature didn’t help. He was convinced these Club membership names were Secret Service agent code names.
“Above all he craved “action.” He would propose expeditions abroad, saying it just wasn’t good enough, all these fellows sitting around when the world was going to hell in a handbasket. “Look at these newspaper headlines,” he would say, “China, Africa, Asia. Time to get out there and set the world to rights, just like Diogenes would have done.” He was told that if he had bothered to do any research, he would learn Diogenes did no such thing, and spurned politics. Also, the Club could not finance such expeditions. Engaging in political activity was against the Club’s charter, its viability depending on the tax deductions it got as a registered charity.
So he changed tack and began trying to get himself included in others’ plans to go on archaeological field trips abroad and the like. “I know what really goes on,” he would say, tapping the side of his nose. This approach gave some the wrong idea. As Ellis delicately put it, “Well, he’s certainly not sharing a tent with me.”
“He would puff himself up and lecture the others on their lack of moral character. “You chaps can waste your life away lazing about,” he would say, “me, I’m made of sterner stuff. There comes a time a real man needs to stand up and be counted. Of course, you need someone to show you the way, give you the idea, that’s my role.” Other members began avoiding him, not wanting to listen to what Simons called this pious piffle. Someone gave him a copy of Don Quixote for Christmas, but he didn’t get it, and was seen underlining key words looking for the secret code.
“It was now obvious he was so naïve he’d believe anything as long he could see evidence of a vast conspiracy – you know, “people in low places, people in high places, their names would astound you” – that sort of thing. It was only a matter of time before someone saw an opportunity to exploit his mania for their own ends. No-one wanted to play Sancho Panza to his Don Quixote, but Carstairs thought Bloggins himself would make a useful Sancho Panza in some convenient cause.
Carstairs was what they euphemistically refer to as “Foreign Office.” There’s someone like that in every Club, dues paid by the Foreign or Home Office, to keep a weather eye on members. Carstairs took him aside one day and told him tales that had Bloggins’s hair standing on end. After that, at least he clammed up. But soon he was hinting he was going abroad. “Hush-hush, can’t talk about it,” he would tell everybody who would listen, “the walls have ears, you know. They have spies everywhere. No one is above suspicion.” And with that, he went.
“The following year the Secretary received a letter from the Consul in some remote flybitten hellhole. Bloggins had lost his papers, but claimed he worked for “a certain department in Whitehall.” He gave his address as the Club, and said they knew all about it. The Club Secretary replied he was certainly not there on Club business. The Foreign Office naturally denied all knowledge of his presence in the country. Details were few, but apparently he had tried to organise an uprising against the big American mining company there. He had told the locals they were being enslaved and should fight to be free, like Englishmen. He had made speeches that managed to offend everyone. “Like a bull in a china shop,” the Consul wrote.

“After one especially insensitive speech about the locals’ treatment of women, there was a riot, and he had to flee over the border. There was a woman behind this of course. “Cherchez la femme,” as Carstairs would say. Bloggins had met this native girl who wanted him to take her back to England with him. She had helped him across the frontier, and he had promised to marry her and make her an English lady. Complications had ensued when it emerged she was only about thirteen. He then said he wanted to adopt her, and she could stay with him in Streatham, where he had a small flat. “I’m going to save her soul,” he said.
“But the local missionaries weren’t having any of that, and sent her back to her family. He himself had malaria and goodness knows what else, and couldn’t travel. But one day he disappeared from the mission hospital, and it emerged he had hitched a lift on a mission supply lorry and crossed the border again. Looking for the girl of course. Said he wanted to save her from a life of servitude. “I’m on a mission too,” he told the local church mission driver, “You see, I can teach her modern western ways, enlighten the poor benighted thing.”
“But he didn’t speak the local lingo, and just wandered about lost in a wretched state, pestering the locals, until he was arrested and accused of being a British spy and agent provocateur. He cracked up totally at this and began laughing hysterically. “The Foreign Office will tell you they’ve never even heard of me,” he laughed. “And as for the church, well, you know the Bible is really written in code, but it’s all been covered up,” he added knowingly. They soon decided he was one of those harmless cranks who waste police time with their attention-seeking behaviour, and despatched him to the mission-run sanatorium.
“Then one day two years on, he turned up again, having staggered off a tramp steamer at Southampton. On his return, he found he had been reported killed, declared legally dead, and was now homeless and penniless. Too proud to turn to his widowed mother for help, he ended up living in the park. He had a sort of shelter there in the bushes, and each morning would scavenge food scraps thrown out by the hotel across the way. It was ironic that finally here he was doing something in the style of the original Diogenes. We saw him less and less, until one day he was just gone for good. He would never talk about what happened in any case. “Mum’s the word,” was all he would ever say, tapping the side of his nose and smiling.