ROGER FEDERER
Roger Federer is one of the all-time great sportsmen. He holds the record for the most victories in the four major tennis championships (Australian, French and U.S. Opens, plus Wimbledon), and is one of only a few players in history to have won all four. He is also charming, elegant, tenacious and brilliant. I am a huge fan.
So, it was somewhat of a surprise that he lost this afternoon to the Czech Tomas Berdych in the quarter finals at Wimbledon. Federer hasn't been at his best this tournament; and Berdych played out of his skin. But that didn't make the defeat any less painful.
For me, that is. It was so painful that I immediately had to go out for a cycle ride. Which lost me a few pounds, but didn't make me feel any better. And I couldn't even console myself with Roger's winnings.
Walter Blotscher
Wednesday 30 June 2010
Tuesday 29 June 2010
THE RULE OF LAW (AND THE IRAQ WAR, AGAIN, AGAIN .....)
If you haven't read the Rule of Law by the English judge Thomas Bingham, then I highly recommend that you do.
Lord Bingham of Cornhill, to give him his full name, was the first person ever to hold the three offices of Master of the Rolls (head of the civil division of the Court of Appeal), Lord Chief Justice (head of the criminal division of the Court of Appeal) and Senior Law Lord (head of the court of final appeal). In the last job, he was the first to be appointed as such from the start, instead of - as the title suggests - being promoted on seniority. He ran the Appellate Committee of the House of Lords, its formal title, for most of the noughties, until he retired in 2008.
In a short book, Lord Bingham teases out the practical meaning of what is often a platitudinous phrase beloved of politicians. He then goes on to consider its effect in two practical situations; the possible conflict with the uniquely British concept of the Sovereignty of Parliament, and the difficulties of maintaining the rule of law in the face of international terrorism and in the absence of a world government or court system. He had to deal with both of these issues when in the House of Lords, and his measured judgments in key cases dealing with the legality of the Parliament Act, the use of control orders, and the admissibility of evidence obtained under torture, repay careful reading. He also saw, much earlier than most, the effect that the Human Rights Act would have on the development of English law.
Along the way, he leaves the reader in no doubt whatsoever that he believes that the Iraq War was illegal. This is relevant, since at the time of the invasion, he was the United Kingdom's most senior judge. The decision to go to war was taken by the House of Commons; and so, under the concept of the Sovereignty of Parliament, cannot be challenged in the domestic courts. Nevetheless, the decision was made on the recommendation of the Cabinet, following formal legal advice submitted by the Attorney General (the Government's in-house lawyer). We now know that Lord Goldsmith changed his mind on the issue, and went against the views of other Government lawyers, notably those in the Foreign Office. Lord Bingham has now made it clear in public, that if his court had been asked to rule on the point, then he at least would have said no.
The Iraq Inquiry, having taken a time-out during the election campaign, is now back in business. One of its peculiarities, given the seriousness of the issues involved, is that none of its five members is a lawyer. One can't help feeling that if Lord Bingham had been appointed to the inquiry team, then Lord Goldsmith - and even Tony Blair - would have had a much more uncomfortable ride in giving evidence than they did. If the committee members haven't yet read the Rule of Law, then the secretariat should quickly make it required reading.
Walter Blotscher
If you haven't read the Rule of Law by the English judge Thomas Bingham, then I highly recommend that you do.
Lord Bingham of Cornhill, to give him his full name, was the first person ever to hold the three offices of Master of the Rolls (head of the civil division of the Court of Appeal), Lord Chief Justice (head of the criminal division of the Court of Appeal) and Senior Law Lord (head of the court of final appeal). In the last job, he was the first to be appointed as such from the start, instead of - as the title suggests - being promoted on seniority. He ran the Appellate Committee of the House of Lords, its formal title, for most of the noughties, until he retired in 2008.
In a short book, Lord Bingham teases out the practical meaning of what is often a platitudinous phrase beloved of politicians. He then goes on to consider its effect in two practical situations; the possible conflict with the uniquely British concept of the Sovereignty of Parliament, and the difficulties of maintaining the rule of law in the face of international terrorism and in the absence of a world government or court system. He had to deal with both of these issues when in the House of Lords, and his measured judgments in key cases dealing with the legality of the Parliament Act, the use of control orders, and the admissibility of evidence obtained under torture, repay careful reading. He also saw, much earlier than most, the effect that the Human Rights Act would have on the development of English law.
Along the way, he leaves the reader in no doubt whatsoever that he believes that the Iraq War was illegal. This is relevant, since at the time of the invasion, he was the United Kingdom's most senior judge. The decision to go to war was taken by the House of Commons; and so, under the concept of the Sovereignty of Parliament, cannot be challenged in the domestic courts. Nevetheless, the decision was made on the recommendation of the Cabinet, following formal legal advice submitted by the Attorney General (the Government's in-house lawyer). We now know that Lord Goldsmith changed his mind on the issue, and went against the views of other Government lawyers, notably those in the Foreign Office. Lord Bingham has now made it clear in public, that if his court had been asked to rule on the point, then he at least would have said no.
The Iraq Inquiry, having taken a time-out during the election campaign, is now back in business. One of its peculiarities, given the seriousness of the issues involved, is that none of its five members is a lawyer. One can't help feeling that if Lord Bingham had been appointed to the inquiry team, then Lord Goldsmith - and even Tony Blair - would have had a much more uncomfortable ride in giving evidence than they did. If the committee members haven't yet read the Rule of Law, then the secretariat should quickly make it required reading.
Walter Blotscher
Monday 28 June 2010
WEARING WELL
Over the weekend my wife and I went to a "100 years" birthday party, the Danish name given to an event where a couple both turn 50.
I wore the same suit that I got married in. A fawn, lightweight tropical number that I had made in Thailand when I was on a business trip there in 1991. Ideal for what was a pretty hot day.
As James Michelsberg would appreciate, good tailoring lasts.
Walter Blotscher
Over the weekend my wife and I went to a "100 years" birthday party, the Danish name given to an event where a couple both turn 50.
I wore the same suit that I got married in. A fawn, lightweight tropical number that I had made in Thailand when I was on a business trip there in 1991. Ideal for what was a pretty hot day.
As James Michelsberg would appreciate, good tailoring lasts.
Walter Blotscher
Sunday 27 June 2010
ENGLAND v. GERMANY
Ugh! What more can one say about England's dismal performance in their 4-1 defeat today by Germany in the last 16 of the World Cup? In my piece on Theo Walcott (11/6/10) I said that I doubted that England would make the quarter finals; they proved me right in decisive fashion.
My son brought home the Daily Express from England on Friday. It had a double page feature with 17 xenophobic reasons why "we're the best". They included Cheryl Cole, Margaret Thatcher, fish and chips, and the bulldog. Playing good football was - surprise, surprise - not on the list.
Oh well, at least Wimbledon still has a week to go ...
Walter Blotscher
Ugh! What more can one say about England's dismal performance in their 4-1 defeat today by Germany in the last 16 of the World Cup? In my piece on Theo Walcott (11/6/10) I said that I doubted that England would make the quarter finals; they proved me right in decisive fashion.
My son brought home the Daily Express from England on Friday. It had a double page feature with 17 xenophobic reasons why "we're the best". They included Cheryl Cole, Margaret Thatcher, fish and chips, and the bulldog. Playing good football was - surprise, surprise - not on the list.
Oh well, at least Wimbledon still has a week to go ...
Walter Blotscher
Friday 25 June 2010
THE MICHELSBERG TAILORING BLOG
The eagle-eyed amongst you will have noted that one of the blogs that I follow is the Michelsberg Tailoring Blog. The curious will even have had a look at it.
I have never met James Michelsberg. I came across him some years ago, since I am part of a business network and we had a mutual contact. I gave him a couple of suggestions for his business and made a mental note that the next time I ever buy a hand-made suit, then it would be from him.
In 2007, he sent me an E-Mail telling me that he was setting up a blog on his website. Not knowing at that time what a blog was, really, I did nothing. Three years later, in January this year, I set up my own blog. A month or so after that, I was idly culling my E-Mail inbox when I came across his earlier E-Mail. By now a fully paid-up member of the blogosphere, I decided to have a look.
And got hooked. I love his blog. It's an insight to a niche world of which I have absolutely no knowledge or experience. I learn words I have never heard of before, see pictures of production processes I can't describe and finished products that I can't afford to buy, and get a feel for what it must be like to work in that milieu.
Yes, it is nerdy and geeky, and more than a little offbeat. But what shines through the words is his absolute love and passion for the subject; he is a true bespoke tailoring nut. And that's infectious.
I just wish he wrote more often than once or twice a month.
Walter Blotscher
The eagle-eyed amongst you will have noted that one of the blogs that I follow is the Michelsberg Tailoring Blog. The curious will even have had a look at it.
I have never met James Michelsberg. I came across him some years ago, since I am part of a business network and we had a mutual contact. I gave him a couple of suggestions for his business and made a mental note that the next time I ever buy a hand-made suit, then it would be from him.
In 2007, he sent me an E-Mail telling me that he was setting up a blog on his website. Not knowing at that time what a blog was, really, I did nothing. Three years later, in January this year, I set up my own blog. A month or so after that, I was idly culling my E-Mail inbox when I came across his earlier E-Mail. By now a fully paid-up member of the blogosphere, I decided to have a look.
And got hooked. I love his blog. It's an insight to a niche world of which I have absolutely no knowledge or experience. I learn words I have never heard of before, see pictures of production processes I can't describe and finished products that I can't afford to buy, and get a feel for what it must be like to work in that milieu.
Yes, it is nerdy and geeky, and more than a little offbeat. But what shines through the words is his absolute love and passion for the subject; he is a true bespoke tailoring nut. And that's infectious.
I just wish he wrote more often than once or twice a month.
Walter Blotscher
Thursday 24 June 2010
THE PRESIDENT AND THE GENERAL
Was it really such a good idea for President Obama to sack General Stanley McChrystal, the architect and implementer of the U.S.A.'s (and NATO's) plan to pacify Afghanistan? I am not sure that it was. True, it was unfortunate - to put it mildly - that the general and his subordinate officers said a whole lot of disparaging things about the President (and other senior politicians), while an embedded journalist from Rolling Stone magazine was in hearing. But underlings are always saying disparaging things about their superiors, whether it be in a company, another organisation, the Army, a family, or even the country. Having millions of people not only think that you are a complete jerk, but saying and writing it every day under the protection of the Constitution, goes with occupation of the Oval Office.
I accept that in America the position is complicated by the fact that the Head of the Executive Branch - unusually amongst democracies - is also formally Commander in Chief of the Armed Forces. This can create problems in time of war, since, with notable exceptions such as Eisenhower and Grant, Presidents tend not to have much, or even any, military experience. Soldiers, more than anyone, are supposed to be loyal to the chain of command. That must be tough if you think that the politicians don't know much, and are far away from getting hurt.
General McChrystal is by all accounts a first rate soldier. So is his replacement, General David Petraeus, the man who led the coalition forces in Iraq, was the architect of the "surge" there, and ended up as General McChrystal's immediate superior. As such, he will obviously know all about the military plans for the country. But he won't have - or, at least, not for some time - General McChrystal's political contacts and personal relations in Afghanistan, built up over the past year while in post. He may also have to deal with possible personnel difficulties, if subordinates think that General McChrystal has got a raw deal.
To my mind, the whole episode smacks of President Obama's trying to show, a little bit too hard, that he is in charge. He has got problems at the moment; an oil well in Louisiana remains uncapped, Afghanistan is not going well, and his approval ratings are sliding. However, it is not a general's criticism that is losing him approval, but what Harold MacMillan, a former British Prime Minister, is supposed to have said, namely "events, dear boy, events". For my part, I would have hauled General McChrystal over the coals, and told the world's press, with the general standing beside him, "I kicked his ass, told him not to speak to journalists, and ordered him to get on with prosecuting the war". Sometimes, less can be more.
Walter Blotscher
Was it really such a good idea for President Obama to sack General Stanley McChrystal, the architect and implementer of the U.S.A.'s (and NATO's) plan to pacify Afghanistan? I am not sure that it was. True, it was unfortunate - to put it mildly - that the general and his subordinate officers said a whole lot of disparaging things about the President (and other senior politicians), while an embedded journalist from Rolling Stone magazine was in hearing. But underlings are always saying disparaging things about their superiors, whether it be in a company, another organisation, the Army, a family, or even the country. Having millions of people not only think that you are a complete jerk, but saying and writing it every day under the protection of the Constitution, goes with occupation of the Oval Office.
I accept that in America the position is complicated by the fact that the Head of the Executive Branch - unusually amongst democracies - is also formally Commander in Chief of the Armed Forces. This can create problems in time of war, since, with notable exceptions such as Eisenhower and Grant, Presidents tend not to have much, or even any, military experience. Soldiers, more than anyone, are supposed to be loyal to the chain of command. That must be tough if you think that the politicians don't know much, and are far away from getting hurt.
General McChrystal is by all accounts a first rate soldier. So is his replacement, General David Petraeus, the man who led the coalition forces in Iraq, was the architect of the "surge" there, and ended up as General McChrystal's immediate superior. As such, he will obviously know all about the military plans for the country. But he won't have - or, at least, not for some time - General McChrystal's political contacts and personal relations in Afghanistan, built up over the past year while in post. He may also have to deal with possible personnel difficulties, if subordinates think that General McChrystal has got a raw deal.
To my mind, the whole episode smacks of President Obama's trying to show, a little bit too hard, that he is in charge. He has got problems at the moment; an oil well in Louisiana remains uncapped, Afghanistan is not going well, and his approval ratings are sliding. However, it is not a general's criticism that is losing him approval, but what Harold MacMillan, a former British Prime Minister, is supposed to have said, namely "events, dear boy, events". For my part, I would have hauled General McChrystal over the coals, and told the world's press, with the general standing beside him, "I kicked his ass, told him not to speak to journalists, and ordered him to get on with prosecuting the war". Sometimes, less can be more.
Walter Blotscher
Wednesday 23 June 2010
CATHERINE THE GREAT
Born in May 1729 in a merchant's house in Stettin (then German but now Polish), Sophie Auguste Friderike of Anhalt-Zerbst was the eldest daughter of the Prince of an insignificant cadet branch of the German House of Anstalt, who was forced to take service as a general in the service of the King of Prussia in order to make ends meet. By dint of a pushy mother, an advantageous marriage to the heir to the Russian Empire, his subsequent accession and murder, and - not least - her own indomitable force of character, she ended her days in November 1796 as Yekaterina Alekseyevna, the most serene and all-powerful Princess and lady, Catherine II, Empress and Autocrat of all the Russias. History knows her more simply as Catherine the Great.
The 18th century was a good age for female Russian rulers. Between the death of Peter the Great in 1725 and the murder of Catherine's own son Paul in 1801, there were no less than four Empresses; Peter's widow Catherine (1725-7), his niece Anna (1730-40), his daughter Elizabeth (1741-61), and the wife of his grandson, Catherine the Great (1762-96), all of whom died peacefully on the throne. The only times that men got a look in were in 1727-30, 1740-41, 1761-62 and 1796-1801, and their respective fates were death from smallpox, incarceration followed by murder, murder and murder. Not until the accession of Catherine's grandson Alexander I in 1801 did the Romanov dynasty acquire a stable succession in the male line. Yet despite that, Russia's already vast size continued to grow steadily during the century, with the acquisition of the Crimea and northern Black Sea coast, what is now Eastern Finland, Estonia and Latvia, and the greater part of Poland, which was casually partitioned between Russia, Prussia and Austria in three bites, in 1772, 1793 and 1795.
Legend has it that Catherine was a nymphomaniac. Although the wilder rumours that she gradually worked her way through her own personal Guards regiment, and even a horse, can be discounted, it is certainly true that she had lovers even in the early days of her marriage to the future Peter III, by all accounts a very unattractive man. Even after he had been conveniently bumped off and she was crowned Empress at the age of 33, she continued to have an active, if not voracious, sex life, taking a series of "favourites", ever more younger than her, until the end (her last, Platon Zubov, was 22 when she was 60). When these relationships ended, as they invariably did, she treated the men kindly, generously even. Though never at the expense of realpolitik. Count Stanislaw Poniatowski was one of her earliest lovers, whom she helped to get elected as the last King of Poland in 1764 with the aid of Russian troops. But that did not stop her dismembering his kingdom thirty years later (though she allowed him to live in exile in St. Petersburg and gave him a pension).
Although Catherine had to convert to Orthodoxy on her marriage and was assiduous in promoting Russian interests, she remained throughout her life a product of the German enlightenment, dedicated to order and rationality. Her natural language was French, then the lingua franca of European diplomacy, she was a correspondent of Voltaire and Diderot (and eventually purchased the latter's library), she was influenced by the political philosophy of Montesquieu, which she tried to incorporate in her great project to codify Russian law, and her court buildings and ritual borrowed heavily from those of France and the larger German states. She even believed in freeing the serfs; though that didn't happen in Russia until the 1860's.
That it didn't is testimony to the difficulties she faced. Despite an iron will, and the advantages of autocracy, ruling the vastness of Russia was like dealing with a huge, soggy pudding. A large proportion of the nobility were still illiterate, 200 years after a revolution in education amongst the elite in (say) England. The country could mobilise immense resources, not least in terms of manpower, that would ultimately frustrate the likes of Napoleon and Hitler. But the "old ways" ran so deep in the population that attempts to yank them from on high into a new age were always doomed to ultimate failure. Although true of Catherine, it applied equally to other energetic Russian rulers from Peter the Great through Alexander II (the emancipator of the serfs, assassinated for his pains) to Lenin, Stalin and Gorbachev.
This has lessons for modern Russia, in my view. Look at Catherine's title; Empress and Autocrat of all the Russias. Most nation states have ultimately developed through their people's willingness to view themselves as part of a nation. That process has taken place at different times in different places; early in countries such as England and Denmark, much later in countries such as Italy and Germany. In some countries (Belgium, for instance, or Spain) the process is incomplete and may ultimately fail. I have never been to Russia, but I suspect that the nation-building process has never happened there, the country has always been an empire rather than a nation state. If true, then we should deal with the current Russian leadership on that basis, and stop believing that Russia is like other European countries, just bigger.
Walter Blotscher
Born in May 1729 in a merchant's house in Stettin (then German but now Polish), Sophie Auguste Friderike of Anhalt-Zerbst was the eldest daughter of the Prince of an insignificant cadet branch of the German House of Anstalt, who was forced to take service as a general in the service of the King of Prussia in order to make ends meet. By dint of a pushy mother, an advantageous marriage to the heir to the Russian Empire, his subsequent accession and murder, and - not least - her own indomitable force of character, she ended her days in November 1796 as Yekaterina Alekseyevna, the most serene and all-powerful Princess and lady, Catherine II, Empress and Autocrat of all the Russias. History knows her more simply as Catherine the Great.
The 18th century was a good age for female Russian rulers. Between the death of Peter the Great in 1725 and the murder of Catherine's own son Paul in 1801, there were no less than four Empresses; Peter's widow Catherine (1725-7), his niece Anna (1730-40), his daughter Elizabeth (1741-61), and the wife of his grandson, Catherine the Great (1762-96), all of whom died peacefully on the throne. The only times that men got a look in were in 1727-30, 1740-41, 1761-62 and 1796-1801, and their respective fates were death from smallpox, incarceration followed by murder, murder and murder. Not until the accession of Catherine's grandson Alexander I in 1801 did the Romanov dynasty acquire a stable succession in the male line. Yet despite that, Russia's already vast size continued to grow steadily during the century, with the acquisition of the Crimea and northern Black Sea coast, what is now Eastern Finland, Estonia and Latvia, and the greater part of Poland, which was casually partitioned between Russia, Prussia and Austria in three bites, in 1772, 1793 and 1795.
Legend has it that Catherine was a nymphomaniac. Although the wilder rumours that she gradually worked her way through her own personal Guards regiment, and even a horse, can be discounted, it is certainly true that she had lovers even in the early days of her marriage to the future Peter III, by all accounts a very unattractive man. Even after he had been conveniently bumped off and she was crowned Empress at the age of 33, she continued to have an active, if not voracious, sex life, taking a series of "favourites", ever more younger than her, until the end (her last, Platon Zubov, was 22 when she was 60). When these relationships ended, as they invariably did, she treated the men kindly, generously even. Though never at the expense of realpolitik. Count Stanislaw Poniatowski was one of her earliest lovers, whom she helped to get elected as the last King of Poland in 1764 with the aid of Russian troops. But that did not stop her dismembering his kingdom thirty years later (though she allowed him to live in exile in St. Petersburg and gave him a pension).
Although Catherine had to convert to Orthodoxy on her marriage and was assiduous in promoting Russian interests, she remained throughout her life a product of the German enlightenment, dedicated to order and rationality. Her natural language was French, then the lingua franca of European diplomacy, she was a correspondent of Voltaire and Diderot (and eventually purchased the latter's library), she was influenced by the political philosophy of Montesquieu, which she tried to incorporate in her great project to codify Russian law, and her court buildings and ritual borrowed heavily from those of France and the larger German states. She even believed in freeing the serfs; though that didn't happen in Russia until the 1860's.
That it didn't is testimony to the difficulties she faced. Despite an iron will, and the advantages of autocracy, ruling the vastness of Russia was like dealing with a huge, soggy pudding. A large proportion of the nobility were still illiterate, 200 years after a revolution in education amongst the elite in (say) England. The country could mobilise immense resources, not least in terms of manpower, that would ultimately frustrate the likes of Napoleon and Hitler. But the "old ways" ran so deep in the population that attempts to yank them from on high into a new age were always doomed to ultimate failure. Although true of Catherine, it applied equally to other energetic Russian rulers from Peter the Great through Alexander II (the emancipator of the serfs, assassinated for his pains) to Lenin, Stalin and Gorbachev.
This has lessons for modern Russia, in my view. Look at Catherine's title; Empress and Autocrat of all the Russias. Most nation states have ultimately developed through their people's willingness to view themselves as part of a nation. That process has taken place at different times in different places; early in countries such as England and Denmark, much later in countries such as Italy and Germany. In some countries (Belgium, for instance, or Spain) the process is incomplete and may ultimately fail. I have never been to Russia, but I suspect that the nation-building process has never happened there, the country has always been an empire rather than a nation state. If true, then we should deal with the current Russian leadership on that basis, and stop believing that Russia is like other European countries, just bigger.
Walter Blotscher
Tuesday 22 June 2010
THE MATHEMATICS OF GROUPS
The World Cup has 8 groups of 4 teams each. Each team plays against the other three teams in its group, and the top two teams go through to the last 16, where it is knock-out all the way to the final.
Sounds simple? What is interesting is in fact how complicated the groups can become mathematically after each team has played just two matches. I watched the Group B Nigeria-South Korea match this evening, rather than the Argentina-Greece game (played at the same time), which I judged would be technical and a bit dull. Since Argentina had already won their first two matches, the big question was who would be the other country to go through. When Nigeria scored first, it was going to be Greece. When South Korea equalised and went ahead 2-1, it was going to be them. When Nigeria equalised to 2-2, it was still going to be South Korea. But then Argentina went 1-0 up against Greece, at which point it would - rather miraculously - be Nigeria, if they scored a third goal. If Maartins hadn't missed an absolute sitter with ten minutes to go, then they would have done it. As it was, Argentina won 2-0, the other game was 2-2, and Argentina and South Korea went through.
As it happens, it was even possible for Argentina not to go through. That would have required Greece to beat them by a certain amount and South Korea to beat Nigeria by a certain amount. Unlikely; but possible.
A number of the other groups finishing this week have equally complex possible permutations. All I know is that England have to beat Slovenia tomorrow to go through, and that on current form, I don't think that they'll do it.
Walter Blotscher
The World Cup has 8 groups of 4 teams each. Each team plays against the other three teams in its group, and the top two teams go through to the last 16, where it is knock-out all the way to the final.
Sounds simple? What is interesting is in fact how complicated the groups can become mathematically after each team has played just two matches. I watched the Group B Nigeria-South Korea match this evening, rather than the Argentina-Greece game (played at the same time), which I judged would be technical and a bit dull. Since Argentina had already won their first two matches, the big question was who would be the other country to go through. When Nigeria scored first, it was going to be Greece. When South Korea equalised and went ahead 2-1, it was going to be them. When Nigeria equalised to 2-2, it was still going to be South Korea. But then Argentina went 1-0 up against Greece, at which point it would - rather miraculously - be Nigeria, if they scored a third goal. If Maartins hadn't missed an absolute sitter with ten minutes to go, then they would have done it. As it was, Argentina won 2-0, the other game was 2-2, and Argentina and South Korea went through.
As it happens, it was even possible for Argentina not to go through. That would have required Greece to beat them by a certain amount and South Korea to beat Nigeria by a certain amount. Unlikely; but possible.
A number of the other groups finishing this week have equally complex possible permutations. All I know is that England have to beat Slovenia tomorrow to go through, and that on current form, I don't think that they'll do it.
Walter Blotscher
Monday 21 June 2010
THE EFFICIENCY OF FINANCIAL MARKETS
The efficient market hypothesis has been around for some time. There are various forms of it, weak, semi-strong and strong, but it basically says that the price of an asset reflects all information available about that asset. Put another way, unless you know something that the markets don't know, there is no point expecting to achieve above-average returns in the long run from your investment. The best strategy would be to put your money into a fund which simply tracked the market, and went up and down with it.
There have been modifications on the theme. Rudiger Dornbusch's famous "overshooting model" (once voted by the Economist as one of the ten most influential economics papers of all time) demonstrated that the foreign exchange market could overshoot, even with perfect information, instantaneous adjustment and rational expectations, if other prices (in his case, domestic price inflation) were sticky. Olivier Blanchard demonstrated much the same thing, this time with a domestic stock market and domestic price inflation. And Stanley Fischer got the same result with wages and domestic price inflation, if wages were constrained within 2-year contracts but prices were not. However, none of these disowned the hypothesis as such; what they said - in essence - was that markets are related, so inefficiencies in one can spill over into, and affect, ones which a priori are efficient.
More recent research has tended to concentrate on the informational aspects. Whatever the theory, it is a fact that some people know more about some things than others. Knowing that, people adjust for it (in the same way as they adjust the prices of second-hand goods in order to take account of the fact that they might be buying a "lemon"). However, while for second-hand cars this informational aysmmetry might be large, decisive even, the consensus seems to be that for big, publicly traded markets, it is much smaller. Indeed, it may well be reducing, owing to the power of the internet, and increased disclosure requirements. Notwithstanding the likes of Enron and Madoff, the hypothesis still holds.
But the financial fall-out from the B.P. oil spill is putting the hypothesis severely under strain, in my view. Nobody knows what the eventual costs of the clean-up will be. The Economist looked at worst-case scenarios and came up with a figure of US$20 billion for costs and damages, and US$17 billion for fines. US$37 billion is a very large number. But what is often forgotten is that B.P. is a very, very large company; and to use a trite mathematical fact, very, very large is very large in comparison with very large. In an average year the company generates US$20-30 billion in cash, so we are talking about a couple of years' cashflow max. Yet since the well erupted, the value of B.P. in the stock market has fallen by US$89 billion; even allowing for general market falls, and the fact that B.P. only had a 65% stake in the well, its value has still fallen by about US$65 billion. Much, much more than the worst-case scenarios.
Why? All of the figures above are known to the world (or, at least, that part of the world who deals with this sort of thing). Shouldn't every fund manager worth his salt therefore be ploughing into B.P. shares as fast as they can, on the grounds that the stock is ridiculously cheap? After all, that is what the efficient market hypothesis would suggest should happen. But it isn't happening.
I think the answer lies in the informational asymmetry outlined above. In this particular case, the asymmetry refers to what the U.S. Government and Congress will do. B.P. is currently America's most hated company, and it is clear that a lot of people, from the President down, want to hurt it. Nobody outside of the Government and Congress yet knows what that hurt will be, though there is a lot of talk about retrospective fines for economic loss (currently capped at US$75m by the legislation introduced post the Exxon Valdez disaster). It is significant that on the day that B.P. visited the White House and announced an agreement to set up a US$20 billion escrow account to cover the costs of the clean-up, an account moreover which would be administered by the Government rather than B.P. itself, the company's share price rose by 7%. Better the devil you know (US$20 billion) than the devil you don't (a much higher, and unknown, figure).
So, our efficient market hypothesis can survive; B.P. is a special case. The problem I have with this analysis is that in today's straightened times, nearly all publicly traded assets are, or could be, affected by Government actions; indeed, they are increasingly being so affected. Banks are nationalised instead of going bust; the price of money is kept artificially low through quantitative easing; wage and pension entitlements are being changed; special levies and corporate taxes are being imposed on financial and mining companies; energy policies are being adapted in the face of climate change. And so on and so forth.
If every company is, or could be, subject to aysmetrical information constraints such as those above, then what is the point of the efficient market hypothesis? You could be forgiven for saying "not much".
Walter Blotscher
The efficient market hypothesis has been around for some time. There are various forms of it, weak, semi-strong and strong, but it basically says that the price of an asset reflects all information available about that asset. Put another way, unless you know something that the markets don't know, there is no point expecting to achieve above-average returns in the long run from your investment. The best strategy would be to put your money into a fund which simply tracked the market, and went up and down with it.
There have been modifications on the theme. Rudiger Dornbusch's famous "overshooting model" (once voted by the Economist as one of the ten most influential economics papers of all time) demonstrated that the foreign exchange market could overshoot, even with perfect information, instantaneous adjustment and rational expectations, if other prices (in his case, domestic price inflation) were sticky. Olivier Blanchard demonstrated much the same thing, this time with a domestic stock market and domestic price inflation. And Stanley Fischer got the same result with wages and domestic price inflation, if wages were constrained within 2-year contracts but prices were not. However, none of these disowned the hypothesis as such; what they said - in essence - was that markets are related, so inefficiencies in one can spill over into, and affect, ones which a priori are efficient.
More recent research has tended to concentrate on the informational aspects. Whatever the theory, it is a fact that some people know more about some things than others. Knowing that, people adjust for it (in the same way as they adjust the prices of second-hand goods in order to take account of the fact that they might be buying a "lemon"). However, while for second-hand cars this informational aysmmetry might be large, decisive even, the consensus seems to be that for big, publicly traded markets, it is much smaller. Indeed, it may well be reducing, owing to the power of the internet, and increased disclosure requirements. Notwithstanding the likes of Enron and Madoff, the hypothesis still holds.
But the financial fall-out from the B.P. oil spill is putting the hypothesis severely under strain, in my view. Nobody knows what the eventual costs of the clean-up will be. The Economist looked at worst-case scenarios and came up with a figure of US$20 billion for costs and damages, and US$17 billion for fines. US$37 billion is a very large number. But what is often forgotten is that B.P. is a very, very large company; and to use a trite mathematical fact, very, very large is very large in comparison with very large. In an average year the company generates US$20-30 billion in cash, so we are talking about a couple of years' cashflow max. Yet since the well erupted, the value of B.P. in the stock market has fallen by US$89 billion; even allowing for general market falls, and the fact that B.P. only had a 65% stake in the well, its value has still fallen by about US$65 billion. Much, much more than the worst-case scenarios.
Why? All of the figures above are known to the world (or, at least, that part of the world who deals with this sort of thing). Shouldn't every fund manager worth his salt therefore be ploughing into B.P. shares as fast as they can, on the grounds that the stock is ridiculously cheap? After all, that is what the efficient market hypothesis would suggest should happen. But it isn't happening.
I think the answer lies in the informational asymmetry outlined above. In this particular case, the asymmetry refers to what the U.S. Government and Congress will do. B.P. is currently America's most hated company, and it is clear that a lot of people, from the President down, want to hurt it. Nobody outside of the Government and Congress yet knows what that hurt will be, though there is a lot of talk about retrospective fines for economic loss (currently capped at US$75m by the legislation introduced post the Exxon Valdez disaster). It is significant that on the day that B.P. visited the White House and announced an agreement to set up a US$20 billion escrow account to cover the costs of the clean-up, an account moreover which would be administered by the Government rather than B.P. itself, the company's share price rose by 7%. Better the devil you know (US$20 billion) than the devil you don't (a much higher, and unknown, figure).
So, our efficient market hypothesis can survive; B.P. is a special case. The problem I have with this analysis is that in today's straightened times, nearly all publicly traded assets are, or could be, affected by Government actions; indeed, they are increasingly being so affected. Banks are nationalised instead of going bust; the price of money is kept artificially low through quantitative easing; wage and pension entitlements are being changed; special levies and corporate taxes are being imposed on financial and mining companies; energy policies are being adapted in the face of climate change. And so on and so forth.
If every company is, or could be, subject to aysmetrical information constraints such as those above, then what is the point of the efficient market hypothesis? You could be forgiven for saying "not much".
Walter Blotscher
Sunday 20 June 2010
MY WIFE'S BIRTHDAY
It is my wife's birthday today, so congratulations to her. It also means not much time for blogging, since I cleaned the house while my daughter made muffins, wrapped up her presents, had coffee (with muffins) with my family plus mother-in-law and sister-in-law, made dinner, and then washed up. Oh, and went for a cycle ride and watched the Brazil-Ivory Coast game. It seems I have been a busy bee.
And, since you ask, yes, my wife enjoyed it all. Though she has yet to work out how to use the new iPod we gave her.
Walter Blotscher
It is my wife's birthday today, so congratulations to her. It also means not much time for blogging, since I cleaned the house while my daughter made muffins, wrapped up her presents, had coffee (with muffins) with my family plus mother-in-law and sister-in-law, made dinner, and then washed up. Oh, and went for a cycle ride and watched the Brazil-Ivory Coast game. It seems I have been a busy bee.
And, since you ask, yes, my wife enjoyed it all. Though she has yet to work out how to use the new iPod we gave her.
Walter Blotscher
Saturday 19 June 2010
FOOD PRICES
I bought a kilo of rice yesterday from Netto, one of the largest supermarket chains in Denmark. It cost kr.8,95 (a bit more than £1); and as I was idly waiting in the queue in order to pay for it, I started "doing the math".
VAT is charged at 25% on everything in Denmark, including food, so we are down to kr.7,16. Working backwards, there is Netto's profit, transport costs from the Netto warehouse, transport costs from the country of origin (Denmark doesn't produce any rice), probably in a container, sorting and packing costs, the plastic wrapping, the sticky label to seal the packet if you only use half of it, and the washing costs. That gets you down to the rice itself in some suitable place. But Netto's supplier probably doesn't buy its rice from single farmers, there will be middlemen in Thailand or Vietnam who deal with the farmers. Plus the transport cost of bringing the rice from paddy to packing factory.
So how much does the individual farmer in Thailand get for his rice? Kr.1 per kilo? Less? All in all, it doesn't seem a lot. I have seen rice being produced in Tanzania, it's very tough work, standing in waterlogged fields under a hot sun and transplanting the wretched things. Avoiding snakes. And then gathering up all of those fiddly grains. In particular, it doesn't seem a lot when compared with the other item I bought yesterday, a pack of disposable plastic razors, which was more expensive.
I think food is very cheap these days. My father-in-law was an onion farmer. One of the last conversations I had with him before he died about ten years ago was on the wholesale price of onions, which was then kr.1 per kilo. I had a similar conversation with his successor a month or so ago. The price is still around kr.1 pr kilo, even though everything else - land, fuel, labour, fertiliser, - has gone up in the meantime.
But surely cheap food is good for us; after all, everybody needs to eat? Well, yes and no. Most of the world still lives in rural areas, and if the returns to agriculture are zilch, then those people will remain there. Increasing those returns certainly seems to be a better way to improve the lot of poor countries than complex rural development schemes that are wasteful, bureaucratic and often pointless.
I used to run a venture capital fund in Tanzania, and was sometimes asked by World Bank consultants how they could improve the private sector. I used to say "double the price of tea". Tea plantations employ lots of labour, and smallholder farmers around the plantations can generate cash income on the side by selling to the central processing factory. Meanwhile, the price of tea in Europe is tiny (1 penny a teabag when I bought a big Tetley's pack for my wife in London last week). Doubling the price would have little or no effect on our willingness to have a cuppa, but would do wonders in the Usambaras. However, like most of my ideas for Africa, this one got nowhere.
Walter Blotscher
I bought a kilo of rice yesterday from Netto, one of the largest supermarket chains in Denmark. It cost kr.8,95 (a bit more than £1); and as I was idly waiting in the queue in order to pay for it, I started "doing the math".
VAT is charged at 25% on everything in Denmark, including food, so we are down to kr.7,16. Working backwards, there is Netto's profit, transport costs from the Netto warehouse, transport costs from the country of origin (Denmark doesn't produce any rice), probably in a container, sorting and packing costs, the plastic wrapping, the sticky label to seal the packet if you only use half of it, and the washing costs. That gets you down to the rice itself in some suitable place. But Netto's supplier probably doesn't buy its rice from single farmers, there will be middlemen in Thailand or Vietnam who deal with the farmers. Plus the transport cost of bringing the rice from paddy to packing factory.
So how much does the individual farmer in Thailand get for his rice? Kr.1 per kilo? Less? All in all, it doesn't seem a lot. I have seen rice being produced in Tanzania, it's very tough work, standing in waterlogged fields under a hot sun and transplanting the wretched things. Avoiding snakes. And then gathering up all of those fiddly grains. In particular, it doesn't seem a lot when compared with the other item I bought yesterday, a pack of disposable plastic razors, which was more expensive.
I think food is very cheap these days. My father-in-law was an onion farmer. One of the last conversations I had with him before he died about ten years ago was on the wholesale price of onions, which was then kr.1 per kilo. I had a similar conversation with his successor a month or so ago. The price is still around kr.1 pr kilo, even though everything else - land, fuel, labour, fertiliser, - has gone up in the meantime.
But surely cheap food is good for us; after all, everybody needs to eat? Well, yes and no. Most of the world still lives in rural areas, and if the returns to agriculture are zilch, then those people will remain there. Increasing those returns certainly seems to be a better way to improve the lot of poor countries than complex rural development schemes that are wasteful, bureaucratic and often pointless.
I used to run a venture capital fund in Tanzania, and was sometimes asked by World Bank consultants how they could improve the private sector. I used to say "double the price of tea". Tea plantations employ lots of labour, and smallholder farmers around the plantations can generate cash income on the side by selling to the central processing factory. Meanwhile, the price of tea in Europe is tiny (1 penny a teabag when I bought a big Tetley's pack for my wife in London last week). Doubling the price would have little or no effect on our willingness to have a cuppa, but would do wonders in the Usambaras. However, like most of my ideas for Africa, this one got nowhere.
Walter Blotscher
Friday 18 June 2010
BLOODY SUNDAY
On 30 January 1972 an illegal march took place in the Bogside area of Londonderry, one of the heartlands of Catholic nationalism in the then bitterly divided Northern Ireland. The march was met by the First Battalion of the Parachute Regiment, drafted in from duty in Belfast and one of the hard men units of the British Army. What followed, on what later became known as Bloody Sunday, was "a tragedy for the bereaved and wounded, and a catastrophe for the people of Northern Ireland".
13 people were shot dead by the paras, and a similar number wounded. Although by no means the only case in which the army shot and killed unarmed civilians during the Troubles, it quickly became a cause celebre amongst both nationalists and human rights activists. An inquiry set up in 1972 by the then Lord Chief Justice (the head of the criminal division of the Court of Appeal) Lord Widgery held that some of the dead were gunmen and bombers, and restricted criticism of the soldiers to saying that some of their behaviour "bordered on the reckless". In 1998, Tony Blair was persuaded, not least by additional witness material presented by the Irish Government, to establish a new inquiry under a High Court Judge, now Lord Saville. The quote in the first paragraph comes from his report into the events of that day, which has just been published, 12 years and £195m later.
To cut a very, very long report short, Saville essentially says that the Widgery inquiry, widely believed at the time to be a whitewash, was indeed just that. All of the people killed and injured were innocent, and none of the shootings was justified or justifiable. The commanding officer of 1 Para disobeyed the operational orders of his direct superior. A number of the soldiers involved lied to both inquiries in order to try to cover up what had happened. David Cameron, announcing the report's findings in the House of Commons, was quick to endorse its findings and to offer an unequivocal apology.
Judging from the enthusiastic reception which the report's conclusions and Mr. Cameron's apology were given in Northern Ireland, one might think that this a milestone in the troubled history of the province. In one sense it is; in another it is not. It is easy for Mr. Cameron to dissociate himself from events that took place when he was still a small child; for others it is more difficult. The statement given by the former head of the British Army, General Mike Jackson, who was a Captain in 1 Para on the day itself, although formally endorsing his Prime Minister, was much more nuanced; the IRA killed a lot of soldiers, he reminded us. More generally, Bloody Sunday was only one of many controversial incidents that took place in and around that time. Yet Saville-style inquiries into all of them would be impossible, not least because of their ruinous cost. Indeed, Saville himself felt bound to set aside any discussion of one particular theme - namely whether the army's actions on the day were part of a wider policy of shoot-to-kill - on the grounds that in order to come to a view on that question, he would have to investigate all possible incidents in similar depth.
The Saville Report has widely - and rightly, in my view - been portrayed as a stain on the British Army. In the long run, this must be to the country's good. The U.K. is involved in war, on average, more often than other countries; and the knowledge that shit happens in war - as Northern Ireland was at the time - should make politicians that little bit more wary of gung-ho intervention. It is all very well to have a foreign policy of "punching above our weight", but not if that punching is outside the law. It will be interesting to see if the Director of Pulic Prosecutions feels that there is evidence for charging some of the soldiers with perjury, manslaughter or murder sufficient to meet the criminal test of beyond reasonable doubt.
There has been less comment about the development of the judiciary since that time. I can still remember as a teenager the sense of fear that the IRA and its bombing campaigns on the U.K. mainland provoked in the ordinary citizen. And I can still remember the collective sigh of relief when the police surely and swiftly got the perpitrators; the Birmingham Six, the Guildford Four, the Maguire Seven. Despite howls from Irish nationalists and others that the police had framed them, they languished in British prisons. Yet when the Birmingham Six applied to Lord Denning, perhaps the finest, and certainly the most influential, common-law judge of the twentieth century, for legal aid in an action against the police for injuries received in custody, he dismissed them out of hand. He exonerated the police in the same way that Widgery had exonerated the army. We now know that he was wrong.
I like to believe that such whitewashes couldn't happen again. A new generation of senior judges, brought up to apply the Human Rights Act, obliged to defer to the judgments of the European Court of Justice, and subject to the informational power of the Internet, would find it extremely difficult to come up with the sort of 1-man "kick the ball into touch" report produced by Widgery and Denning. Lord Hutton's inquiry into the death of weapons expert David Kelly looks as if it might have fallen into that category, but pressure is building to reopen that. If the Saville Report has spurred the development of a more critical appraisal of such matters, then it will have achieved much. Members of the Iraq War Inquiry, please take note.
Walter Blotscher
On 30 January 1972 an illegal march took place in the Bogside area of Londonderry, one of the heartlands of Catholic nationalism in the then bitterly divided Northern Ireland. The march was met by the First Battalion of the Parachute Regiment, drafted in from duty in Belfast and one of the hard men units of the British Army. What followed, on what later became known as Bloody Sunday, was "a tragedy for the bereaved and wounded, and a catastrophe for the people of Northern Ireland".
13 people were shot dead by the paras, and a similar number wounded. Although by no means the only case in which the army shot and killed unarmed civilians during the Troubles, it quickly became a cause celebre amongst both nationalists and human rights activists. An inquiry set up in 1972 by the then Lord Chief Justice (the head of the criminal division of the Court of Appeal) Lord Widgery held that some of the dead were gunmen and bombers, and restricted criticism of the soldiers to saying that some of their behaviour "bordered on the reckless". In 1998, Tony Blair was persuaded, not least by additional witness material presented by the Irish Government, to establish a new inquiry under a High Court Judge, now Lord Saville. The quote in the first paragraph comes from his report into the events of that day, which has just been published, 12 years and £195m later.
To cut a very, very long report short, Saville essentially says that the Widgery inquiry, widely believed at the time to be a whitewash, was indeed just that. All of the people killed and injured were innocent, and none of the shootings was justified or justifiable. The commanding officer of 1 Para disobeyed the operational orders of his direct superior. A number of the soldiers involved lied to both inquiries in order to try to cover up what had happened. David Cameron, announcing the report's findings in the House of Commons, was quick to endorse its findings and to offer an unequivocal apology.
Judging from the enthusiastic reception which the report's conclusions and Mr. Cameron's apology were given in Northern Ireland, one might think that this a milestone in the troubled history of the province. In one sense it is; in another it is not. It is easy for Mr. Cameron to dissociate himself from events that took place when he was still a small child; for others it is more difficult. The statement given by the former head of the British Army, General Mike Jackson, who was a Captain in 1 Para on the day itself, although formally endorsing his Prime Minister, was much more nuanced; the IRA killed a lot of soldiers, he reminded us. More generally, Bloody Sunday was only one of many controversial incidents that took place in and around that time. Yet Saville-style inquiries into all of them would be impossible, not least because of their ruinous cost. Indeed, Saville himself felt bound to set aside any discussion of one particular theme - namely whether the army's actions on the day were part of a wider policy of shoot-to-kill - on the grounds that in order to come to a view on that question, he would have to investigate all possible incidents in similar depth.
The Saville Report has widely - and rightly, in my view - been portrayed as a stain on the British Army. In the long run, this must be to the country's good. The U.K. is involved in war, on average, more often than other countries; and the knowledge that shit happens in war - as Northern Ireland was at the time - should make politicians that little bit more wary of gung-ho intervention. It is all very well to have a foreign policy of "punching above our weight", but not if that punching is outside the law. It will be interesting to see if the Director of Pulic Prosecutions feels that there is evidence for charging some of the soldiers with perjury, manslaughter or murder sufficient to meet the criminal test of beyond reasonable doubt.
There has been less comment about the development of the judiciary since that time. I can still remember as a teenager the sense of fear that the IRA and its bombing campaigns on the U.K. mainland provoked in the ordinary citizen. And I can still remember the collective sigh of relief when the police surely and swiftly got the perpitrators; the Birmingham Six, the Guildford Four, the Maguire Seven. Despite howls from Irish nationalists and others that the police had framed them, they languished in British prisons. Yet when the Birmingham Six applied to Lord Denning, perhaps the finest, and certainly the most influential, common-law judge of the twentieth century, for legal aid in an action against the police for injuries received in custody, he dismissed them out of hand. He exonerated the police in the same way that Widgery had exonerated the army. We now know that he was wrong.
I like to believe that such whitewashes couldn't happen again. A new generation of senior judges, brought up to apply the Human Rights Act, obliged to defer to the judgments of the European Court of Justice, and subject to the informational power of the Internet, would find it extremely difficult to come up with the sort of 1-man "kick the ball into touch" report produced by Widgery and Denning. Lord Hutton's inquiry into the death of weapons expert David Kelly looks as if it might have fallen into that category, but pressure is building to reopen that. If the Saville Report has spurred the development of a more critical appraisal of such matters, then it will have achieved much. Members of the Iraq War Inquiry, please take note.
Walter Blotscher
Thursday 17 June 2010
FRU RASMUSSEN
Fru Rasmussen, the joint owner of the local inn, where I attended my wife's aunt's golden wedding (6/3/10), has died recently, aged 89. Her husband, aged 90, continues to run the business.
I don't know her first name. Her husband, in keeping with local tradition, is called "Inn-man" (see Rural Names, 26/4/10). She was always simply called Fru ("Madame") Rasmussen.
Fru Rasmussen is the only person I have ever addressed in Danish by the formal you-form "De". Like "Sie" in German, it is the third-person plural form of the verb (i.e. they), but with a capital letter. However, in contrast to German, where Sie is still very widely used, particularly in the work-place, the De form in Danish pretty much died out during the 1970's. My wife still uses it, often with people on the phone whom she doesn't know. But she's quite unusual.
Both my sons, notably the elder one, have worked at the inn, and they both always addressed Fru Rasmussen as De. When I asked them why, they said "you just do". Sure enough, after dinner at the golden wedding, I went into the kitchen and found myself automatically doing the same thing. I introduced myself and thanked her for having given them both jobs when they were boys. She was charming and self-deprecating, and said that they had not been a problem, since they obviously came from a very good family. Coming from Fru Rasmussen, it was one of the nicest compliments I have ever had.
Walter Blotscher
Fru Rasmussen, the joint owner of the local inn, where I attended my wife's aunt's golden wedding (6/3/10), has died recently, aged 89. Her husband, aged 90, continues to run the business.
I don't know her first name. Her husband, in keeping with local tradition, is called "Inn-man" (see Rural Names, 26/4/10). She was always simply called Fru ("Madame") Rasmussen.
Fru Rasmussen is the only person I have ever addressed in Danish by the formal you-form "De". Like "Sie" in German, it is the third-person plural form of the verb (i.e. they), but with a capital letter. However, in contrast to German, where Sie is still very widely used, particularly in the work-place, the De form in Danish pretty much died out during the 1970's. My wife still uses it, often with people on the phone whom she doesn't know. But she's quite unusual.
Both my sons, notably the elder one, have worked at the inn, and they both always addressed Fru Rasmussen as De. When I asked them why, they said "you just do". Sure enough, after dinner at the golden wedding, I went into the kitchen and found myself automatically doing the same thing. I introduced myself and thanked her for having given them both jobs when they were boys. She was charming and self-deprecating, and said that they had not been a problem, since they obviously came from a very good family. Coming from Fru Rasmussen, it was one of the nicest compliments I have ever had.
Walter Blotscher
Wednesday 16 June 2010
PENSIONS
France's decision to raise its retirement age from 60 to 62 over the next eight years looks to be a classic case of too little, too late. Under the current arrangements, both men and women can retire at 60, provided that they have paid 40,5 years of social security contributions. Public sector workers retire on 75% of their final six months' salary. Some groups of workers (eg railwaymen) have even more favourable deals.
There is only one problem with the current system; it is completely unsustainable. The annual pension deficit is estimated to be Euros 32 billion this year, and could rise to Euros 114 billion by 2050, if no changes are made. Since the country's budget deficit is already 7,5% of GDP and rising, something had to be done.
Yet that something looks puny when set against developments in life expectancy. When state pensions were first introduced in the U.K. almost a century ago, the retirement age for men was already 65. Life expectancy for both men and women has since increased dramatically, while falling birth rates and longer education periods have reduced the numbers in the active workforce. The dependency ratio (the ratio of pensioners to workers) has shot up in all European countries. In some, it is crippling the public finances.
The only sensible long-term solution is to tie the retirement age to increases in life expectancy, as some Scandinavian countries have done or are considering. 67 would be a reasonable target to start with today, 70 increasingly looks to be the medium-term goal. Set against these numbers, 62 is simply not old enough.
However, tinkering with citizens' entitlements is not easy, as the immediate reactions to the announcement show. There is already talk of strikes by the powerful French trade unions, which often result in public chaos and the watering-down or shelving of unpopular measures. In Freakonomics (15/5/10) I said that the great challenge for Governments over the next decade will not be inflicting pain (that will happen, whatever they do), but in sharing out that pain in a way that keeps their societies from imploding. France now faces its first big test, in sharing the pain between pensioners and non-pensioners. Since pensioners are by definition economically non-productive, it's a fight the Government needs to win, and it will be interesting to see if they can see it through. Other countries with similar problems will be looking on interestedly from the sidelines.
Walter Blotscher
France's decision to raise its retirement age from 60 to 62 over the next eight years looks to be a classic case of too little, too late. Under the current arrangements, both men and women can retire at 60, provided that they have paid 40,5 years of social security contributions. Public sector workers retire on 75% of their final six months' salary. Some groups of workers (eg railwaymen) have even more favourable deals.
There is only one problem with the current system; it is completely unsustainable. The annual pension deficit is estimated to be Euros 32 billion this year, and could rise to Euros 114 billion by 2050, if no changes are made. Since the country's budget deficit is already 7,5% of GDP and rising, something had to be done.
Yet that something looks puny when set against developments in life expectancy. When state pensions were first introduced in the U.K. almost a century ago, the retirement age for men was already 65. Life expectancy for both men and women has since increased dramatically, while falling birth rates and longer education periods have reduced the numbers in the active workforce. The dependency ratio (the ratio of pensioners to workers) has shot up in all European countries. In some, it is crippling the public finances.
The only sensible long-term solution is to tie the retirement age to increases in life expectancy, as some Scandinavian countries have done or are considering. 67 would be a reasonable target to start with today, 70 increasingly looks to be the medium-term goal. Set against these numbers, 62 is simply not old enough.
However, tinkering with citizens' entitlements is not easy, as the immediate reactions to the announcement show. There is already talk of strikes by the powerful French trade unions, which often result in public chaos and the watering-down or shelving of unpopular measures. In Freakonomics (15/5/10) I said that the great challenge for Governments over the next decade will not be inflicting pain (that will happen, whatever they do), but in sharing out that pain in a way that keeps their societies from imploding. France now faces its first big test, in sharing the pain between pensioners and non-pensioners. Since pensioners are by definition economically non-productive, it's a fight the Government needs to win, and it will be interesting to see if they can see it through. Other countries with similar problems will be looking on interestedly from the sidelines.
Walter Blotscher
Tuesday 15 June 2010
THE WORLD CUP
My first impressions of the World Cup are not good. France, Uruguay, England, Italy, Holland, Cameroun, Nigeria, Ivory Coast, Portugal and now Brazil have all been, well, dull. No, that's not right; very dull. The only exciting team so far has been that perennial candidate for the dullsville award, Germany.
I don't think that seeding the teams at this stage is a good idea. There is only one "Group of Death", and even in that one, it still means that two out of Portugal, Brazil and Ivory Coast go through. Big deal. What about having a straight lottery? Then you could end up having a Group of Death consisting of Brazil, Spain, Italy and England. Now that would be exciting.
Thank goodness the Tour of Switzerland is also on in the afternoons.
Walter Blotscher
My first impressions of the World Cup are not good. France, Uruguay, England, Italy, Holland, Cameroun, Nigeria, Ivory Coast, Portugal and now Brazil have all been, well, dull. No, that's not right; very dull. The only exciting team so far has been that perennial candidate for the dullsville award, Germany.
I don't think that seeding the teams at this stage is a good idea. There is only one "Group of Death", and even in that one, it still means that two out of Portugal, Brazil and Ivory Coast go through. Big deal. What about having a straight lottery? Then you could end up having a Group of Death consisting of Brazil, Spain, Italy and England. Now that would be exciting.
Thank goodness the Tour of Switzerland is also on in the afternoons.
Walter Blotscher
Monday 14 June 2010
MY MUM
I visited my mum while I was in the U.K. on my walking tour. Now aged 84, she still lives in Derby in the semi-detached house she bought in 1958, just before I was born. She does everything herself, with the exception of a nice man who comes for a couple of hours every fortnight to look after the garden. Her apple trees and rhododendrons were looking particularly nice.
Since I was last there, she has had bits and pieces done on the house. A crumbling chimney, the wooden bits under the roof and above the windows, new gutters, leaking brickwork in the garage. She has also replaced the asphalt driveway and garden path with coloured paving stones, which have spruced things up. That's a good thing, since she may have to sell the house soon and move into a bungalow. Stairs are not the best of things once you get past 80.
As ever, she plied me with large helpings of some of my favourite foods (see Grandmothers' Cooking, 17/4/10). We had roast lamb with home-made mint sauce, strawberry flan, scones, chocolate mini-rolls and digestive biscuits. It was terrific. And I went to sleep in my childhood bed, solidly as always.
She is finding the world a strange place these days, full of weird happenings, an absence of tolerance, and too much "me, me, me". But some things never change, and she still plays the piano beautifully. The hands may be mottled, the wrists and fingers slightly stiff, the eyesight failing. But the tone, the touch and the technique are all still there, the result something wonderful and timeless.
She asked me this time if there was any furniture from the house that I would like to have if and when she goes. Only the piano, I said; it would be enough.
Walter Blotscher
I visited my mum while I was in the U.K. on my walking tour. Now aged 84, she still lives in Derby in the semi-detached house she bought in 1958, just before I was born. She does everything herself, with the exception of a nice man who comes for a couple of hours every fortnight to look after the garden. Her apple trees and rhododendrons were looking particularly nice.
Since I was last there, she has had bits and pieces done on the house. A crumbling chimney, the wooden bits under the roof and above the windows, new gutters, leaking brickwork in the garage. She has also replaced the asphalt driveway and garden path with coloured paving stones, which have spruced things up. That's a good thing, since she may have to sell the house soon and move into a bungalow. Stairs are not the best of things once you get past 80.
As ever, she plied me with large helpings of some of my favourite foods (see Grandmothers' Cooking, 17/4/10). We had roast lamb with home-made mint sauce, strawberry flan, scones, chocolate mini-rolls and digestive biscuits. It was terrific. And I went to sleep in my childhood bed, solidly as always.
She is finding the world a strange place these days, full of weird happenings, an absence of tolerance, and too much "me, me, me". But some things never change, and she still plays the piano beautifully. The hands may be mottled, the wrists and fingers slightly stiff, the eyesight failing. But the tone, the touch and the technique are all still there, the result something wonderful and timeless.
She asked me this time if there was any furniture from the house that I would like to have if and when she goes. Only the piano, I said; it would be enough.
Walter Blotscher
Sunday 13 June 2010
KOSOVO
When is a country not a country? That sounds a bit like a riddle from the Hobbit, but for Kosovo the issue is a bit more serious.
Yugoslavia was cobbled together after the First World War as a combination of six republics; Slovenia, Croatia, Bosnia, Macedonia, Montenegro and Serbia. Serbia had the added complication of two autonomous regions within its borders; Vojvodina in the north, added as part of the dismembering of Hungary, and Kosovo in the south. Both of these regions were dominated by non-Serbs; ethnic Hungarians in Vojvodina and ethnic Albanians in Kosovo, who made up 90% of the population. Kosovo had the further wrinkle that it included the site of Serbia's most famous historical site; the battlefield of a mediaeval slugfest against the Turks, which the Serbs in fact lost. Imagine the Brits wishing to hold onto the Calais enclave because the Battle of Hastings had been fought there.
After the Cold War, Yugoslavia gradually - and very painfully - split up into its six constituent parts. The Albanians in Kosovo naturally wanted the same, but for Serbia this was a split too far. After severe repression, NATO forces intervened, bombing Serbia until they stopped. In 1999 Kosovo was placed under a U.N. protectorate. Then in 2008, after a period of - for the Balkans - relative calm, Kosovo unilaterally declared independence.
Does that mean that it is a country? Well, yes and no. More than 60 countries have recognised Kosovo, including the U.S., Britain, France and Germany. But a fair number of others have not. They include two permanent members of the U.N. security council (China and Russia, the latter bound by historical ties to Serbia), India, and five members of the European Union. Romania and Slovakia have Hungarian-minority problems of the kind that could flare up in Vojvodina, Greece is still upset about Macedonia's name, and Cyprus remains a divided island. But the biggest naysayer is Spain, worried that regional separatist movements in Galicia, Catalonia and especially the Basque Country could lead to the crumbling of one of the E.U.'s bigger states.
Kosovo's unilateral declaration has been referred to the International Court of Justice in the Hague. However, because of the balance of political forces in favour and against, any ruling is unlikely to be definitive. Kosovo's final legal status remains in limboland.
This clash between legal niceties and political realities has lessons for other would-be countries. Palestine, Taiwan and Cyprus all spring to mind; plus southern Sudan. There is no obvious answer to the riddle above.
Walter Blotscher
When is a country not a country? That sounds a bit like a riddle from the Hobbit, but for Kosovo the issue is a bit more serious.
Yugoslavia was cobbled together after the First World War as a combination of six republics; Slovenia, Croatia, Bosnia, Macedonia, Montenegro and Serbia. Serbia had the added complication of two autonomous regions within its borders; Vojvodina in the north, added as part of the dismembering of Hungary, and Kosovo in the south. Both of these regions were dominated by non-Serbs; ethnic Hungarians in Vojvodina and ethnic Albanians in Kosovo, who made up 90% of the population. Kosovo had the further wrinkle that it included the site of Serbia's most famous historical site; the battlefield of a mediaeval slugfest against the Turks, which the Serbs in fact lost. Imagine the Brits wishing to hold onto the Calais enclave because the Battle of Hastings had been fought there.
After the Cold War, Yugoslavia gradually - and very painfully - split up into its six constituent parts. The Albanians in Kosovo naturally wanted the same, but for Serbia this was a split too far. After severe repression, NATO forces intervened, bombing Serbia until they stopped. In 1999 Kosovo was placed under a U.N. protectorate. Then in 2008, after a period of - for the Balkans - relative calm, Kosovo unilaterally declared independence.
Does that mean that it is a country? Well, yes and no. More than 60 countries have recognised Kosovo, including the U.S., Britain, France and Germany. But a fair number of others have not. They include two permanent members of the U.N. security council (China and Russia, the latter bound by historical ties to Serbia), India, and five members of the European Union. Romania and Slovakia have Hungarian-minority problems of the kind that could flare up in Vojvodina, Greece is still upset about Macedonia's name, and Cyprus remains a divided island. But the biggest naysayer is Spain, worried that regional separatist movements in Galicia, Catalonia and especially the Basque Country could lead to the crumbling of one of the E.U.'s bigger states.
Kosovo's unilateral declaration has been referred to the International Court of Justice in the Hague. However, because of the balance of political forces in favour and against, any ruling is unlikely to be definitive. Kosovo's final legal status remains in limboland.
This clash between legal niceties and political realities has lessons for other would-be countries. Palestine, Taiwan and Cyprus all spring to mind; plus southern Sudan. There is no obvious answer to the riddle above.
Walter Blotscher
Saturday 12 June 2010
BOILED EGGS
The world is divided into two kinds of people. Those who slice the top off their boiled eggs, and those who bash it and pick off the bits.
My mother was a slicer. When we had boiled eggs for breakfast, she would solemnly slice the tops off her three children's eggs, before sitting down to her own. It was always done with a bit of a flourish, like a fencer with an epee. The advantage was that there were never any bits of shell in the yoke; the disadvantage was that she sometimes cut too low, so there was less room for me to dip my "soldiers".
Despite - or perhaps because of - maternal instruction, I have always been a basher. I like that first bash, when the spoon cracks the shell. And the challenge of picking off the surrounding bits without burning your fingers. You then prise open the top, put in some salt, and off you go.
When all is finished, I put the bits back in the empty shell and then put the whole thing in the bin. All of my family think that this is a disgusting habit, but I can't see why. Must be some Danish thing.
Walter Blotscher
The world is divided into two kinds of people. Those who slice the top off their boiled eggs, and those who bash it and pick off the bits.
My mother was a slicer. When we had boiled eggs for breakfast, she would solemnly slice the tops off her three children's eggs, before sitting down to her own. It was always done with a bit of a flourish, like a fencer with an epee. The advantage was that there were never any bits of shell in the yoke; the disadvantage was that she sometimes cut too low, so there was less room for me to dip my "soldiers".
Despite - or perhaps because of - maternal instruction, I have always been a basher. I like that first bash, when the spoon cracks the shell. And the challenge of picking off the surrounding bits without burning your fingers. You then prise open the top, put in some salt, and off you go.
When all is finished, I put the bits back in the empty shell and then put the whole thing in the bin. All of my family think that this is a disgusting habit, but I can't see why. Must be some Danish thing.
Walter Blotscher
Friday 11 June 2010
INGERLAND
Ingerland is a rather strange country. For a start, it seems to be almost entirely populated by men, and not very attractive ones to boot. They generally wear either extremely tight-fitting white T-shirts, or no shirt at all. They have large beer bellies, and lots of aggressive tattoos, and they demonstrate a fashion sense, which in my youth was called "builder's bum". Their underlying skin tone is generally white, but exposed areas can often be bright pink. I sometimes wonder if they use body paint.
Ingerlanders quite obviously have a deep cultural heritage, since they are always singing local folksongs. However, I have not managed to learn many words of their language, since most of the songs seem to consist principally of the one word Ingerland. Maybe I am just getting old.
I tend to see Ingerlanders every four years or so, when the football World Cup is on. Is that just a coincidence? I think it must be, since no Ingerlander looks remotely suited to playing serious football. Perhaps if I knew more words, I could ask them.
Walter Blotscher
Ingerland is a rather strange country. For a start, it seems to be almost entirely populated by men, and not very attractive ones to boot. They generally wear either extremely tight-fitting white T-shirts, or no shirt at all. They have large beer bellies, and lots of aggressive tattoos, and they demonstrate a fashion sense, which in my youth was called "builder's bum". Their underlying skin tone is generally white, but exposed areas can often be bright pink. I sometimes wonder if they use body paint.
Ingerlanders quite obviously have a deep cultural heritage, since they are always singing local folksongs. However, I have not managed to learn many words of their language, since most of the songs seem to consist principally of the one word Ingerland. Maybe I am just getting old.
I tend to see Ingerlanders every four years or so, when the football World Cup is on. Is that just a coincidence? I think it must be, since no Ingerlander looks remotely suited to playing serious football. Perhaps if I knew more words, I could ask them.
Walter Blotscher
ONE MAN WENT TO MOW (2)
Typical. I go away for ten days, and when I get back, the grass on our lawn is halfway to emulating a Brazilian rainforest. It has apparently rained a lot recently here in Denmark; but even so, the growth rate was impressive. No prizes for guessing what I'll be doing for the next few days.
You may be wondering why none of the other inhabitants chez Blotscher did anything about it. Notably my elder son, who is currently at home, in-between national service in the army and going off to university. Mm, I had exactly the same question .....
Walter Blotscher
Typical. I go away for ten days, and when I get back, the grass on our lawn is halfway to emulating a Brazilian rainforest. It has apparently rained a lot recently here in Denmark; but even so, the growth rate was impressive. No prizes for guessing what I'll be doing for the next few days.
You may be wondering why none of the other inhabitants chez Blotscher did anything about it. Notably my elder son, who is currently at home, in-between national service in the army and going off to university. Mm, I had exactly the same question .....
Walter Blotscher
THEO WALCOTT
You have to have sympathy for Theo Walcott. Picked as an unknown 17-year old for the last World Cup four years ago, he didn't play a single game. Now an established member of Premier League side Arsenal, he was the most high-profile casualty when England team manager Fabio Capello reduced his squad from 30 to the final 23.
England have had a mixed run-in to the tournament. After qualifying with something to spare, they have stumbled in recent weeks, both on and off the pitch. Capello didn't listen to my advice (see Playing Away From Home, 4/2/10), but sacked captain John Terry for extra-marital infidelity. His replacement Rio Ferdinand - hardly a saint in my view, but that's neither here nor there - then tore knee ligaments in one of the final training sessions in South Africa, and is out for the tournament. And star striker Wayne Rooney is already being tipped by referees as one of the players most likely to be sent off, for dissent or bad tackling or both.
Most worryingly, England are trying to win the World Cup with a squad that has the highest average age of all the 32 teams (though it came down a bit when Ferdinand was replaced by someone younger). The pundits seem to think that they can definitely make the quarter finals, and possibly the semis. I am not so sure.
My tip to win? My heart says Holland, but my head says Spain, the current European champions. They warmed up with a 6-0 demolition of Poland, which was pretty impressive.
Walter Blotscher
You have to have sympathy for Theo Walcott. Picked as an unknown 17-year old for the last World Cup four years ago, he didn't play a single game. Now an established member of Premier League side Arsenal, he was the most high-profile casualty when England team manager Fabio Capello reduced his squad from 30 to the final 23.
England have had a mixed run-in to the tournament. After qualifying with something to spare, they have stumbled in recent weeks, both on and off the pitch. Capello didn't listen to my advice (see Playing Away From Home, 4/2/10), but sacked captain John Terry for extra-marital infidelity. His replacement Rio Ferdinand - hardly a saint in my view, but that's neither here nor there - then tore knee ligaments in one of the final training sessions in South Africa, and is out for the tournament. And star striker Wayne Rooney is already being tipped by referees as one of the players most likely to be sent off, for dissent or bad tackling or both.
Most worryingly, England are trying to win the World Cup with a squad that has the highest average age of all the 32 teams (though it came down a bit when Ferdinand was replaced by someone younger). The pundits seem to think that they can definitely make the quarter finals, and possibly the semis. I am not so sure.
My tip to win? My heart says Holland, but my head says Spain, the current European champions. They warmed up with a 6-0 demolition of Poland, which was pretty impressive.
Walter Blotscher
THE LAKE DISTRICT
I haven't blogged yet this month, since I have been in the U.K. on my annual walking holiday in the Lake District. Because of the hills, it is almost impossible to get an internet or mobile phone connection (though some of the more dedicated members of the group immediately open their Blackberries when they get to the top of a suitable peak). It has in fact been nice to get away from the daily electronics round.
Up to seven friends from University go on this trip, and this year's was the ninth, with everyone present. It always takes place during the summer half-term, as two of us are teachers. We meet in Lancaster on the Wednesday evening, travel to the Lakes for three days of walking, and return on the Sunday morning. At our age (50+), three full days is just about the right length of time.
This year we stayed in the Little Langdale valley at the Three Shires Inn, the meeting point of the three old counties of Westmoreland, Cumberland and Lancashire. The valley is beautiful, and we had some great walks in perfect sunshine. The weather has been fantastic for each of the last 5-6 years, so we were all expecting a drenching this time. But there was no rain. In fact, there had been no serious rain since last November, and the hills were the driest I have ever seen them. Many of the streams had no water in them at all.
The day of our arrival was marred by the news that a lone gunman had shot and killed 12 people in the area, and wounded a further 25, before committing suicide. Some of the killings (eg his twin brother and solicitor) were targeted, but many were random victims. A fair proportion of the local people were in shock.
Our party had its own horror story. Nobody fell down a ravine or sprained an ankle. But at the top of Bow Fell, as we stopped for lunch on the second day, I took off my T-Shirt and showed the others my cycling bib shorts. This created such frissons of revulsion and panic in the group that I had to get dressed again in a hurry. In vain did I tell them that all serious cyclists wear them, they were not convinced. But at least it gave us something to talk about on the way back down.
Walter Blotscher
I haven't blogged yet this month, since I have been in the U.K. on my annual walking holiday in the Lake District. Because of the hills, it is almost impossible to get an internet or mobile phone connection (though some of the more dedicated members of the group immediately open their Blackberries when they get to the top of a suitable peak). It has in fact been nice to get away from the daily electronics round.
Up to seven friends from University go on this trip, and this year's was the ninth, with everyone present. It always takes place during the summer half-term, as two of us are teachers. We meet in Lancaster on the Wednesday evening, travel to the Lakes for three days of walking, and return on the Sunday morning. At our age (50+), three full days is just about the right length of time.
This year we stayed in the Little Langdale valley at the Three Shires Inn, the meeting point of the three old counties of Westmoreland, Cumberland and Lancashire. The valley is beautiful, and we had some great walks in perfect sunshine. The weather has been fantastic for each of the last 5-6 years, so we were all expecting a drenching this time. But there was no rain. In fact, there had been no serious rain since last November, and the hills were the driest I have ever seen them. Many of the streams had no water in them at all.
The day of our arrival was marred by the news that a lone gunman had shot and killed 12 people in the area, and wounded a further 25, before committing suicide. Some of the killings (eg his twin brother and solicitor) were targeted, but many were random victims. A fair proportion of the local people were in shock.
Our party had its own horror story. Nobody fell down a ravine or sprained an ankle. But at the top of Bow Fell, as we stopped for lunch on the second day, I took off my T-Shirt and showed the others my cycling bib shorts. This created such frissons of revulsion and panic in the group that I had to get dressed again in a hurry. In vain did I tell them that all serious cyclists wear them, they were not convinced. But at least it gave us something to talk about on the way back down.
Walter Blotscher
Subscribe to:
Posts (Atom)
