Category: Public square

The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic. The political impact will be seismic; anger will rage. The haunted looks on the faces of those in supporting roles, such as the Chancellor, suggest they have worked out that a tragedy is unfolding here. Gordon Brown is engaged no longer in a standard battle for re-election; instead he is fighting to avoid going down in history disgraced completely….

Iain Martin Britain at edge of bankruptcy

We cannot recapitalize them through taxpayer donations, for through that path we only delay the inevitable. We do not have the ability to “manufacture” or “borrow” the three to five trillion dollars it would take to cover those losses – a full fifty percent increase in our federal debt, on which we would pay hundreds of billions of dollars a year – forever – being a permanent drag on GDP. Such a path will only lead to more insolvency as the crimp on GDP will inevitably lead to more job losses, more credit losses and more malaise, ultimately resulting in the very collapse that the proponents of this path claim to be trying to avoid. The math demands that we take bold action. We must force a cramdown of debt to equity, which will wipe out all of the existing shareholders, including those holding preferreds while converting the bondholders into new equity holders, pushing down the capital structure however far is necessary in order to return the firm to solvency.
Many people would argue this is “illegal.” It is not. These firms are already bankrupt if anyone bothers to perform a simple dispassionate balance sheet analysis. Their common and preferred stock is worthless. They continue to trade only on the premise that our government would come in and bail them out with an endless supply of taxpayer dollars, mortgaging our nation and its future in order to keep these bankers and their investors from suffering their just desserts as a consequence of their voluntary, irrational and patently unsound lending decisions. None of these investors put their money in with their eyes wide shut – or if they did, they knew better. Nobody was forced to buy a bank stock or bond. Everyone did so expecting a return, and all took a risk. That risk has now become realized – it has gone from hypothetical to actual. President Obama needs direct Treasury and The Fed to immediately go institution-by-institution, write down the assets to “death’s door” levels, determine how far down the capital structure needs to be crammed to restore that institution to a strong capital position with double the Tier Capital ratio required by law, and then forcibly reorganize the debt into equity.

Market Ticker There is only one solution to the banking crisis

and see Ambrose Evans-Pritchard

After an angry, inevitably, celebrity-studded rally in Trafalgar Square, groups of Jews descended on Brick Lane to assault anyone visibly identified as a Muslim. Some burst into a curry house and attacked the diners, tugging at their beards while shouting Oi Vey. A rabbi is rumoured to have tried to strangle a waiter with a rolled up prayer shawl. Outside one of the many mosques in the area, the Jews chanted ‘Death to the Earabs’ (in emulation of the Palestinian supporter’s ‘Death to the Juices’ (sic) placard I saw last week).
Elsewhere, irate Jews rioted outside the Iranian and Syrian embassies, blaming them for the rocket attacks in Gaza, while mysterious Jewish websites published lists of prominent Muslims who they threatened to kill. In Bradford an imam was dragged from his car and beaten up by two men on a day trip from Stamford Hill.
Meanwhile, a group of well-known Jews published a letter in the newspapers warning the British government that if it didn’t adjust its pro-Arab foreign policy, there would be a corresponding radicalisation of the British Jewish community who might resume terrorist attacks on public transport.
Faced with such concerted manifestations of hysterical anger, the police decided to arrest any Muslims provocatively sporting a Palestinian keffiyah. Tantalised by Jewish violence, the BBC sent several admiring reporters to tell their story to a wider public, giving a new spin to the saw ‘Jews means News’. My God how they must have suffered to be this angry, threatening Muslims with something ominously called a ‘Holocaust’. Grovelling interviews were conducted with Israeli spokesmen because of their remote connection with these wild-eyed Anglo-Jews. The IDF became heroes over night…..
All of which is only as incredible as what we are witnessing now here in London

Michael Burleigh Imagine

This asymmetric character of the global crisis â?? the fact that the shocks were even bigger on the periphery than at the epicentre… the troubles of the rest of the world meant that in relative terms the US gained, politically as well as economically. Many commentators had warned in 2008 that the financial crisis would be the final nail in the coffin of American credibility around the world. First, neo-conservatism had been discredited in Iraq. Now the â??Washington consensusâ?? on free markets had collapsed. Yet this was to overlook two things. The first was that most other economic systems fared even worse than Americaâ??s when the crisis struck: the far larger economic problems in the rest of the world had given Obama a unique opportunity to reassert American leadership, particularly in Asia and the Middle East. The â??unipolar momentâ?? was over, no question. But power is a relative concept, as the president pointed out in his last press conference of the year: â??They warned us that America was doomed to decline. And we certainly all got poorer this year. But they forgot that if everyone else declined even further, then America would still be out in front…

Niall Ferguson An imaginary retrospective of 2009

Civil society emerges out of altruism – small platoons of enthusiasts with the freedom and resolve to change things. Britain’s institutions and services all began with Victorian self-help groups. Schools, sewerage, charities for the blind, the sick, for orphans, lepers, stray dogs, all were pioneered by Christians. Yet, in Orissa, India’s poorest state to which we are en route, Christians are not regarded as Indian or even human. The worst massacre of Christians since Partition took place in Orissa on 23 August last year, under the orders, so it’s said, of the Vishwa Hindu Parishad – the World Hindu Movement – who claim Christians are ‘impure’, foreign. Most are dalit – literally ‘untouchable’. It is still a sin for a dalit – or outcaste’s – shadow to fall on a Brahmin. It is actually illegal in India for a dalit to convert to Christianity, and so escape this oppressive caste system. If they do, they lose numerous ‘privileges’ such as schooling, and job opportunities. In Orissa, 85 per cent of the population is officially dalit. Despite massive infrastructure development going on everywhere, India’s age-old hierarchicalism and massive, religiously-consolidated injustice is everywhere.

Jenny Taylor Real India

Why do citizens in democracies enthusiastically embrace a radical Islamist group that not only seeks the destruction of a fellow democracy but is overtly committed to the substitution of a world-wide Islamic caliphate (or umma) for the existing international order based on territorial nation states? Not because of compassion for the Palestinians, whose plight has never attracted genuine international interest, especially by the Arab states (and for that matter, the Palestinian leadership), whose decades of mistreatment of the Palestinians have gone virtually unnoticed.

Between 1949 and 1967, Egypt and Jordan ruled the Palestinians of the Gaza Strip and the West Bank respectively. Not only did they fail to put these populations on the road to statehood, but they showed little interest in protecting their human rights or even in improving the quality of their life – which is one of the reasons that 120,000 West Bankers moved across to the East Bank of the Jordan and about 300,000 others emigrated abroad between 1949 and 1967. Nobody in the international community paid any more attention to this than they have more recently to the ongoing abuse of Palestinians across the Arab world from Saudi Arabia to Lebanon, a country which was condemned in a June 2006 Amnesty International report for its “long-standing discrimination and abuses of fundamental economic and social rights of Palestinian refugees.” Nor has there been any international outcry when Arab countries have massacred Palestinians on a grand scale. In 1970 King Hussein of Jordan ordered the indiscriminate bombing of Palestinian refugee camps in the course of putting down the Palestinian uprising during “Black September.” This left between 3,000 and 5,000 Palestinian refugees dead. But the fact that Hussein killed more Palestinians in the course of a single month than Israel managed to do in decades was never held against him or dented the widely held perception of him as a man of peace. Again, more than two decades ago Abu Iyad, the number two man in the PLO, publicly stated that the crimes of the Syrian government against the Palestinian people “surpassed those of the Israeli enemy.” While in the wake of the liberation of Kuwait in 1991, Kuwaitis not only set about punishing the PLO for support of Saddam Hussein’s brutal occupation by cutting off their financial support for Yasir Arafat’s overblown and corrupt organization, but there was also a widespread slaughter of Palestinians living in Kuwait. This revenge against innocent Palestinian workers in the emirate was so severe that Arafat himself acknowledged: “What Kuwait did to the Palestinian people is worse than what has been done by Israel to Palestinians in the occupied territories.” Yet there was no media coverage or specially convened UN meetings because it is only when they interact with Israel that the Palestinians win the world’s attention.

Efraim Karsh

Longtime habits of virtue, enactments of responsibility and unconscious acknowledgement of generational bonds had continued to maintain the order upon which the modern system rested and flourished, but in no way renewed or replenished. Thrift; moderation; liberality; self-sacrifice; these, and other virtues, continued for a time, but in this year were revealed to have been overthrown by the mad, even insane pursuit of temporary and fleeting gains. We discovered at once that we had passed a tipping point in our consumption of supposed infinite energy, even as we discovered as well that we had passed a tipping point in the maintenance of the virtues that might have prevented us from such abandoned consumption. We found that neither our leading citizens nor the ordinary working stiff any longer exercised prudence or forsight in making some of the basic decisions that ensures the future of a civilization…
While ours, and likely the next, will be the generation that curses its fate not to have lived during a time of plenty and excess, and we will wonder why it was our bad fortune to have lived in the aftermath of an empire’s glory, if we are capable of deeper and better perspective, we will understand the blessings of our age. From such times of trial a certain deeper wisdom has been made possible – one thinks especially Augustine’s great blessing to have lived in a time that made it possible to write The City of God – and we may yet come to know, and accept – even embrace – the knowledge that our falsity will have spawned. While for most we will despair over our losses and pains, perhaps later if not sooner we will understand the blessings of this – our – time of trial.
Patrick Deneen

New legislation may be needed to curb the activities of informal sharia courts that are operating in Britain, said the organisers of the One Law For All campaign, which was launched at the House of Lords this week. Maryam Namazie, commented that sharia law was undesirable in any form as it sets up conflicts between both human rights and civil law in Britain. â??Even in civil matters, Sharia law is discriminatory, unfair and unjust, particularly against women and children,â?? she said. Of particular concern was whether women were being coerced into using these courts and tribunals against their best interests… Gina Khan, a secular Muslim who has been fighting for justice on these issues, spoke of her own and her familyâ??s experiences at the hands of sharia justice. She spoke passionately about the way extremists within the Muslim community were exerting control through giving the impression that â??real Muslimsâ?? would settle their disputes using only â??Godâ??s Sacred Lawâ??. This, she said, led to injustice to Muslim women, many of whom didnâ??t know they had rights in British civil courts. Keith Porteous Wood, Executive Director of the National Secular Society, said: â??Sharia is becoming a growth industry in Britain, putting growing pressure on vulnerable people in the Muslim community to use sharia councils and tribunals to resolve disputes and family matters, when they could use the civil courts. Sharia â??lawâ?? is not arrived at by the democratic process, is not Human Rights compliant, and there is no right of appeal.â??

Most Western governments appear to have forgotten simple political truths which the Islamic challenge should have reinforced. Among these truths is that the principles of the free society require toleration of the tolerant, but demand that intolerance be shown towards those who not only reject such free society’s values but look forward to the day when they are brought down. If civil society is to be upheld and protected from pluralist dissolution, the obligations of the citizen, whether indigenous or incomer, must also be accorded parity of status with claims of rights and be enforced, in the interests of all.
David Selbourne

For those, like me, who have only recently become aware of the terms, let alone begun to understand them, they refer to the increasing use of the British (and American – though without so much success) law courts, by individuals like Saudi businessman Khalid Bin Mafouz who use libel law to stifle publication of books or articles that investigate the links between gulf oil money and terrorism.

The clearest recent British example of this was the law suit against Cambridge University Press which resulted in the removal from the bookshelves of Alms for Jihad: Charity and Terrorism in the Islamic World by J. Millard Burr and Robert Collins. CUP issued a full apology to avoid a suit.

Sean Oliver-Dee at Lapidomedia

We should be clear that you don’t overcome resentment by feeling guilty, or by conceding your fault. Weakness provokes, since it alerts your enemy to the possibility of destroying you. We should be prepared to affirm what we have and to express our determination to hold on to it. That said, we must recognize that it is not envy, but resentment, that animates our foes. Envy is the desire to possess what the other has; resentment is the desire to destroy it. How do you deal with resentment? This is the great question that so few leaders of mankind have been able to answer. But we are fortunate in being heirs to the one great attempt to answer it, which was that of Christ. You overcome resentment, Christ told us, by forgiving it. To reach out in a spirit of forgiveness is not to accuse yourself; it is to make a gift to the other. And it is just here, it seems to me, that we have taken the wrong turn in recent decades. The illusion that we are to blame, that we must confess our faults and join our cause to that of the enemy, exposes us to a more determined hatred.

Roger Scruton The Defence of the West: How to Respond to the Islamist Challenge (downloadable Word doc)

For a gentle introduction to the financial crisis, see Ann Pettifor‘s The Week that changed Everything and Why the Bail-Out would not Work.

For longer-term reasons for the crisis see Spengler‘s US Shrinking wealth

Why didn’t these overseas investors buy mortgages in their own countries, instead of scraping the bottom of the credit barrel in the United States? It is because there aren’t enough Germans, or Italians, or Frenchmen or Japanese starting families and buying homes. The aging pensioners of Europe and Asia must find young people to pay interest into their pensions, and they do not have enough young people at home.

There is nothing complicated about finance. It is based on old people lending to young people. Young people invest in homes and businesses; aging people save to acquire assets on which to retire. The new generation supports the old one, and retirement systems simply apportion rights to income between the generations. Never before in human history, though, has a new generation simply failed to appear.

The monster is not the financial system, crooked and stupid as it may have been. The monster is the burgeoning horde of pensioners in Germany and other industrial countries. It is easy to change the financial system. The central banks can assemble on any Tuesday morning and announce tougher lending standards. But it is impossible to fix the financial problems that arise from Europe’s senescence.

For more views, here are Becker & Posner, and here are the FT economists’ blogs. On the earth’s impending Sabbath see Andrew Simms Final Countdown – One Hundred Months to a climate change tipping-point and there’s more on the link between other people’s poverty and our carbon expenditure at the New Economics Foundation.

It looks as though our bishop has got some more fasting to do. In fact it looks as though we may all be about to join him. Come, friendly Poverty.

The reason why the Lehman Brothers collapse is historic is that this institution expected until a very late stage to be saved by the state-run Korea Development Bank (KDP). But Seoul looked at the books and had other ideas: on 9 September 2008 – to the astonishment of Lehman’s shareholders and investors – this ever-so-reliable ally of Washington refused to fund a bail-out.

The fact that such sovereign wealth funds as the KDP are no longer willing to finance reckless US institutions is of itself of the greatest significance. It implies a lack of confidence in the solvency of US financial institutions, and indeed of the United States as a whole. This will lead to a fall in the dollar, which will have profound economic implications for the global economy, and for globalisation as a whole.

The billionaire investor Warren Buffett wrote a letter to shareholders in March 2005, in which he predicted that by 2015 the net ownership of the US by outsiders would amount to $11 trillion. “Americans … would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society’ will not find happiness in – and I’ll use hyperbole here for emphasis – a ‘sharecropper’s society’.”

Buffett was and is right. The collapse of banks and investment funds, and of the international financial system – a consequence of the unpardonable folly of the powerful – is serious and dangerous enough. But what is even more to be feared is the emergence of a sharecropper society, angry at its downfall. Thus will America’s problem become the world’s.

Ann Pettifor America’s financial meltdown
And see Pettifor The coming first world debt crisis (2003)