The Bewilderness

Goosed banks throw up pate de debt noir

You do have to wonder how the European Union can continue to bind its figleaves to economic ruination. The response of personages from the European Commission, Central Bank and various Eurozone creditor countries has been a renewed lesson in the ties that bind. For them, Greece's bankruptcy, and by extension, the European Central Bank, cannot be allowed to precipitate a crisis within the currency area. That is a political failure for the European ideology.

To maintain the primacy of Europe, the pressures placed upon Greece to allow the release of more support, demands the appointment of a bail bond. The conditions are dangerous and sinful: the sovereign is asset-stripped for the benefit of its creditors; the asset-stripping is undertaken without oversight from the democratically elected representatives of the Greek people; and, all of the Greek political parties must agree, to ensure that there is no opposition.

During the formative period of the common currency zone, all of the political class in a country could be co-opted without difficulty. The good times of debt stuffed their mouths with gold. Now that the age of austerity has dawned, the formal linkages between Brussels and a country's political class are fraying or have broken. Then the contempt for democracy becomes clear. The bailiffs demand that all opposition is silenced, and that a political consensus must be agreed at the point of a cheque. Good luck with that!

Most of the opposition is extraparliamentary: organised by the trade unions and frustrated demonstrators. They are angry and do not understand how a political class could betray a nation for the sake of a fiat currency. Neither do I. Political parties in power have become so hollowed out by the delusions of ideological primacy from Brussels that they kill their own voting base.

What comes after and how long will it take? I am not a prophet who can give dates, but Greece will default and the debt crisis will inundate the Eurozone. The damage may be swift, merciless and fundamental, or limited and confined to the periphery. That depends upon the wisdom of politicians: so I am not an optimist.

Yet, when default does occur, it will invoke the primacy of first, economics and then, politics. The price of debt and default will be shoved down the gullets of our goosed banks as their pate de debt noir is forced out. Then, a discredited party will be replaced by new incompetents: more extreme, more populist, and guaranteed to speed the ruination that is rightfully theirs. Still, I am looking forward to cheap beet, priced in new drachma.

Joint Security

The United States and the United Kingdom have used the opportunity of President Obama's visit to launch a new initiative in security co-operation: a National Security Board. It is not clear why the initiative has been stepped up. Perhaps it is due to Cameron's establishment of a National Security Council, aligning institutions with Washington's structure allowing direct co-ordination. Or perhaps, the divisions over Libya were due to tactical misunderstandings, not political differences.

Whatever the motive, it is doubtful that this new body will keep the strong differences between the two nations from occasionally surfacing. Nevertheless, an emphasis upon cybersecurity, suggests that Britain faces strong attacks from Russia and China in this field - just as much as the United States does. Will the rest of the Anglosphere observe, perhaps join?

Augmented reality remains flat for now

Augmented reality has gradually crept across the world of smartphone applications, with a flatland overlay of the real world in its current form. The Independent is reporting that LG is shifting to a three dimensional browser for augmented reality. You look through the display of your phone as if the camera function is switched on and information overlays the view. 

The technology is slowly maturing. 

More powerful handsets and faster wireless connections will make AR apps far more useful and flexible, providing relevant information about whatever -- or whoever -- is in front of the user. From there, it's not much of a leap to glasses that keep a display in front of our eyes all the time with data superimposed directly on the real world rather than a camera feed.

The technique of squinting through the world via your phone, not even the hold up and click ease of taking a photo leaves this venture in early adopter territory. No doubt the LG application will soon migrate from the phone to a heads up display, built in to your glasses or portable lens. Perhaps this means a comeback for pince-nez?  

One day Greece will go 'splat' on the Euro windshield

Geoffrey Smith in the Wall Street Journal documents the build-up of the capital reserves with European bansk since the fall of Lehman Brothers in 2008. His article notes that a Greek default is unlikely to send any European bank into freefall. From a restructuring perspective, a Greek default will not cause significant problems for reserving in the European banking system.

The European Central Bank and its political bankers have consistently defended the system of bail-outs designed to prevent any default or debt restructuring in the PIGS. Their fear is defined by the experiences of 2008. They perceive the financial system to be too fragile for any further crisis of confidence, though this is an essential bug of market psychology. The sovereigns of the Eurozone are bucking the market. Josef Ackermann of Deutsche Bank exposes this fragility:

“The losses in many areas would be too high and could provoke a contagion impact,” Ackermann said in an interview... 

Greece cannot pay back its debts. If this truth is recognised, then banks may systematically fail, due to the risk of 'contagion', requiring further sovereign bail-outs and increased debt. Therefore, Greece must crucify itself to avoid this risk. As a story, it sucks. If 'contagion' from a confidence sapping event is that powerful, then the system will fail, as night follows day. If it is not inevitable, then pretending that a problem does not exist and extending its duration, may perversely bring about the outcome that the strategy was meant to avoid. The problem grows over time. 

Europe is not yet allowing its bugs to go splat! That day will come!

The Arabs find their feet and their voices

Reading Ben Wilson's "The Making of Victorian Values" has provided some striking similarities between the change in values that transformed Britain in the early nineteenth century and the current disturbances within the Arab world. Britain in the eighteenth century was a rugged, brutal island where entertainment was violent, cruel, witty and drunk. By 1820, all of these fairs and bawdy traditions were erased by a conformist middle-class that wished to erase its own connections with the gin-sodden success of its ancestors. The swift revolution in values was enhanced by a rapid demographic turnover; by 1830, most of those living in Britain were children of the nineteenth century: intoxicated by progress, thankful for victory and confident of British superiority. Their values were to remain strong, if changing over time, till another demographic turnover in the 1960s.

The combination of economic change, demographic revolution and political instability afflicts the Arab world. The protestors that have dominated the Arab Spring are the youth: students, graduates, the unemployed and dispossessed. It is not clear if there is a consensual set of values as Britain enjoyed, or that a number of competing value systems jostle for attention. These range from westernised secularism to the salafist fundamentalism financed by Saudi Arabia. Whichever value system wins is likely to maintain a dominant position in Islamic regions for a number of decades whilst the current demographic runs its course.

The adoption of values within the younger generation has been favourable to originalist versions of Islam like Salafism and Wahabism. The simplicity and clarity of this doctrine has led to the abandonment of regional forms of Islam such as the Sufi movement in Pakistan or the syncretist traditions of Indonesia. Even the fundamentalists are deformed by compromising with modernity, but on current trends, the dominant value system is likely to be religious, populist, democratic, maybe technocratic and tempered by a strong secular minority. This depends upon the balancing of Islamic identity, participatory notions of representation, and music, that are currently underpinning the crisis in North Africa.

Bring on the referendum for Scottish dependence

The final results of the first post-electoral test for the coalition have come through. An unedifying result for the Liberal Democrats, confirming their lack of maturity in government. Unwilling to strategise, they hanker after the soft left vote that they have lost. Is it not telling that they also lost their potential right wing to the Conservatives...the tactical unwind is becoming a classic squeeze for the third party. Entry into power has been at the expense of the 'progressive majority' and the chance to remake the national system.

The council elections and referendum did not meet the expectations of the soft left. Expect the next attempt to introduce electoral form via Parliament as the 'progressive majority' decides to refuse the 'regressive electorate' a say. The Tories may come to rue winning the AV referendum, if Lib/Lab decide that they need to bring in a complex system of PR to cement their dominance. This has not had too much success over the long term. It took a decade for the SNP to gain a majority in Scotland within an electoral system designed to preserve Labour's dominance. Complacency and weak leadership overturned that myth.

Yet, the SNP will only obtain a referendum on Scottish dependence. Whether it is dependence on Westminster financial transfers or dependence on the English market, our weaker neighbour in the north will never find its feet without dancing nimbly to London's tune when required. The Irish example should show that an adolescent wish to escape English dominance leads to hubris and strategic miscalculation. One neutral state in the North Atlantic reaches is acceptable; two is a danger. (I bet Salmond argues that he gets the Security seat: as Scotland is the rightful successor nation or some such rubbish!)