Newsnotes 2008 10

Notes On The News

by Gwydion M Williams

Post-New Labour

Barking at China – and failing to bite

The End of an Hegemony [US Decline]

Backwoodswoman for All-American Vices [Sarah Palin]

Obama and US Racism

Feed the Rich [Banking]

Update on Nepal

Large Hadron Collider


Post-New Labour

Blair and Brown were united in accepting Thatcher’s vision of a better world through deregulation and privatisation. They could assert themselves on small matters – mostly notably admitting that old-style ‘Family Values’ were dead and that poor people needed help. But they treated state regulation of industry and finance as if it were a disaster area. The ‘dead hand’ of the state must be removed to allow wealth to be generated.

The ‘dead hand’ of the state turned out to have been preventing fraud and gambling. Thatcher did not in fact improve the British economy, which did slightly worse after 1980 than it had in the era of solid Keynesianism, 1950 to 1970. There was an appearance of success, because the break-up of Keynesianism damaged France and Germany.

Rather than wait for a massive defeat in 2009 or 2010, Labour could go on the offensive. Admit they went too far in the 1990s. Remind everyone of the success of Bevin / Attlee economic management after 1945 and how a much poorer Britain back then could afford pensions and a National Health Service and all of the other things that are now deemed ‘too expensive’.

But who in the Labour Party would do it? Most of the current MPs are people who spent 40 years debunking the Bevin / Attlee legacy, first as leftists and then New Labour.


Barking at China – and failing to bite

After winning the Olympics, China has also won the Paralympics, and won it decisively. (Unlike the Olympics, they were way ahead on both golds and total medals.) Britain came second, the USA third, but China in the Paralympics did better than Britain and the US put together.

It’s part of a pattern. The Chinese also won the 2004 Paralympics, way ahead on. Britain was second there as well, with Canada third and the USA fourth. Britain got yet another second place in 2000, when China were only sixth.

Meantime China is growing fast internally, and strengthening its global position:

“When China Investment Corp, the country’s $200bn sovereign wealth fund, was founded last September, the rest of the world woke to the realisation that China was about to go on a global shopping spree.

“Many in the west were ambivalent about the prospect of a huge pool of capital under the control of a secretive and autocratic government buying up prized corporations to meet the Chinese Communist party’s undeclared political and strategic objectives…

” According to Chinese media reports that officials in Beijing confirmed as largely accurate, Safe has also used a shadowy Hong Kong subsidiary to build stakes of less than 1 per cent in numerous companies listed in the UK, including BHP Billiton, Rio Tinto, Unilever, Tesco, British Gas, Cadbury, Royal Bank of Scotland and Barclays Bank, as well as in other markets.” (Beijing’s shadowy fund for buying assets, [A])

The West does not like it, but the West cannot easily stop China spending its own money. Or using carefully cultivated havens like Lichtenstein, if China needs extra secrecy. The West cannot do much about it. Not with the Western economy so dodgy, whereas China is protected by an unconvertible currency that they have kept in defiance of Western advice.

Now we know why Bush and the others were all at the Beijing Olympic opening. They badly need China, whereas China could manage OK without them. I anticipated it back in March-April, at a time when I had never heard of AIG. It turns out they have a direct interest in some of the companies we’ve been hearing about.

“China has a direct interest in the U.S. crisis. It is estimated to hold a fifth of its currency reserves — as much as $400 billion — in Fannie Mae and Freddie Mac debt. In addition, its banks have billions of dollars worth of exposure to the American International Group, Merrill Lynch, Lehman Brothers and other companies in crisis. The Industrial and Commercial Bank of China, for example, has $151 million in bonds issued or linked to Lehman; China Merchants Bank has $70 million of Lehman bonds; and the Bank of China has $75.62 million of Lehman bonds…”(Japan, China Locked In by Investments, [M])

Japan may be locked in – they’d be in a lot of trouble if global trade fell apart. China under Mao grew fine without much foreign trade: they threw off the stagnation of centuries, which had broadly continued under various pro-Western governments of the Chinese Republic. China has most of what it needs, even its own oil if it cut down on usage. If it’s going to stay within the world trade system, the USA must play fair:

“Andy Xie, an independent economist who was formerly Morgan Stanley’s chief Asia economist, said the United States needs to accept that a large amount of U.S. assets must be transferred to other countries’ ownership. “If the U.S. is not willing to accept that,” Xie said, “they will have to print money and the dollar will fall. And we will be headed toward a global financial meltdown.”(M)

Extended ownership might have included a chunk of Morgan Stanley: the bank is one of just two big investment banks left on Wall Street:

“Morgan Stanley is in talks to sell a stake of up to 49 per cent to China Investment Corp, the state investment fund, as part of the Wall Street firm’s efforts to ensure its survival and reverse a slump in investor confidence.

“People close to the discussions said the investment bank’s top management preferred a stake sale to CIC to a merger with Wachovia, the troubled US lender that approached Morgan Stanley on Wednesday.

“They added that talks with CIC, which bought a 9.9 per cent stake in Morgan Stanley in December, were advanced but no deal had been clinched yet.” (Morgan Stanley in talks with CIC [N])

Morgan Stanley have now decided to sell a chunk of themselves to a big Japanese bank. But China must be making other less high-profile deals.

Mao made an apt comment on one early opponent: ‘take no more notice of that man than a dog barking’. The current Chinese leaders might not say such a thing – at least not in public – but they seem to be applying the rule. The Western protests on Tibet proved insubstantial because the Western leaders ended up giving China most of what China wanted. It was the worst possible move – get insulting and then fail to back it up, give every indication that you can be safely ignored. Thanks to a multi-party system and the weakness of ideology, this is now true for Western leaders on all issues where their public would not be prepared to suffer. They are now prepared to suffer on ‘green issues’, but I doubt this would extend to trying to dump the problem on China and India. Ecological concern is not really compatible with New Right approach, which relies on the ‘slob vote’ to get elected.

In the same spirit, they also barked at Russia when it threw Georgia out of the non-Georgian territories it inherited from the Soviet Union. And then did nothing, and it looks like the West might lose the Ukraine as well.


The End of an Hegemony [US Decline]

The West are appalled to see their influence fading, but the ‘opinion-formers’ fail to connect it to their own blunders:

“The west’s efforts to use the United Nations to promote its values and shape the global agenda are failing, according to a detailed study published yesterday.

“A sea change in the balance of power in favour of China, India, Russia and other emerging states is wrecking European and US efforts to entrench human rights, liberties and multilateralism. Western policies in crisis regions as diverse as Georgia, Zimbabwe, Burma or the Balkans are suffering serial defeats in what the study identifies as a protracted trend.” (Haemorrhaging of western influence at UN wrecks attempts to push human rights agenda. [B])

I’d say it had a lot to do with a massive failure by Europe and the USA to practice what they preached in face of a relatively minor threat from Islamic terrorism. Also the visible damage to those counties that followed their economic advice, and the visible prosperity of those who ignored them. The battle for ideas during the Cold War depended on what the West could deliver. The USA got a decisive advantage when they put a man on the moon and also produced massive economic successes in West Germany, Italy, Japan, South Korea etc. The New Right were certain this was despite the Keynesian policies of that era, and so did something quite different. Original, but not successful. The wider world is noticing it:

“Take China. It has 250 million internet users – now the largest online community in the world, far surpassing America – based in both the cities and rural areas. Politics is often the furthest thing from their minds, but connecting with friends has become an essential part of life. I met very few bloggers who wanted to discuss anything political and most expressed general satisfaction with the regime’s economic policies. No great desire for ‘democratisation’ there…

“A recent study by the Pew Internet & American Life Project found that the vast majority of China’s web users expressed support for Beijing managing or controlling the internet, including the banning of ‘pornographic’ sites. This is not to say that the Chinese desire authoritarian rule; but while they want change, curbing corruption and ensuring essential services are their top priorities, not the advances in human rights the west puts at the top of the agenda.” (Bloggers not respecting Western values, [C])


Backwoodswoman for All-American Vices [Sarah Palin]

“Mr Obama’s own initial reaction to the Palin nomination was exactly right. All the party had to do was follow his lead. Mr Obama, in effect, would give her enough rope; her inadequacies would reveal themselves in due course; it cost nothing, in the meantime, to be courteous, and to keep pressing on the issues, where the Democrats still enjoy an advantage with most voters. Ms Palin’s first television interview last week, an adequate but far from stellar performance, affirmed the wisdom of that course.

“But the Democratic talking-heads had to exult in their disdain for Ms Palin and all she represents – namely, a good part of the electorate whose support Mr Obama needs. In the space of a few days, they irreversibly damaged Mr Obama’s candidacy and transformed this election.” [D]

The East Coast elite look at Palin and are certain that someone like that should not be in charge. That makes her popular with the voters, who see her as someone like them. Socialists and Communists pioneered the idea of ordinary people being fit for the top jobs, but the USA assimilated it and it helped win them the Cold War.

The Democrats are a very old party, going back to the early 19th century. They straddled the North-South divide in the USA’s Civil War and then somehow became the party of the left, but without ever changing the core ideas. The Democrats are the party of the old-style elite, the people who want to run things without reference to ordinary people, which worked in the Kennedy era. Worked up until Vietnam, in fact. Since then it has been Democrats against the ‘demos’. They are old-fashioned liberals at heart. The socialist New Deal program was an accident and they prefer to be free of it. They work the system, obviously. But so do the Republicans, who are often bigger spenders in practice.

The Democrats cannot tap into the US public’s discontents, because the US public have a fixed idea that tax is unreasonable. Republicans play to that. Their best period was just when they did let taxes rise in a booming economy, in the 1950s and 1960s. But the first crisis was an excuse to look back to methods that had failed before. That was the essence of the New Right – Old Right values, but without any definite moral code of the sort that once existed

The Republicans made the adaptation to 1960s rebelliousness, flattering people and fooling them. There was also the long-standing anti-tax and anti-state tradition which they tapped into. They have delivered very little on that front, mostly tax cuts for the rich. But the Democrats have no answer and cannot cope with someone like Palin.

Myself, I’d have said that Sarah Palin had benefited from the Left’s agenda. I’ve spoken before about the Republicans relying on the ‘New Backwoodsmen’. But the world has changed massively under the hegemony of the New Right’s ‘conservatives’. It no longer seems odd for a woman to be serving as governor and now likely to be the next Vice-President. No need to say that this woman is a ‘New Backwoodswoman’: that culture kept women out of public life, as was the US norm until European habits came drifting in during the late 19th century.

I’d also say that talk about the ‘bridge to nowhere’ was foolish. The Gravina Island Bridge would have replaced the current ferry link to Ketchikan International Airport, which has 200,000 passengers a year. Alaska is huge, sparsely populated and likely to grow faster as global warming takes hold and melts the ice. The project was not obviously stupid, nor was it obviosuly wrong for Palin to back it at first and then kill it off when it became a political liability.

What should be condemned was her commitment to the politics of the Christian Right. Their aim is not just live their own way, but to impose it on everyone else. Palin rejects the need for contraceptives and preaches abstinence as an alternative. To persuade teenagers to abstain from contraception is not so hard. To persuade teenagers to abstain from sex is another matter. It did once work in most cases, but that was with a much stronger moral authority, a world in which someone like Palin could never have had a public career. As things are, her 17-year-old daughter is pregnant and she thinks an early marriage is the answer. It may work out for her family, rich people in the USA look after those who serve their interests. But how many other lives have been ruined by such foolishness?

Despite which, I am not surprised that she boosted McCain’s standing. It’s not the economy; the electorate are stupid, stupid.


Obama and US Racism

“Doug Wilder, 77, still meets people who wanted to vote for him when he stood for governor of Virginia back in 1989 but found they just could not do it. They said they would. They even thought they would. But when it came down to it, they just could not vote for a black man. ‘I’ve had people who tell me ‘I didn’t vote for you for lieutenant governor or governor. I wish I had that chance again’,’ he says.

“On the eve of his election he led in the polls by 9%. On the day he won by less than 0.5%. They call it the Wilder effect – the shortfall between white voters’ professed support for black candidates and their propensity to actually vote that way. They also call it the Bradley effect, after the Los Angeles mayor Tom Bradley who stood for California governor in 1982. Back then the deception continued even after some had cast their ballot. Bradley’s exit poll lead was so significant that early editions of the San Francisco Chronicle projected his victory. He lost by just over 1%.

“The question over the next two months is: will there be an Obama effect? And if so will it end like Wilder, in victory; or like Bradley, in defeat?…

“At any moment, while passing for the presidency, he can be outed by anything from a preacher to a fist bump or a magazine cover. Such is the lot of the incognegro.” (Barack is playing the incognegro, but it is not a risk-free strategy, [F])

I’d figured that when it was still a race between him and Hilary Clinton. The USA buried racism but did not cure it. The USA remains very segregated in practice. Whites in the USA are ready to make a grand gesture by voting for an impressive black candidate in a primary. But when they think about electing a President for the next four years, that is another matter.

There is a positive side. I don’t think anyone could save the USA from the mess it has got into. Better that McCain and Palin take the odium.


Feed the Rich [Banking]

Banking used to be viewed as a secure job for dull trustworthy people. Likewise insurance. Even being ‘something in the City’ was seen as profitable but dull. Jazzing up these sectors yielded short-term profits and long-term disaster.

There is talk of more regulation. What they should really do is make it a criminal offence for bankers to do anything interesting during working hours. If they are adventurous they can try skiing or sky-diving, or maybe insult the local motor-cycle toughs. But leave the money alone.

Boring bankers were also assumed to work for their entire lives for one company, usually a company that was much older than anyone working there and employees were proud of their traditions. That has gone. A recent article mentions the typical attitude of new recruits:

“For those who have been making ends meet on a student loan and occasional bar work, the salaries are particularly exciting; enough to pay off your loan in two or three years and, so the reasoning goes, if you can keep on living at your student level of expenditure, after 10 or 15 years you would have enough to retire on. Then, you will have time and money enough to focus on your dreams.” [H]

The article looks at the mass of middle earners, those who don’t make it to the top. But lots of people did and many more still hope to do so. At Enron, dozens of people walked away with tens of millions of dollars in personal wealth, leaving behind a mass of debts that they could blame on someone else. They are a modern version of ‘coin clippers’, who could remove precious metal from coins in the days when they were still gold or silver. (Clipping was the reason why valuable coins had milled edges, a system kept on modern coins with limited metallic value.)

Lots of people walked off with huge personal wealth. What they left behind was not wealth but debt. Debt that now has to be paid by public money, in case the whole system collapses. ‘Smart Money’ only works if it can find ‘Silly Money’ to buy its overpriced assets. Having sneered at the state, they are now happy to have the state as a grand provider of ‘Silly Money’ to companies that would be allowed to go bankrupt if they were small ordinary productive enterprises. Health and education are seen as crushing burdens, there has been repeated talk of a crisis in payments for pensions. But the money is always there if the rich need it:

“It is true that the US government has very deep pockets. Privately held US government debt was under $4,400bn at the end of 2007, representing less than 32 per cent of gross domestic product. This is roughly half the debt burden carried by most European countries, and an even smaller fraction of Japan’s debt levels. It is also true that despite the increasingly tough stance of US regulators, the financial crisis has probably already added at most $200bn-$300bn to net debt, taking into account the likely losses on nationalising the mortgage giants Freddie Mac and Fannie Mae, the costs of the $29bn March bail-out of investment bank Bear Stearns, the potential fallout from the various junk collateral the Federal Reserve has taken on to its balance sheet in the last few months, and finally, Wednesday’s $85bn bail-out of the insurance giant AIG.

“Were the financial crisis to end today, the costs would be painful but manageable, roughly equivalent to the cost of another year in Iraq. Unfortunately, however, the financial crisis is far from over, and it is hard to imagine how the US government is going to succeed in creating a firewall against further contagion without spending five to 10 times more than it has already, that is, an amount closer to $1,000bn to $2,000bn.” (America will need a $1,000bn bail-out, [K])

This advice seems to have been followed: the Federal Government has stabilised the markets by promising to buy up all of the doubtful assets that were created by highly paid financial geniuses over the past few decades. (American taxpayers will swallow Wall Street’s toxic debts, [P]). So much for the notion of the market knowing best!

From the 1980s, we have been lectured by New Right for not knowing ‘elementary economics’. We now see that the real world also knows nothing of ‘elementary economics’ and breaks its rules very casually. The market was supposed to know, but we find now that supposed experts have purchased worthless junk as if it were sound assets. It’s been a couple of decades of economic surrealism. Get away from messy manufactures and concentrate on the nice clean money, along with various cultural products.

The New Right have been clever at day-to-day and month-to-month politics. They have proved incompetent on the larger scale, the long-term results of their own actions. Any idiot can release existing social forces from existing regulations. It’s also not too tough to persuade people that nothing bad will happen. The problem arises once they do make a mess, as has happened.

It’s not just the finance industry, we saw a huge holiday package company collapse and its planes sit around idle while other aircraft were hired to do the job they were no longer allowed to do. It’s a predictable product of the modern business model – borrow money and get margins very narrow, so essentially you have no reserves if anything goes wrong. They grow like weeds and have a weedy level of strength. I notice also a recent spate of air crashes – are small risks being accepted when the pressure is on and airlines are at risk?

Of course the basic economy is still immensely strong. The framework – eroded but still holding – is the Post-War ‘Keynesian’ system, also known as the Mixed Economy by its defenders even as the Left denounced it as capitalist. It was not capitalist and the ex-Leftists in New Labour have done vast damage by thinking that it should be brought into line with textbook capitalism, which has failed before. Call the actual system Mesocapitalist: there is some freedom for enterprise but also a regulated framework and things do not randomly collapse.

Straightforward Mesocapitalism did much better than the older capitalist order. Just as well economically as the new capitalist order than came in under Thatcher, and without all of the social damage.


Update on Nepal

After a lot of negotiations, the Maoists in Nepal have formed a government along with the other big Communist Party. The official opposition will be the Nepali Congress, which is similar to Congress in the Republic of India, and insists that it is socialist.[L] Royalists and non-socialists got rather few votes in the recent elections, which confirmed the overthrown of the old feudal order.

“The budget was another transforming moment in Nepal.

“For a decade Baburam Bhattarai, an austere intellectual, was the hardline underground voice of Maoist rebel ideology.

“But today, as finance minister, he delivered his budget speech, seeking to start on delivering some of the Maoists’s promises.

“Disadvantaged people, including widows, disabled people and so-called untouchables, will get a monthly allowance of about $8 – a large sum in a Nepalese village.

“There will be four extra years of free education for some poor children.

“Many bank loans taken out by the poorest people will be cancelled, or interest payments rescinded, at the government’s expense and families of those who died or were made to disappear during the 10-year war will get compensation of around $1,500.

“The Maoists insist they see a role for the private sector and Dr Bhattarai says there will be more competition in transport provision.

“He has also made grand promises: that this coming year will be a year of construction while 2011 will be designated a year of tourism.” (Nepal Maoists table first budget, [J])

It could all work out. China and India are both keeping cool and are even talking about their long-standing border dispute. With the US weakening, India would want to keep its options open.


Large Hadron Collider

The Large Hadron Collider is there to create tiny collisions with a fantastically high energy-density. High enough that they expect particles to appear that have never been seen before. Maybe the famous Higgs Boson. Maybe something quite unexpected.

It’s not a danger because the amount of energy involved in any collision is very small. More drastic things happen in Earth’s atmosphere due to cosmic rays. And even if they produced a black hole, it would grow very slowly and might ‘evaporate’ due to Hawkins’s Radiation.

With sub-atomic particles, you get new particles created when they collide. This is related to the amount of energy in the collision. It’s like being in a restaurant with items at different prices – the more you can pay, the wider the range of dishes if you can pay. Now suppose you are in a Chinese restaurant and you can read the price but not what the dish is. Except you can read a little and have some notion – actual Chinese names for dishes are often rather weird and may give you no clue as to what you would be eating. You could order at random and see what turns up.

There was a flurry of media interest over the formal switch-on on Wednesday 10th September. In fact they had been using it before that, and the high-energe collisions come later. The plan was for collisions of ten tetravolts some time in November, then a shut-down and rebuild to get to the promised maximum of fourteen tetravolts. If there were dangers, they would apply then rather than now. The whole thing has anyway been shut down because of a technical fault, but not for more than a couple of months. Some time in early 2009 the big collisions will begin. But remember, though the energy density is high, the actual amount is rather small. I remember a New Scientist cartoon in which an ordinary 9-volt battery bore the label ‘danger – nine million microvolts’. It’s the same with CERN. As they put it:

“In absolute terms, these energies, if compared to the energies we deal with everyday, are not impressive. In fact, 1 TeV is about the energy of motion of a flying mosquito. What makes the LHC so extraordinary is that it squeezes energy into a space about a million million times smaller than a mosquito.” [G]

If one TeV is a mosquito, then 14 TeV would be about a flyswat. But concentration matters as much as force, that’s why a knife does damage and a razor much more so.

As for the usefulness, they expect to find just a few events that prove the existence of new particles. The most interesting is the Higgs Boson, which is the most plausible explanation as to why different particles have different masses, a proton much heavier than an electron and other particles heavier than a proton. It is called the ‘God Particle’, but that is a piece of silliness. If discovered or if disproved, it would not say anything about the origins of the Big Bang, the question that might have theological significance. the Big Bang may have come from nothing or from a meta-universe with different physical laws, this is still being talked about. But when physicists use a name loaded with emotional tags, it gets picked up. People suppose there is something mystical about an Einstein-Bose Condensate. I’m wondering what the media reaction will be when someone finally finds a Degenerate Fermi Gas!

Seriously, we already know that the universe as we know it originated in the Big Bang, 14 billion years ago and long before the formation of the Earth, about 4.5 billion years in a solar system that had already existing for about 500 million years and was still emerging from primaeval disorder. That actually matched the Norse Pagan creation mythology rather better than the myths of any higher religion. We did emerge between fire and ice, though the Norse version also has Primaeval Cow and similar gibberish. But it would be a nice line to throw at Christian ‘Fundamentalists’, whose Young Earth view is ludicrous and is also based mostly on the work of Bishop Usher, not anything the Bible actually says.

There is also a chance that CERN will provide evidence for one version of supersymmetry (often abbreviated SUSY). Supersymmetry is also a feature of most versions of string theory, though it can exist in nature even if string theory is wrong. In a year or two we may have a more definite idea. It is also possible they will find things that were not expected – call this the ‘Sedna Effect’, after the strange little world they found in the Kupier Belt but which is something quite different, thought to come from the much more distant Oort Cloud.

Every previous new experiment has found interesting stuff and it would be horrible bad luck if CERN does not. The problem is, these will be rare events and could be confused with two unrelated events that happen to overlap. Also the detectors are new and might produce false results. So it will take time before anything interesting develops.

None of it is likely to have any practical use, in terms of new consumer goods or weapons or medicine. This isn’t totally certain – high-temperature superconductors would be vastly important if they could get some cheap convenient material that does it, and new understandings of basic physics might give a clue. But my view is that new knowledge is worth having just for itself.

[As most people know, the Higgs Boson was indeed found. As of April 2015, no evidence of supersymmetry has been found. It might well turn up with the higher energies of the new run that is just beginning.]



[A] [,dwp_uuid=9c33700c-4c86-11da-89df-0000779e2340.html]

[B] []

[C] []

[D] []

[E] Gravina Island Bridge, Wikipedia article, as at 18th September 2009.

[F] []

[G] []

[H] []

[J] []

[K] []

[L] []

[M] []

[N] []

[P] []

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