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    Will someone teach Guido Fawkes economics?


    by Sunny on 17th August, 2007 at 10:09 am    

    The huge losses at the FTSE 100 stockmarket index this week have prompted big daddy of the right-wing British blogosphere, Guido Fawkes, to blame Gordon Brown. “Well didn’t he tell us he had abolished boom to bust?“, he crows happily.

    Firstly, how is Brown to blame for the collapse of the US sub-prime mortage lending market, and the resulting liquidity crunch in markets around the world? Secondly, the markets have been in panic for only just over a week. For a recession to occur British output would have to contract for two quarters in a row. So we’re not in a recession either (yet), even if all this was Brown’s fault. You have to laugh at Guido’s terrible attempt at pointing fingers.
    As usual, Chris Dillow explains better why this issue matters.



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    78 Comments below   |  

    1. Courtney Hamilton — on 17th August, 2007 at 2:41 pm  

      Well spotted Sunny - the idea that Prime Minister Brown (non-elect) is to blame for the recent slide on the markets is fanciful to say the least.

    2. sonia — on 17th August, 2007 at 2:48 pm  

      simple question ( i hope) : why do economists talk about global financial markets if they are not inter-connected?

      scapegoating people is a bit pointless - however the fact that Gordon was the Chancellor of the Exchequer surely meant that [the public can reasonably expect] that he should have an understanding of what might happen in the US, and what might then happen here.

      i’m no economist but my economics professor at USC ( great guy Titus..) always pointed out that economics is common sense dressed up, and its common sense that people expect the Treasury to have some idea of what might be going on. Isn’t this about the wider picture of holding government accountable for their claim that they know what’s going on and are fit to govern us?

    3. Leon — on 17th August, 2007 at 2:49 pm  

      Heh I nearly posted pretty much the same thing but thought of this old saying:

      “Ignore it or kill it, anything else honours it.”

      Couldn’t be bothered tbh he’s just not worth the effort and if people want to take his brand of ‘blogging’ seriously more fool them.

    4. sonia — on 17th August, 2007 at 2:50 pm  

      so if we don’t understand economics - and precisely since most of the public don’t - but are ruled by people who claim to know - isn’t it a fair question to ask how the situation in the US can be compared to here? given that people are very nervous about rising interest rates and the amount of debt in the system - all of which is clearly unsustainable - and mind you, mortgages and the housing market that ordinary mortals are very concerned with.

      so fine, let’s hear the economists on this.

    5. sonia — on 17th August, 2007 at 2:50 pm  

      ask the government i mean.

    6. Rumbold — on 17th August, 2007 at 2:52 pm  

      Gordon Brown claimed credit for years of low inflation when it was really cheap Chinese labour that was behind it. Oh, and changing the way we measure inflation so that anything that causes inflation is excluded (house prices, utilities, etc.).

      He can either take the credit and blame for things outside his control, or neither. Brown could not have stopped this whatever he had done or not done. I am glad that the Bank of England did not intervene- why bail out speculators with taxpayers’ money?

    7. Sid — on 17th August, 2007 at 2:54 pm  

      Rumbold: word

    8. El Cid — on 17th August, 2007 at 2:57 pm  

      One thing’s for sure, it’s not only crusty lefties that don’t know about economics. I will have to revise my prejudices.

      Rumbold… that’s just pants man

    9. Sunny — on 17th August, 2007 at 3:02 pm  

      surely meant that [the public can reasonably expect] that he should have an understanding of what might happen in the US, and what might then happen here.

      Well, not in this case I’d say. The sub-prime market is quite small in the grand scheme of things. But because they debt wasn’t packaged properly or the risk spread evenly enough, some companies got caught with their pants down. People took fright, a liquidity crunch followed and stock markets started tumbling. I don’t think Alan Greenspan (god bless his irrationally exhuberant soul) could have predicted this.

    10. sahil — on 17th August, 2007 at 3:18 pm  

      Gordon Brown has taken credit for the economy because for the last 10 years, we’ve only one quarter of no growth. That is AMAZING by any benign international standard. The UK has been performing better than any member of the G8 over the same economic period, hence the BRIC factor can be discounted and is a pointless argument. The main thing Brown has done, is on the whole balance the books (I don’t mention PFI because that will hit us 15-20 years) via his so-called ’stealth’ taxes. If everyone knows about them they can’t be particularly stealthy. The other option is to maintain current public expenditure would be to borrow and crowd out private investors i.e. RISING INTEREST RATES. Or just not spend, on health, education, pensions, i.e. the main gainers of those policies have been middle England who have also been the biggest moaners of the ’stealthy’ taxes. You’d might to spare a thought for the 16-24 olds who have grown up during the Blair years, they are completely screwed.

      Lastly about the Credit crunch: Debt that people thought they had correctly priced, is as it turns out not correctly priced, because different forms of debt held in a portfolio i.e. CDO, CLO, ABS, do not diversify risk if the correlation between the assets head to 1, that is what is currently happening, and the market is spooked hence the general risk aversion being experienced. This means we see more extreme behaviour in the market, that causes out of the money options to be exercised, and the issuers did not ever think that they would be. This creates a general margin panic, that leads to even more liquidation and panic. On the whole, its all a bit spooky.

    11. Rumbold — on 17th August, 2007 at 3:34 pm  

      Brown is running massive defecits every year, in addition to PFI. How is that balancing the books? The middle class have been hit hardest by Brown and benefited least- they are taxed up to the hilt, prosecuted for minor offences, the constituencies they occupy are gerrymandered to return more Labour MPs (who are elected by smaller numbers), their pensions destroyed by a combination of Broonian greed and corporate greed.

      The other group to have suffered have been the working working class, who find themselves paying tax on very little income earned, receiving few benefits. It is those who do not work, those who feign disabilities to defraud properly disabled people of money, and the super-rich who have benefited most from the land of New Labour.

      Which part of my argument annoyed you El Cid?

    12. funkg — on 17th August, 2007 at 3:41 pm  

      Its Bilderberg wot done it mate

    13. El Cid — on 17th August, 2007 at 3:41 pm  

      About 90% lardy arse Daily Mail rhetoric
      You’re lucky I’m busy Rumbold

    14. sahil — on 17th August, 2007 at 3:52 pm  

      “Brown is running massive defecits every year, in addition to PFI. How is that balancing the books?”

      That is factually incorrect, look at the bottom of this IMF document for the numbers:

      http://www.imf.org/external/np/sec/pn/2003/pn0322.htm

      “The middle class have been hit hardest by Brown and benefited least- they are taxed up to the hilt, prosecuted for minor offences, the constituencies they occupy are gerrymandered to return more Labour MPs (who are elected by smaller numbers), their pensions destroyed by a combination of Broonian greed and corporate greed.

      The other group to have suffered have been the working working class, who find themselves paying tax on very little income earned, receiving few benefits.”

      Again completely wrong, look the the latest green paper by the Institute of Fiscal Studies (chapter 7 for the relevant expenditure):

      http://www.ifs.org.uk/budgets/gb2007/index.php

    15. Rumbold — on 17th August, 2007 at 3:53 pm  

      El Cid:

      As your comment refered to my first post, I can only assume that:

      a] You do not understand that if goods cost less, there will be less pressure on other areas (like wages), which will result in lower inflation (then would have existed had goods been more expensive).

      b] You believe that speculators, who knew the risks and would have made a lot of money had they pulled it off, should be compensated with taxpayers’ money. So cleaners and rubbish collectors are paying income tax in order to shore up the bank accounts of hedge fund managers.

    16. Rohin — on 17th August, 2007 at 3:55 pm  

      No El Cid, I want to hear what you have to say, cos I a) don’t see anything wrong with Rumbold’s argument b) don’t know much about this and want to hear both sides. It’ll take ya five minutes guv…!

    17. Rohin — on 17th August, 2007 at 3:56 pm  

      Rumbold, how dare you steal my a) b) format and post just before me.

    18. Leon — on 17th August, 2007 at 3:58 pm  

      You’re lucky I’m busy Rumbold

      Heh that was a real wild west moment!

    19. Rumbold — on 17th August, 2007 at 4:09 pm  

      Sahil:

      That document was from 2003, about 2002 and before data. In the last few years, Brown has been running defecits. As for the persecution of the middle class, that is perhaps more of an opinion based on some evidence rather than an unarguable fact.

      Rohin:

      Your doctor’s fingers are no match for mine (maniac laugh).

      Leon:

      El CId has probably just gone back to sleep. He will threaten me no more until he awakes from his siesta.

    20. ZinZin — on 17th August, 2007 at 4:33 pm  

      Rumbold many good points in this thread, but about IB as you must be aware that is where many of the unemployed have been placed to massage the unemployment figures. This has been going on since the 1980s and it is no coincidence that unemployment blackspots are now called IB blackspots.

    21. sahil — on 17th August, 2007 at 4:35 pm  

      “Sahil:

      That document was from 2003, about 2002 and before data. In the last few years, Brown has been running defecits. As for the persecution of the middle class, that is perhaps more of an opinion based on some evidence rather than an unarguable fact.”

      Well go look at the Green document from the IFS, it has the fiscal deficit numbers from 1997-2007, its no big deal. Like Brown himself has said, the books have got to balance over the business cycle and so far it look fine. Those are the authors words not mine. Those are not MASSIVE deficits. This is one of the reasons why a lot of people are expecting Brown to cut back expenditure because he’ll need to balance over the business cycle in the coming years, because he will NOT raise taxes. As for the middle class persecution, maybe its an English thing, but the middle classes have benefited the most from this government: great school, great health, great pensions, great economy. Maybe people just need a good moan. The people who have been screwed are the 16-24 in Labour’s time. They’ll need to pay more taxes, work longer, have lower job security, no pensions, no house, student loans, PFI to repay, etc…

    22. ZinZin — on 17th August, 2007 at 4:35 pm  

      Will someone teach me economics? I can do home economics but I keep being told there not the same thing.

    23. sahil — on 17th August, 2007 at 4:39 pm  

      #22 ZinZin, good start here :D

      http://www.amazon.com/Economics-Dummies-Sean-Masaki-Flynn/dp/0764557262

    24. Rumbold — on 17th August, 2007 at 4:57 pm  

      Sahil:

      Lokk at the increasing numbers of people paying for private schools, in spite of massive fee rises. That is a good indicator of how the present school system is viewed. Meanwhile, universities are increasingly setting their own entrance tests because they no longer trust A-Levels.

      Great pensions? If you work for the government, yes- the ‘client state’. Otherwise, the state pension is awful.

      You are spot on though about the 16-24 generation being hit badly.

      ZinZin:

      Good point about incapacity benefit. And doctors are too scared not to sign people off as sick because their wages depend partly on ‘patient satisfaction’ responses.

    25. sahil — on 17th August, 2007 at 5:15 pm  

      Rumbold, much of what you are repeating to me is not related to government performance rather people’s expectations and at times stupidity. For example you’re right with the no. of people opting for private schools but does that mean the actual state level of education has dropped?? Not according to record A-level and GSCE results. Next point is are A-levels too easy? Not according to most subject’s curriculum, its the same as before if not more subjects. Most people are complaining that there is no calculus in A-level maths, that’s nonsense, I know people who are studying differential equations in A-levels, something unheard of before. However more people then ever are getting As. So universities only want the top 5% from every school or a minimum of 4As. So they now are forced to have entrance exams simply due to demand. Remember that more people than ever are now going to uni, so its no surprise that entrance requirements are getting more difficult (demographic bulge i.e. baby boomers brats are coming).

      As for pensions, don’t blame the govt for private sector pensions that’s the specific companies fault, quit if it sucks. All companies are ditching pension schemes its simply too expensive with people’s life expectancies. Moreover that’s a simply reality of open labour markets, companies here do not need to worry about hiring Brits, they can hire anyone from the EU. Now multiply that frustration by 10 to understand how difficult it is for a graduate with no work experience to even compete or demand any rights in the UK labour market. In regards to state pensions, well most people heading towards retirement have seen the biggest capital increase in their houses. There has been a 300% increase in house prices since labour came into power. Many now can live an easy life of luxury by simply freeing up some equity from their house which is easy enough with today’s financial instruments. PLUS state pensions have risen faster than in line with inflation so in real terms there has been an increase, just not as much as the spending in health and education.

    26. Jai — on 17th August, 2007 at 6:33 pm  

      But because they debt wasn’t packaged properly or the risk spread evenly enough, some companies got caught with their pants down. People took fright, a liquidity crunch followed and stock markets started tumbling.

      Lastly about the Credit crunch:…..This creates a general margin panic, that leads to even more liquidation and panic.

      It’s not just that. The turmoil was because, structured credit derivatives being the way they are, it’s a comparatively lightly regulated part of the financial sector and trades don’t occur through formalised exchanges (hence they’re known as OTC, or “Over the Counter” financial instruments). So there’s a lot of opaqueness and confusion right now about where the credit risk has been passed on to and exactly who else globally has been impacted by the knock-on effects of the problems in the US sub-prime market.

      PS. Sahil, stop showing off with investment banking jargon that most other people here won’t necessarily understand ! Unlike me, Sid, and (presumably) you, not everyone here works in the City, y’know ;)

      (re: #10 — Good explanation by you, incidentally).

    27. Bond Trader — on 17th August, 2007 at 6:41 pm  

      Gordon claimed credit for the benign economic conditions of the last few years didn’t he? Of course in reality he had nothing to do with the economic success or with stock prices.

      But he has driven up government debt levels immensely - add the Enron-style off balance sheet capital spending via PFI and you get fiscal irresponsibility. Debts that will be borne by the children of today’s taxpayers - some PFI deals are 50 years long.

      The politics of the situation are that the Tories would be fools not to pin a debt crisis on him. That is how politics works. Just as Labour blamed mortgage repossessions on the Tories in campaign posters in the 2001 and 2005 elections.

    28. El Cid — on 17th August, 2007 at 9:02 pm  

      Don’t be so presumptious Jai. You’re not exactly front office.
      Anyway, now that U.S. markets are almost shut and the Fed has showed its hand, here are a few points from me.
      Firstly, the Spanish work very long hours and are second only to the Brits in terms of the most hours worked in Europe. That’s not necessarily something to be proud of but you can still shove it up your arse Rumbold.
      Second, what I objected to was the naked party political broadcast by the Conservative Party. If I want to hear that I’ll tune into Question Time.
      Third, yeah ok, so cheap manufacturing from a fast-expanding China has helped to keep a lid on finished goods inflation. I could add — just to help you out — that so has massive outsourcing of production and services, and globalisation generally. These are global structural forces that no government of an individual and relatively large European economy can claim credit for. Globalisation has also led to massive primary goods inflation — but we’ll leave that aside.
      But what the UK government can legitimately point to is that has overseen an unprecedented period of growth which has seen Britain excel within Europe and kept foreign investment flowing in.
      Fourthly, who said anything about bailing out ’speculators’, whoever these ’speculators’ are? Have I been on another planet in recent days? I don’t recall anyone saying BNP Paribas, Bear Stearns, Countrywide, IKB, et al should be bailed out?
      Finally, you know the phrase ‘what’s that got to do with the price of fish’? That what I thought when I saw what you said bond trader — if you really are a bond trader, rather than some jub. What’s the U.S. subprime crisis and the problems it has created for institutional investors foolish enough to load up on the repackaged risk got to do with sovereign debt?

      Picklers be warned: I smell Tory propagandists.

    29. Rumbold — on 17th August, 2007 at 11:00 pm  

      El Cid:

      “You can still shove it up your arse Rumbold.”

      Your eloquence does you credit El Cid.

      “Second, what I objected to was the naked party political broadcast by the Conservative Party. If I want to hear that I’ll tune into Question Time.”

      I defended Gordon Brown by saying that there was nothing he could have done about the crisis. I said that this was a situation, like low inflation, that Brown has had little control over. Then I argued that the Bank of England should not bail out speculators.

      However, if you believe the crisis is Brown’s fault and taxpayers’ money should be used to compensate stockbrokers, then please, state your case. I am all ears.

      “Picklers be warned: I smell Tory propagandists.”

      It is difficult to see how my statements are Conservative propaganda- surely they would have tried to blame Brown for the fall in the FTSE?

      As for insulting me- please, leave it to Sid. He is so much better at it then you.

    30. Rumbold — on 17th August, 2007 at 11:11 pm  

      Sahil:

      I do recognise that perception does not always reflect reality. Though more people are applying for university, there are also more places than ever before. Are you saying that people are many times clever than children in 1960? That is what the stats suggest.

      You are right about companies ditching pensions because of the expense; why then is the government continuing to pour vast amounts of money into very nice government employee pensions, when we have reached a point as a country where state sector salaries are comparable to private, and it is harder to get fired from the civil service or local government?

      Releasing equity is all well and good, but what is happening is that people who have paid off the mortgage have to sell off part of their home in order to live comfortably. Something about that just makes me feel a bit uneasy (not that I would ban it, I just think that living off pensions and savings is better than reverse mortgaging your house).

    31. Riz — on 18th August, 2007 at 2:36 am  

      An economics post … woo hoo !

      Gordon Brown may have something to do with what’s happening, in a very roundabout way. He was behind giving the Bank of England independence, and as such the BoE won’t be jumping in to save the financial mkts/public for political brownie points. That means a reduced chance of rate cuts which is bad for stocks, so Guido was right all along! Of course, I’m just pulling your leg(s).

      That said, I have to disagree with C Dillows statement that ‘the turmoil undermines the simple-minded justification for free markets’ though, as we could make the case that imperfect information is at the heart of the crisis. I put this down to the fact that lenders, because they package up and sell the mortgages on their books, have transformed into fee-collecting sales agents. People respond to incentives, and if you don’t bear the risk you certainly won’t care any more about the quality of your credits.

      You have to love the terms the Americans come up with eg: teaser-rates, ARMs (adjustable rate mortgages. In the UK, we call them variable rate mortgages but that doesn’t abbreviate well..duh, what were we thikning), and my favourite…NINJAs (people with no income, no jobs, no assets … aka the subprime customer group).

      Anyway, hippies are dangerous … long live the free market!

    32. Jai — on 18th August, 2007 at 12:02 pm  

      El Cid,

      Don’t be so presumptious Jai. You’re not exactly front office.

      Given the fact I actually specialise in working closely with the Front Office and the associated complex financial instruments, particularly involving Fixed Income — plus their trading systems — perhaps you should be a little less presumptious yourself. Especially considering the fact that I also hold multiple professional financial qualifications which are geared specifically for members of the Front Office.

      As for insulting me- please, leave it to Sid. He is so much better at it then you.

      Agree completely with Rumbold. Please don’t make us embarrass you again.

    33. sid — on 18th August, 2007 at 12:49 pm  

      chih chih! I don’t insuly anyone. I only make them aware of their delusions of adequacy.

    34. Rumbold — on 18th August, 2007 at 12:58 pm  

      That explains everything.

    35. Clairwil — on 18th August, 2007 at 1:11 pm  

      Rumbold
      ‘Good point about incapacity benefit. And doctors are too scared not to sign people off as sick because their wages depend partly on ‘patient satisfaction’ responses’

      True but GP evidence is not regarded very highly by decision makers for IB and DLA. Hence why claimants need to be seen by a doctor appointed by the DWP before being awarded benefit. Though there is a period at the start of the IB claim where G.P evidence is sufficient. Believe me the days of saying you’ve got a bad back and claiming indefinitely are long gone. There are also reforms due to be introduced next year for IB which look like being pretty disastrous for genuine claimants, though on the plus side will make life pretty difficult for fraudsters (until they think up a new scam).

      Coupled with the mess they made off tax credits, the one thing Labour haven’t been is soft on the low paid or the disabled.

    36. Rumbold — on 18th August, 2007 at 1:21 pm  

      Clairwil:

      I was basing my point on anecdotal evidence, namely from a number of my friends who have been working in GPs’ surgeries and have been told that it is a lot easier to sign people off sick because otherwise the GPs lose money. I did not realise that more evidence was required; thank you for that.

      Not that you are saying this, but I do not know what the fuss is about when governments argue that people claiming disability benefit should have to prove that they are disabled. From my experience I have seen that genuinely disabled people have lost out on services because there has not been enough money, presumably because crooks are falsely claiming it. I therefore have no problem with people having to prove that they are disabled- it will mean more money for those who need it.

    37. El Cid — on 18th August, 2007 at 6:23 pm  

      Jai, what you don’t know won’t hurt you.

    38. El Sexy Beast — on 18th August, 2007 at 6:51 pm  

      El CId has proobably just gone back to sleep. He will threaten me no more until he awakes from his siesta.

      So what does the above say about your eloquence?
      Granted, maybe I should have not taken the bait, but it is irritating to be on the receiving end of lame cliches that allude to my ethnicity and culture.

      I mean, why not go for:
      Sid is probably busy with one of his 5 prayers to Mecca. He will threaten me no more until he returns form the mosque.

      Or
      Jai is probably busy manning the help desk. She will threaten me no more until the bond trader has rebooted and the problem is solved.

      I’m just saying….

    39. Clairwil — on 18th August, 2007 at 6:53 pm  

      Rumbold,
      Yes I agree. The whole thing could be resolved with a proper medical rather than the biased DWP medical we have at present. Decision making at the DWP is very poor and as you say a lot of genuine claimants lose out on other services like home helps etc.

      In my area which may not be typical about 75% of disability benefit refusals are overturned at appeal when an unbiased look is taken at the evidence. There seems to be a mentality that everyone who applies for benefit is committing fraud and their evidence, that of their family, their G.P and in some cases consultants is disregarded in favour of the DWP doctors who supply computer generated reports based on multiple choice answers.

    40. Rumbold — on 18th August, 2007 at 8:24 pm  

      Those are quite good El Sexy Beast- I will have to remember them. What about Sid has just left to go catch some fish (I do not know why this is a Bengali stereotype but it seems to be)?

      El Sexy Beast- I presume that you and Charlton Heston fan El Cid are one and the same. If so, I would like to point out that you had started insulting me long before I started to stereotype you matey. And, just so you know, Gibraltar is British.

    41. sahil — on 18th August, 2007 at 8:24 pm  

      “PS. Sahil, stop showing off with investment banking jargon that most other people here won’t necessarily understand ! Unlike me, Sid, and (presumably) you, not everyone here works in the City, y’know ;)”

      I’m not working in the city yet Jai, I still need to appreciate the limitations of model building in finance so I’m currently doing an options course dealing with limitations like, yes you guessed, non-normal market conditions and credit derivatives Heh. I’m really shouldn’t be laughing too much about the current problems, cause it’s going to make my life difficult getting a job, but it’s amusing to see the quants squirming a little bit.

      Rumbold, students are slightly smarter now than before, its evolution, but yes most of the grades are probably down to productivity increases in teaching and exam preps, and not necessarily a significant sign of student intelligence. As for more uni places: there may be more uni’s but still only the few Ivy league ones, where its your best chance to get a job that pays of your loans, supply has not kept up with demand.

      As for the state pensions, they were promised to many of the older civil servants years ago, the govt is simply honouring its agreements, new civil servants do not have those privileges, so what is the grumbling about. As for the house equity, if people spend most of their saving in their house instead of saving it in a tracker fund, then they should rely on their pensions from their main wealth stock i.e. house. What’s so creepy about it, if you put all your money in one basket, then you need to tap that once in a while to smooth your consumption.

      El Cid temper temper, have you been losing money :D

    42. Rumbold — on 18th August, 2007 at 8:28 pm  

      Clairwil:

      As I said, my knowledge of this is mostly garnered from others telling me what is happening. That is interesting about the numbers who win on appeal- what do you mean by ‘unbiased’?

      Councils also seem pretty awful at dealing with the provision of services for disabled people, yet they happily waste money on junkets. It is a disgrace.

    43. Rumbold — on 18th August, 2007 at 8:34 pm  

      Sahil:

      “Most of the grades are probably down to productivity increases in teaching and exam preps, and not necessarily a significant sign of student intelligence.”

      Excellent point. I had forgotten that. Are students today smarter than those from the 1950s? In some areas yes, in other areas no.

      With regards the pensions, it is the sheer scale of the index-linked pensions that worries me. I am all for honouring past agreements, but at what cost?

      “If you put all your money in one basket, then you need to tap that once in a while to smooth your consumption.”

      Good point once again. I see now that I overreacted to the original point- you have convinced me. Good luck in the City. Jai was right about explaining terms though.

    44. El Cid — on 18th August, 2007 at 8:46 pm  

      And, just so you know, Gibraltar is British.

      Funny enough, so am I, and Sid, Sunny, et al. You get it?

    45. El Cid — on 18th August, 2007 at 8:47 pm  

      El Cid temper temper, have you been losing money :D

      :D

    46. Rumbold — on 18th August, 2007 at 8:51 pm  

      You are awake then? Good.

      You cannot have it both ways El Cid. You can either insult people (jokingly or otherwise) and have the same done to you in turn, or not. Your choice.

    47. sahil — on 18th August, 2007 at 10:35 pm  

      “Are students today smarter than those from the 1950s? In some areas yes, in other areas no.”

      Agreed, it is all relative anyways, I hate the term intelligence.

      “With regards the pensions, it is the sheer scale of the index-linked pensions that worries me. I am all for honouring past agreements, but at what cost?”

      Agreed, as I said before I have not included PFI in any of my arguments, that is the ticking time bomb IMHO. We’re F**KED.

      And yeah, I should explain what I mean more often, but I hate typing and have the attention span of a puffer fish, instead I just get angry and turn all bubble eyed and purple :D

    48. Rumbold — on 18th August, 2007 at 10:39 pm  

      “I hate typing and have the attention span of a puffer fish, instead I just get angry and turn all bubble eyed and purple.”

      What a lovely sentence- it brought a smile to my face.

    49. Gump — on 18th August, 2007 at 11:08 pm  

      “I don’t think Alan Greenspan (god bless his irrationally exhuberant soul) could have predicted this.”

      apart from the economics in the comments above (in which i largely agree with Sahil) i dont get this “it’s a bolt from the blue” thing.

      you had articles in UK broadsheets talking about this happening and they were in february this year.
      actually, i was speaking to a polish builder a couple of motnhs ago and he used to live and work in the US. he came over here two years ago but has still has friends working in the US. he said to me that work was really slow over there because they’ve stopped house building because people cant afford the prices and the mortgages are too high and they can’t pay. this, according to him, had been the case for quite a while.

      the basic idea is that if people can’t afford the mortgage re-payments, they’re going to default. if they default theat debt is going to be with those providing the loans. now, if that debt has been repackaged and sold on to others, then they’re going to face the brunt of it too.
      it’s not that difficult to predict that SUB-prime mortgages are going to involve a high chance of people defaulting. that’s why they’re sub prime.
      so, as soon as people start to arrange sub prime mortgages freely, you’re asking for trouble.
      and to all those companies that are facing the consequences…shouldnt they have known the risk that they were exposing themselves to. either they, for some unknown reason, didnt expect people to default. or, they miscalculated their own risk.
      i dont see how this couldnt have happened.

    50. Jai — on 19th August, 2007 at 11:31 am  

      Sahil,

      I’m not working in the city yet Jai,

      Don’t worry mate, I was just pulling your leg and wasn’t having a go at you.

      The current turbulence is a little worrying, though. There are different viewpoints around on whether it’s temporary and manageable or something that’s going to be protracted; as you’ve guessed, the latter risks affecting other job roles in Financial Services and (if it gets worse) the rest of the private sector. Some reassuring noises coming out of the Treasury anyway, so let’s hope they’re right, eh.

    51. Jai — on 19th August, 2007 at 12:01 pm  

    52. Sunny — on 19th August, 2007 at 12:20 pm  

      ha ha… alright guys, please put down the handbags and get back to the important task of dissing Guido Fawkes. This sniping is amusing but futile. El Cid - stop being a naughty boy.

    53. Jai — on 19th August, 2007 at 12:22 pm  

      El Cid,

      Jai, what you don’t know won’t hurt you.

      What you don’t know — or are apparently assuming, based on God-knows-what — is embarrassing you considerably here. You don’t have a clue who you’re actually talking to. Even worse for you, I’m FSA Approved too - do you know what that term means, especially its relevance to the Front Office ?

      Jai is probably busy manning the help desk. She will threaten me no more until the bond trader has rebooted and the problem is solved.

      A couple of points:

      1. “Jai” is a man. As everyone else on PP knows and as has been made abundantly clear during the last couple of years of my participation on this blog.

      2. As I mentioned early in the New Year when I started my most recent job (I originally come from a “Big 5″ management consulting background — sorry mate, worlds away from “helpdesks”), I actually work in Business Analysis/Project Management, aligned with the Front Office. Which is the reason I post relatively infrequently on PP during quick breaks and usually only during specific times of the day, mainly early morning and during the evening when most of the working day is over. If you think I work in some kind of IT Support/back-office role then you couldn’t be further from the truth.

    54. Jai (message for Sunny) — on 19th August, 2007 at 12:23 pm  

      Sunny,

      Glad you’re here. I’d be grateful if you could please delete my post #51.

      Many thanks.

    55. El Cid — on 19th August, 2007 at 12:53 pm  

      I’m FSA Approved too

      Snigger

    56. El Cid — on 19th August, 2007 at 12:54 pm  

      Rumbold, please don’t insult me via my ethnicity.
      It doesn’t put you in a good light — believe me

    57. Jai — on 19th August, 2007 at 1:19 pm  

      I’m FSA Approved too

      Snigger

      The capital ‘A’ in ‘Approved’ was not accidental. It’s a legal/regulatory term specific to the City. Do you know what it means, El Cid ?

      It’s okay to admit it if you don’t.

    58. El Cid — on 19th August, 2007 at 1:41 pm  

      oh my god, you really are entertaining jai!

    59. Rumbold — on 19th August, 2007 at 1:47 pm  

      El Cid:

      “Rumbold, please don’t insult me via my ethnicity.”

      Fine; I am sorry. Shall we just drop it?

    60. Jai — on 19th August, 2007 at 1:54 pm  

      oh my god, you really are entertaining jai!

      So are you El Cid, although probably not in the way you intend ;)

      Given your continuing silence on the subject, I take it you don’t actually know what the term “FSA Approved” means ? Here’s a hint: it’s a specific legal term relating to activities only certain groups in the Financial Services sector are authorised to do, and even then only after certain professional accreditations have been attained.

      Come on, I’d expect you to be better informed, especially after all the name-dropping you’ve engaged in.

    61. sid — on 19th August, 2007 at 2:10 pm  

      hey will you two bitches take it to a room?

    62. El Cid — on 19th August, 2007 at 2:45 pm  

      sorry guys
      i can’t help it.
      i mean, how pompous can someone be/get?

      I will desist and allow Jai to have the last word.
      P.S. If i can remember, it’s so long ago — the compliance section is particularly boring, don’t you find?

    63. Jai — on 19th August, 2007 at 6:15 pm  

      i mean, how pompous can someone be/get?

      Difficult to say at this point, El Cid. You set the bar pretty high there and keep raising it regularly (in-between your frequent rage attacks, of course). That is of course when you don’t realise someone’s male despite other commenters constantly referring to them as “he” and “him” over the course of several years. Rocket science for you, I know, but please do try to keep up.

      Target me without good reason, expect the same in response.

      P.S. If i can remember, it’s so long ago — the compliance section is particularly boring, don’t you find?

      It’s been a number of years since I completed my series of certifications, but personally I found regulatory topics boring as hell and therefore concentrated on trading strategies and portfolio theory as it was the most relevant to my remit.

      Now if you’re ready to wipe all the egg off your face, perhaps we can get this thread back on-topic, as per Sunny’s request in post #52. That is, if your ego can handle being wildly off the mark in your assumptions about Gunga Din’s professional background, along with having been proven wrong yet again in front of all the “natives”.

    64. Jai — on 19th August, 2007 at 6:27 pm  

      hey will you two bitches take it to a room?

      Apologies Sid — I’m done now anyway. Some people are too easily threatened by Asians who won’t back down in response to obnoxious behaviour (it does happen from time to time in the City too, as you must have seen yourself), and I found the statement made at the start of post #28 to be curious and, funnily enough, presumptious. Interesting how people make huge assumptions without any facts to base it all on.

      Enough sidetracking from me. Back to the main topic.

    65. El Cid — on 19th August, 2007 at 6:34 pm  

      *keeps promise, bites tongue* :D

    66. sahil — on 19th August, 2007 at 6:39 pm  

      BREAK!!! Time Out!!! Both of you are traders, just try and survive the current mess. Leads to my next point:

      Guido is a dumdass!!! He’s an economic retard.

      Anyways points to disagree with??

    67. El Cid — on 19th August, 2007 at 6:44 pm  

      Sahil, no worries, all is not what it might seem. Apologies, I’ve just been having a bit of fun. I’m not a trader — not anymore, anyway — and neither is she.

    68. sahil — on 19th August, 2007 at 6:47 pm  

      “neither is she.”

      Ohhhh, you really are spoiling for a reaction :D

      I give up, I’m going to watch the rain evaporate from my window.

    69. Jai — on 19th August, 2007 at 6:55 pm  

      I’m not a trader — not anymore, anyway — and neither is she.

      Now now, El Cid, surely even a man of your limited intelligence can come up with something better than that ?

      Then again, probably not…..

      Never mind ;)

      I don’t intend to insult Sunny any further by taking this thread any more off-topic, and neither should you. Time to let everyone else get back to their discussion, mate. Enough fun and games.

    70. El Cid — on 19th August, 2007 at 7:03 pm  

      You are very entertaining oh great linen suit, Panama hat wearing wise one. Thank you for deigning to speak to the little people. I am truly honoured. *shuffles backwards out of room, head bowed*

    71. sahil — on 19th August, 2007 at 7:04 pm  

      Jai, El Cid, Sid would it be possible for me to have your email to send a private message? Its about the city and how to get a job here. Would be much appreciated.

    72. Jai — on 19th August, 2007 at 7:11 pm  

      El Cid,

      Sometimes I find that it makes the riff-raff’s day when I give them a little attention. I’m glad you appreciate it, although you’ll forgive me if I prefer to keep my interaction with the “great unwashed” fairly limited.

      And don’t worry about the previous altercation. From time to time I am indeed misunderstood by people. Great men often are.

    73. Jai — on 19th August, 2007 at 7:17 pm  

      Sahil,

      You can ask me whatever you want on the Open Thread — I’d be more than happy to answer your questions there when I get a chance — probably sometime tomorrow, now(hopefully El Cid will be willing to constructively join in there too, unless he wants to speak to you offline).

      Feel free to be as honest as you want — thanks to the miracle of this interwebnet malarkey, your anonymity and privacy are assured, so we’ll all be able to be as frank as necessary (and it won’t compromise your own ability to land a job in the City).

    74. El Cid — on 19th August, 2007 at 7:17 pm  

      Depends. Think the other 2 might be in a better position to help. But here’s my email address:
      elcidthinksjaiisveryfunny@hotmail.co.uk

    75. Jai — on 19th August, 2007 at 7:22 pm  

      Sahil,

      Here’s mine: jaithinkselcidisamofopahenchhod@gmail.com

      (Just kidding — Use the Open Thread instead :) )

    76. Rohin — on 19th August, 2007 at 8:49 pm  

      Here’s mine (I don’t work in the City, but I boned a bunch of fit bitches in business suits from the square mile innit blud):

      I’mratheralarmedthatI’myoungerthanElCidandJaiSinghcosthey’resuchbigkiddies@pickledpolitics.com

    77. Federal Government and Politics — on 21st August, 2007 at 6:20 am  

      Federal Government and Politics…

      I couldn’t understand some parts of this article, but it sounds interesting…

    78. Free Online Tax Returns — on 5th September, 2007 at 12:29 pm  

      Free Online Tax Returns…

      I couldn’t understand some parts of this article, but it sounds interesting…

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