Wednesday, November 16, 2016

Unmaking Money

I remember when I was a student at the LSE a lecturer talking, in hushed awe, about the Irish bank strikes in the 1970s and how a modern country somehow managed to get by without a banking system.

It seems to me we're witnessing something even more awe-inspiring  (though that might not capture the full horror of what is unfolding), as India runs an experiment in running a cash economy without any cash. Last week, November 9th, as the world was somewhat focussed on the election of Donal Trump as the next President of the United States, the Indian Government took advantage of the distraction to ban overnight the use of Rs500 ($7.50) and Rs1,000 ($15) banknotes. Banks and ATMs were closed as the Government replaced all the bank stocks of Rs500 and Rs1,000 notes with Rs100 notes. Apparently it's all to do with fighting terrorism: it alway is.

Except it seems they haven't supplied enough Rs100 and other notes: surprising that in a country renowned throughout the world for bureaucratic efficiency and streamlined administrative practices, not. The result - in an overwhelmingly cash based economy - is, shock horror, unfolding economic collapse. Who knew?

Maybe all those advocating the abolition of cash might want to learn some lessons fast, before it turns up in the economic text books as a case of 'how not to do things' in a modern (or modernising) economy.  Though  doing without banks might be an experiment worth rerunning...

Thursday, November 10, 2016

The Closing of the Liberal Mind

"People who think their own opinions make them virtuous have the most closed minds of all." Peter Hitchens (in a despondent mood)
That's three out of three so far this year for me: I forecast there would be no Fianna Fail/Fine Gael coalition government; that the British would vote Leave; and that Donald Trump would be the next President of the United States (back in July as it happens). Only wish I'd placed an accumulator bet with Paddy Power...

So how did I do it? Was it some kind of Nate-Silveresque algorithm (though his own blew up alongside every other major pollster)? Or maybe I had my own private polls? Nope. My secret was (is) to try and see things as they are, not as I would like them to be. I know: not terribly special. In fact, as talents go it's one that was remarkably common when I was growing up. Though not so much these days it seems.

How did we end up in this state? One in which the mass media (or should that be the 'media en masse') has ended up a sad little echo chamber, virtue signalling its liberal credentials to one another even as, you know, reality moves on. Whose on the wrong side of history now?

What we have witnessed in 2016 is the acceleration of a phenomenon that has been gathering pace in recent decades. That phenomenon is the closing of the liberal, progressive, leftist mind, to the point that it no longer sees things as they are but only as they would like them to be. And despite their perennial rebellion they have failed to notice that THEY ARE THE ESTABLISHMENT; THE MAN; THE SYSTEM. And so they simply cannot comprehend it when the People reject the establishment by rejecting THEM.

Not all leftists have lost touch with reality, however.  Michael Moore - a reluctant Hillary supporter - intuited that Trump's election would be 'the biggest 'f**k you message ever recorded in human history'. And if you haven't seen the video, go see it now: it's right up there with Al Pacino's 'one more inch' pep talk in Any Given Sunday. I knew in my head Trump would win back in July, I knew in my heart he would win when I saw that video just a few weeks ago.

There's a bigger problem. I call it 'the closing of the Liberal mind'. Alastair Roberts calls it Liberal Obliviousness. Here he is on the liberal/progressive outlook during the election:
The troubling thing is the frequent unwillingness to attempt to believe better of their fellow Americans, to explore the possibility that perhaps many Trump voters are intelligent, well-meaning, and, yes, fearful people just like themselves, people who are actually opposed to misogyny and racism and only voted for Trump because they believed there was no other choice. The fact that such liberals seem to find it more reassuring to believe that an overwhelming multitude of their compatriots are irredeemably hateful and evil than it is for them to believe that a well-meaning and intelligent person might support an opposing candidate is immensely revealing. Perhaps it suggests that such people have more of an existential stake in the cocoons of ideological communities than they do in the world of social reality.
He continues:
While they flatter themselves that they are compassionate and open—they are standing for love!—their vicious vengefulness and hostility towards people, or the way that they sacrifice even the closest relationships on the altar of political and ideological differences, is truly terrifying. The other side isn’t just driven by different yet valid group concerns, or well-meaning but mistaken, or even compromised yet open to moral suasion. No, for so many they are evil and beyond redemption, a group that cannot be won over by reason, service, or love but can only be eradicated. 
Do read the whole thing.

What to do about it? How do we create a common dialogue based in reality rather than on psychological projection? Here in Ireland as well? Maybe it's self-correcting, a healthy backlash against Politically Correct doctrine that returns us to something more 'liberal' with a small 'l'. Successfully navigated such a turn might create a more 'inclusive' society, one which tolerates diversity of thought, not just diversity of religion, race or sexual orientation. We'll see. Like Bruce Charlton, I am filled 'with both hope and a dash of optimism' as we approach the end of 2016.

Though you'll have to wait a while longer for my 2017 forecasts.

Monday, November 7, 2016

Centenary Values

Below is the unedited text of my recent article in the Irish Times, part of their Centenary Conversations feature:

They say politics is downstream of culture, and culture is downstream of values. Politics changes on a daily basis; culture sometimes in a generation; while values change more slowly, if at all. In this centenary year we can observe these different patterns and pace of change in Irish society, and so reflect on where the stream of change might carry us in the future.

The commemorations and celebrations we have shared in 2016 have, as their touchstone, the 1916 Proclamation. Why? Its language is quite arcane and its subject matter somewhat dated: surely less than relevant to Ireland in 2016? Yet its words, and the wider discourse about 1916, has compelled us to think anew about our values and our culture, and even about our politics. Witness the enthusiasm with which thousands of children throughout the country composed their own proclamations on Proclamation Day earlier this year.

The power of this centenary year is ‘hidden in plain sight’ so to speak: it is a reminder of an extraordinary moment in time – ‘this supreme hour’ – which fused the past with the future, the dead generations with generations yet unborn. A moment when the course of history and the fate of destiny pivoted and took a different direction to that expected one hundred years ago in April 1916.

The ancient Greeks knew all about this. They had two concepts of time: chronos and kairos. The former – chronos – is what we usually mean by time, a single dimension linking the past to the present to the future. But kairos is different, it comes from an ancient Greek word meaning the right or opportune moment; a time in between, a moment in time when something special, something unexpected happens.

The 1916 Rising took place in kairos time – ‘she now seizes that moment’ – a fleeting intersection of opportunity and action. Yeats recognized kairos too in his immortal line ‘all changed, changed utterly, a terrible beauty is born’. Right now, in this centenary year, some also sense a ‘moment’ to step back from the constant flow of chronos to once again adjust our course if we are unhappy with our future destiny as a nation. A chance to reconnect with kairos, even with beauty.

The centenary has captured our imagination in ways that were perhaps unexpected. There is a saying that ‘politicians campaign in poetry, but govern in prose’. Certainly the Rising was more poetry than prose – which is why the Proclamation still resonates with us a century later invoking, as it does, ‘the dead generations’, ‘cherishing all the children’, while calling us to our ‘august destiny’. Poetic indeed.

Yet much of contemporary politics appears ‘trapped’ in the present, and not just in Ireland. We had a general election at the beginning of this year in which 1916 barely featured beyond the usual bromides in speeches and press releases. It’s as if our politicians lack the capacity to reimage Ireland and the future by drawing inspiration from the past.

But, but… politics is downstream of culture, so it’s not surprising if our politicians are pre-occupied with the stuff of headlines, not proclamations. In a democracy we get the politicians we deserve. We have created a culture that values novelty over tradition and fashion over virtue, so we too are trapped in the present. We have become customers of the state, not citizens charged with our own sovereign destiny. We have forgotten, at least until now, our past and our duty to ‘give a vote’ to our ancestors, in G.K. Chesterton’s memorable phrase, to ‘the democracy of the dead’.

It comes back to values; it always does. Culture is downstream of values and one hundred years is enough time for values to change. But what are our values and how have they changed? Jonathan Haidt uses ‘moral foundation theory’ to distinguish between six distinct clusters of moral beliefs that shape our political and cultural values. To briefly summarize a substantial body of work, moral values can be said to cluster around: empathy, fairness, liberty, loyalty, authority and sanctity.

Haidt finds that political liberals and progressives emphasize the first three clusters (empathy, fairness and liberty) almost exclusively; while social conservatives and traditionalists emphasize all six clusters, including loyalty, authority and sanctity. However, it is the moral virtues of loyalty, authority and sanctity that have been and remain the deepest sources of identity, purpose and meaning in societies and civilizations. Through them we ‘create’ tradition.

This leads to a genuine tension in a country like Ireland. Contemporary Irish politics – like the rest of Europe – is almost exclusively caste in the progressive mould, driving the current debate on issues such as inequality (fairness), repeal of the 8th amendment (liberty) and housing (empathy). But the centenary has also strengthened our sense of Irishness (loyalty), our connection with the men and women who founded the nation (authority), and our gratitude for their sacrifices (sanctity).

Post-2016 will we enter another general election with a different set of values and with different expectations? As always it depends: on events, on the economy and on the choice of policies and parties available to us. Look at what’s happening elsewhere: Brexit is all about values, not policies. Europe is entering kairos time: the confluence of Brexit, the fragmentation of the Eurozone and the refugee crisis are forcing a wider conversation about values, culture and destiny.

Richard Kearney recently observed in the pages of this paper that:

History is more than what has taken place and cannot be changed; it equally involves potential futures still dormant in the past.

There is something appealing, reassuring even about the idea of ‘potential futures’ waiting to be unearthed as we respond to the challenges of the present in preparation for the future. It suggests we don’t have to do it all on our own: our ancestors have our back. And we’ll need all the help we can get as we navigate our small nation through the turbulent times ahead.

The question, of course, is: who are ‘we’? As I stood with tens of thousands of others on the streets of Dublin on Easter Sunday, watching Capt Peter Kelleher read the Proclamation outside the GPO, there was a palpable sense of our nation coming together in a way we hadn’t for a very long time. Maybe this is our moment of kairos? Time will tell.

Friday, October 28, 2016

Speaking Truth to Disempowerment

"During times of universal deceit, telling the truth becomes a revolutionary act." George Orwell 
Michael Moore is no George Orwell, but like Orwell he loves the working class, and not in some abstract socio-economic sense, but in his heart: the men, women and children he grew up with and whose suffering he has raged against over the years. 

Which is probably why only Michael Moore could produce and narrate the following:

The background music, by the way, is from Hans Zimmer's glorious soundtrack to the movie Inception.

Surely just a coincidence...?

Tuesday, October 25, 2016

Seeking Lehman

Every so often I discover writers/bloggers/analysts and find their writing so compelling that I end up 'bingeing' on their output for a time. Ben Hunt is one such a writer and also Chief Investment Strategist at Salient Partners.

Ben writes like Adam Curtis edits: sampling and savouring an eclectic mix of movies, novels and plays to form powerful and compelling insights into contemporary politics, economics and finance, with some investment guidance along the way. Though it's usually a lot clearer where Hunt is going with his narrative than where Curtis is going (sometimes even after the latter has been and gone).

A few examples - first up from a brilliant essay on Virtue Signaling:
Look, I get it. The Democratic candidate isn’t Clinton, it’s Clinton™. Having chosen (or more accurately, anointed) a profoundly hypocritical and opportunistic pragmatic candidate, Democratic mouthpieces are now in the uncomfortable position of manufacturing enthusiasm rather than channeling enthusiasm. Enthusiasm is something you can easily fake when you’re winning big. But when the game gets tight … when it looks like (gulp!) the game might go the other way … well, that’s when thoughts of self-preservation and virtue signaling start to creep into the most adamant Democratic partisan. In fact, particularly the most adamant Democratic partisans. They WANT to believe. But Clinton™ is just so hard to sell out FOR.
He's equally scathing about Trump by the way.

And one of his best, on Magical Thinking (you'll never think the same way about Central Bankers and eggs ever again):
It matters whether or not we call things by their proper names, because the words and the spells motivate human behavior like nothing else. It matters whether or not we sleepwalk our way through our own fin de siècle, because the really bad people and the really bad ideas that periodically wreck our world can’t be wished away. It matters whether or not we become courtiers ourselves, because the courtiers always fall the farthest. The problem with magical thinking run amok and its perpetuation of a fantasy world is that sooner or later the dream of the delusional king becomes a real world nightmare for real world people. It’s time to wake up.
Finally on The Narrative Machine:
I’ve written at some length about Brexit and the Narrative that emerged in its immediate aftermath, a Narrative that not only stopped the immediate sell-off in global risk assets in its tracks, but actually reversed the market decline and drove financial asset prices to new highs. To recap, I called Brexit a Bear Stearns event rather than a Lehman event, predicting that creators of Common Knowledge (what game theory calls Missionaries) would successfully characterize the event as an idiosyncratic fluke rather than a systemic risk, exactly as the collapse of Bear Stearns was portrayed in the spring of 2008. In other words, Brexit was NOT a Humpty Dumpty moment, where all the Fed’s horses and all the Fed’s men couldn’t put the egg shell back together again.

Do, as they say, read the whole thing.

Tuesday, October 18, 2016

Running Out of the Long Run

If there must be trouble, let it be in my days, that my child may have peace. Thomas Paine
One of the funnier moments in Budget 2017 was the stated intention by the Minister for Finance Michael Noonan to run a small budget surplus in 2019, with taxes projected to exceed expenditure. Yeah right. Given that Michael Noonan won't be the Minister for Finance in 2019 - and the Government probably won't be 'the Government' - then promising to be prudent in three years' time is straight out of the Augustinian playbook of delayed temperance.

But unfortunately it is par for the course, and not just in Ireland. One of the reasons people don't trust politicians (and we trust ours less in Ireland than they do in Saudi Arabia, never mind Singapore) is that they make promises they don't keep, and then they go to make even more promises. Which they don't keep. The strange thing is, however, I don't blame the politicians. Between news cycles and electoral cycles is well nigh impossible to make prudent decisions with long-run, positive consequences that nevertheless entail some short run sacrifice (or plain old temperance).

Of course they don't do much to help themselves, our politicians. Take the much heralded Citizens' Assembly. A supposedly representative selection of citizens from around the country will deliberate on a selection of topics that can best be described as 'random' (and certainly more random than the selection of people chosen and vetted for the Assembly). But its the things they won't debate that are the missed opportunities if the intention is to create a 'safe space' to discuss contentious issues without the inevitable political acrimony. And maybe come up with some useful ideas to boot. Issues they won't debate include:

- creating a new inter-generational contract on pensions (including the public sector)
- deciding what future we want for Ireland in Europe (including relations with the UK and NI)
- improving the quality of our governance and mitigating the short-termism that cripples it
- changing the social welfare and tax systems to be fairer to tax payers and to reward welfare recipients to take up employment
- creating a health service that delivers better outcomes for less money (okay, maybe not that one, way too hard!)

Instead we get some topics - such as the 8th Amendment and fixed term parliaments - that should be addressed by the Dáil; and other topics - such as an ageing population and tackling climate change - that are far too vague to lend themselves to any easy resolution or recommendations (not already available from multiple, expert sources).

We're running out of the long run in Ireland, having squandered the sacrifice of a deep recession by leaving all the institutions and practices in place that made it such a bad one in the first place. It's a pity that we seem bent on rushing towards the long run, one short run decision at a time. Maybe we could sub-contract our political thinking to Singapore?  Though perhaps on Saudi Arabia.

Monday, August 29, 2016

A Cash-Strapped Recovery?

I've holidayed in Ireland this summer, and one of the things that has struck me on my travels is the number of shuttered and boarded-up shops: even on the main streets of seemingly thriving towns and villages. What's going on? The latest retail sales data for July from the CSO has been heralded as further evidence of recovery and proof, if proof was needed, that things are getting better. 

But I'm not so sure: there are two stories in the Retail Sales Index report, the one we hear about and the one we don't. The one we hear about is real for sure: the value and volume of retail sales keep rising year-on-year, with some sectors rising a lot faster than others. But there's another story we don't hear so much about and the clue is in the name: the Index of retail sales is indexed against sales way back in 2005 - that's eleven years ago. The Index has been running above it's 2005 level for some time now, so recovery all done? Not quite, because 2005 wasn't the peak in retail sales: 2007/2008 was and we're nowhere near the peak yet, as the chart below shows (I've excluded motor sales as they are a capital purchase rather than a measure of current consumer spending, plus they have their own 'funding' in place these days from the car manufacturers themselves):

In fact, retail sales - excluding the motor trade - are still some 20% below their peak, and I very much doubt they'll ever get back to that peak again (due to online shopping, discounters, sterling etc and many other factors I won't go into now but I see playing out with clients every day).

And there's something else going on: there doesn't seem to be enough money in the economy to sustain anything like the level of spending in years gone by - it's as if we're living through a cash-strapped recovery. Look at the Central Bank's data for currency in circulation and M2 (a broad measure of money supply): the former has risen inexorably over the same period as the retail sales data (start of 2005 to mid-2016), but the latter has been fairly stagnant:

What could be driving this? The obvious culprit is debt repayment, and sure enough the amount of money Irish households owe by way of outstanding bank loans is now below the amount they have on deposit with the same banks:

But it isn't just households that have been on a 'debt detox' after the 'debt binge' of the Celtic Tiger era - sometime soon, if it hasn't happened already, Irish businesses will have more money on deposit than they owe in outstanding debt:

It's no wonder then that retail sales are still so far below their peak: households and businesses are hoarding billions on deposit that they might otherwise have spent or invested - but the scars of the crash are still hurting and nobody wants to go through that again.  Add to this the fact that the 'pillar' banks are equally risk averse and would prefer to lend only to people and businesses that don't actually need to borrow then no wonder progress is slow: 'tits on a bull' and all that.

Friday, August 19, 2016

Politics After Democracy

“How small, of all that human hearts endure, that part which laws or kings                         can cause or cure.” Samuel Johnson
What if the people voted to end democracy: would it be a democratic decision? We're witnessing a 'crisis of faith' in Ireland right now, and it'll probably get worse. It's a bigger story than 'the church in crisis' or 'the media in crisis', but it isn't getting the attention it deserves.

I've observed before that politics is sport for nerds, but the national interest in sport is looking a lot healthier. The latest Eurobarometer poll shows that Ireland is number six in the EU28 for our lack of interest in politics:

What's more, when we look at the results for Ireland in detail, we see that women, young people under 25, and the working class are the cohorts least interested in politics:

So what? The big 'So What?' is that there is growing evidence that younger generations in Europe and the United States are less and less enamoured with democracy, and aren't sure it's 'worth the effort' any more. A recent article by Roberto Stefan Foa and Yascha Mounk on The Democratic Disconnect drew on similar survey data and reached some very disturbing conclusions. Essentially they chart a strong growth in support for undemocratic political ideas (such as rule by the military) in many mature democracies, especially among the young.

They observe that:
Citizens of democracies are less and less content with their institutions; they are more and more willing to jettison institutions and norms that have traditionally been regarded as central components of democracy; and they are increasingly attracted to alternative regime forms. 
Far from showing that citizens have merely become more willing to criticize particular governments because their expectations of democracy have grown, this indicates a deep tension at the heart of contemporary politics: Even as democracy has come to be the only form of government widely viewed as legitimate, it has lost the trust of many citizens who no longer believe that democracy can deliver on their most pressing needs and preferences. The optimistic view that this decline in confidence merely represents a temporary downturn is no more than a pleasing assumption, based in part on a reluctance to call into question the vaunted stability of affluent democracies.
At the same time, 'politics is the new religion' in the sense that people are less and less tolerant of dissenting political ideas and choices in the same way previous generations were intolerant of dissenting religious preferences. What Michael Schulson calls The Moral Tribalism of Contemporary Politics.

Combine increasing scepticism about the efficacy of politics with a growing lack of interest in party politics and with a narrower and narrower definition of 'acceptable politics' and the stage is set for a very different type of politics. The type that doesn't see much point in people wasting time ticking boxes in booths every four years or so. There'll still be politics, of course, but there might not be democracy and I suspect a lot of people probably won't care...

Tuesday, August 9, 2016

The Puppies Win

I do a lot of work in the newspaper/media research space, and I found John Oliver's recent tour-de-force on the state of modern journalism to be, well, depressingly accurate (but in a very funny sort of way):

Over 3 million views since it went up on You Tube yesterday, so it has obviously struck a chord with more than just me.

But not everyone agrees with Oliver's analysis. David Chavern from the NAA thinks that:
People want, need and consume more hard news than they ever have. The core demand for the product isn't decreasing at all, and based upon that we will find our way to the far shore where the industry is thriving and growing once again. 
Which does sound worryingly like the sort of corporate speak Oliver has a go at in the video.  Still, I hope Chavern is right. I just hope that the shore doesn't prove further away than is possible to reach...

Monday, July 25, 2016


The election is now between the borderline personality Mommy and the arch-narcissist Daddy for the hearts and minds of a public sore beset by the initial spasms of economic and cultural collapse. James Howard Kunstler

And Daddy's going to win. Just over three months out from polling day on 8th November and I reckon Trump is on his way to a landslide. The latest CNN poll shows him ahead, but more than that it shows he's got momentum. On just about every measure in the survey, Clinton's numbers are going the wrong way, Trump's are going the right way. 

We can also see the same polarisation evident before Brexit: men are leaning strongly Trump, women are leaning strongly Clinton, and it's the same story for whites vs blacks, older vs younger, poorer vs richer:

A standout statistic for me from the poll is the percent of US voters who think each candidate is "running for president for the good of the country, not for personal gain". The percent for Clinton? 44%. The percent for Trump? 52%. Trump's number is rising, Clinton's is falling.

Clinton will get a boost from the Democratic Convention this week (though Kunstler's not so sure). But unless Trump goes full Nazi then I think he has it in the bag.

Just a pity Enda didn't have that round of golf with Trump when he last offered to visit us. Oh well, maybe his successor will be more welcoming to President Trump.

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