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Ian Fraser: The Economist Loses the Plot With This Shallow, Pro-City Propaganda

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By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser.


I was surprised and disappointed when I opened my copy of The Economist on Friday morning.

The magazine is running a feebly-argued propaganda piece headlined “Save the City” as its cover story. The piece vaunts the “skills” that are to be found in the City of London and seeks to persuade us that having a powerful financial sector is critical to the future health of the UK economy and that the “Square Mile” must therefore be cherished and preserved at all costs. The cover image harps back to the Blitz, as if Hitler’s Lufwaffe is once again poised to carpet bomb a key part of our heritage.

Outside PR puff sheets like HBOS’s absurd “Deal Leaders” of 2005-08 and the Pravda-style advertorials inserted into newspapers and magazines to launder the images of evil dictatorships, I’ve rarely read such a farcical or misleading article.

The magazine’s “Save the City” leading article is one-sided, snide, racist, xenophobic, and makes massive omissions. It doesn’t even start to acknowledge the multifarious failures of the financial sector, or the damage it has wrought on the UK economy in recent years. The article fails to mention the massive risks posed by “crony capitalism” and “regulatory capture”, including wilful blindness to fraud, and even includes the words –

Finance—the funnelling of savings to their best use—is a vital industry. Britain is very good at it, leading the world in various financial markets, including foreign exchange and over-the-counter derivatives.

Who wrote this garbage I wonder?

Yes, the City did once fulfil the function of efficiently allocating capital, but that stopped some ten to 20 years ago when the ‘zero sum’ game of financial speculation for the self-enrichment of the participants took over.

As I have said before the City has, with a few exceptions, become the cuckoo in the nest of the UK economy.

It has become gigantic skimming machine/casino. In addition to making taxpayer-underwritten bets, however absurd, it largely serves to diminish the savings and pensions of UK citizens, though outrageous fees, spurious and unwarranted trading and an intermediated structure that favours the interests of the people that work in its own, often-conflicted institutions (plus the people in their various suppliers including brokerages, law firms, accountancy firms, investment and actuarial consultancies, etc, etc) over and above the long-term interests of savers and the needs of the wider economy.

The article includes the cross-head “Strangely, California doesn’t talk down Silicon Valley”. As several of the 144, mainly outraged, Economist readers who have commented on this piece said, such a claim is farcical. One commenter, who uses the pseudonym jbunniii, wrote:-

Strangely, California doesn’t talk down Silicon Valley.” That is because Silicon Valley produces tangible, useful things (in addition to less useful things such as Facebook). Financiers produce nothing and enrich themselves by skimming from other people’s transactions.

This intellectually lazy piece of journalism is a disgrace. More than any Economist article I’ve recently read (some of which have been excellent by the way), it has made me give serious thought to cancelling my subscription to The Economist. I’ve heard that others are thinking along similar lines.

I’m kind of hoping there might be an internal rebellion at the magazine next week against whoever wrote or approved this ill-considered piece of claptrap, and that the magazine will, at the very least, prominently publish an opposing view in its Friday 13th January issue. Letters will not suffice, I’m afraid.

Edited highlights of other comments on Save the City piece include:-

Hyperoglyphics:-

Comparing the “City” to Silicon Valley is so ridiculous that I did not expect it even from the Economist. This reprehensible article reads more like a propaganda piece than balanced reporting from an esteemed magazine of economics…

ZUBq9o3Lo5

It would be great to see feature in the Economist of a a sober analysis of what actually goes on in the City. If they are so confident lets see them look at all the activity, quantify it and break down how much is actually true investment and proper allocation of resources and how much could be characterised as zero sum games?

mdoo:-

“Finance—the funnelling of savings to their best use—is a vital industry” Amen. Is that Comical Ali by invitation in the Pravda?

guest-iaisajo

The Economist aims “to take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.” You should be ashamed of yourselves. You would do well to take heed of the ire you have invoked here in the comments. This docile fluff piece that praises those who caused the The Great Recession, tipping us the closest to a Depression we’ve ever come whilst maligning those who seek to make their voices heard against the the greed of The City is sick. Your readers are incredibly intelligent, there’s a reason why we won’t swallow guff like this. Do yourselves a favour, pull this piece of nonsense and throw your weight behind reforming the city into a useful and honourable place where I’d want to work.

WT Economist:-

…Nobody has properly allocated capital for more than a decade. That takes lots of people in middle class jobs checking up on those using the capital, which cuts into the pay and bonuses of those doing the deals. … [as a result of rampant fraud] what I worry about for New York is what the Economist should worry about for London. That the financial industry will be lost because no one will trust anyone doing business in that city. Detroit’s auto industry ended up a despised and overpaid oligopoly with many political protectors that produced bad cars for its customers, and was subsequently blown away by a bunch of competitive companies from Japan. Worry about the customers, not the regulators.

Canuk:-

…At least you know how to spell the word “finance” but that is all you all at the Economist and the FT really know about the real world of finance. Too bad really – you are a disgrace, along with the City itself, to any well meaning and developed civil society trying to survive in a real political economy.

Insubstainability:-

…I used to work as a quantitative analyst and a trader for a hedge fund … Don’t hide behind a self-justification of how important finance is, we all know it is, what we decry is the misappropriation of returns and the lack of consequences of losses on what is essentially gambling with borrowed and highly leveraged money.

Jo Mellon:-

Finance is a vital industry. Yes… Britain is very good at it No, Britain is really, really, really crap at it. Like the once large and now gone UK car industry, the products are badly engineered, leak oil, break down and lack safety features. The current world financial crisis is the death agony of Anglo-Saxon finance: delayed by the ‘Big Bang’, but inevitable due to endemic incompetence.

Perig:-

What a perspective for UK! The economist is advising UK of becoming, protected by its veto, the ultimate uncooperative fiscal paradise in the world… A Cayman Island of 60 millions inhabitants. In other words a huge parasite.

Cord Christian Drews:-

“Britain will one day wake up to discover that it has lost… the best hope the next generation has of earning a decent living.” As other readers I struggle with this conclusion to your article. There are plentiful reputable academic studies that show how little the whole British economy benefits from the financial centre … Of course, the UK should make sure to remain the important financial centre it is, but only if it’s at a justifiable cost to the whole society, rather than preserving the status quo, where a farcially small minority increases their wealth on the shoulders of the rest of the nation that has increasingly less benefit from the current workings (and had to support the broken financial system up with billions of tax money).

John Sanderson:-

I would like to add to the outrage expressed on this article. A few points:
1. A thorough review by John Cassidy of all the studies done found that what Wall Street investment bankers do is socially useless (see New Yorker Nov 29, 2010). The same is undoubtedly true of the City of London.
2. The City of London paid £63bn in tax although only only £7.2bn was corporation tax and banks paid £3.5bn of this (in 2010 HSBC increased profits by 27% but paid 15% less tax and Barclays paid just £113m tax last year). Most of the tax paid appears to be VAT which is paid by clients. This compares to the minimum £850bn bail-out cost of rescuing the banks to the UK taxpayer out of which bankers still take their bonuses.
3. There is no correlation between success or failure and remuneration in the city.
4. In the same issue of the Economist Buttonwood’s article is entitled “Rich Managers, poor clients” and reports on a devastating analysis of Hedge Funds. Clients have largely done badly while the managers have made fortunes.
5. The City has taken young graduate talent out of more productive industries.
6. The City has conspicuously failed to invest in productive industries (in contrast to the banks in Germany).
7. The Financial services industry has served investors and in particular pensioners very poorly. Most of any profits have gone in fees.
8. Most of the big money made in the City is based on exploiting small inefficiencies and failures of the markets which are now in any case increasingly manipulated to maximize short term profit. This is not serious work.
9. There is no evidence that a 50% tax rate on high incomes deters people from creating major industries or wanting to live in a fair society with good public services viz Sweden
10. The comparison with silicon valley is ridiculous as many have pointed out: they produce goods and products that are generally socially very useful and make real money.
Do we really want or need this industry in the UK? Surely a talented and inventive nation with good universities could do better and create industries that provide real value to the whole community and do some good rather than just enriching its own workers and destroying value of long-term investments.

This week’s Economist also has a Schumpeter piece which warns against the demonization of bankers. The article is yet another example of shoddy journalism. It mainly uses diversionary tactic running through various historical instances of the demonization of bankers and money men, which are wholly inappropriate to today’s situation, including historical instances of hatred of the Jews.

Jesus expelled the moneychangers from the Temple. Timothy tells us that “the love of money is the root of all evil.” Muhammad banned usury. The Jews referred to interest as neshek—a bite. The Catholic church banned it in 1311. Dante consigned moneylenders to the seventh circle of hell—the one also populated by the inhabitants of Sodom and “other practisers of unnatural vice”.

… The rise of banking has often been accompanied by a flowering of civilisation. Artists and academics railing against the “agents of the Apocalypse” might also learn from history.

Surely the Economist can do better than this?

Here are two of the comments from underneath the “Dangers of Demonology” article:-

New Conservative:-

This is a terrible article. It tries to tuck away the important part, “most people have gotten off scot free” and instead of examining why they got off scot free it says that people should give the finance industry the benefit of the doubt because it might turn into racism. (Which is ridiculous because modern finance is a fairly cosmopolitan affair. It isn’t dominated by one ethnic group. Someone trying to be racist against bankers would find, once they’ve checked off all the nationalities on the boards of big financial firms, that the only people not involved in international banking are from Bhutan and Lesotho.)

Canuk:-

…For those of us who have no power, and are completely sickened by the corrupt role that banks/finance have played in our society over the last decade or two, all we can hope is that, by “demonizing” these scum, others with political and street power will find ways to bring them down for good, for the benefit of younger members of civil society and, indeed, a more cohesive society. I apologize for my tone here, but having starting in the City in 1955, and having had to watch for the past 50 years the decimation of wide swathes of UK civil society outside of the London and South East, just to save the role of sterling initially and now the so called “City” makes me deeply ashamed to be English and I would have hoped the same might apply to the journalists of the Economist and the FT (I have been reading and subscribing to both for over 40 years). But I am not holding my breath.

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64 comments

  1. Jay Aycsh

    Kicks major rear Sir Ian. But I also observe that surely this would be true of any and all finance sectors in every country on earth now? A snake pit of utterly useless and valueless psychopaths that naturally gravitated there and don’t do anything except foul the place up.

  2. vavoida

    SIR – It is time to pivot.

    Silicon Valley Speak for inevitable changes – in this case the broken business model of the City.

  3. Charles Frith

    The Economist backed the Iraq war and has never retracted its ‘genius of capitalism’ war chant while institutions were lending like crazy. It is owned and so are its readers. An irony considering it’s fake advertising.

  4. F. Beard

    “Finance—the funnelling of savings to their best use—is a vital industry.” The Economist

    Say what?! The chief purpose of banking is to BYPASS savers via temporary money creation – so-called “credit-creation” – and cheat them via inflation.

    1. Mansoor H. Khan

      F. Beard said,

      “and cheat them via inflation”

      You are being very unfair to bankers here.

      In order to save (which really means in order to produce more than one consumes) some sort of claim tickets must be issued as a claim against future production so one may exchange one’s over-production for the claim tickets.

      This is exactly what bankers do. And no, at least theoretically they don’t create inflation. That is what central banks are suppose to monitor and manage via open market operations.

      If bankers did not create new currency (claim tickets) we would have deflation. So, what bankers really do is keep deflation at bay.

      The problem is once an economy reaches peak credit (for whatever reason) the whole scheme collapses and economic life of a civilization goes to chaos (war etc).

      Which really tells us that claim tickets (currency) should be thought of as equity rather then debt. Equity is self-adjusting and debt is not self-adjusting. Claim tickets should be issued as equity by the gov and not debt by bankers.

      Then the gov can manage overall supply and demand (i.e., inflation and deflation) via various strategies (income tax, consumption tax, social dividend, infrastructure spending).

      When the gov does this it is basically adjudicating claims on current production to maximize social good and social stability. Money is a social arrangement.

      mansoor h. khan

      1. F. Beard

        You are being very unfair to bankers here. Mansoor H. Khan

        Not at all. Banks are thieves of purchasing power. Where do you think the purchasing power for the new money they create comes from? It comes from all money holders including and especially the poor.

        As for deflation, that is not a problem with monies that are spent, not lent, into circulation.

        The least of the sins the banks engage in is usury from fellow countrymen and you say I am unfair to them?

        1. Mansoor H. Khan

          F. Beard,

          “As for deflation, that is not a problem with monies that are spent, not lent, into circulation.”

          That is what the Austrians say.

          I believe otherwise. I believe deflation is a problem even with monies spent into existence. I believe expectations of future deflation lead to less risk taking therefore less creation of good and services.

          For more detail see:

          http://mises.org/Community/forums/t/15128.aspx

          mansoor h. khan

          1. F. Beard

            I believe deflation is a problem even with monies spent into existence. I believe expectations of future deflation lead to less risk taking therefore less creation of good and services. Mansoor H. Khan

            If fiat is readily created (ie. no gold standard) and if we have genuine liberty in private money creation then deflation is not likely to be a problem since the money creators will likely seek to reap as much of the real productivity gains as they can.

            The bankers would be creating money now if they had not (as they usually do) choked the real economy with debt.

    2. Parvaneh Ferhadi

      Correct. Modern finance does not depend on savings, but on credit/debt which bankers can create more or less as they see fit, with the only restriction being demand and the ability to pay back the credit/debt.
      But not even that seems to be a problem, if you run out of money to pay back existing credit/debt, just create more of it.
      Savings don’t matter in this world at all.

      1. Mansoor H. Khan

        Parveneh Ferhadi,

        “Savings don’t matter in this world at all.”

        Not completely true. Inflation matters and is real and will piss of people if too much of it is created!

        Mansoor h. khan

  5. F. Beard

    ” … The rise of banking has often been accompanied by a flowering of civilisation. Artists and academics railing against the “agents of the Apocalypse” might also learn from history.” The Economist

    Banking has succeeded to the extent it has because of the brilliance of “asset-backed money.” However, the way banks implement “asset-backed money” is completely unethical. The ethical way to implement asset-backed money is the use of common stock as money.

    But yes, it is probable that banking will be the cause of WW III just as it caused WW II.

    1. Sufferin' Succotash

      The article’s author might have benefited from taking a course in economic history. Commerce, industry and agricultural surpluses have always been preconditions for banking whether the cities in question have been London in 2012 CE or Uruk in 3000 BC.

    1. jake chase

      I have often wondered why anyone reads this rag, but it is a favorite of high energy business types who only consult reality once a week and are heavily dependent on pictures. The mag tells them what to think about all the bogus issues of the day. What more can they ask for?

      1. Tom West

        Actually, I find the Economist has better and more complete foreign coverage than any American or Canadian newspaper that I have read, which is why I have a subscription.

        However, the puff piece on the City was a waste of time.

  6. Jim Sterling

    ”The rise of banking has often been accompanied by a flowering of civilisation”

    No, the flowering of civilisation has often been accompanied by a rise of banking. You might as well suggest that a rise of CO2 has often been accompanied by an industrial revolution, thus showing that global warming is the cause of technology.

    1. Foppe

      You might as well suggest that a rise of CO2 has often been accompanied by an industrial revolution, thus showing that global warming is the cause of technology.

      They have. More or less, anyway.

  7. UnlearningEcon

    Great piece, but I was surprised by this:

    ‘More than any Economist article I’ve recently read (some of which have been excellent by the way),’

    If you are talking about their coverage of the West then forget it. They have called increasing taxes on the rich ‘class warfare’ in this terrible article:

    http://www.economist.com/node/21530104

    …they have been ridiculously dismissive and condescending towards OWS:

    http://www.economist.com/blogs/democracyinamerica/2011/11/occupy-wall-street-0

    …and flat out denied the blatant failure of austerity – which they initially supported – instead blaming stupid things like the EZ crisis and royal wedding:

    http://www.economist.com/node/21541021

    TE has become nothing more than a capitalist/rentier propaganda machine. Whether they know this or not is up for debate – neoclassical economics instills such cognitive dissonance in you that they probably don’t even realise what they are saying.

    1. knowbuddhau

      Brilliant! Could hardly say it better myself. What’s up with the current cohort of experts? They don’t seem to recognize deliberate, calculated, elaborate psychological operations as such; instead, calling them by any other name than PSYOP, even when they’re as blatant as the examples you cite.

      Maybe it will take a generation of new experts to call out deliberate efforts to manufacture consent as such, and not bemoan them as merely “intellectually lazy” or whatnot. We’re in a world of hurt not because of a string of blunders, that all happen to benefit the same class. The plundering ain’t no blunder, it’s the main effect!

      Mr. Fraser’s threat, to maybe cancel his subscription to a propaganda rag, is cold comfort to this reader. Better to reconsider the role of coordinated psychological operations in producing the propaganda in the first place.

      Do we have to wait for a new generation of experts to call out the expanded role of weaponized rhetoric with which we’ve been besieged since the end of WWII? Is the present cohort just too set in their ways to learn a new way of seeing the convergence of gov’t, so-called finance, and media?

      Wars, economic bailouts of titanic proportions, and other gargantuan endeavors don’t just happen, they take a lot of prep work. The Economist, WSJ, and other siege engines like them, are waging economic war, aided and abetted by thousands of Perkinsian economic hit men; meanwhile, “experts” bemoan “mistakes”.

      Consider this: In 2007, the Pentagon had $US4.7B to spend on “psychological operations.” WTF do we think they did with the money, spend it on perfectly honest and ethical public service announcements? No, they spent it on manufacturing our consent to be jacked to hell and back, stuck with the bills in every way.

      And the Brits? How much is MoD spending on weaponizing rhetoric and turning it against the public?

      I’m not suggesting every crap article is a PSYOP. But they are in play. We’d be wise to learn to spot and bust them before they further pervert our shared narrative.

      1. knowbuddhau

        Case in point:

        ~~~~~~~~~~~~~~~~~
        How Propaganda Targets Iran
        January 6, 2012

        America’s Founders saw press freedom as a key check on government dishonesty, but today’s media has become a powerful ally of official lies by funneling sophisticated propaganda especially in support of war, as Lawrence Davidson notes about the hysteria over Iran.

        By Lawrence Davidson
        http://consortiumnews.com/2012/01/06/how-propaganda-targets-iran/

        “It is to be kept in mind that if those who spread lies that result in slaughter and massive destruction are citizens of or protected by a superpower, no punishment will accrue. None of the major liars that brought us the Iraq war have been punished. One can hardly think of a more corrupt political situation.”
        ~~~~~~~~~~~~~~~~~~~~~

        Et tu, The Economist? The only thing the horrors of Iraq has taught them, is that PSYOP pay ROIs of mythic proportions.

        Imagine if the publication of even one war-mongering lie led immediately to thousands of cancelled subscriptions and unending public condemnation. Imagine a public so well attuned to getting jacked to hell and back by weaponized rhetoric that that method cost its practitioners more than it gains them.

        As it is, what have TPTB got to lose? Not even Mr. Fraser’s subscription.

      2. LeonovaBalletRusse

        “Sizzlin’,” knowbuddhau. Give ‘em hell. Make a rap out of it and sell it for Occupy YouTube.

  8. Aaron Boyden

    I seem to remember the Economist being a source of news in the 1990s, though perhaps it is just nostalgia for the Good Old Days finally catching up with me. It certainly hasn’t been remotely worthwhile for at least a decade, so I don’t know why this article was such a surprise to you.

    1. Bob

      If hedges funds, by charging a 2% management fee, and 20% profit allocation override for the winning side of the transaction. The losing side is also getting a 2% management fee (which will be reduced if their assets under management are reduced due to losses or investor redemptions). Just a giant casino where each side make a boat load and sh*tload of money, respectively.

  9. billwilson

    The Economist has always had good articles and lousy/horrible/awful/crappy/… editorials. It is often hard to see how both can come from the same cast of editors.

  10. Don

    “… it has made me give serious thought to cancelling my subscription to The Economist. I’ve heard that others are thinking along similar lines.” Why do you need to think about it? It should be obvious to you that you must cancel your subscription.

  11. ZeroInMyOnes

    Who wrote it? Why the precious banks themselves, no doubt! And then the Economist ‘increased efficiency’ by inserting this bank PR as the cover article in their ‘magazine.’

  12. ZeroInMyOnes

    PS I am just a lay person trying to educated myself and my kids about what happened to the US economy, but I chose to bail on the Economist a long time ago when I realized that I could get closer to the truth by reading blogs such as this one. How do I know these blogs speak the truth? The outcomes they predict actually come to pass!

      1. LeonovaBalletRusse

        Dirk77, luckily, YOU CAN pay: via the Tip Jar (upper right) or a subscription.

        Go ahead.

  13. aka_ces

    After 20+ years as a subscriber to The Economist, I declined to renew in 2010 due to its generally milquetoast coverage of the financial sector.

  14. bloodnok

    good to see most people reacted the same way to that vacuous bit of propaganda. but it shouldn’t be a surprise: the economist has always promoted the city and, to an unfortunately large extent, wall street as mostly good. sigh ….

  15. House Wulf

    I subscribed to The Economist for many years and then let my subscription go. It was their support for the war in Iraq that forced me to recognize that this magazine allows “planted” stories. I lost confidence in the magazine and no longer read it.

  16. Lambert Strether

    It’s sad. Maybe fifteen years ago The Economist gave me my first view of the international business world. (Late, I know, by the standards of many here.) I used to go to Out of Town News in Harvard Square, buy a copy, and read it with coffee and a croissant. I loved the style, and I loved the content, too. I figured I could add as many grains of salt as I needed to the coverage, and arrive at something near the truth. Silly me. Now, of course, the corrupt sac of pus that was swelling in the body politic back then has burst and covers and infects everything. I don’t read The Economist any more. I read the New Yorker since I was a child, and don’t read that any more. I stopped reading the Times since the pay wall went up. With no corrective from the Times, the utter insanity of the Post became evident, and I stopped reading that. The Atlantic, gone. NYRB, a shadow of itself. It’s just sad. Tonstant reader frowed up.

  17. Chris Rogers

    Ian Sir,

    As with your goodself, the nonsense has been sprouting of late is ridiculous to say the least, and damn outright lies and propaganda if we wish to be honest.

    I’m afraid I transgress from you in one important aspect of your critique, namely, the City of London stopped being a valuable asset to industry/commerce and pensions in our country circa 1986 with the introduction of ‘Big Bang’ and a stampede by US Institutions to grab as much of the City they could – we lost a huge number of household names after ‘Big Bang’ – evidently due to the fact that US-Anglo Capitalism certainly does not like competition – rather it likes a monopoly or at worst a cartel.

    So, I can safely say that the rot set in under Thatcher and has carried on unabated to this day.

    Indeed, had the author of this little bit of ‘Propaganda’ bothered to look at the Bank of England’s own research – hardly a bastion of Socialism – he’d have noted several speeches and papers by the Governor, two deputy Governor’s and head of financial stability that underscores clearly the price the UK public have had to pay for the largesse of the Square Mile and hosting of numerous Ponzi Scheme hedge funds.

    Thankfully, information exists freely on the Internet to refute completely this garbage from the Economist – WHATEVER HAPPENED TO FREE AND HONEST JOURNALISM is all I can add.

    Still, come the ‘Great Hunger’ and consequential social upheaval this will cause, we can add the Author of this tripe to a long-list of City sponsored spivs who should all be executed if justice were ever to exist.

    ‘Hang them up’ seems the only language these thieves understand, and if it is good enough for the poor and downtrodden, its certainly good enough for the majority of wasters in the City who believe in an ‘entitlement’ culture for the great 1% at the expense of the majority in our so-called ‘civilised’ society.

    1. LeonovaBalletRusse

      Chris, you got it! “The City” and “The Crown” are as useless as the Dodo bird: just as dead and don’t know it. It’s downhill unto death for “England”, so long as the dead weight of “royal” corpses smother “open democracy” in that beautiful isle.

  18. andrea3000

    Nobody like bankers right now, and it’s ok. But come on. There is no silicon valley without high risk finance. Disconnecting the two is immature. “Financiers produce nothing and enrich themselves”. You can’t be serious..

    1. F. Beard

      There is no silicon valley without high risk finance. Disconnecting the two is immature. andrea3000

      It’s not “high finance”. It is “low finance”; using the population’s own stolen purchasing power to put them out of work.

      Did we get a “mess of pottage” in exchange for a stolen birthright? Indeed we did. We also got deadlier weapons should Great Depression II cause WW III as GD I caused WWII.

    2. Mel

      Well, it’s like this ..

      Betting against Steve Jobs would have been a risk.

      Betting against John Paulson is a death-wish.

    3. Still Above Water

      Tellingly, most Silicon Valley startups get their capital from Sand Hill Road, not Wall Street. Wall Street and the City don’t funnel savings into productive uses, they funnel savings into bonus checks for banksters.

    4. craazyman

      I don’t mind high risk finance as long as they take their own losses.

      Seems like tech evolution did pretty well before the banksters. The world went from the Wright Brothers at Kitty Hawk to the Moon itself in about 70 years.

      And not one bankster supplied a dime.

      Since the Saturn 5 and the Apollo program, what have we done? The internet? A department of defense project.

      Where are the banksters in all this?

      No where. Wherever you put banksters, you get nothing.

      1. craazyman

        I should say “America went” while the world watched. Not to be a jingoistic moron though . . . .

        These days I’m not sure we have much to watch that’s worthwhile, sad to say, except perhaps some of our films, like Don Juan de Marco itself, the transcendantly magnificent testament to supremacy of Imagination over the dull phenomenon that weak-minded call “reality”.

        this is pure genius, mostly starting at the 30 second point, Avril. :) ha hahahahah, just having fun, don’t freak, it’s only a metaphor.

        http://www.youtube.com/watch?v=zrl0c8kl4J0&feature=related

        and I bet the banksters had nothing to do with this either. they wouldn’t have a clue.

  19. Ian Fraser

    Right. You’ve decided it for me. Clearly it’s impossible to have any faith in a publication that prints this sort of BS. So I’m going to wait until my subscription expires in March 2012 and then not renew it. I’ll be £108 a year richer.

  20. Lambert Strether

    Jo Mellon: It’s not “incompetence.” It’s looting. The banksters are highly competent at accounting control fraud, and the bailouts were the largest upward transfer of wealth in world history.

    1. LeonovaBalletRusse

      Lambert, after Hurricane Katrina and the Great Flood of 2005, “Blackwater” had orders to shoot looters on sight! We are all in King John’s England now.

  21. Paul Herzberg

    I’m sure I’m being naive, but how many banks are in public ownership now?

    Because it seems to me that when bankers tell us they are the only ones who can drag us out of the crisis they made then, with at least one bank, the government should call their bluff.

    Sack them all and get some high achievers in from the local comp in and see who does better. It can’t cost the tax payer any more than Northern Rock and we’d have minimum level of success to gauge them by.

    Of course, by most measures of success the whole sorry lot have failed everybody except themselves, but at least a little emperical evidence might be nice…

    1. LeonovaBalletRusse

      Paul, many are those who would relish this opportunity, whose actions could stand inspection by legitimate open democracy monitors and reporters.

  22. glacierpeak

    Thanks for calling my attention to the article…I used to be an avid reader of the Economist when I was an American student studing the economic transition of central European economies, but when they slammed the WTO protests in Seattle, I ripped the copy in half, and swore never to pay them again. Your post is only the third or fourth article of theirs that I have read in the last 13 years.

    A few take-aways:

    A) Wow, they certainly feel under siege, and have just telegraphed that to everyone. I say “telegraph”, but the message is hardly in code.

    B) There was a surprising amount of frustration expressed with the coalition government; simultaneously this week also had a rash of “dump Ed Milliband” comments and articles in the British press. On the heels of Cable’s comments and the government’s debacle in Brussels, is the City getting frustrated with Cameron & Clegg, and using its friends in the media to push for a Blairite opposition leader?

    C) Lastly, I’m struck by the mention of the term “cluster”. Last week Friedman also used that term in one of his columns. That’s a very interesting development…even a mention is a sea change from the late ’90s, which were all about “the world is flat”, and how the wonders of technology and relatively open borders meant that business operations/relationships would be diffuse globally and in a constant state of flux. On the contrary, I always felt that a “flat world” meant that clusters were now the organizing principle (if I’m using that term correctly) for economic activity, as building and sustaining them would be more important then ever (in order for a community or nation to have an economic niche). And that involves a very different set of policies than we’ve had over the past 20 years. So I just think that’s interesting…in the ’90s, you never saw the word “cluster” used by the devotees of free trade.

  23. Someone

    Facebook has provided linkage and assisted social interactions to more people than many technologies before.

    As someone who ran dial-up BBSs in middle school, email, FIDONET, USENET, web forums, Facebook is a natural progression of technology that enables countless things. Disliking Facebook has not stopped me from using it; I don’t dismiss it either.

    Bankers have been hated since the dawn of time, including the Middle Age Jewish bankers and Chinese Shanxi banker/financial transfer/loan merchants who dominated the Silk Road trades. I don’t strike them from the book either, just realize the need for regulation.

    1. F. Beard

      I don’t strike them from the book either, just realize the need for regulation. Someone

      Regulated or unregulated, banking is a very suboptimal way to impliment money.

      It is also supremely unethical.

  24. monte_cristo

    Yes it’s a shame the Economist prints such leaders. On the otherhand we see the response.
    In responsse to seeing the above I went over to the Economist to see what Buttonwood said this week:
    http://www.economist.com/node/21542452
    Normal Buttonwood commentary. He’s been more or less in line with thinking here for years, and prior to the crisis. He moved from the FT after the dot.com episode.. I got the impression at the time that he was too Bearish for the FT, and wasn’t he the editor?.
    Commentary for years has been that the economist has been becoming intellectually more feeble with time. It’s become a sort of world digest. Treat it as such. Do we really think that the ‘big bad boys’ read it?
    I used to read it years ago but I just have a look from time to time now. It’s a bit like a TED lecture.
    Let’s be realistic, if you asked people where the Economist stood I don’t think we’d see any surprises. People that didn’t know would be more surprised to see Buttonwood there. I’m just saying anybody who expects the Economist to be a radical journal is showing up their own innocence.

  25. hidflect

    I read The Economist in the ’90′s until 1999 when it changed direction appointing some new, aggressive leadership. After that the publication lurched from conservative to camouflaged uber-right so hard that many of its articles started to make no sense. I dropped it into the garbage forever shortly afterwards.

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