Sunday, September 28, 2008

Hedge Fund Britain

John Gray writes brilliantly on the true meaning of the crisis - the end of one extremely aberrant model of capitalism and the decline of American power. I like the idea that Britain is a hedge fund, I remember when we were an American aircraft carrier.


  1. Yes it is a good article. But there is a rather unseemly relish about the whole thing among commentators generally at the moment. Some articles - not this one - are too close to end-of-the-world ranters at Speakers' Corner. At least the problem has been admitted and identified, which is all cause for hope rather than despair. Gray is too pessimistic, imho.

    It would be interesting if someone totted up the combined wealth of Wall Street's top 1000 bankers (or the City's). That's what they took out. Then totted up how much they give back in the form of philanthropy. Alas, one imagines that giant yachts, private jets and "sporting" estates would somewhat dwarf this side of the equation, but maybe not.

  2. Does Gray understand the idea that the more the world becomes connected and interlinked the more black swans will appear?

    Ultimately economics is about people and that means demographics.

    So lets take a quick lap of the world.

    Europe, serious problems
    Russia, meltdown
    India, ethnic tensions, and rivalry
    China, problems will set in due to one child policy.
    United States, still having children and still drawing in immigrants, and as it is in effect a new country can easily assimilate them as opposed to Europe.

    Recessions usually blow a 10% hole in gdp, this bailout is about 5% of gdp, a shallow recession would be about 5%, a bad one would add up to a 15% blowout.

    1997 the year this fault of sub prime came into the system and started disstorting the financials, USA gdp was around 8 trillion now its just short of 14 trillion? so even with all this mess the US has experienced serious growth in the past 10 years

    Who knows what the future holds, but the Liberal democratic capitalist model still seems to me the one you need, as the Chinese get more wealthy they are going to ask for more rights and then we could see the ethnic divisions in china that the leaders fear really come out.

    Another big issue in this mess, the big black swan of sovereign wealth funds adding fuel to the fire, what does it say about countries that don't invest in themselves? except of course they sort of do, asia is in the middle of a massive arms race, which Gray seems to ignore.

  3. The Gray article is nicely written, and may or may not be true. As to its "brilliance," I don't see anything more than boilerplate for a certain rather prevalent way of thinking, with nothing new either in information or point of view. And the bit about the Chinese astronauts is good op-ed melodrama but void of thought.