Archive - Nov 24, 2013

Dear old Larry Summers has come over all Zero Bound constipated, fretting that the natural, real rate of interest has somehow become fixed down there at negative 2%-3% where conventional policy (if you can still remember of what that used to consist) cannot get at it – unless we blow serial bubbles, that is, these episodes in mass folly and gross wastefulness now being raised to the level of such perverse desiderata of which Krugman’s only partly-facetious call for a war on Mars forms an infamous example. In fact, this entire notion is another piece of nonsense to spring from the one of Keynes’ least cogent ramblings, the notoriously insupportable notion of ’Liquidity Preference’ – a logical patch fixed over the lacunae in his reasoning when, having insisted that saving must always equal investment, all he could think of to determine the rate of interest was our collective desire to hold money for its own sake. From such intellectually bastard seed soon sprang, fully-armed like Minerva from the head of our economic Jove, the even worse confusion of the ‘Liquidity Trap.’

Confirming that the brotherhood of the "fairness doctrine" in which everyone is equal to everyone else (but some are too big to fail or prosecute, and are thus a little more equal) will have to do much more work to bring wayward Swizterland, home to some of the world's biggest companies, fattest bank accounts and wealthiest individuals, into the socialist fold was the announcement moments ago that Switzerland roundly rejected a proposal to limit executive salaries to 12 times that of the lowest paid employee, with 66% of the voters opposing. This so-called "1:12 initiative for fair pay," was brought about by the youth wing of the Social Democrats (JUSO) which claimed that nobody should earn more in a month than others earn in a year. The outcome is notable because it was in March when Swiss voters backed proposals to impose some of the world's strictest controls on executive pay, with some 70% of voters thought to have supported plans to give shareholders a veto on compensation and ban big payouts for new and departing managers. Surprisingly, just over six months later, the drive to bring more equality to all appears to have lost it steam.

"We, the German Fuhrer and Chancellor, and the British Prime Minister, have had a further meeting today and are agreed in recognizing that the question of Anglo-German relations is of the first importance for our two countries and for Europe. We regard the agreement signed last night and the Anglo-German Naval Agreement as symbolic of the desire of our two peoples never to go to war with one another again. We are resolved that the method of consultation shall be the method adopted to deal with any other questions that may concern our two countries, and we are determined to continue our efforts to remove possible sources of difference, and thus to contribute to assure the peace of Europe. My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honor. I believe it is "peace for our time." Go home and get a nice quiet sleep." - Neville Chamberlain, September 30, 1938

Never Say Biebro...