Don't read Michael Lewis articles, do check if he's still writing

So that Michael Lewis - you know, the one who writes articles about how stupid Icelanders were. Via The Oil and the Glory, here's what he was saying in January, 2007, just as the last bulls in the US housing market's dizziest bubbles finally cracked and the big plummet began. Here it is.

But the most striking thing about the growing derivatives markets is the stability that has come with them. More than eight years ago, after Long-Term Capital Management blew up and lost a few billion dollars, the Federal Reserve had to be wheeled in to save capitalism as we know it.

Last year Amaranth Advisors blew up, lost more than LTCM, and the financial markets hardly batted an eyelash. ``The financial markets in 2007,'' some member of the global economic elite might have said but didn't, ``are astonishingly robust. They seem to be working out how to absorb and distribute risk more intelligently than any member of the global economic elite could on his own.'' Once the laughter subsided -- and someone took down his name to make sure he didn't make next year's guest list -- he might go on to point out that in spite of a great deal of political turmoil the markets have remained calm.

The Sarbanes-Oxley Act sticks a wrench in the American market for initial public offerings, and the capital-raising business simply removes itself to London and Hong Kong. Thailand installs capital controls and the markets force it to reverse its policy, virtually overnight -- again with nary a ripple. The Brazilian real is now less volatile than the Swiss franc; Botswana's debt is now more highly rated than Italy's. Oil prices double, the U.S. housing market tanks -- no matter what happens, financial markets adjust quickly and without hysteria.

This is a case in point of Daniel Davies's contention that while forecasting the future is great, forecasting the recent past is almost as good and much more likely to be successful. That is to say, it's not just enough to have the information, it's also important to draw consequences from it and react to them. This is why John Boyd held that the most important element of his Observation-Orientation-Decision-Action loop was the Orientation.

In this case, Lewis was well aware that a massive housing market bust was actually in progress, that the oil price was very high, and that a range of generally weird things had happened. But he didn't integrate this information into his broader situational awareness - he noted that nothing had exploded yet and reached for a variety of rationalisations, notably confirmation-bias, to explain why nothing would happen.

However, for his own part, he actually responded more effectively. He spent quite a lot of this article whining about people who weren't taking risks and wondering why nobody was going short if things were so bad. Well, in fact somebody was going short the US housing market. (Logically, somebody had to be short if so many people were so long - someone had to be taking the other end of those trades, as in fact he said in as many words.) And Michael Lewis later wrote a book about him, making a considerable profit.

Obviously, he was in a position to wait and see what happened, and then write the book either about the Great Bull Run of 2008 or the Great Crash. That helps. From a Boydian point of view, it is critical to all strategy that you keep your options open as far as possible and avoid being forced into reacting on the other side's time-table. It's also true, though, that the precondition of not being bankrupt in 2008 and therefore being able to take opportunities as they came was not taking risks in 2007, perhaps by doing a well-paying writing gig at Bloomberg in which you moan endlessly about people who aren't taking enough risks.

In fact, anyone looking for economic advice from Lewis in 2007 would have been well advised to ignore everything he said and instead study what he was actually doing.

From the noisy phase to the quiet phase

Is it meaningful to say that the Egyptian revolution is calming down, or petering out? I ask because a common flaw of the reporting on it has been to treat the basic dynamics of mobilisation as if they were signs of huge political shifts behind the curtain. It's obviously true that both revolutionaries and reactionaries need to sleep and eat. When the revolutionaries want to, they have no great difficulty in putting over a million people on the streets in Cairo and probably a bit more again elsewhere in Egypt. These are peak efforts. Idiot management-speakers like to talk about maintaining peak performance, but they are idiots: the word peak implies a supreme effort that cannot be maintained continuously. People have to eat and sleep, they have families, they have jobs, although many millions of Egyptians have been taking part in the revolution silently by essentially going on strike. Even revolutionaries have to maintain their barricades, update their blogs, and hold meetings to decide what to do next.

The result of this is that there's been a sort of media cycle - one day the papers are full of pictures from the latest day of rage, the next it's all about people grandly speculating on what happens next, and the regime's spokesmen explaining how they intend to preserve the substance of the regime. Perhaps they talk about that on the other days, but nobody is listening. Or perhaps they believe it, when they wake up and hear that there are only tens of thousands of rebels in Tahrir Square rather than hundreds of thousands. Then, the next callout of the demonstrators resets the clock again.

Today, we seem to be in one of the ebb-tide phases. So it's a good moment for a bit of speculating. What is important, in these terms, is that the government doesn't seem to be regaining much ground in between waves of protest. Instead, there seems to be a ratchet in operation - each wave extracts a new concession. Mubarak sacked his government. And appointed a vice president. Then he promised not to stand again. Then talks were opened with the opposition. Then the military accepted to talk directly with the opposition, independently. Then the NDP hierarchy was purged. Then Suleiman renounced becoming president himself. And the regime's own peak effort - Wednesday's thug raid - was dramatic and violent at the time, but with hindsight was nowhere near enough in terms of numbers to change anything. Arguably, it wrecked the government's remaining legitimacy and only demonstrated its lack of mass support.

The fear is that this is no ratchet, but a sort of retreat into the Russian hinterland, a trap. On the other hand, it's a common pattern in the end of dictatorship, a sort of political Cheyne-Stokes breathing. You may think you are saving the structural realities of power and giving away the forms, but how will those realities stand up without the Emergency Law and the special constitutional amendments and the practice of having political prisoners and the ban on opposition parties and the censorship of the press? After all, there must be a reason, rooted in the structural realities of power, why you wanted them in the first place. If owning hotels was enough to sustain a tyranny, there'd be no need for Central Security or private thugs on camels or sententious TV broadcasts or bulk SMS messages with faked originating numbers.

Revolutions come with years, like New Order remixes used to. Prague '89. Paris '68. Probably the most relevant ones now are the Polish ones - Solidarity feat. Jaruzelski '81 and '89. The first one was a lot like what everyone fears for Egypt and also quite a lot like the official preferences of our governments. There was violence, but not as much as there could have been, and a safe military dictator won. He, in turn, turned to a religious and conservative pseudo-opposition to give his rule some foundation. The second was more optimistic but less spectacular. In 1989, the end of communism in Poland involved far more negotiating than it did street-fighting, and it involved putting up with Jaruzelski sticking around for the rest of his term as a sop to the powers that be, or rather the powers that were.

Egypt is already some way beyond 1981 - there is something like a round table, and the officially designated military strongman is getting very close to the exit, having disclaimed supreme power for himself. Probably the communists of 1989 thought they were cunningly playing for time. Suleiman has a far more ruthless reputation, though; the big issue is whether he can be trusted or better, constrained from trying to either crush the opposition between here and whenever the election date is set or else to start a civil war like the Algerian generals of 1991.

One argument has been that there would be a fake revolution, leaving the security state in charge, as Jamie Kenny put it. I think this is now out of date. Similarly, although they are now talking to the Muslim Brotherhood, I think my own prediction is also out of date. We're past the point where a few Brothers in the government would convince anyone. In fact, Jamie and I saw our predictions first validated and then rendered irrelevant within a week.

Looking ahead, it's worth remembering that 1989 took time to deliver. After the original moment of success, there was a long and uncertain haul of getting rid of specific individual bastards, changing laws, moving editors around the State TV and inspectors around the police force. I think we're now into this phase. Some people seem to agree, from very different points on the spectrum. Changing the union confederation and the university professors' club is very much to the point, whether you're thinking 1989 and maintaining enough forward momentum to protect the revolution or 1917 and the second wave.

Take it easy ya Ahmad. Every revolution in history always has this carnival-like side. The insurrection will come later. #Jan25

I think I'd rather have that man on my side.

Flushing the cache

Well, ha ha. But I do think we should note that David Cameron's appointment as Prime Minister was greeted by the markets with a dramatic spike in the price of gold, not usually seen as a vote of confidence. Here's the data, at Felix Salmon's; as he points out, trying to map events in consensus reality to market charts is a sucker's game (although I did once have to explain that the giant V-shaped downspike in MTN stock on the chart was the day when half the management team died in a plane crash).

In other post-election cleanup, YouGov did some polling about the public's preferences. The only group of people not to be consulted about the coalition - that's us! - broke 20% Tory, 33% Unholy Alliance, 39% Lib-Lab. Anthony Wells, like a good Tory, points out that this means 53% of the public wanted Tories in government, but doesn't mention that by the same token, 72% wanted Liberals in government. Ah, the times when we were the nation's least despised option. Also, how many people would have wanted a Labour minority government?

Hopi points out that the key lubricant in the coalition is money, and that both parties have agreed to give money to each other's pet clients. Interesting contributions in comments from Alan Beattie and Dan Paskins, babbling idiocy from others.

Computer Weekly is interesting on the future of the NPfIT debacle. Also here.

Healthcare volunteers in Kenya: it doesn't work. Turns out you need to "pay" people to "work" in "jobs" if you want to achieve anything lasting.

Whatever the coalition does, I've a feeling this story will determine how it ends up - on China's property bubble, banks, and the coming blowout of the government deficit as it inevitably bursts and lands on the government's books. As Doug "always up to no gooood" Henwooood would say, he believed in the collapse of capitalism until he realised the power of a good bailout. When the Chinese banks blow up and get bailed out, will American right-wing nuts blame that on black people?

IPPR: I agree with...

The Institute for Public Policy Research has issued a report on the correlates of BNP membership and support (pdf).

Fascinatingly, they reckon that there is very little or no correlation between BNP support and key socio-economic indicators like GVA per capita, growth, unemployment, immigration, etc. It's as if a typical BNP supporter was, well, a case of free-floating extremism. (A dedicated swallower of fascism; an accident waiting to happen.)

Oddly enough, this replicates an earlier result.

The Nottingham University Politics blog has a more nuanced response, but I'm quite impressed by the fact that two analyses based on two different metrics of BNP support - votes in the IPPR study, membership in mine - converged on the same result.

links, the light alternative to writing

Ill-coordinated links. Great news in RepRapping - South Korean scientists have succeeded in getting bacteria to make polylactic acid. PLA is the RepRap project's favourite feedstock because it's a reasonably tractable, general purpose plastic that can be synthesised from starch. The synthesis is not exactly simple, which is why outsourcing the job to germs is interesting. As the kit of parts now costs about £395, I really ought to get started with one of these. Now there's a Christmas present for you. "Engineered bacteria not included." MUM! YOU FORGOT THE GERMS!

The uranium-enrichment deal with Iran is still on, but they are looking for stronger guarantees of getting the promised fuel for their research reactor. I reckon this is going to come down to the exact number of kilos that leave at a time, and therefore to a fine judgment about the efficiency of their centrifuges.

Spencer Ackerman mourns a great Mod shop. I remember that Klass Clothing in Leeds was about the first business of any kind in town to have a Web site, apart from these guys for obvious reasons. That's gone, as is Sam Walker in Covent Garden...and possibly even the SL1200!

predictions are difficult, except about Martin Kettle

The Grauniad asked 21 of its opinion writers to make predictions for 2009. As a service, and to force Daniel Davies' hand into starting his planned Predictions-L mailing list, I've shorterised each one and reflected briefly on it. The full texts are here.

1) Jackie Ashley thinks the Lib Dems may be powerbrokers in a hung parliament.

Comment: not so much a prediction as a statement that the polls currently look like that. But at least it's based on data.

2) Michael Tomasky thinks e-books will be a major hit, but nobody wants to read 80,000 words cos of wikipedia and google an stuff.

Comment: This is one of those issues that kills forecasters. The dawn of e-books has been repeatedly predicted and repredicted without happening. Tomasky makes the good point that the Amazon Kindle is selling well...but then his New Yorker/smartass kulturpessimismus conwis kicks in and he ends up predicting that e-books will sell hugely but nobody will buy them. Quack, quack, oops.

3) Gary Younge thinks industrial relations in the US will be troubled as the recession takes hold.

Comment: Fair enough.

4) Oh Jesus, here we go. Madeleine Bunting thinks the recession will teach us all a lesson about the Virtues of Thrift.

Comment: Mr Keynes, call your office. More specifically, this is so woolly that it's impossible to think of criteria that would let us determine the success or failure of the prediction. In fact, she explictly backs out of it by suggesting there will be a "confusion of values". Yellow.

5) Peter Preston thinks we will see better satire on TV, and a UK network will recruit John Oliver from the Daily Show.

Comment: Is/Ought confusion - not clear whether Preston thinks this *will* happen or whether he's hoping to encourage it. Hard to define "better", but if better satire on TV does happen there will probably be a degree of consensus that it has happened.

6) George Monbiot thinks some mate of his will have a big success with this fillum they made.

Comment: Well, it'll be either a hit or a turkey. Nobody knows anything (and the kid stays in the picture). It's a prediction, even if the film about climate change is characterised by "a Nigerian fisherwoman who has to wash her catch with Omo"; climate change does not cause oil spills, nor vice versa. Not in Nigeria, at least. I know about that pipeline in Alaska.

7) Polly Toynbee thinks environmental issues will lose salience unless there's a major disaster.

Comment: There's a bit of hedge in how you define "the agenda" here, but it's fair enough. And she's based it on data. Tim Worstall probably already has accused her of hoping for the flooding of New York City, and is now probably guiltily masturbating over her byline photo. And that's a prediction!

8) Jonathan Freedland thinks there could be a hung parliament, and a Lib-Lab coalition, or maybe a Lib-Con coalition. Or it might not happen.

Comment: Coward - three mutually exclusive predictions in one.

9) Simon Jenkins thinks genetic and embryological research will conquer disease. Seriously.

Comment: I am not joking. Perhaps a drop too much of the Old Tory's Arse 76-year old malt this Christmas. But we could treat this as a forecast that there will be at least one major medical achievement in this line in 2009, and that way it is fair enough.

10) John Harris thinks there will or should be a national debate that's something to do with sub-post offices.

Comment: Jesus wept, what a bunch of wank. I remember when he was good; he was especially good mocking the Big Conversation, strange to relate. This sounds like his balls just dropped off. Absolutely no testable claims. FAIL.

11) Jonathan Steele thinks Russian influence will increase in Georgia and the Ukraine. And there will probably be a change of government in Thailand, but it won't matter.

Comment: I was tempted to say Jonathan Steele thinks...whatever the Russians tell him to. Note that back in 2004 he thought the Ukrainian revolution was an evil fascist plot because Yulia Timoshenko made a pile in the gas business. Now she's "a figure to watch in 2009, a controversial and vastly rich entrepreneur who takes a more respectful line towards Moscow". Prediction: Steele will continue to follow the Party line and will continue to be invited on all-expenses trips to Moscow (indispensable pdf). And he's hedging about Thailand like Capability Brown with a Black & Decker and a liberal dose of amphetamine sulphate. However, at least he made a testable prediction.

12) Jenni Russell thinks there may be something wrong with race relations in South Africa.

Comment: No shit, Sherlock.

13) Hugh Muir thinks various European politicians will do something or maybe not, and some UKIP MEPs may be re-elected. Or then again they may not. Who knows?

Comment: Hugh Muir may make a testable prediction he could be held responsible for. Or perhaps he won't.

14) Tim Garton Ash thinks there will be a youth protest wave, driven by graduate unemployment.

Comment: A testable, nonobvious prediction based on a quantitative model. Score one for Agent Romeo.

15) Julian Glover thinks "the age of depoliticised power will come to an end".

Comment: I think he means things like independent central banks. It's not at all clear though. Still, chalk it up; if the ECB gives up monetarism by December, he's right.

16) Libby Brooks thinks "the gardener who knows how to grow their own carrots" will be valued more than a hedge fund manager, and the success of Mamma Mia! is an example of a profound change in our views of status.

Comment: I think there is more than a little contradiction here, and not just because nobody ever liked hedgies anyway. Again, vague puffology about abstract nouns.

17) Seamus Milne thinks the "the neoliberal model is collapsing around our ears, but what is going to replace it is still up for grabs".

Comment: Not a prediction, and unfalsifiable. If you read on, it turns out the old tankie really means "maybe this crisis is the one! world revolution is here!" but he's wily enough to realise everyone will laugh if he says that.

18) Mark Lawson thinks William Golding's books will come back into fashion.

Comment: God, I hope not. But at least it's a prediction.

19) Scraping the barrel. Zoe Williams thinks that the idea of prime-time TV is obsolete, and that TV will be dominated by crowd-pleasing repeats.

Comment: Slightly contradictory. And whingeing about repeats? Radical.

20) Martin Kettle, for it is he, thinks the extreme Right in Europe will win more seats at the European Parliamentary elections. He doesn't think this means a third world war is imminent, but he does not have "high confidence" of this.

Comment: Kettle, Kettle. The boy's so prone, Ron. Trust him to make a fool of himself. I would think anything less than very high confidence that the radical right will not start a world war from Europe would be front-page news, but he actually buries this behind the shattering suggestion that the BNP might pick up an MEP or two.

Of course, that's actually quite unlikely because the method of election favours parties with a small but widespread support base like the Greens, rather than ones with sporadic, concentrated support like the BNP.

21) Marina Hyde thinks the Russian state will continue to take control over more of the Russian economy, but will re-privatise in the future, only to re-expropriate a new set of temporary oligarchs when the next crisis arrives. And the Government will fail to get newly state-owned bank branches to open on Saturday mornings.

Comment: That's actually a very good point. Two very good points, in fact. We have a winner!

HOWTO: remove giant statue of Sir Fred Goodwin

think I've said before that I find public sector accounts incredibly weird. Here's a great example; it's a very good FT story on the bank nationalisation plan and how it affects the national finances. Bizarrely, the £25-50bn of government bond issuance required to raise the money probably won't count towards the public sector net cash requirement (what used to be the PSBR in John Major's days of sound finance...not!); it's a "financial transaction" and these are excluded.

Well, that makes a weird sort of sense; the liability on one side is matched by an asset (the stake in the banks) on the other, the net change in the government's cash position is zero (at first, but even later, any dividend paid on the preferred stock would at least balance the interest payments). The next bit, however, gets really strange; although it's not counted as new public borrowing, it is counted in the figure for the national debt. It's debt, right? Yes, but if the government was anything else but the government, the increased debt would be matched on its balance sheet by the stash of bank shares. It being the government, however, it's not.

Now, it gets really counterintuitive when it comes to the really big money - the £250bn guarantee for wholesale bank lending. Apparently, if the Government (as suggested) charges the banks a significant fee for the guarantee, this will force it to take the full wad on its books as a liability of the public sector. (Even though most of any transactions among the eight participating banks will add up to zero; if Lloyds lends Barclays £1bn and Barclays lends HBOS £1bn, and Barclays then goes bust, the state guarantee would only come into it if Lloyds and HBOS couldn't agree to settle the transaction between themselves.) If the Government offers the guarantee free of charge, however, the rules on public sector contingent liabilities mean they can keep it off the books. Yes, you heard that correctly; it's in some sense financially better for the state not to receive quite a lot of money.

Anyway, in these weird times, let me propose a weird solution. The Government has promised to put manners on the banks in return for the £50bn, pressing for executive pay restraint and measures to help small businesses. Some people are concerned that they won't be able to make this stick because preference shares don't come with a vote. I disagree; whatever the formal terms, anyone who fronts up as much as half of RBS's capital base is going to have several billion votes, and indeed it looks like the CEO is going to be sacked as a condition of the deal. It's a question of political will.

EDINBURGH, October 12th: Crowds cheered as the giant statue of Sir Fred Goodwin was torn from its perch by a Royal Engineers' armoured tractor. As the news spread this morning, a mob gathered around the base of the monument, unavailingly beating it with sledgehammers and dragging at it with ropes. Eventually, Sergeant Mick Kelly's Chieftain AVRE arrived. After a few minutes, its engine roaring, the huge vehicle succeeded where they had failed and the dictator's figure crashed into the dust. In a sinister orgasm of rage and contempt, the mob beat it with their shoes, spitting and jeering as the ruin was towed through the streets....

Like I said, it's a matter of political will.

However, it will be much easier to hold the Government's feet to the fire about this if they do have formal rights to intervene, as well as safer, as unwinding the stakes in a hurry in order to punish a recalcitrant bank wouldn't be easy. One option is to buy ordinary shares as well as the new preference ones, and have the Treasury Shareholder Executive manage them; the numbers involved would put the Government in a position to insist on a seat on the board and extensive influence over management. However, this would be riskier, as ordinary shares don't have the charge over cashflow the preferred kind do, and it would also spook the market even more, as issuing the new shares would dilute the existing shareholders.

It would also be affected by weird public accounting, as this would make the banks into public-sector entities and therefore bring them on the Treasury's books; in which case, only their liquid assets would be counted against their debts and the national debt would therefore reach unheard-of proportions.

But there's another option. For many years after privatisation, the Government held so-called "golden shares" in a range of ex-nationalised industries considered to be strategically important. For example, that in Rolls-Royce gave the Government a veto over changes of ownership and the right to reserve the top management positions to British citizens. Some of them were abandoned in the early 2000s at the request of the European Commission; notably those in BAA plc. Now, these shares were legally structured as "special preference shares", and the Office for National Statistics didn't consider them to be sufficient state control to put BAE, RR, National Grid plc, BAA and the rest on the books - but they certainly granted the Government special rights over these companies. In fact, they still do at BAE Systems and Rolls.

Update: Oh well, here comes the shock and awe. Sod golden shares, preference shares, whatever - it looks like we're in for the whole hog, 75% of RBS's market cap, voting stock, Government directors, sack the board, don't open the London Stock Exchange...fuck, did they just say that? Looks like the opening of the books must have been quite a dramatic event.

stuck, stuck, stuck

Pakistan Policy Blog speaks sense:

Zardari’s attempt to present himself as a savior belies the reality and the way most in Pakistan and even the United States see him. Billionaire Zardari is part of Pakistan’s feuding oligarchy, not a revolutionary against it.

The sad fact is that most Pakistanis have been hostage to this sadistic version of Bill Murray’s Groundhog’s Day for 60 years. There will be no messiahs in Pakistan. Pakistanis need the rule of law — neither Baitullah Mehsud’s law, nor Farooq Naik’s law — and a system with real checks, balances, and accountability to free them from their malaise.

Read the whole thing; I mean the whole blog, if you've got time. I suppose it couldn't last; the position since the formation of the PPP-PML(N) government was just too good. The government had genuine public support, civil society had given The Tyrant a beating, both the Punjabis and Sindhis were represented, and no bugger voted for the Taliban tribute bands.

Now it's back to normal service; a weak, unpopular, corrupt civilian president without support from half the country. I confidently predict there'll be a coup in three or so years. What is genuinely depressing is the role of Zalmay Khalilzad - whether officially or pseudo-unofficially - in egging Mr 10 Per Cent on. The Americans seem to think that Pakistan is a 1970s rightwing military dictatorship, by nature. Says Mr. Douglas State:

Sweating with indignation, as of course they have every right to be, the great majority of the public would go communist tomorrow - and then, what? So, you see, we have to support General Caudillo. I agree he's unattractive, but, you can't do everything...

But they won't - even the NWFP recorded about 15% of votes for the various Taliban tribute bands. They don't trust the Americans. So what? I don't. After all, they got new F-16s from the US, to replace the ones they didn't get the parts for the time before that; they got a couple of spanking new GSM networks from dealing with Norwegian and UAE interests, respectively.

They need exactly the opposite of this kind of government, and this kind of ethic. It's especially painful that, despite all the "freedom agenda" bollocks, the people who defied the tyrant precisely to defend the rule of law are being sold out. We're on the wrong side of history, again.

This, meanwhile, is purely irresponsible, unless the game is to bring about a new military government. The upshot is that the Pakistanis turn off the MSR via Karachi; now, their interests and the other side are aligned.

Hammond's Sauce Works Band

Recently, our dear duckspeaker Philip Hammond MP had his local talking points cache refreshed. He's now constantly saying that the Government is causing "uncertainty" in the housing market because they haven't decided whether or not to cut stamp duty, and that this is a problem. Both statements are of course completely vacuous at best, and actively misleading at worst. For a start, the housing market is tanking. We're in the worst property crash since 1983, says the Halifax; that's another way of saying that the Halifax started computing an index of real estate prices in 1983. It's not impossible that it's the worst since the Great Depression. The price of property is dropping with the almost supernatural swiftness of an economic imbalance that finally clears; at the moment, anyone who wants to buy a house would be literally insane to do so, as it is as certain as anything in economics ever is that it will be much cheaper in a year's time.

Of course, this only matters if you can raise the money. At the moment, the banks have practically stopped lending, so whatever happens to stamp duty is risibly irrelevant. Further, all these statements go double the smaller the deal; nobody who owns a house is ever likely to struggle to raise mortgage money if they want to buy another, but without new entrants, who can they sell to? What mortgage lending is going on is actually very good business for the banks, because it's practically all to people with lots of existing equity, and at higher interest rates too.

Supposedly, according to Hammond and the real-estate lobby, reducing stamp duty would help people raise a deposit in order to pass the new and more astringent lending criteria. But this is obviously drivel. The large majority of new entrants are either zero-rated or in the first, 1% band, so their stamp duty bill will be at the very most a couple of grand. If they have to raise a 20% deposit, well. It's not going to work. If you've got £18,000 to plunk down as a deposit, and the stamp duty at 1% is a dealbreaker, shouldn't you either be waiting a few months, looking for somewhere cheaper, or getting a better mortgage broker?

Further, there's the marginal issue. The Tories seem to be collectively blind to the existence of marginal effects, as if their love of classical economics had carried them back past Hayek and von Mises and Bohm Bawerk all the way to the 19th century. For example, they want to "encourage marriage" by offering a tax break to the married; but the only extra marriages this will result in are the ones where the spouses wouldn't stay together but for the tax break. And those aren't likely to be gems, are they? Similarly, the only additional house sales a cut in stamp duty will cause are ones where that sum of money is enough to make the difference; not very many, as we've just seen. But we're having an epic financial crisis precisely because the banks lent so much money to people who couldn't pay it back. Do we really want more crappy loans?

So; it's completely ridiculous to suggest that cutting stamp duty will do any good, it's frankly irresponsible, and it's even sillier to imagine that buyers are holding off wondering if they'll have to pay 1 per cent more or less, when they can be certain they will pay 10 per cent less in a few months' time and perhaps 30 per cent less in a year or two. So why is Hammond so obsessed? (And he is. Check out the 14,400 Google results, including a veritable barrage of official Tory press statements.)

The first point is pure clientelism. What stupid Tory giveaways have in common is that although their marginal effects usually defeat the stated point of the exercise, they usually succeed in showering one or other campaign demographic with cash. A tax break for married couples won't actually do any good, but it will provide a payoff for several key voter groups who don't even have to do anything; the money just comes. Similarly, the people who are dealing in houses at the moment by definition have lots of equity and cash; who else can get a mortgage? They would get the tax break as much as anyone else. Kerching! Another group who would benefit either way would be the real estate lobby itself; and the sheer number of property millionaires who have quartered themselves on London since Boris Johnson's election should explain this reasonably well.

The second is Philip Hammond's own personal financial interest. Here's something he added to the register of interests in June, his shareholding in Castlemead Ltd, a company whose main interest is....property development, of houses through its stake in Castlemead Homes Ltd and of NHS primary care centres through Castlemead Developments Ltd. (I reckon the Tory position on PCTs wants watching, no?)

This must be no small holding, either; he managed to forget to declare a £3m dividend from the firm. That's enough to make him the the second richest man in the Shadow Cabinet with net wealth (I refuse to describe it as "worth") of £9m. No wonder he spends so much time howling for the propertied interest. He is talking his own book. But surely even he can't be worrying about the stamp duty on his £1.5m pad in Belgravia? Even at the 4% higher rate?

one intelligent soldier

Said Sir Michael Rose, speaking at the SAS passing-out parade in 1979: One intelligent soldier can achieve more than a fleet of B-52s. There's some debate as to whether that statement could be applied to Rose himself, but I doubt many would disagree with it.

David Davis apparently agrees. His resignation from Parliament should be understood as an exercise in the struggle for strategic influence, specifically directed at the growing decent/neocon faction in the Conservative Party. I have been a little surprised, and pleased, by how well the Tories have held up on the Counter-Terrorism Bill, ID cards, and related issues; I would have thought the Murdoch influence would be telling by now. And, indeed, there are signs of change within - Boris Johnston's win seems to have hugely strengthened the Policy Exchange/Michael Gove current, while Cameron's annoying press chief Steve Hilton has run off to California. His BlackBerry is unlikely to be enough to compensate for the distance, which must strengthen Andy Coulson's role as Rupert Murdoch's ambassador to the Tories.

But now: cazart! Davies' replacement, Dominic Grieve is even talking about repealing the 28 day provisions. Stick that up your punter - I think not. There's not going to be any cave-in now. It's part of the Westminster traditional language that, to be considered principled, an act must also be ineffective or poorly executed, which is one of the reasons so many people have been at pains to accuse Davis of Machiavellianism or frivolity. People who want something that isn't evil or dishonourable don't get to pull off brilliantly outrageous triple-crosses, do they? Yes, of course it's Machiavellian scheming - this is politics after all, and that's how things get done, and the people who complain are usually the ones who were outschemed.

If you needed evidence that the Davis coup is significant, you need look no further than the emergence of an actual Murdoch candidate running against him. Yes, Kelvin McFuck is back, looking to add another name to his litany of post-Sun failures. He is one of very few men to actually fail to make money by underestimating the public's taste - it's not like News Bunny ever made a penny... But, this time, he is clutching a promise of actual financial support from News International, plus close air support from the paper itself. Inevitably, the media establishment is busy writing him off as a joke candidate, which makes as much sense as writing Davis off and is being done for precisely the same reasons.

Whether McFuck realises it or not, in a very serious sense Davis was running against the Sun Party from the word go. What does the Sun actually stand for, politically? Well, now we know - we can read it off McFuck's public statements.

He also told the BBC he would be campaigning on three issues - hostility to the "sense that our country is somehow in the grip of some kind of security vice", demanding that there be "the referendum for Europe", and on more populist issues - like seeking changes to government spending on "things I don't think we care about".

In a BBC Radio 5 interview, he was slightly more specific about point three, saying that he wanted to ban BT from using "automatic voice responders and call centres". You have to wonder whether a man who had just come from a late-night dinner with antisocial binge drinker Rebekah Wade was entirely sober, but there is a clear pattern here - he, and it, stand for authoritarianism, the Special Relationship in the worst sense, and fake populist gut-chafing (this latter, of course, is essentially content-free).

Putting it another way, McFuck's candidacy is an exercise in the promotion of power-worship. It's Schmittian conservatism; the permanent crisis requires an Ausnahmezustand, which demands a strong leader who may incidentally beat up the odd call centre to demonstrate their compassion for the weak, who are very much intended to stay that way. Note that McFuck's not interested in the people who work in the call centre. Only a numskull like Geoff Hoon could think the Government ought to field a candidate - it should be clear enough to everyone else that the Government, in many ways, already is.

In this light, it's clear why Davis is standing and why he deserves your support - it's only contradictory that he believes in both the death penalty and habeus corpus in terms of generalised progressivism or liberalism, which he doesn't believe in (or he wouldn't be a Tory). In terms of classical conservatism, it makes perfect sense to think that the State should have the power to cut your head off, and that its power must be constrained by law as much as humanly possible. (After all, if the State *wants* to kill someone, it's likely to find a way unless someone stops it.)


And, going by the polling data, this is likely to be your chance to help pour the proverbial vast bucket of shit back over McFuck's head. Imagine the scene at the Murdoch summer party - McFuck, red-faced, holding forth, James Murdoch explaining to Rupert, ticking quietly on his death-support system, that there's this thing called the Internet and it's like TV that you read, Wade drooling slightly over Wendi Deng's shoulder but still reasonably coherent, the plates of roast baby stewed in the juice of freshly squeezed minority shareholders well dug into but not quite down to the toying level yet. All seems well with the world...and then, the disruption. Forced to show their hand.

This is also to say that Dan Hardie was right. He's been a Davis fan for some time; I was doubtful, especially after he reacted to the police crime figures going down by suddenly deciding the BCS was right all along. But when the time came...

There's a PledgeBank here; and what's this? Bob Marshall-Andrews and Colonel Tim Collins? And Kings of War. And Peter McGrath. It's like going back to the 2005 general election, maaannnn.

People say to me just be yourself, it makes no sense to follow fashion. How could I be anybody else?

Ackerman reckons we should be impressed that he suggested a Turkish-Kurdish rapprochement two years ago. The evidence for the rapprochement is pretty good - there are meetings going on between the KRG and the Turks, under the chairmanship of (Kurdish) Iraqi president Jalal Talabani, about issues connected with all the business Turkish companies are doing in Kurdistan. But who cares about that, when there's blogger one-upmanship at stake?

It's the 24th of July, 2005, and this is on the front of TYR: The Turks Are Coming! Maybe

If I was a Turkish spook, I wouldn't be planning to attack the Kurds. I'd arm them, trade with them, finance them, and sleep soundly knowing I had one of the most bitter bunches of mountain killers in the world between me and the chaos in Iraq. And I'd still have the menace of invading them available. Just one thing: do not declare a sovereign state - yes, be one, but don't say it. I wouldn't want to be shot by my own side.

Hey, that's two whole days after Jean Charles de Menezes was offed by Ian "Therapy Cat is Concerned" Blair. Well, the Turks eventually blew their stack and invaded, achieving nothing and wasting their deterrent credibility. Now they are getting serious. You read about it here first. And remember, one day Kurdistan will apply to join the EU.

Speaking of predictions - look at this. Via Brian Ulrich, Turkey is playing a key role in negotiations between Syria and Israel, by offering the Israelis a side-payment....in water. Yes, just like this old school January 2004 post on TYR. There's a huge opportunity for an EU-like technocratic settlement there, y'know.

Where did I get the title?

Solidarity with the oppressed police informers

Not looking great for Comrade Bob, which is fine news to anyone other than a blind-thick arsewit. David Osler thrashes Stephen Glover over a gaggle of strawmen about how "the Left" secretly support Zanu-PF; he's right, you know. I've said before that Tories still have a very odd relationship to Southern Africa, and here is exhibit A - check out the raging projection as he struggles to avoid the thought of Margaret Thatcher and Lord Carrington arranging for Mugabe to take power in the first place, whilst also trying to dog whistle the old Rhodesia lobby without breaking cover. Gah.

But this made me think; surely, somebody's going to mourn Robert Mugabe. Probably...How long before Neil Clark or John Laughland comes out of the woodwork to accuse the MDC of being as bad as Hitler, or something? Checking up, I find Clark is fully occupied accusing Nicolas Sarkozy of being as bad as Petain, but no doubt he'll get to it in due course.

leave it, Daz, he's not worth it

The Times has been doing the best reporting from Iraq by far at the moment. Here's some evidence.

Now, to substance. Note this:

“We have received a shipment of Strela antiaircraft rockets,” Abu Sajad boasted to a Sunday Times reporter.“We intend to use them to prove to the world that the Mahdi Army will not allow Basra to be turned into a second Falluja."

This could get bad, especially if the Sadrists can be as good at shooting down helicopters as that NOIA outfit in early 2007 were. Anyway, the last dispatch is that far from the Iraqi government offering anyone mercy in exchange for surrender, Moqtada al-Sadr has just issued an official Leave It, Daz, He's Not Worth It order to his army to stop beating them. I can't see any evidence of this being due to imminent government triumph, so I reckon it's a mix of an exercise in contemptuous indulgence and a renewed assault on the moral high ground.

Think of that; officially at least, the Sadrists have been on ceasefire, more sinned against than sinning, acting only in self defence, but they've also kicked the shit out of the Iraqi government, and now they're looking to exit the confrontation on their terms. The question about this is of course whether the big red stop button will work; Sadr has historically had only coarse control of his army, basically a choice between STAND BY and BURN SHIT DOWN. It's quite possible that the political dynamic will get out of hand, though, and there are signs of this round taking on a life of its own.

For example, it is reported that the Mahdi Army in Baghdad has been going after the usually ex-NOIA, Sunni "Awakening Councils"/"Sons of Iraq", even to the point of attacking Sunni territory; apparently, their outposts are being rolled up into more defensible concentrations, which would mean at least a temporary disruption of the US counter-insurgency strategy, and at worst the enduring loss of territorial control and a major NOIA counteroffensive, probably (if you want a guess) in Diyala. Policemen are deserting in droves of up to battalion strength. It may be that this round of violence, like all the others in Iraq, is breeding its own army; 2004 gave us the original Mahdi Army and the NOIA, 2005 the SCIRI fake policemen, 2006 the ex-NOIA countergangs, 2007-8 the Mahdi Army 2.0?

There's more evidence of renewed sectarian war here. Brief thought; has anyone else noticed that as well as improving its coverage, the Times has started referring to Moqtada al-Sadr as Hojetoleslam Moqtada al-Sadr? This shows both greater respect, and significantly improved spelling. (So has the US Army.)

Finally, let's all be thankful the Mahdi Army mortarmen missed Tariq al-Hashemi, this blog's favourite not-quite-an-insurgent Sunni politico and Iraqi vice president. Because that probably would have been the starting gun for the various Awakenings to turn.

Update: I spoke too soon. Someone tried to assassinate the governor of Diyala earlier today.

Necrocracy!

Necrocracy: government by the dead, for the dead. Thoreau@Jim Henley's says s/he expects Dick Cheney to invoke executive privilege in relation to an act performed after he ceases to be Vice-President. It's an interesting idea, but I'm going to raise the bar. I predict that Dick Cheney's lawyers will attempt to invoke it in relation to an act performed after he ceases to be.

Congressional committee: Who authorised Operation Oedipus?

Counsel for the Cheney Foundation: Mr. Cheney.

(Sensation in Congress.)

Committee: And how is it financed?

Flack: My client asserts executive privilege over any and all information relating to Operation Oedipus.

(Astonishment, and disbelief.)

Committee: Your client is currently deceased. Indeed, he was deceased at the time Oedipus was initiated. He remains so. In fact, you don't actually have a client.

(Silence. A blogger is ejected by guards.)

Flack: I am retained to represent Mr. Cheney's continuing interests as a juridical person, which continues insofar as the provisions of his last will and testament must be placed in execution..

Senator Moulitsas (D-CA), intervening: Given what little we know of Operation Oedipus, execution is the right word!

Flack: I'm afraid I'm not at liberty to discuss that. It is my contention that Mr. Cheney's position as Vice-President of the United States conferred privilege on his responsibilities as deputy head of the executive branch, including those which continued after his leaving office. As Mr. Cheney's prior status is unchanged by the mere termination of his biological existence, so this privilege continues unchanged.

Committee: Do you mean to say that people are taking orders from a dead man?

Flack: I dispute the use of the term "man". It implies certain responsibilities and expectations inconsonent with the dignity of the deceased Vice-President.

Sen. Moulitsas: You're damn' tootin! And that's my line!

Committee: I think we will adjourn to digest the implications of this remarkable argument..

Dead Pool

The Ministry is doing a ministerial dead pool for the post-Blair era. Strange concept. I have to say I'm not that impressed by his pre-resignation. Not only do I have the feeling it won't be over until something like the Czech joke about Bilak's widow going to visit Husak in jail to tell him how Jakes was murdered at the funeral of some other dinosaur whose name I forget, what really matters is the Blairite continuity or lack of it.

But here goes, anyway:

Douglas Alexander, Alistair Darling, Des Browne, Alan Johnson, Hilary Benn: in line for promotion, clearly. Amos, Hain, John Hutton, Jack Straw and "World's Boringest Man" Mike O'Brien: dull, useful placemen, in line for a sideways move. God, this is going to be a boring government, isn't it? No wonder Brown is talking coalitions and "governments of all the talents". David Miliband, Hazel Blears - difficult to see whether to use one of them to square the Special Republican Guard survivors, or crush them. Hewitt - strong Brownite/Kinnockite credentials, but if Brown goes for the idea of pulling the NHS out of ministerial line management, it'll be indistinguishable from a demotion.

Lord Falconer - no, can't see a future for him, whack him on the list. Ruth Kelly: the unions despise her, so does the press, and it's only a matter of time until some council or planning issue goes pop. Jowell - whatever she's got on Blair can't harm Brown, surely? Hoon - much the same.

Goldsmith - that bastard would survive a nuclear holocaust, and turn up perfectly pressed in the smouldering aftermath to justify it. Chief Whips - for a start, who are these people? Simply a tactical issue, anyway - does the benefit of having your own thugs outweigh the risk of offending the last ones?

Beckett - might survive for the sake of credentialism, but her seat is probably wanted for Miliband or someone.

I'll go with Falconer, Beckett (if Miliband is saved, else Blears), Jowell, Hoon, and Hewitt with the proviso that the Department of Health will be reduced enough to count as a demotion.

Tories, meanwhile...

Andrew Lansley - numskull, associated with Hague's 2001 campaign. Gotta go. Francis Maude - doesn't have a department to shadow, so can't get very much wrong, and anyway has managed to survive from 1997. David Davis, William Hague - needed to prop up Dave from PR, like a drunk's less pissed friends. Oliver Letwin - the tribal right hate him, but more importantly he's bound to fuck up epically at least once. Might make it to the first reshuffle. The rest - really, I've no idea. Who are these nonentities?

Out of sheer schadenfreude, I'll list Philip Hammond, my MP, because he's a slimy old git. But I suspect he's really going to shadow Pensions until he draws his pension. I suspect George Osborne might crash at some point.

So...Lansley, Letwin, Duncan (bright, but flaky), Osborne as a long-range target, who else? Liam Fox is a thin layer of sane over an abyss of right-wing crazy, and there's always the chance he'll plunge through.

There is still going to be no attack on Iran

Chatter builds that the US govt is considering moving another carrier to the Gulf to put pressure on Iran. Meh. Fleet availablity is still low. Eisenhower is on station, Enterprise back from deployment and due to go in dockyard hands. Nimitz is doing her COMPTUEX off Southern California. Reagan is still in the CARQUALs phase of the training cycle, Theodore Roosevelt is also a long way back in the deployment cycle.

Vinson, Lincoln, Truman, and Washington are all in drydocks. That leaves only the John C. Stennis. She has recently signed off her JTFEX, which means she has all the ticks in the right boxes to sail. There is also the Kitty Hawk in Japan, but she is essentially marking the Korea and Taiwan commitments and would have to be replaced by another ship to go to the Indian Ocean.

Two carriers is not going to cut it. Still no attack in prospect.

Option 8

In this post, we analysed the options open to the Iraq Study Group. Supposedly, the original brief foresaw 8. Number 8 was one last push, and it seems that this is exactly what we're going to get. Note that it is sourced to the President and "Pentagon officials", rather than the Group itself.

In that post, I pointed out that option 8 was absurd because there was no discrete strategic, or even operational, aim that could be achieved by a "last push". I theorised that it was included as a debate framing exercise to make some version of option 3, phased withdrawal, seem palatable through the false impression of "balance" or "moderation." Well, it seems that George W. Bush has bought the dummy so completely he thinks it's a real option.

Years ago, I had a dog, a big friendly barky one that was not perhaps very bright. One day, out for a walk by the Wharfe, the dog smelt a rabbit and plunged off after the creature. Normally, the bunny would have outmanoeuvred him within a couple of turns - I'm sure one of them managed to get on his tail once and claim a Fox-10 - but this one made a fatal mistake. Assuming the dog was intelligent, he reefed into a sharp turn one way, then back the other, then threw a dummy the other way but kept going the same way. The dog, however, wasn't clever enough to notice the dummy, and the rabbit ran right into his jaws.

So George and Dick are going to send for more troops, 20,000 of them - presumably this is "whatever is left in the bag" rather than any specific tactical formation - in order to "secure Baghdad". Ah, that again. I see no reason why they will be any more successful at this than the last three times. One sane use for more troops, incidentally, would be to concentrate a reserve strike force in the MND(SE) zone in case it becomes necessary to re-open the roads by force. But they could be provided by pulling out of Anbar.

They are also flirting with the idea of a international conference, but can't quite bring themselves to say "talk to Iran". It is hinted at, but they prefer to talk about Saudi Arabia and Kuwait - who are the least influential Arab nations in Iraq by a distance. And the idea of encouraging the Saudis to get involved in a fight with SCIRI and Sadr inspires, well...fear more than anything else except perhaps astonishment.

So it looks like Charlie Whitaker was right.

They also want to revive the national reconciliation process and ask Congress for more resources. On this, frankly, I'm disappointed they didn't also get to grips with the urgent question of ponies.

Watch out!

As usual for events that are meant to be a Turning Point in Iraq, temporary calm has been enforced by a total curfew and vehicle ban during Saddam's judgment. It works, of course, for a few days - but it can't last, as people have to buy food and go to work. Consider it a radical drug from a kit of extreme measures, only for use in a desperate crisis and to be dropped as soon as possible.

Reuters AlertNet reports that the curfew expires at 0600 local time tomorrow. That's 0300Z, 2300 US Eastern Standard Time - or in other words, in time for the first US news cycle on polling day. Haifa Street, a NOIA stronghold area, is around 400 yards from the Green Zone. Snipers have been active in the area for weeks to intimidate US and Iraqi patrols. They could also serve as a stopgroup to hold up relief from outside.

I doubt the NOIA will let their king hang without trying a spectacular.