The wonders of the Internet

From my hotel room in London, I read this SMH report, headlined “NBN benefits ‘grossly overstated'” which in turn refers to a report by “British telecommunications consultant Robert Kenny and Charles Kenny from the US Centre for Global Development” released (in London, as it happens) a couple of days ago.

Five minutes with Google is enough to determine that

* the Centre for Global Development is a genuine and reputable thinktank, with no particular axe to grind

* Charles Kenny is not what you might call an Internet enthusiast, having written, in 2002, a piece entitled Should we Try to Bridge the Global Digital Divide.
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Austerity in the UK* — Crooked Timber

Visiting London briefly, I’m struck by both the drastic nature of the cuts being proposed by the Coalition government, and the bitterness of the response. By comparison, the austerity measures being proposed by most eurozone governments seem both less regressive and more sustainable in the long run, and the demonstrations in response to be much more in the nature of normal politics, with an element of street theatre.

I haven’t had time for a detailed analysis, but a quick comparison of the eurozone cuts listed here, and the measures proposed by the Coalition seems to me to bear this impression out. Maybe it’s just lack of detail in the eurozone list, but (except maybe in Ireland) there seems to be nothing like the mass withdrawal of public services and the focus on punishing the poor for the crimes of the rich that is the hallmark of the Cameron-Clegg regime.

This, again, seems to me to cast doubt on analyses that focus on the role of the EU and the euro. As far as I can see, UK policy is essentially unconstrained by the EU and is driven by the demands of ratings agencies and the financial sector generally. On the plus side, the Bank of England has been more expansionary in monetary policy than the ECB, but it’s been equally supportive of fiscal austerity which is the main problem.

  • My intended allusion doesn’t jump off the page as I’d hoped, but UK political and social discussion has, to this visitor at least, a distinct late-70s air at present.

Murdoch backs Bligh

Michael Stutchbury’s piece a while back supporting the QR asset sale (my critique, his response) turns out to have been the first of many as the Murdoch press tries desperately to talk this flop up. But the punters aren’t buying, and even some of the subeditors appear not to have got the memo. This (unsigned) piece in the Courier-Mail says that, rather than repaying the debt that was the pretext for the sale, Bligh and Fraser plan to spray much of the proceeds on electoral bribes of one kind or another. The text gives the most positive spin possible, but the headline referring to a “desperate push for votes” gives the game away.

And if Bligh and Fraser weren’t feeling desperate, the comments on the story ought to make them so. In 127 comments, I didn’t find one that actively supported the government, although there were a fair few that were also critical of the hopeless LNP. My personal favorite from “Skeptic”

Hands up those who reckon they can be bribed by this behaviour. If so, I have a bridge to sell you. Oh, wait, they’ve sold that too…

Bligh and Fraser are doubtless on the way to well-paid sinecures in the financial sector. But those members of the Labor Caucus who don’t have anything lined up post-politics must soon realise that their only chance of keeping any seats at all next time round is to sack them both.

The crisis of 2011 – in 2010? — Crooked Timber

Back in July, no one seemed to be talking about a shutdown of the US government following the Dems loss of control of the House. Now the only question is – when?

David Dayen at FDL says it could be as soon as December (I don’t understand the mechanics well enough to confirm or reject this claim). Among those looking forward to the shutdown, the most notable, for a variety of reasons is Alan Simpson. Obama must really be feeling the gratitude there.

There’s still a chance that the Dems can manage a pre-emptive capitulation/collaboration so massive that some on the other side will be willing to cash in their gains without taking the risk of a shutdown. I imagine that would entail, at a minimum, full extension of the Bush tax cuts, effective repeal of the health care bill, no more money for the unemployed, Social Security ‘reform’ and a bunch of spending cuts directed at the tribal demons of the Tea Party. Of those, health care is the only one where I can see the White House taking a stand. I’m less clear about the priorities of the Congressional Dems.

Smoke and mirrors yet again (corrected)

The QR float came in at the bottom of the indicated price range ($2.55 a share for institutions, $2.45 for individuals) and the government sold only 66 per cent of the shares, implying a return of $4.1 billion. However, the government announced a return of $4.6 billion. Unsurprisingly, these figures are bogus. To get there the government included some extras, picked up in later reports:

Dividends due to the government from the company and cash proceeds from a debt facility make up the difference between the $4.1bn worth of shares issued and the total revenue figure of $4.6bn.

It’s pretty rich, but par for the course for this government, to treat the dividends from an asset you are selling as part of the sales proceeds.

A couple of points

* The sale just scraped in at the government’s minimum. What are the odds that some favours were called in, and future favours promised, the get the float over the line?

* As I mentioned last time , the government took on $4.3 billion of extra debt when it restructured QR for sale. So, in cash terms, this sale actually leaves the government marginally behind.

Update In the original version I used reports that said the government had retained a 40 per cent holding, which created some additional puzzles. I’ve now fixed this.

Euroconfusion — Crooked Timber

Most of the discussion I’ve seen of the financial crisis as it affects the eurozone seems to me both confused and confusing. A country outside the eurozone and without the “exorbitant privilege” of being able to sell lots of debt denominated in home currency has three options when it runs into debt trouble: default, depreciation and dependency.

Default is the straightforward solution, but it involves a big loss of face, and unpredictable long-term costs. Depreciation doesn’t directly improve the debt position, since debts are in foreign currency, but by making exports cheaper and imports dearer it helps a country to trade its way out of difficulty, without the need for a reduction in domestic prices and wages. Finally, there’s the option of dependency on an outside rescuer, normally the IMF. This has been the most common solution, but the IMF always demands a price (in terms of policy “reforms”) that makes a rescue only marginally more attractive than default.

A eurozone country doesn’t have the option of depreciation. In return, however, it has two dependency options, calling on either the IMF, or the European Financial Stability Fund. Since the EU would like to keep the IMF out, a distressed debtor can expect slightly better terms from the EFSF.

The default option isn’t affected, except in the same way as any kind of behavior viewed as discreditable affects membership of any club. A government that defaults on its debts might be thrown out of the eurozone, but then again it might be thrown out of the OECD, and the eurozone might expel a member that facilitated tax evasion.

The big question is whether the EFSF will work. That’s certainly challenging, but it still seems like a better bet for debtor countries than going it alone. And of course, there’s more commonality of interest than is often supposed because any bailout benefits the creditors, usually French and German banks