Saturday, 6 August 2011


1. In The Worldly Philosophers, about the underpinning of economics: Be it noted, in passing, that the treasures of the East were truly fabulous. With the share received as a stockholder in Sir Francis Drake's voyage of the Golden Hynd, Queen Elizabeth paid off all England's foreign debts, balanced its budget, and invested abroad a sum large enough, at compound interest, to account for Britain's entire overseas wealth in 1930.*/**

2. Standard & Poor? They're the guys who didn't think people with a history of defaulting on debts and no jobs might default on housing loans, right? Why are we listening to them? This is not a facetious question, even if it's the shape of one. I mean, they're just these guys trying to keep their jobs. And the reason they have them, and the reason we listen to them, is that we're desperate for someone to put numbers on things and make them feel like someone understands them. But we don't. Seriously, people, get a grip.

3. In my next post, I promise, pretty pictures. But seriously, and I have stopped being apologetic about this, listen to a halfway competent historian about America's likelihood of default before you listen to Standard & Poor.


* Not totally sure what that wealth was. WWI wasn't the best for the British economy. Incidentally, I think Golden Hind should be spelled with an 'i'.
** One solution to economic crisis suggests itself, though: treasure ships. Where? Mars? Invest in Adventure.

1 comment:

Rachel said...

I wouldn't trust Standard and Poor to advise me on what t-shirt I should wear this morning, even when the choices were between a black one, and this other black one, to go with these black trousers.

Admittedly, fashion ("fashion") may not be S&P's area of expertise, but given that they - and all the other credit rating agencies - failed to stand back and ask some sensible questions when the finance world was salivating over sub-prime debt, in what is supposed to be their area of expertise, makes me doubtful over their expertise. Why do people still listen to them? It's like someone pointed out the Emperor has no clothes on but instead of laughing, everyone decided to follow the new 'being naked' trend.

Do I also recall correctly that the agencies are funded by the people who are issuing the debt? Yes, I do. I don't quite know how that works when it comes to sovereign debt, having dropped A Level Economics after one and a half lessons; is it in the interests of the institutions lending to the countries to see their rating go down and pushing interest rates up? I suppose it must be. But I don't know if it works like that.

I am incredibly tired.