Britain poised to tumble

I am deeply dubious that the answer to our economic problems lies in encouraging banks to lend. Rather, since the reason they won't lend is that households are overburdened with debt, to such an extent that a large proportion of existing loans may never be paid back, the answer to me seems to be to play things quietly: to let people reduce their debts — over years if necessary — until financial health is restored. Only then can growth resume.

To put it in more familiar terms: if you've binged so much that you're lying puking in the gutter, with a cirrhotic liver and clogged kidneys, then a hair of the dog is probably not the right answer.

I also doubt recent claims in the media that the government will stand ready to claw back any excess liquidity should inflation reassert itself. I think they've calculated that a decade of inflation at 10% or so will nicely reduce all those personal loans to manageable proportions, and at far less political cost than a decade of real financial prudence.

That's not a popular analysis. Indeed I expect most commentators would scoff at its naivety. Certainly, insofar as the original personal debt problem has led to other problems such as a dearth of commercial lending, I suppose it may be reasonable to try to resolve those separately. But I don't think that trying to give the old wheel one more turn is going to get us anywhere, other than the poor house.

So it's nice to see that at least some financial professionals agree with me: house prices 'could fall by further 55 per cent' say Numis Securities, a leading City investment bank whom I've regrettably never heard of till now. They put it rather better than I've been able to:

"The Prime Minister and Chancellor have publicly stated that they want banks this year to lend at 2007 levels... We think this is a crazy policy, given that too much debt was one of the prime reasons why the economy has its current problems."

"The bankruptcy of the UK is a very real probability as the UK Government is trying to stimulate a greater debt burden in a grossly indebted economy."

Intel prepping for mass roll-out of Android netbooks

This post, from January 2008, is looking a little bit prescient now. I do so love being right. [OK, I said set top boxes and it's actually netbooks, I'm still claiming half a point.]

Of course, this is just the tip of … well, something a lot more pointy than an iceberg … a giant harpoon perhaps, aimed fair and square at Microsoft's heart. Manufacturers are already putting versions of Linux on full-size desktop PCs whose primary operating system is Windows, so that you can use them — for email, browsing, and playing tunes — without having to "boot" them [i.e., not into Windows]. Look for Android to be made more suitable for this purpose.

In true Google style, nothing will be said. Officially, it won't be happening. In practice, some manufacturer's light-boot linux will turn out to be Android when disassembled by an intrepid hacker. If it catches on, good; if it doesn't, "we were never really interested in doing that anyway".…

"Cannot access the Hardware Clock via any known method."

Downloaded the latest VirtualBox, version 2.1.2, for my now-ancient Windows XP main PC, and wondered if I could finally get Ubuntu server to boot on it. Having tried previously with the old 1.6 version and failed. Got the same problem, couldn't boot, but fixing it was as simple as enabling PAE (processor architecture extensions) in the settings for the VM. I don't know whether that option wasn't there in 1.6 or whether I was just being exceptionally dense that day, but anyway it's solved now.

During the Ubuntu boot process there was another odd message though, even when it was successfully booting: "Cannot access the Hardware Clock via any known method." Sounded like the hardware was being hidden a little too successfully. Sounded like something that a lot of people would come across, but the only solution I found was on a German website.

In brief, there are two files in /etc/init.d :

hwclockfirst.sh

and

hwlock.sh

You need to edit both of them. There's a line that defines an (empty) environment variable, HWCLOCKPARS; it looks like this:

HWCLOCKPARS=

Edited that line to look like this:

HWCLOCKPARS="--directisa"

And Ubuntu server now boots in the VM without any problem.

Markets in used lightbulbs

Hat tip to the ever-readable Marginal Revolution blog ("interesting throughout"):

For most of us, it is hard to fathom the rationale for a market in burnt-out light bulbs. But in the scarcity-driven Soviet economy, the market was entirely reasonable. Light bulbs were rarely available to individual consumers, but were obtainable for state-sponsored activities. Thus, it would be difficult to purchase a light bulb for a new lamp in one's home, while burnt-out bulbs in state-run offices or factories were routinely replaced. So if someone purchased a new lamp and needed a bulb, he would buy a used light bulb for a small fee and replace a functioning bulb at work with the dud. He would then take the functioning bulb home for the new lamp, while the burnt-out bulb at the office/factory would be replaced with a new functioning bulb. Meanwhile, the maintenance person at the office/factory would take the used bulb and sell it on the used light bulb market.

What's particularly interesting here is the use of something (the broken bulb) — other than money itself — acting as a catalyst in an economic transaction.

I think I finally understand

I think I finally understand why the pound is falling so badly and, even when the whole world is in recession, people are particularly "shorting" Britain. As I read more and more American articles on the current financial collapse they all seem to be saying the same thing: the old financial system was a house of cards, and it's not going to come back. What will rise in its place is something very much smaller and less ambitious - and far less profitable.

Britain, of course, allowed its manufacturing sector to run down while it concentrated on growing its financial sector. Britain is fucked.

iPhone shipments overtake Windows Mobile

As reported by Silicon Valley Insider. Their analysis covers the challenge to the current wisdom (that buyers want customised models) that this poses, and the fact that other manufacturers seem to be turning to non-Windows OSes such as Android to counter Apple.

All of which must be deeply embarassing for Microsoft. I suppose they'll just have to grin and bear it (there'll be a lot of people wanting to help them with that — at least with the grinnning part) while they do yet another revision of Windows Mobile.

It looks to me like Microsoft's in real trouble here though. It wouldn't be so bad if they'd "only" been pushed out of the number three spot (after Symbian and BlackBerry). Symbian is clearly in trouble itself and has been more or less abandoned by Nokia (that's the perception at least, after the recent open-sourcing, whatever Nokia might say) so you might expect its market share to be gobbled up by the others over time. However Windows Mobile shipments were actualy down in real terms, not just as a proportion of a growing pie: by 3% over the year.

In a world where perception matters, Windows Mobile is looking weak: the only one doing all-around worse in the mobile space is Linux. Manufacturers, like investers, tend to stampede. Will 2009 be the year Windows Mobile collapses?

Notes on the Fiscal Crisis and Bail Out

A very useful, exceptionally clear analysis of what went wrong with the US mortgage investments market. It's very good at showing the causal chain (if I may use such a discredited notion) of events. Find it here (PDF). Hat tip, if that's the right phrase, to Tyler Cowen at Marginal Revolution.