That AA+ rating

So one of the big credit rating agencies, Standard & Poor's, has downgraded the United States' rating from AAA to AA+ — basically, from so called "prime" debt to "high grade" debt. Still a long way from junk then.

Good, even so. Sovereign states, especially big ones that feel utterly omnipotent within their own territory, are prone to a kind of ego inflation in their governmental elites that lead them to believe that they can make just about anything happen so long as they can get agreement from "stakeholder" parties. They are so used to making, and on occasion bending, the legal laws in other words, that they fall into the trap of thinking that the laws of nature can be chivvied in the same way.

Big mistake. I see that the administration still hasn't really learned this lesson: the article linked to above notes that "unnamed officials in Washington had told US media that S&P's analysis of the American economic situation was deeply flawed". Shoot the messenger then!

In part of course, the agencies are simply making up for their failings pre-2008, when their routine granting of prime and high grade ratings to what turned out to be toxic and unrecoverable debt made them look like complete patsies — and complicit patsies at that, given that companies pay them to rate them. In an echo of "quis custodiet", who will believe the agencies' credit ratings, if they have no credibility themselves? So it's only natural that, now they are finally and completely awake, they are rushing around and barking like mad, in an effort to convince their subscribers that they are worth the money.

For all the briefing and spinning in Washington, and in chancelleries around the world in what are pleased to call themselves the "advanced" economies, you have to remember one thing: these countries are all running primary deficits; they are all still getting further into debt. For all the sound and fury in Washington last week, the nub of the agreement they reached was that they would allow themselves to take on extra debt now, while cutting back a little bit on the expenditure in two years' time. That's all you need to know to figure out that in a national emergency, US politicians' time horizon shrank to just under two years.

Imagine a rich man who, when told by his bankers that his extravagant spending has outpaced even his magnificent income by some 20% per annum, decides that he can, with great difficulty and with a lot of noble self sacrifice and tears, perhaps cut that 20% deficit to 18%, and really, the bankers should be grateful that he could manage even that. There were many such men in 18th century Europe, noblemen who knew how to spend but not how to save, and without fail they left their families ruined and their estates in the hands of other, more sensible individuals.

Indeed, it all reminds me rather horribly of one of my favourite bits of Jane Austen:

But now, another occupation and solicitude of mind was beginning to be added to these. Her father was growing distressed for money. She knew, that when he now took up the Baronetage, it was to drive the heavy bills of his tradespeople, and the unwelcome hints of Mr Shepherd, his agent, from his thoughts. The Kellynch property was good, but not equal to Sir Walter's apprehension of the state required in its possessor. While Lady Elliot lived, there had been method, moderation, and economy, which had just kept him within his income; but with her had died all such right-mindedness, and from that period he had been constantly exceeding it. It had not been possible for him to spend less; he had done nothing but what Sir Walter Elliot was imperiously called on to do; but blameless as he was, he was not only growing dreadfully in debt, but was hearing of it so often, that it became vain to attempt concealing it longer, even partially, from his daughter. He had given her some hints of it the last spring in town; he had gone so far even as to say, "Can we retrench? Does it occur to you that there is any one article in which we can retrench?" and Elizabeth, to do her justice, had, in the first ardour of female alarm, set seriously to think what could be done, and had finally proposed these two branches of economy, to cut off some unnecessary charities, and to refrain from new furnishing the drawing-room; to which expedients she afterwards added the happy thought of their taking no present down to Anne, as had been the usual yearly custom. But these measures, however good in themselves, were insufficient for the real extent of the evil, the whole of which Sir Walter found himself obliged to confess to her soon afterwards. Elizabeth had nothing to propose of deeper efficacy. She felt herself ill-used and unfortunate, as did her father; and they were neither of them able to devise any means of lessening their expenses without compromising their dignity, or relinquishing their comforts in a way not to be borne.

A run on the bank?

Just read "Greece Deputy PM Warns Of Tanks In The Streets, Mass Suicides, If Second Bailout Voted Down By Greek Parliament" on Zero Hedge [yes, I am indeed about a month behind — those people post far too often], which quotes one Theodoros Pangalos as saying that "Returning to the drachma would mean that on the following day banks would be surrounded by terrified people trying to withdraw their money, the army would have to protect them with tanks because there would not be enough police".

I can't see that there's any excuse in a "modern", fiat currency system, for a run on the banks. Perhaps Mr Pangalos doesn't get it, but here's Gerard's Patented Method For Dumping The Euro And Going Back To The Drachma Without Having A Run On The Banks™ — no honestly, thank me later.

First of all, coin and print drachma equivalents for the amount of euro-denominated cash currently in circulation. Just for fun, assume that you are going to announce a drachma that's worth ten euros. (Trust me, that's going to increase the amount of fun almost exponentially once you've got an exchange rate.) "But," you will say, "that's only a minute fraction of the amount of money in bank accounts! How will we avoid people queueing up at the banks for cash that isn't there?"

Simples! As well as the 1, 5, 10, 20, 50, 100 and 1,000 drachma notes that you were expecting, you will also get your central bank to print 10,000, 100,000, 1,000,000, 10,000,000 and 100,000,000 drachma notes. Remember you are going to be swapping euros for new drachmas at 10 to 1, so a 100,000,000 new drachma note will be "worth" ONE BILLION EUROS! And you really can't have too many of them, so print a few more to be on the safe side.

Now, when multi-billionaire shipping-line owners queue up outside the banks for their cash, they can leave with just a few notes tucked discreetly into their slimline wallets! No need to spoil the hang of their suits with over-stuffed wallets or money belts! No need for a firm of private security guards to accompany dozens of boxes as they shuttle between the Bank of Greece and the nearest Citibank!

And the best bit will be the psychological effect on the masses. Once people see the rich entering the banks and leaving, only moments later, their valuable 1,000,000 new drachma bills tucked safely away, they will realise that there's absolutely no point taking need to take any money out themselves. Such is the power of the fiat money system when handled wisely.

What's that you say, Mr Pangalos? Inflation? Not a bit of it! You laid the groundwork for inflation when you allowed your banks to create credit out of thin air. That's the nature of a fractional reserve banking system. After that it's a balancing act. People mustn't take their cash out of the banks and hide it under their beds, or the economy will implode with massive deflation. Likewise, the velocity of circulation and the amount of credit mustn't rise too fast otherwise you'll get inflation. The beauty of my plan is that you won't have a deflationary scenario because there will always be enough cash circulating, while should only get a modest boost to inflation because most of the people taking money out of the banks will be stashing it away abroad.

What's that? What will it do to the exchange rate? Well isn't that the whole point of leaving the euro in the first place?

Another brilliant BBC article

I tend to think of the BBC as the Pravda of the British left: they tell us, not so much what is actually going on, as what the important issues of the day are, and what we should think about them to ensure that we are on the right side (which is of course, the left side). Although there have to be a few facts, naturally, much as a kind of stodgy bread on which to smear the marvellous bounty of their super-correct views.

All the more amusing then, when those naughty facts just won't do what they're told and support Aunty's version of what's what. Take for example, Bolivia moves to end dependence on foreign seed firms. The words, the style, the thoughts, all paint a background of local (good), actually indegenous (even better) farmers and foodstuffs battling against evil globalism (bad), actually Big Agro (shudder!), led on by heroic indigenous president Evo Morales (wild cheering!).

So what's the problem then? And what's his solution? Well the problem is encapsulated in one truly astonishing sentence, where we get the full force of the writer's desire to present one way some facts which all, unfortunately for him or her, point exactly the other way:

The recent rise in global food prices forced many Bolivians to abandon their indigenous staples, such as quinoa, in favour of cheaper, imported products.

Oh Noes! It's those rotten Big Agricompanies, cunningly producing rice and wheat and such cheaply, so that our poor people will be able to buy it when, erm, they can't afford the locally-produced foodstuffs. Erm...

So let's see. Cheap imports = BAD because it means Bolivians won't starve, check. Foreigners paying for locally produced grains = BAD because it means we have the money to buy what they are selling, check. Really, it's such a pity that people 5,000 years ago in the Fertile Crescent ever learned about that division of labour stuff. Ugh!

Hmm, you know, one way around this would be to let people make some money by exporting quinoa, which is a premium product for which there is increasing demand at high prices. Then, following the price signal, they could, oh let's think -- ah yes! -- grow more of it next year, making even more money and helping the price come down a little. Why, if you did that for long enough, you might even have a financially independent middle class. So is that Presient Morales' favoured solution then?

No, the favoured solution is state seed companies apparently. Because of course, that has worked so well every other time it's been tried [ask yourself: just why is the locally produced quinoa so expensive that local people can't afford it?]. Oh, and "generous" credits to indigenous farmers. Which, I am 100 percent sure, will mean that either the farmers will soon be bankrupt or the state credit-granting entities will be. Or both, of course, like Fannie and Freddy and a few million homeowners in the US when they tried something similar in their housing market recently.

There's one other gem of a sentence in the same article. In contrast with evil agribusinesses that might want to produce either Frankenplants or varieties that won't self-seed, we learn that:

The Morales government wants to improve genetic stock through natural selection.

Does the writer even know what natural selection is? Or is the BBC just cutting and pasting a press report written by someone in the Morales government who, themself, doesn't know what natural selection is? Because taken literally this sentence means that the Morales government is willing to wait several million years for quinoa to evolve to produce more seeds, if it ever does. Or for Bolivians to evolve not to need so much in the way of food (a rather more plausible scenario, given the likely state of their food supply in the near future).

Annother NetBeans annoyance

NetBeans' search and replace dialog allows you to use regex capturing groups in the find string and regex back references in the replace string. But a naive user, who expected to be able to use something like "\1" and "\2" for his back references, would be sorely annoyed when they didn't work.

Instead, NetBeans uses $1, $2, etc. for its back references. As this person found out after perusing the source code for the search and replace dialog.

The reason, apparently, is because that's what Java regexes do (and Java regexes do what they do because that's what perl regexes do, and always have done). And because NetBeans is primarily a Java-oriented IDE, the Javaness wins out over the regexness, or something.

All of which would be but a minor annoyance, were it not for the information that you're offered when you click the help button in the search and replace dialog, which eventually leads you to a page in the official Java regex documentation that says this:

Back references
\n Whatever the nth capturing group matched

Sigh...

The new Wii

Reading about the new Wii U, I can't understand how they resisted calling it the Wii ii.

I've discovered Ian Fletcher !

A beautifully clear exposition of the theories of absolute and comparitive advantage, and his own observations on the limitations and likely consequences of naively using the latter as a guide to economic policy: The Theory of Comparative Advantage and Why It’s Wrong.

Advertising's unintended side effects

Targetted advertising must surely be responsible for a lot of unintended guffaws nowadays. As I avidly read a CS Monitor article about mass sackings of Shiites by the Sunni minority government in Bahrain, in the context of the continuing unrest there, I notice that the right hand side of the page is full of adverts for ... cheap holidays in Bahrain! Special offers, apparently. I bet they've got a lot of those.