The Eurozone: seventeen countries divided by a single currency

Reading an interesting article on VoxEU.org which reveals that, inside the Eurozone, "national supervisors require banks not to transfer cash out of their country so as not to be exposed in the event that the crisis degenerates".

I had no idea that that was happening. Though of course I had heard, along with everybody else, that European banks are entirely unwilling to extend credit to peripheral-country banks generally and selected weaker banks in core countries, I had assumed that that was simply every-man-for-himself prudentialism. Though that news is stunning enough, it's the conclusion the author draws from it that had me admiring its neatness:

We have arrived at the paradox of having a single currency with 17 bank and public debt markets segmented by national borders, charging their customers different interest rates. Such a situation cannot last long.

An unsettling day

First the dustbins went missing, now they are back, all without any explanation.

Thursday night I had remembered to put out the main bin and the recycling bin, just as well as I'd forgotten the recycling bin two weeks previously (it's on a two week cycle) and it was full. Friday I forgot to bring them in, so this morning (Saturday) I went out to get them and they were gone.

As soon as I got back in the house I fired off an email to the local council, asking if they'd taken them away for any reason, and asking what I should do if they'd been stolen. I saw mention of a £35 charge for lost or missing bins, presumably per bin, so that didn't put me in a very good mood.

Then just now, about 00:40 Sunday morning, I heard the rumbling noise of bin wheels in my drive. I rushed to the door, put the hall light and the outside light on, and unlocked the door. Two locks, the second one a little difficult to get the key in properly, it must have taken me about 30 seconds to get out the door. Predictably, by the time I got out the bins were back in their accustomed places, and there was no one to be seen. I even went to the end of the drive and looked up and down the avenue: nothing, no one, just the wind in the trees and the yellow sodium lights; it was like some mid-western ghost town so I hurried back in.

Worse, I'd been watching a rather creepy horror story on TV, so I had to check every room in the house before I could settle down. I texted one of my friends, and he said I should look in the bins for evidence: what if they'd been used to transport a body or something? Thank you George, that's just what I need right now! Still, I'll be out there in the morning, looking; as of tonight though, I'm not going out there again for love nor money.

Leaving the Euro

I remember when they were first elaborating what eventually became the Euro. There was a competition to name the new currency. My own thoughts tended towards some kind of derivative of "Mark". Not only was that the name of Europe's strongest currency, there were also antecedents in British history — indeed, much of Europe employed "marks" of one kind or another as units of value.

Another of my favourites was "ecu": there was of course an ECU (European Currency Unit) at that very time, in a kind of virtual foreshadowing of the common currency. There had also been several écu coins in French history, the first one as long ago as 1266. The word is related to Portuguese escudo, ultimately from Latin "scutum" (a shield) and has a long history in the realm of currency.

"Just as long as they don't call it the 'Euro'," I thought, cringing at the very idea (I did, I swear it, I was that psychic person), "that would be so horribly self-important and bureaucratic." Perhaps I meant "beurocratic". But when I thought of how those sophisticated European elites would sneer if the Americans ever decided to rename the Dollar the 'Americo', I realised that our clever EC politicians would never do anything so hopelessly gauche.

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There's much speculation at the moment as to whether one or more nations might leave the Euro in the near future, and if they did, how exactly that might happen. The modalities, as the French say. A few clarifying considerations might be in order.

Firstly, what is a Euro? Unfortunately I don't have one in front of me, but I do have twenty pounds, and we shall have to be content with that. If you look at the top of the front of a twenty pound note you will see the words "I promise to pay the bearer the sum of twenty pounds". The same idea is true of all our modern currencies, they are promises to pay. To pay what? For that, we need to remember a little history.

Nowadays when we think of currency we tend to think of coins and notes as being more or less the same thing, one perhaps a bit heavier and bulkier than the other. Historically though, they were very different things. Coins were essentially lumps of valuable metal: gold, silver, and for the cheap seats, copper, bashed flat and stamped with the mark (there it is again) of a reputable treasury to guarantee its weight and purity. Notes on the other hand were originally bankers' receipts, handed out when traders deposited their bags of coins with them. They were promises to (re)pay the coins. It was the coins that were valuable. The notes, insofar as they had value, had it because they guaranteed that you could convert them into coins.

Notes of course were a lot more convenient for trading with than coins, especially for large transactions. So despite the fact that there was what we nowadays call "credit risk" associated with them (if the banker went bust and couldn't give you the coins, the notes would then be worthless) they caught on. They were also freely tradeable: if I gave a twenty pound note to my butcher, he could take it to the bank and receive his twenty gold coins without having to prove either his identity or mine. That makes them bearer instruments and further increases their fungibility with coinage.

It's sometimes surprising to remember that this system remained essentially intact up until the early 1970s, when Nixon unilaterally revoked the convertibility of the dollar into gold. What was especially clever about this was that he did it in the context of the then prevailing Bretton Woods System, which defined the dollar as the currency that other currencies were valued against, thus more or less legally obliging everyone else to go along with it, much to the fury of some of the European contingents.

That's really the point when everything changed. Instead of having to redeem their notes in precious metals, central bankers were now able to take your twenty pound note off you and replace it with ... another twenty pound note! Since they were no longer bound by the necessity of converting their essentially worthless paper back into gold, they could print as much of it as they wished, and this, in very large part, they promptly did (neatly illustrating the tension between a currency's dual functions as a unit of exchange and a store of value).

It's no accident that at the very same time as this happened, nations all over the world quietly retired their silver and copper coins and replaced them with almost-worthless substitutes. After all, you can't have twenty shillings being worth more than a pound note can you? You can't have arbitrage between the various components of one currency, can you? If you look at the Royal Mint today you'll see that they are selling a coin with a two pound face value for nine hundred and ninety five of the paper equivalents. That's the scale of the arbitrage that would now be available!

The point
Yes, now to the point of this post. Which is that even today, even inside the Eurozone, there is something that is remarkably similar to the old, national currency note. It's a government-backed promise to pay, that's freely tradeable between third parties. They are issued by country governments sovereignly, and the worth of each government's issue floats freely against all the others. I'm referring, of course, to the currency note's "big brothers", the T-bills and government bonds.

It's remarkable indeed, that in the context of the various European governments' eagerness to remove the ability of financial markets to arbitrage between them, of their eagerness to hide the effective international wealth transfers that were so cruelly exposed in the bad old days of fixed exchange rates, when the richer European countries had to repeatedly intervene in markets to prop up the currencies of their poorer neighbours, that they neglected to remove the one class of instrument that allowed markets to see exactly that, and to do exactly that.

So, in a sense, there still are independent national pseudo-"currencies" within Europe, and I wonder if more could be made of them, in order to relieve the pressure that a common currency creates? For example, Governments could legislate that their bonds could be used to pay taxes. Ok, that's not really a winner: of all parties to a transaction, governments are the most likely not to want to be paid in something as worthless as their own paper. But as a means of retiring their issuance, possibly at a discount, it might be considered. Or how about legislating to make a government's bonds legal tender for the settlement of all transactions in its territory that are over, say, 100,000 Euros? And of course, once you can force people to take your worthless bonds, you may as well make them irredeemable — "consols" as they are called.

In just such a way, by just such a series of steps (and more), European governments could surreptitiously introduce something that was more and more like a freely-floating, national currency, without ever quite leaving the Euro. A way of effectively letting off some steam, without losing face.

The other thing they could do of course, is to say to international bond markets what they said to their own populations in 1971: that the only thing they will redeem their notes for is more of the same. That's effectively what they've been doing for decades anyway, by consistently rolling their debt over from one year to the next — a sure sign, for any student of history, that the next step would be bankruptcy. That would be much more likely to provoke an outcry from the markets than the creeping speciation of bonds, but maybe people really are that stupid.

Relocate the Chrome address bar? Get a life!

According to an aggrieved poster on Slashdot, users are overwhelmingly asking Google to move the Chrome tab collection underneath the address / URL edit box. As far as I am concerned, all that that proves is that those users are stupid, and Google is right to ignore them. The URL is a property of the page that the user is on, and as such, the control that surfaces it should be inside the page. If you consider that tabs are a part of the page metaphor, then what is below the tab is part of the page, while what is above the tab is not.

All these supposed users are doing then, is asking Google to move away from a placement that makes sense in the context of the page metaphor to one that doesn't. Instead of being part of the page, the address bar would become some kind of shared area updated whenever the user changes tabs. I don't see that as an improvement.

[And note that since we are talking about consistency with a metaphor, it's actually irrelevant whether the tab bar is in fact implemented as a shared resource or not, i.e. whether there is only one of them or one per tab.]

Cornbread Surprise

The surprise being that it came out rather well!

I had a big bag of coarse-ground cornmeal and some plain flour hanging around, so during the week I made an effort to buy some baking powder and some bicarbonate of soda (which I *think* is the same as what Americans call baking soda), as well as some eggs and some yoghurt.

I took 1.5 cups cornmeal, 1 cup plain flour, 2 tablespoons of sugar, 3 teaspoons baking powder, half a teaspoon bicarb and half a teaspoon of salt, and mixed all the dry ingredients together in a bowl.

I took a cup of plain yoghurt and three eggs and mixed them in a measuring bowl. Decided that that wasn't going to be enough liquid to wet all the dry ingredients, so added a big splash of milk, say half a cup. The original recipe had called for two tablespoonsful of honey (yes, this seems to have been a very *northern* US recipe) but I didn't have any, so I added a few drops of vanilla essence for the taste and smell, and hoped for the best on the moistness side.

Then baked at 200 degrees centigrade for 30 minutes. One is supposed to use a cast iron skillet, but I made do with a ceramic oven dish, which would have taken about twice as much ingredients as I actually had. As a result, the bread was fairly thin in the dish, say just over an inch in depth.

I was prepared for the ceramic dish not to be conductive enough of the heat, but in fact it ended up baked perfectly (it's an old fan-oven). The bread rose to about two inches in depth, and moved in a remarkably spongy/foamy way when cutting. Despite this however, it was somewhat dry — a single cup of yoghurt was about two thirds of the largish pot that I had bought, perhaps I should have used it all. Three eggs had seemed like rather a lot to me, since most of the recipes I'd seen had called for two, and some for only one, and indeed, the result was rather eggy/cakey-tasting; despite this however, and perhaps because of the dryness, it was prone to breaking up when handled. The vanilla made it smell and taste excellent.

All in all a qualified success: it will definitely all get eaten, and it should keep for three days or so in the fridge. Next time I'll try with more yoghurt and only two eggs. I think that should taste better and be more moist, but whether it will make the crumbliness better or worse is an open question.

I'm also leaning to want to experiment making potato bread like this, by including mashed-potato powder in the mix. But should it be the flour or the cornmeal that I replace? I'll probably try both. Potato bread, being naturally savoury rather than sweet, will probably also require a more southern-US oriented approach: no sugar, buttermilk rather than yoghurt, maybe only a single egg. On the other hand, I could add fried-onions, and would wet the baking tin with bacon fat rather than butter :)

HP, Apotheker, Whitman — the saga continues

The latest news from HP, that the board is supposedly going to fire Leo Apotheker after only eleven months in the job, and install Meg Whitman as the new CEO, is making me very nervous about my Autonomy shares.

I was flummoxed to receive a letter from my dealers stating that the first deadline for acceptances had passed with only 46% of holders accepting, since I had assumed that UK institutional investors, long famed on the boards for their apathy towards AU, would have cashed out at the first opportunity, especially since the offer is widely seen as being an overpayment. I guess the art of brinkmanship is not lost. We'll see, the next deadline is 3rd October, and I think there's another, final one on the 17th or thereabouts.

Gossip on the boards is frenzied right now, with some even speculating on an HP/SAP merger: the rationale being that if HP are indeed moving to be an enterprise software company, they would still lack a big-hitter product even after the AU purchase. SAP would, of course, fit that bill.

I think Larry Ellison would relish the role of Wicked Fairy at that particular wedding. I have no doubt that the M&A specialists at Oracle are even now casting their eyes over HP and running the numbers. A further fall in its share price (already down 47% since Leo came aboard), as might well accompany a bid for SAP, would only make it more vulnerable.

There are other attractions for Larry, besides the pure pleasure of sacking the HP board en masse and putting his mate Mark Hurd back in the CEO's seat. He bought Sun for Java, not for its hardware business, but the addition of HP's Unix server business (and the re-introduction of the Oracle database on those servers) would please HP's midrange customers and add to the critical mass of Oracle's Unix business. If the worst came to the worst, he could perhaps simply shift some proportion of HP customers over to Sun kit the hard way, by simply (over time) raising HP prices faster (even) than Sun's, but there's no need at all to be so cavalier. He could kill Itanium after the next two, contracted-for, revisions by simply failing to extend HP's contracts with Intel, and have HP engineers in the meantime scurry to port HP-UX to SPARC, while scheduling new Superdome SPARC cells for some time around 2015. Any remaining HP IP in Itanium might be a useful addition to SPARC, and increased volume couldn't hurt. If he's as neutral on Sun's x86 business as he says he is, he could complete the spinoff of HP's PC division while throwing in Sun's x86 business as a sweetener. What he'd do with WebOS is anyone's guess.

Well that's enough wild imaginings and uninformed speculation for one night.

Native Client — Google lets a hunded flowers blossom

There are already about a hundred schools of thought contending over the worth of Google's new Native Client ("NaCl") technology.

NaCl (inevitably punned by the Googlegentsia) is a way of allowing native-code (raw machine instructions, instead of an interpreted language such as the currently-standard JavaScript) to execute in your browser. As such it is painfully reminiscent of Microsoft's ill-fated attempt to add ActiveX controls to the browser, a move resulting in so many security breaches that it contributed significantly to the mass developer move away from Internet Explorer.

Some critics contend that NaCl will is merely a rerun of ActiveX and will suffer the same fate. However, unlike ActiveX, Native Client is not restricted to a single operating system, and although currently implemented only in one browser, Google's own rapidly-growing Chrome, it is open source and available for incorporation by other browsers if their developers so desire. As such, Native Client would run on whatever operating systems a given browser does.

A more serious criticism is that NaCl is currently restricted to a single chip architecture, x86-class code, meaning that it won't run on your mobile phone or tablet's browser, as those machines are currently almost all powered by ARM cpus. Google already have an answer to this in the works, based on compiling your C or C++ source down, not to native instructions, but intermediate-level LLVM bitcode. This is where the story starts to get hazy. Will the bitcode get further compiled, and if so when? In the browser? By the web server? It has even been suggested that Google may end up writing a virtual machine to execute LLVM bitcode directly. Shades of Java, why not just use that? — Indeed, your humble blogger remembers writing a post on the Mozilla developers mailing list about a decade ago, advocating exposing Mozilla internals to Java, so that people could write internal-level stuff using Java (which almost everybody could do) instead of C++ (which relatively few people could do), an idea which sank immediately and without trace; but that's another story.

The security angle seems much better thought out. Google are determined to sandbox the native code inside the browser, and seem to have invented a clever way to check and enforce that sandboxing. Said clever way relies on features of the x86 chip family though, and again, the concern must be that similar ways may not be so readily found for other chip families.

The least convincing criticism, I find, is that Google should have spent this effort on implementing the complainer's favourite interpreted language instead, because it's allegedly so much better than JavaScript. Candidates include the usual suspects: Python, Ruby and Lua (though I actually don't remember anyone proposing Perl). The people who make this criticism seem to me not to be one hundred percent awake: the goal of NaCl is to make browser capabilities that are available to JavaScript also be available to C and C++ programs (initially, with other compiled languages later, perhaps). Now if your NaCl program were to be ... a Python interpreter ... a Ruby interpreter? See how that might work? By doing the larger job, Google have automatically provided for the smaller job. Now, all we have to do is get responsible people in the Python, Ruby, Lua and whatever else camps to hook their interpreters up to the Native Client APIs, and a hundred browser languages will blossom,