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Wednesday 17 September 2008
Letters: Financial mayhem
Paying the bill for financial mayhem and extravagant rewards
Your coverage of the demise of Lehman Brothers, and the attendant worries for the financial stability of the world, is, as ever, exemplary. Stephen Foley's analysis (16 September) explained with perfect clarity why it had happened.
Now Hank Paulson blames Wall Street and promises a sweeping overhaul of financial regulation to prevent it happening again. Had he never had any thought of regulating things before? Perhaps Wall Street should employ Stephen Foley to point out the future pitfalls.
Whilst we can feel sympathy on a personal level for those who have lost their jobs, clearly the level of pay and rewards in the financial sector was getting out of control and needed correction. You report that 24-year-old Edouard d'Archimbaud, arriving for his first day of work on Monday, was looking to receive a £45,000 salary as a trader: not many of us earned that after 30 years of employment, and few in teaching or the NHS would ever get that far up a pay scale. And try telling that to a Cumbrian fell sheep farmer.
Christopher R Bratt
I recall all the times when extravagantly rewarded bankers claimed that they were simply being paid the "market rate" for their rare skills. We now see that their rare skills were in enriching themselves, creating financial mayhem and destroying grand old banking institutions. Lehman Brothers, no doubt once at the front of the queue for paying the market rate, can now no longer pay any rate at all.
So, can we at last hear talk of sensible rates rather than market rates? And, in the light of the current glut of unemployed merchant bankers, can we look forward to savage pay cuts across the financial sector, since supply of banking "geniuses" now far outstrips demand?
And what about calling an end to the annual bonus jamboree, which is now clearly revealed as one of the prime causes of financial instability through the encouragement of irresponsible risk-taking and speculation?
It would be some consolation for us all if lessons were learned from the causes of the current global financial crisis, ensuring that it didn't happen again; but history suggest that bankers never learn.
In the 1770s, when capitalism was still in short trousers, there were a series of banking crises caused by reckless lending and a subsequent removal of credit facilities. In 1772, a London merchant observed that at first "money matters were very easy and credit and a general confidence was established beyond anything you ever knew, but all of a sudden the very reverse took place and the most diffidence and suspicion was established everywhere". That early credit crunch was due to the worthlessness of the 18th-century equivalent of a "derivatives" market, which Adam Smith described as a "fictitious circulation".
Despite the hopes of contemporary economists, such as David Hume, that "the check given to our exorbitant and ill-grounded credit will prove of advantage in the long run, as it will reduce people to more solid and less sanguine projects", it is obvious that, in Darwinian-economic terms, we are still up in the trees.
Only recently the Royal Bank of Scotland posted the biggest loss in the history of British banking. An advertisement in my local branch reads: "Come in for a free financial review to help sort out your finances." It seems almost perverse. If only I could offer them the same service.
Science lessons from creationism
I agree with Robert Smith (letter, 13 September) that creationism should be taught more widely; pupils could learn a lot by analysing the implications. I've been thinking about the events of that busy first week in the "Young Earth" model.
Consider the challenge of creating the first chicken (on the fifth day); an egg would be no good on its own. Would you start at the beak and sweep backwards? You would have to be quick, or fluids would leak out. No, it would have to be completely formed in an instant, with all the organs and blood supply and nerves (including behaviour and memory). The space it suddenly occupies would have to be cleared of air at exactly the same moment to prevent a deafening shock-wave.
Creating a whale would be even more challenging; a large volume of water would have to be removed in an instant, and not by converting it into energy, or the planet would be blown away.
The difficulties don't stop there. All the delicate inter-relationships between species would have to be immaculately planned, and there would have to be fully-grown trees (the third day), ready-rotted wood and dead animals for scavengers; nests, burrows and much else. And this for the whole world, down to the last ant and pine-needle, rotifer and bacillus.
That's zoology, anatomy, physiology, psychology, physics (newtonian and nuclear) and ecology.
Hugh Dower (letter, 13 September) asserts that "creationism is a legitimate theory, which means that natural evolution is only a theory too". Unfortunately, this is a completely false comparison.
His dismissal of evolution as "only" a theory confuses the general understanding of the word theory (a conjecture or hypothesis) with the scientific understanding (a testable and thus potentially falsifiable explanation). And this latter point is precisely where creationism falls down: it can never be a legitimate theory because it is unfalsifiable, and by Karl Popper's test is not scientific.
It would be both pointless and misleading to attempt to teach it in science classes; we might as well teach astrology or the existence of the tooth fairy.
Dr Richard Carter
Who is briefing Palin about the world?
Bruce Anderson indulges in playground revenge (Opinion, 15 September) when he writes about the outrage that the prospect of McCain/Palin would cause the left-liberals and "for that one is prepared to forgive her almost anything".
The greatest proponent of the Palin candidacy has been Bill Kristol, media cheerleader for the neocons. This is the man who declared in 2002 that a war in Iraq "could have terrifically good effects throughout the Middle East".
With the forthcoming exit of Dick Cheney, the neocons have been searching for a new vessel for their toxic world view, and some of Palin's statements, such as her anticipation of a possible armed conflict with Russia and giving her blessing to unilateral action by Israel against Iran, come straight from the neocon playbook.
Having never before shown any interest in global affairs, Palin blithely spouts views which would drag America even further into the neocon quagmire created during the past eight years.
Serious commentators need to ask who promoted her candidacy, who is briefing her and who sees her as an opportunity to continue their baleful influence on the world.
Palin arrived on the international scene with a solid core of support among Republicans because of her right-wing social views. Could it be that she has been picked out as the perfect candidate for indoctrination by people who believe in continued US aggression and belligerence rather than democracy and diplomacy?
Mary Rose Gliksten
Home schooling is nothing radical
Johann Hari (Opinion, 11 September) really ought to be a little more careful. Home education in the UK has a long and proud tradition, and there are a huge number of families (at least, where we are in central London) who are actively involved in a thriving home-education community. The kids have a great time and are bright and well adjusted. They can count, too.
We don't deserve tarring with such a mucky brush. These kids are not being "uneducated" or abused. They're just being educated by their parents. Not very radical really. All parents worth their salt do the same; we (saintly as we are) just do a bit more.
As for Hari's call for draconian inspection, well, it's a bit pointless really. Social services already have the right to call on any family (home-educating or not) if they have reasonable suspicion of abuse.
Perhaps it would make a little more sense to direct resources towards a rather more careful inspection of schools. There they would find no end of children who are bored, ostracised, bullied, isolated, and tested-to-death.
And then what, Johann? Close the schools and send the kids home, perhaps? Just an idea.
What happened in Georgia?
The Georgian government's claim that its 8 August military actions in South Ossetia were a response to Russian aggression is based on the allegation that Russian forces were at the time advancing into that territory, specifically, that they were coming through the cross-border Raki tunnel.
On 26 August, the Foreign Secretary, David Miliband, was in Ukraine calling for the "widest possible coalition against Russian aggression". Surely the time has now come for a thorough inquiry into the circumstances surrounding the outbreak of this conflict, with particular reference to the truth or otherwise of the Georgian claim and, by the same token, into the sources of the information or intelligence upon which Miliband based his response.
Hillary Clinton, in hearings before the US Congress, also called for a commission of inquiry into the origin of the conflict. An equivalent initiative in this country could help to establish definitively whether Miliband's position was based on adequate investigation and knowledge of the facts, or whether it was, as one is otherwise bound to suppose, nothing more than a knee-jerk reaction in support of the "widest possible coalition" in support of policies emanating from extreme neocon circles in Washington.
Dr Hugh Goodacre
Senior Lecturer, University of Westminster
Not a good moment for a price rise
As they say, timing is everything. The day that the Lehman crisis exploded, The Independent decided to raise its cover price by 20p to £1. In my view, the price hike is totally unjustified.
I have bought The Independent daily week after week for the past eight years, but I am afraid that this will not be the case from now on. Notwithstanding the evident quality of your paper, your decision to cross the £1 barrier, especially at this time, appears to be completely out of touch with the world your readers live in.
Oh dear – can I live on a pound a day (Extra, 16 September)? Not if you expect me to buy your newspaper at its new cover price. Can I ask that you hold back on the colour, scrap the glossy magazines, get rid of the celebs and let me pay a reasonable price for the reporting?
Go on, guv – just so I can get a bite to eat.
Hey, love the new cover price. It means women will think I am "successful" because I can afford The Independent.
Clegg's crisis measures
In terms of timing, you've got to hand it to the Lib Dem leader, Nick Clegg. Banking system in meltdown, capitalism in crisis and he comes up with the idea of tax cuts, thereby limiting the ability of government to intervene in society and the market. You could've given Charles Kennedy the keys to a distillery and he still would have a greater grip on reality.
I'm surprised that John D Anderson (letter, 11 September), a former school-teacher, should think that "Closed Tue's" breaks his suggested rule of using apostrophes only for abbreviations. Any self-respecting 14-year-old could argue convincingly that in this case the apostrophe actually illustrates Anderson's rule by standing in for four missing letters. But I also sympathise with readers who find apostrophes boring. Perhaps we can move on from "A for Apostrophe" to "B for Bloody semi-colon"?
James Mottram begins his article about Walter Salles' forthcoming film of On the Road (12 September) by stating that Jack Kerouac wrote the novel in three weeks. In fact, Kerouac began writing the novel in earnest in 1948, and filled many hundreds of pages with ideas for it. The "scroll" version of the novel was written in three weeks in April 1951, but only after several proto-versions were produced.
Dr Howard Cunnell
Research Fellow, American Studies Department, University of Sussex, Brighton
Team of toffs
Norman Evans' point about class and privilege in the Tory party is probably fair enough (letter, 16 September), but the three schools he accuses of being the cradle, Eton, Winchester and St Paul's, have an even greater reputation for formidable academic levels. They are very hard for boys to get into, with or without money. So at least David Cameron is not surrounding himself with Tim Nice-but-Dims. They may be toffs, but they are not thick toffs. How many of them are female toffs is another matter.
One wonders how much Damien Hirst's cadaver suspended in a tank of formaldehyde would eventually fetch at auction.
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