« Narcissism & wages | Main | The economics of bling »

September 20, 2007


Matt Munro

"I look at policy towards climate change, I see a lower time discount rate. Am I right to see this? Am I right to think it inconsistent?"

Yes you are. Like most people I'm deeply suspicious of green political agendas in part because they are inconsistent with the (entirely logical if ethically bankrupt) short-termism prevalant in politics. Why do politicians care about what happens to the planet when they will be out of office and quite posssibly dead ? Worried about their kids ? Some evolved genetic imperative to protect the future of the species ? Or do they just sense votes and tax revenues ?

Mark Wadsworth

It's not "inconsistent" it's "Totally bloody hypocritical".

That said, Mervyn was morally right and The Badger was politically right, so I wouldn't get too upset either way.


another possibility is that your first link refers to a hypothetical possibility of a run on a bank of unspecified size, whereas your second refers to an actual event of a top ten deposit-taker. just saying.


Isn't it just that King is a civil servant and so has to operate within the regulatory framework given to him, but Darling is chancellor so can shape the regulatory framework?

I would be surprised if anyone was saying NR had got away with it by the time Darling has finished with them.

Mike Woodhouse

As long as politicians' investment horizon is no longer than the next election then we'll know where we are at least.

I suspect we may get more trouble when they are in a planned final term, at which point they may begin to seek a place in history, or at least some kind of political legacy. That's when we are at risk of getting ourselves an Iraq.

But mismatched objectives has been my favourite subject for a good while now (I don't get out much).


You are right to see it as inconsistent, for sure.


To get an idea of the magnitude of the effect and the discount rate, this excellent piece on Northern Rock a bit of sensational news:

«It quickly became clear that any deal would be done at a substantial discount to Northern Rock’s share price, which at the time was about 650p: The board was apparently willing to recommend a bid worth around 300p.»

So without Darling Northern-Rock's own management valued their bank at 300p/share instead of 650p/share.

However Darling's actions seem to have had relatively little effect as the share price is now at 185p, that is the government guarantee has vertically reduced the value of the bank:


At that price the P/E of Northern-Rock is less than 2. Amazing!


Mark Wadsworth is right - it frequently happens that a good for one is a bad for another, and vice versa.
I was at the LSE during the 60s ( Mick, Danny and Tariq etc)and Pigou was very big then. He's slipped down the scale somewhat


do you have a large colleciton of pictures of Nigella? I find your ability to produce photos of Ms Lawson at will faintly disturbing.


Nothing disturbing about that picture - well not mentally disturbing anyway!

The comments to this entry are closed.

blogs I like

Blog powered by Typepad