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September 21, 2008



Dan Ariely cites an experiment which shows that when people order food and drink, many choose not what they want, but what will project an image to others

Quite an interesting thread to pursue, that.

Bob B

"never again will the U.S. be able to preach the advance of free markets to developing countries with authority."

President Bush has been distracted by all those wars.

As former US Treasury Secretary Paul O'Neill revealed in a TV interview in 2004, the Bush administration started planning for the forthcoming Iraq war as soon as it came into office in January 2001, months before 9/11

And there was a lot of arranging to do.

"WASHINGTON — A soon-to-be-released audit will show that at least $8.8 billion in Iraqi money that was given to Iraqi ministries by the former U.S.-led authority there cannot be accounted for, FOX News has confirmed. And three senators want to know where the cash is."


"lightly regulated capitalism leaves something to be desired": everything in real life leaves something to be desired. It's not clear to me whether the regulation part of the problem is (i) light regulation, or (ii) badly designed regulation, or (iii)incompetent, negligent regulation, or (iv) corrupt regulation. The list is doubtless incomplete.

Bob B

Something was obviously wrong in the lead up to the Northern Rock debacle last year with offers of 125% mortgages and, by reports, applicants for mortgages being advised to lie about their incomes.

That might have worked through if the house-price bubble had gone on inflating indefinitely but economists were already warning of the bubble as far back as 2000 and nothing was done about that. If fact, Brown, as Chancellor, changed the price index for the BoE's inflation target as from February 2004 so that the index no longer included house prices. Relatively speaking, the house price bubble inflated to bigger dimensions in Britain than in America. So much for the New Labour myth that the causes of the problems with our financial institutions were imported from America.

And it wasn't as though HBOS's problems were a dark secret:

"Fear was HBOS’s greatest enemy. The bank holds about £258 billion in customer deposits, according to research by Citigroup, while it has lent its customers £456 billion. That leaves a funding gap of almost £200 billion that has to be raised from the financial markets."

Like Northern Rock, HBOS was borrowing heavily (? recklessly) in the wholesale money market and that business model went seriously wrong when interest rates on inter-bank loans shot up. Short-selling is just a convenient scapegoat.


"So what are you freer to do in the US than western Europe?"

Sleep under bridges, beg in the streets, and steal bread, of course!


Yes but the consequences of doing those things is more severe.
But surely this is the wrong question. The question is why does America think it should preach to the rest of world in the first place. If it really believed its own rhetoric it would just lead by shining example.


"So what are you freer to do in the US than western Europe?"

Say what you like about whom you like, for one thing. Congres shall make no law restricting freedom of speech, or words to that effect.

Keep and bear arms for another - which was also a Briton's right up until the 1920s, when the first restrictive laws were passed by a Government afraid of Bolshevism and acutely aware of the several million young men trained in WWI. In those peaceful inter-war years, when life and limb and property were protected by the laws, few resented or felt the restriction. Not sure if that applies now.

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