Congratulations to Germany (600)

Germany has taken a sensible decision to phase out its nuclear power plants by 2022. It’s a pity that it also does not do so for its other two ‘green’ technologies—wind turbine and solar cell. For use as electricity generators, all three technologies are uneconomic and require tax-payer subsidies. One by one, most of the present nuclear countries will probably follow Germany’s lead and phase-out nuclear power in the coming years.

In the case of the latter two technologies, they are so new that their ongoing maintenance and replacement costs are completely unknown. In the case of nuclear power plants, so long as they are not sited on earthquake- or tsunami-prone sites, their maintenance costs are now largely known. However, the future costs of de-commissioning their infrastructures and the safe storage of highly radioactive byproducts of long half-lives are also completely unknown. The costs are likely to be gigantic when borne by our descendant taxpayers for hundreds of years to come.

On the other hand, recent developments in fracking technologies and the delineation of massive shale-rock basins in many parts of the world mean that natural gas supplies will be sufficient to power all the countries of the world for at least a few centuries. This will particularly be the case as world population declines substantially from about 2020 onwards. On the basis of the present decline of family size in the advanced countries, future world population could be very small indeed and natural gas supplies could be spread over many more centuries, perhaps even a millennium or two. This will give our descendants plenty of time in which to develop future solar-bacterial technologies which will give us truly renewable energy.

It won’t be plain-sailing from now onwards, of course. Human nature being what it is, we’ll probably still have 20 or 30 wars going on in the world every year, as now. Nationalistic wars, wars over water supplies, religious wars, ethnic wars—even just accidental wars—will continue if we are halfway realistic about the nature of our deeply-embedded genes. Wars will only largely die down when all cultures become sufficiently scientifically literate to be able to develop weapons that will guarantee mutual destruction if used. Potential combatants will come to their senses just as the Soviet Union and America did during the Cold War because of the thousands of nuclear-tipped ballistics they had produced.

There still remains one potentially large problem. This is global warming. Is it just a blip or will carbon dioxide — if indeed it’s the cause of it—continue to accumulate in the atmosphere? In view of the fact that the Intergovernmental Panel of Climate Change (IPCC) has persistently and grossly exaggerated the effects of global warming for the past 30 years, and that it still cannot produce a hypothesis that can also explain the Middle Age Warm Period, or the subsequent Little Ice Age, and that total world fossil fuel burning is likely to stabilize or even decline from about 2020, we can afford to be a little sceptical for a few years longer about the economic gravity of a few centimetres rise in sea levels. There is still a lot of scientific research to be done yet on many other powerful agents of climate change.

Meanwhile congratulations are to be paid to Germany, even though its decision was taken as a result of the Fukushima panic rather than economics. In future years, when the true economic costs of nuclear power become more transparent in the wider world, all Germans—instead of about half of them at present—will be even more thankful that the present decision has been taken.

A doublet of reforms is needed (950)

The real reason why, in due course, China’s system of government will prevail over that of Western Europe and America is that ours can only think short-term. The attention spans of our governments rarely stretch beyond a few months ahead and never beyond four or five years when, even in the best cases, the next general elections are due. The disparity between the Chinese system and ours is not due to any outstanding virtue of the Chinese or any particular faults of ours, but in the more subtle ways that our respective histories have moulded national cultures.

In our case, short-termism was exacerbated by the rapid rise of the scientific-industrial revolution as a cornucopia of consumer products was brought into being. It overthrew the previous land-owning aristocracy whose wealth had accumulated over generations and replaced it by opportunities to get rich quickly by entrepreneurs well within their own lifetimes. Parallel with that, and as a consequence of consumer power, our short-termism has been made worse by universal suffrage which came into being about a century ago. The increasing use of opinion polls, focus groups, consumer statistics and the growth of social groups on the Internet are also powerful influences. All this means that, today, politicians are constantly having to look over their shoulders. Political manifestos at election times consist of very little more than bribes to this or that class of the electorate to vote for this party or that.

It is this immediacy of purpose that has brought governments of Western Europe and America to the edge of financial disaster. In several countries, such as Greece, Portugal and Ireland, the payments of interest on government debts are already beyond the abilities of taxpayers (or, rather, of their children) despite all the PR which bureaucrats are constantly dishing out. In many more countries, such as America, UK, Spain and Italy, we are already speeding quickly to the point of no-return. Of course, the massive, but constant, inflation of the last century has also been exported to China and the other emergent countries because they necessarily have to deal with our currencies in order to develop along our lines. Their economies would also suffer if ours collapsed.

This is why China has been trying to cushion the collapse of America by buying large quantities of its government debt and, more recently, by buying those of Greece, Portugal and Spain. But whether it can continue to do so is another matter. The majority of its own population is still as poor as the poorest in Africa and many parts of the rest of the world. The economic development of something like 700 million of its own people (and the social cohesion of the whole country) is being delayed by the money being deflected to help supporting Europe and America.

I detect a change of policy by the Chinese government in the last year or two. It has been open knowledge that, for years, it has been trying to persuade America to help bring about a stable world trading currency but has been spurned. More privately, it may also have been trying to persuade some European countries. There has certainly been a flurry of visits by premier Wen to Germany and France in the last year or so. But, hitherto, the Eurozone countries have been as fanatical about the euro as America is about the dollar and it is as likely as not that they are equally adamant that the sun shines out of their particular currency.

So, maybe, China has decided instead to promote their own currency, the renminbi (yuan) as a possible world trading currency. It now has two-way exchange deals with the currencies of Russia, Brazil and several other countries. Two years ago, the use of the renminbi amounted to 1% of total world trade. In the past year it amounted to 7%. By this time next year it may amount to, say, 20%. A year after that, it may have completely broken the present world trading lock of about 55% for the dollar and 35% for the euro. It is perhaps only then that America and the Eurozone will come to their senses and voluntarily approach the discussion table.

But even if financial catastrophe is avoided in the coming years, the Western European and American governments still have their major underlying problem. How do they reform their governments so that meritocratic politicians are selected/elected who are not so badly frightened by their electorates that they cannot think long-term. There was a brief period about a century ago when enough of the most talented of the young were recruited into our civil services. But that didn’t last long and, today, the better-educated young elect to go elsewhere than to public service, mainly to large multinational firms but also into small specialist businesses or scientific research. Our politicians and civil services are now devoid of the relevant balance of expertise which is actually driving our national economies (or, as with the banks and hedge funds, etc, taking advantage of the sloppy way our governments continue to print money whenever they get into difficulties).

Thus we need two major reforms. The one is becoming increasingly widely recognized; the other is scarcely talked about as yet. The first will have to be accomplished in the next few years. Ultimately, I hope that even the second will be achieved. No doubt the Chinese system will also evolve as the world economic system become even more complex. However, I’m sure that the Western democracies will be a lot nearer to the present Chinese system than the future Chinese system will approximate to what we have now.

Robert Zoellick, the world’s first citizen (650)

[The following is written with the possibility that the government of Greece might default on its debts this week-end. If it does so then the Eurozone might start peeling apart followed by that of America’s economy.]

The present gold price bubble (2001-2011) is remarkably similar to the previous gold price bubble (1971-1981). They both started winding-up at much the same rate for a few years before shooting upwards almost vertically in their final year. The only difference so far is that the present price of gold ($1500/ounce) has not yet reached the same peak of the previous bubble. When allowing for the inflation of the dollar, pound, euro, etc, the present bubble “ought” to be at $2300/ounce by now—though, on the evidence of the last few months, it could easily reach this by the end of the year.

The 1971-1981 bubble was punctured by Paul Volcker who, pretty-well single-handedly, raised US interest rates to 20%. Over the succeeding few years, as speculators were clobbered, faith in the soundness of the American dollar was more or less restored, and American government debt was considered to be manageable, gold prices dropped back until it was owned only by those gold fanatics who’d actually read a few history books and cogitated over them—and decided to hang onto their gold as firmly as before.

Today (or at the end of 2011 perhaps), the Volcker strategy is impossible. Bernard Bernanke (of the US Fed), Jean-Claude Trichet (of the ECB) and Mervyn King (of the BoE) dare not raise their interest rates by even as little as 0.5% (which used to be the normal adjustment in my young days). Their interest rates remain—and will remain—at the derisory levels of 0.25%, 0.5% and 1.5% respectively. (The ECB raised its rate slightly recently but this was only for PR reasons because the Eurozone is now so fragile.) At anything approaching normal currency interest rates of between 2% and 4% within the next few years, it would mean the bankruptcy of tens of millions of people, thousands of businesses large and small, and scores of major banks. Messrs Bernanke, Trichet and King dare not budge.

With the values of the printed US dollar, the Eurozone euro and the UK pound continuing to see-saw their way downwards in the coming months, perhaps years, towards nothingness, and the gold price continuing to ascend into the stratosphere, world trade devastation will stare Western politicians in the face at some point. What to do then? There’ll only be one thing to do. This is to stop printing money willy-nilly and to institute a stable world currency which China and many other countries have been calling for for years. And will the gold bubble then burst? Of course not. It will be made of super-glue, not soap suds. It will remain at the price level it had then reached. It will be the reference point for a world currency and also for nationalist currencies, if their governments have any sense.

We are all bound with the iron bands of our immediate peer group. But, ever since Robert Zoellick, previously MD of Goldman Sachs, previously US trade Minister, previously US Deputy Secretary of State, became President of the World Bank in 2007, he found himself with a different peer group around him who thought of the world as a whole. Zoellick began to think as a world citizen and not as an American. This is why, in the Financial Times on 7 November last, he wrote about gold as the reference point for all currencies.

What was the result? Total silence from all the central bankers of the world. These comprise some of the most intelligent and widely-read individuals in the world. Zoellick could have been shot down in flames. But he wasn’t. They know he was right. They haven’t yet had the courage to tell their politicians. Until then, the world economy, and particularly that of Europe and America, will continue to be a developing nightmare with the majority of economists not knowing what to advise.

The shy bookmaker (200)

William Hill, the bookmakers, won’t accept a bet on the next chief of the International Monetary Fund. They had a book a few days ago, apparently, but now they haven’t! I suspect that Christine Lagarde, France’s finance minister, is already such a strong candidate in the media that they think they’ll lose money whatever odds they offer. Well, I think William Hill have made a mistake because it will almost certainly go to a non-European from the emergent world and probably, in my opinion, to a Chinese.

China has a strong case because its immediate and massive response to the 2008/9 credit crunch almost certainly saved the West from an immediate economic depression. Furthermore, now that the Eurozone is now so perilously perched on the edge of disaster, the powers that be—in both Europe and America—know that only China could save it if Greece or Portugal defaulted.. China has already been helping Greece, Portugal and Spain to remain in the Eurozone by quietly buying their bonds. Now that Italy is being added to the danger list, China is probably going to be needed again to save the Eurozone and Europe’s banks—and for substantially more money than hitherto. But, like all nation-states, the Chinese are not altruists. In exchange they’re going to want more status and influence in the world than hitherto. This seems to me to be a very convenient opportunity.

Wherefore art thou? (650)

Where are/what are the brand-new consumer goods (or services) that people in the West are yearning for? This is an important question that no economist, to my knowledge, is asking. If there is no answer to this question then we can say that the industrial revolution of the last 300 years or so has finally stabilized. During that period, and apart from the very rich, almost all the forebears of the present-day advanced people were taking aim at at least one or two attainable items on a shopping list as long as your arm.

Not so today. There is scarcely an item, or a service, or a consumer good, or an experience that the rich can enjoy which is completely denied to the bulk of the working population in advanced countries. Even pornography in its various manifestations, and hitherto available only to the elite, is now widely available on the Internet. Yes, there are wish lists for the latest versions of some consumer goods, or the very latest clothes fashions or for medical procedures that are just becoming available, or for more exotic foreign holidays (including space trips around the planet). But there is nothing unique or absolutely new on the horizon that people are working and saving strenuously for—as all classes without exception were doing for the last 300 years.

We are all becoming locked into a predominantly urban way of life in which our daily time and energy are fully used up in either commuting, working or leisure (mainly of watching television or internetting which is now closely approaching 8 hours a day for most). The countryside is still important, of course. It grows food, furniture and biofuels. Also, some minimum amounts of quasi-natural countryside are reserved by and for the better-educated for second homes, or rambling or scientific investigation.

And it is this same “city-ness” to which even the over-populated, undeveloped countries of the world are now fast heading. Many billions of people will die from starvation or disease or will lead stressful lives for another two or three generations but the balance of this vast agricultural surplus are already flocking into our major cities and are beginning to adjust to an urban way of life even if it’s only in a shack and living on minimum governmental and charity hand-outs. (But, be it noted, even the poorest favelas of Sao Paulo have a television and even a dish aerial and a DVD player—the modern equivalent of the bread and circuses of Roman times!)

By and large this seems a practical state of affairs which could go on for centuries. But there’s a fly in the ointment. Even among the largely satisfied, entertainment sated, city dwellers of the West, birth rates are dropping steeply to below replacement numbers. Even the largest cities, prosperous and vibrant as they seem to be at present, are now poised on the edge of major population decline in about a generation’s time.

So, unlike the many previous locked-in states in hunter-gathering and agricultural times which lasted for many millennia or centuries at least, our present locked-in city-ness seems destined for change after all. We’re not really locked-in. We are passing through a phase which, historically, will prove to be quite short-lived.

Future, Future, wherefore art thou Future? Who can say? I would venture one opinion, however. We are a small-group species essentially—always have been and always will be—a form of society in which our genes are more at ease with themselves and our predisposed behaviours with one another. There’ll be Nobel Prizes a’plenty for those philosophers or political scientists or geneticists who can outline the direction in which city-ness could now turn. There’ll be fortunes for those entrepreneurs who actually start to construct the new environments that consumers will place on a brand-new shopping list. As always, the rich will enjoy them first, and I suspect that the recent phenomenon of gated, managed communities is roughly along the lines that post-big-city-ness will take.

Who will be the next boss of the IMF? (500)

I fell to thinking this morning as to who might be the next MD of the International Monetary Fund. Few ordinary members of the public know much about the IMF, just that vaguely it is some sort of disciplinarian body which occasionally cracks the whip over this country or that. But it’s much more than that. Potentially it could be very important indeed—the entity that could bring about a world trading currency to replace the inflating American dollar. Several powerful countries are already calling for this.

Traditionally, the post goes to a European (with America supplying the Presidency of the World Bank). The main candidate so far—at least in the European media—is Christine Lagarde, France’s highly articulate finance minister. Because she spent a large part of her career in America then this might well also go in her favour, since America has by far the largest part of the IMF vote (16%). However, what counts against a French candidate is that there have already been a disproportionate number of French MDs already. Of the past 11 chiefs since 1944, when the IMF was established, four have been French. Considering that there are now over 200 countries represented in the IMF and that, recently, there had already been strong pressures that Strauss-Kahn’s successor should be a non-European then this looks likely to me.

So far, there has been too much emphasis on the personalities and experience of various candidates. This is understandable, of course. People are so much more interesting than finance, banking and economics! But all large nations, and most medium-sized European nations, could supply at least one or two candidates who have the necessary qualifications. Nevertheless, the IMF is a powerful body and the candidate won’t be chosen on personal characteristic alone, but on nationality.

Because China has been the most vocal in calling for a world trading currency I think China will press the hardest and it will be more likely than not that a Chinese candidate will be voted into the job. However, it almost certainly depends on one crucial tie-up. This is between Japan and China which, at 6% each, are second and third in voting power. Traditionally these two countries don’t much like each other and relationships are often very tense, but lately, particularly since the Fukushima disaster, they have become much closer with high level political visits. Thus, with a possible 12% of the vote compared with America’s 16%, China only needs to find another 4%. Any two of Russia, Saudi Arabia or Brazil—fellow champions of a new currency—could supply this. Besides, China now has many friends in Africa and even some in Europe which it’s helping (Greece, Portugal, Spain) might vote for her.

If Japan supports China, then it’s a walk-in. Even if Japan doesn’t (but doesn’t support America’s choice), China still has a strong chance. If I find a bookie offering odds on this later on this morning I might venture a bet on China.

Central banks as tourist sites (1,050)

When someone is in debt and takes a piece of jewelry to a pawnbroker he loses an asset in exchange for a loan. Similarly, when someone wants a loan to buy a house, he hands over the deeds of the house (an asset which, in fact, he only fleetingly receives from the seller) to a building society, or whatever, in exchange. Similarly, when someone or a business wants to borrow a large sum of money from a bank, he or it hands over a signed guarantee (an asset) that if he fails to pay back the loan the bank can appropriate whatever possessions the borrower still has in order to be compensated.

However, when a government wants to borrow money it hands over no asset to the lender. It could do, of course. It could hand over the title deeds to a national park or a valuable building in a city centre which the lender could re-possess if the loan were not paid back. Instead, it hands over a piece of paper called a Bond (if a long term loan) or a Bill (if a short-term loan) which are actually nothing more than promises to pay back the loan at some specific date (with interest payments in the meantime). After all, governments say, we have massive powers of taxation, so there’s no problem.

Ah, but there is! Lenders to governments aren’t mugs. They know that governments are as unreliable as anybody else when desperate. What lenders also want to know is whether the government has a central bank under its control that has the monopoly of printing the only legal money within its borders. In that case, lenders are reassured that if the government can’t repay loans (from taxation) on their due date then its central bank can print the money instead. If the loans are very large ones—which they usually are—then the lenders make sure of immediately investing or spending the newly-printed money before it starts losing its value, which it inevitably does, of course, before it finally reaches the public. Original lenders have what is called ‘first user advantage’.

In fact, that’s how central banks were forced to come into existence in the first place. In 1672, the English government (actually King Charles II and his Parliamentary cronies) repudiated a large debt that was owed to the London goldsmiths. By 1694, its credit rating in tatters, the government was desperate for money. No-one of any decent wealth would lend money to it. The many banks in the country, each with their own unique banknotes (credit notes notes exchangeable for gold if desired), certainly wouldn’t. Then a cunning plan was devised. Half-a-dozen rich men in London said they’d form a new bank—the Bank of England—and lend its working capital (their money) to the government subject to certain conditions. These included the outlawing of all the other banks’ banknotes and for it alone to freely print as much money as it needed in order to repay the original half-dozen shareholders and also to replenish the extinct banknotes of all the other banks in exchange for the gold in their vaults. Some banks which had previously issued more banknotes than they could back-up with gold were, of course, cleaned out of their gold completely and only survived (if they survived at all) by adopting an air of confidence about the new BoE banknotes. Thus, at a stroke (of BoE’s printing machine, that is!), gold started pouring into the Bank of England and it became fabulously prosperous. From then onwards, the Bank of England was able to lend the government as much as it ever needed and, in short, became the creditor of the whole nation.

After this confidence trick, perpetrated by the English government and the original gang, other governments one by one took up this jolly wheeze whenever, as always, they became desperate for money, usually to fight wars. It made the private shareholders of all these central banks very wealthy, of course. But, over the decades these shareholders became increasingly worried, too. They realized that if they printed too many banknotes they would become increasingly worthless (just as American dollars are heading today). Central banks started to become awkward whenever governments made requests for money that were far too outlandish. In reply, in order to get at the one remaining entity in the whole of their countries not yet under their control, governments nationalized them one by one.

It is a current myth that central banks are separate from governments. They’re not. They may have board members who are independently wealthy or economic advisors whose careers rose, and are maintained, outside government ranks, but central banks are institutions which are, essentially, part and parcel of governments. All the important individuals in central banks are chosen by governments. Interest rates are set in order to suit governments. The myth of independence had some traction during the 1980s and ’90s but has been palpably false for all to see in the last decade or so.

Shocking though it may seem, we don’t actually need central banks. They were brought about by confidence tricks—or, if you like, by the granting of excessive privilege to wealthy individuals—and could be dispensed with just as neatly. Only a small minority of economists and politicians who are well briefed in the history of central banks are calling for their abolition at the present time. But the demand will grow as national currencies become increasingly less valuable when compared with the prices of commodities such as food or energy or copper and inflation becomes more rampant. Gold, by itself, and when its price become appropriate, could resume its role as the ultimate discipline in the printing of banknotes (or digitalization in computers). Indeed, central banks (that is, governments) no longer have any deep faith in the future of printed money because they have been buying gold for the last decade. Governments and their sidekick economists and financial journalists may still be spinning the myth that gold is a ‘barbarous relic’ but, quietly, central banks (that is, governments) are all buying it now. Governments are buying gold because it is gradually becoming a real currency again. In due course, central banks will only become historical buildings on site-seeing tours. They might even be retained as places with useful vaults, but that’s all.

If Ophelia had been white (600)

If Ophelia Famotidina had been white, the fifth most powerful person in the world would not be spending his nights with drug-runners in a New York jail while awaiting a trial on seven charges which could lock him away for up to 27 years if found guilty.

That’s my view. There’s a different view that is nothing to do with Mrs. Famotidina’s African birth. This is that M. Strauss-Kahn’s alleged attempt at oral sex, bathroom imprisoning of the chambermaid and associated physical violence must have been set up by those who hated him—with Famotidina being willing to fabricate the event. This is held by some Francophile New York lawyers apparently and a sizeable chunk of the French population. It’s an absurd view, of course, because it would also implicate President Obama as an accomplice in the plot.

After all, from the time that the woman apparently escaped from the bathroom and Strauss-Kahn apparently fled from the hotel leaving behind some of his important personal effects and his arrest several hours later on an Air France plane, there was plenty of time for news of the alleged event to have ricocheted upwards in New York and outwards to the White House in Washington. And then, presumably, the most powerful person in the world did nothing to get Strauss-Kahn out of the predicament that had been constructed around him.

But what would have happened during that hiatus if the chambermaid had been white? The news of the alleged event would have ricocheted to the highest political levels in New York within minutes. Within an hour or two—perhaps before the White House would have heard of it—Ophelia would have been whisked away to a place where she would have been held incommunicado, though no doubt treated kindly. She would have been held at least long enough for the Sofitel Hotel to have delivered Strauss-Kahn’s mobile phone and personal effects to him at Kennedy Airport. No doubt by then there would have been intensive discussions going on between New York and Washington and for long enough for there to be a plausible reason for the plane to have taken off to France with Strauss-Kahn still aboard. He would then have been safe from prosecution and, quite possibly, have become the President of France after the election next year—the fourth most powerful person in the world.

But no, Ophelia Famotidina was an African-American. More than likely, there were enough African-Americans at medium and even high levels in the New York Police Force to have insisted on the due process of law even if pressure had been applied from above. Famotidina was not to be kept quiet for a few hours on one pretext or another. Her allegations and her state of mind were sufficient evidence pro tem for Strauss-Kahn’s to be arrested and charged. Once the news had got to Washington it would then have taken a very brave—and foolhardy—American President, whether himself an African-American or not, to have become embroiled in a cover-up and to have allowed Strauss-Kahn to escape examination.

Despite its many governmental irresponsibilities, particularly as to currency matters which is driving the world to the edge of financial disaster, America still has a system of justice which can rise to the occasion—on occasion! When considering the next three or four most powerful nation-states in the world, I somehow doubt that the word of a chambermaid of a non-indigenous skin colour would have been treated seriously or, indeed, that we’d have heard about the matter at all.

All is status (600)

Status is by far and away the most fascinating item which grips people’s imagination. This applies whether we talk of the rise of an individual’s—or many’s—status, or their humblement. Millions of people were delighted that David Beckham, a soccer star, was invited to the recent royal wedding just as, by way of revenge, a few top civil servants were delighted that they had succeeded in excluding Tony Blair and Gordon Brown, our two most recent prime ministers, without any public backlash.

Status involves a package of other things. Subtle (or not so subtle) roles in social groups, political power, economic wealth, opportunities for sexual dalliance—are all involved in what we call status. Unless a person is a beggar in the street, or an old person living alone without relatives or friends, everybody has at least a small part of one of these components. If you are a very high status person then the total package is available in full measure even if not all items are fully taken up.

It is the skill of a newspaper editor to decide which of the two changes in status—up or down—should be the front page headline. It’s never just simply news; it’s always about status. Usually, a decline in status wins because they’re often unexpected and sometimes involve a total descent from top to bottom. Often, however, an editor might decide between a dramatic loss of status of one individual over that of a slower loss by many. This is why M. Dominique Strauss-Kahn, now in jail after his week-end debacle, took precedence over the continuing loss of status of millions of people in Portugal and Greece whose economic plight he was to have been attending to yesterday.

Why can such a broad generalization be made? It is quite simple. For millions of years our predecessors lived in small groups on the open savannah and our genes have been selected accordingly. Whether the group was family-sized or larger, there always had to be a leader to direct its wanderings in looking for food or defending the group against predators. As groups became larger over millions of years then a necessary rank ordering had to emerge from those genes engaged in behaviour—minimally to keep the peace, maximally to supply a new leader when the older one starts to fail with ageing. Then also, when girls were seeking out young men to partner and have children with they needed to see clear signs of status in order to maintain quality control of the species by ignoring the genes of the more inept — who then remained childless.

We may assume, therefore, that while all the above was taking place, the rest of the group were fascinated by the outcomes, particularly—because it was so important—the replacement of one leader by another. And, we can also assume, they were delighted when a new stable situation was arrived at. “The King is dead. Long live the King.”

This is why one of the headlines of one newspaper today says: “IMF boss sits with the dregs of New York” and the other says: “Huhne takes on wife in fight for career”. This is a lesser case, but yet similar news of another hitherto powerful person whose status is now in peril. Readers are delighted and editors know this.

Will a Chinese be the next IMF chief? (500)

Due to the rape allegations over the week-end, Dominique Strauss-Kahn will no doubt have to resign as the Managing Director of the International Monetary Fund (and pretty soon, too). In any sensible world he should never have been appointed in the first place. Between 1994 and 1996 he was alleged to have misappropriated about $100,000 from a French student insurance group. These allegations came to a head in 1999, but by then he had become the French Finance Minister. Although he denied wrong-doing, he felt he had to (or was forced to) resign. In the usual way that these sorts of things often happen to be smoothed over in France, a subsequent Paris court cleared him in November 2001. It was necessary, of course, that he must be shown to be whiter than white in order to be considered for his subsequent IMF position.

But who will be the next MD? It is traditional that, while the World Bank should be headed by an American, the IMF should be led by a European. “Traditional” really means since 1944 when the IMF and World Bank were instituted and when America imposed the Bretton Woods Agreement on 43 other countries. But times have changed since then. Two heavyweight Asian players arrived on the economic scene—Japan first and then China—and, due to its increasingly depreciating dollar, America is now quickly becoming an ‘ordinary’ country like all others.

China is now the third largest contributor to IMF funds and is likely to be the largest within a year or two. Together with Brazil, Russia and 20-odd other nations, it is now calling strongly for a more open process for the selection of MD—and “without regard to nationality”. The strong likelihood is that the next MD will not be a European at all. China itself has a big claim (though it may not want to of course). By buying large quantities of American government debt, China is already helping to save America from bankruptcy. By quietly buying the Eurobonds of Greece, Spain and Portugal, China is also saving the Eurozone from collapse.

M. Strauss-Kahn was due to meet Angela Merkel yesterday, and possibly produce solutions for Portugal and Greece this morning in a wider meeting. His place will be taken by his deputy, John Lipsky. But he’d already announced that he will be retiring in August, so he’ll hardly have any authority at all and it looks as though Portugal and Greece will be left hanging for the moment. The really intensive discussions will be who is to be the next MD of the IMF. We will hear nothing of these discussions but we can be certain that these will dominate the minds of the international Great and the Good for the next few days.

So who will it be? He is unlikely to be Japanese (certainly not a ‘she’ in that country anyway!) because Japan is even more bankrupt than all the other advanced countries. As already mentioned, China has a strong claim to produce the next MD. But would America—and an election-dominated Obama—be prepared to lose face? We live in interesting times.

The discombobulation of my brain genes (1,000)

In my newspaper this morning I read of a European Union committee’s statement about mobile phones—that they are potentially dangerous if used too much. The EU would like member nations to ban the use of wireless networks and mobile phones in schools. Fears have already been raised that electromagnetic radiation emitted by wireless devices, particularly when held close to the ear, or living too closely to a base station, can cause cancers and affect the developing brain. This runs counter to statements by the World Health Organisation and the UK Department of Health, which say exposure to electromagnetic fields poses little or no risk to human health.

Until there’s hard evidence that mobile phones are harmful I don’t suppose for a minute that this instruction will ever be issued or, if it’s issued, that children will obey it. Sixty-odd years ago, teachers all over England tried to ban the use of ballpoint pens, insisting that children use pen and ink or, if they were well-off, fountain pens. This was not on medical grounds but that ballpoints led to sloppy writing. In this, teachers were quite right, of course. But the children still won!

But as to the health risk of mobile phones, the EU committee, nannie-like though it may be, is much more likely to be right than the WHO. Those who pooh-pooh the harmful effects say that the wavelength of the electromagnetic radiation emitted by the mobile phone is beyond the radiation reception bands of the atoms that make up the normal molecules of our bodies, so mutational effects are unlikely. That’s as may be, though it must be pointed out that a fully stretched-out chromosome (a DNA molecule containing a super-conductive hydrogen-bond core and which would act as a perfect aerial) is several centimetres long and would be a natural absorber of cell phone radiation. It never is stretched-out, of course, and remains for the most part tightly bundled, but one never knows just how much our chromosomes—containing our genes, of course—are affected.

However, the fact remains that even if our chromosomes are not perfect absorbers of radiation—unlike food in our microwave ovens—the constant use of the mobile phone does, in fact, heat up body tissue, including brain cells, within a few centimetres of its use. This is well-established and not denied by anyone. However, the ‘safe proponents’ of mobile phones say that the heat effect is so slight that the normal blood supply easily takes it away.

This is true enough, but this is only a superficial derivation from physics. It does not take into account the brand new science of epigenetics which has only come into its own since the Human Genome Project of 2003 and since. This says that genes respond to any changes that might take place in the environment outside the nucleus of a cell, even those we would consider trivial. For most of the time, most of our genes are strictly regulated to carry out normal housekeeping tasks according to a ‘standard’ (ideal) environment around them. What regulates them are not in the genes themselves but outside them. Some of the regulators are produced in the ‘junk’ or non-coding region of the DNA, others are in the nuclear fluids outside the DNA, others are in the fluids outside the nucleus but within the larger cell, but yet others come into the cell from the bloodstream and even more broadly from the outside world—the food we eat, the quality and the temperature of the air we breathe and so on.

What regulators do is to alter the stops and starts of specific genes and also to alter the multitude of associations that take place between genes. All this is for the sake of adjusting the expression of our genes (which are themselves normally unchangeable) according to the environment outside. For most of the time, the re-adjustments are benign attempts to keep the whole body working efficiently. But sometimes (let us say when we inhale or eat carcinogenic chemicals) some harmful variants of otherwise healthily-repressed genes are brought into play. This is what can cause many types of cancers and other diseases.

No matter how trivially the external environment may change, our gene regulators—epigenes—adapt with the most exquisite sensitivity to the new circumstances—healthily for the most part, but very dangerously sometimes. The real point at issue regarding mobile phones is not whether their use causes epigenetic changes in our brain genes—they certainly will do—but of what sort and to what extent and how frequently. This depends on a host of factors—the power-wattage of the mobile phone, how often it’s used, the individual genetic (and epigenetic) make-up of the user, the throw of the dice as to the period of months or years before a particularly dangerous epigenetic effect occurs.

So far, the frequency of any particular risk when using the mobile phone is unknown. The evidence about cancer either way is thin on the ground. It will require a lot more data gathering to be sure. If definite risks are discovered then will they be acceptable? After all, we all take a life-threatening risk when we cross the road and we still cross roads. So far, it’s far from being a black and white issue. At this stage, whatever the EU or the WHO may say, we simply don’t know.

As to declaring an interest I like to think that I am objective in this matter. Due to my particular circumstances I neither need nor own a mobile phone. As far as I can recall (and I can recall these occasions very clearly), I have only used a mobile phone three times in my life. So you can take it from me that those brain cells close to my ears are supremely unaffected. However, as I prepare scrambled eggs or kippers in the microwave for my breakfast every day and peer at them through the oven window I often wonder whether the epigenes in the whole of my brain are being discombobulated. (A wonderful word I’ve never had occasion to use before!)

The third solution still awaits (650)

Once the thousands of young Muslims recently fleeing from the troubles in Tunisia, Egypt and Libya have crossed the Mediterranean to land in Italy or Spain then they are allowed to travel further within the European Union. Indeed, the Italian authorities actually give them train tickets so they can make their way all the quicker to countries like France or Germany or Denmark where there is a chance of jobs or the certainty of welfare benefits which enables them to have a way of life far beyond that which was possible in their own countries. This latest onslaught only adds to the millions of poor Muslims, Confucianists and other cultural in-betweens from all over Asia and Africa who have migrated legally and (usually) illegally to Europe in the last 20 years or so.

Strictly speaking, this freedom of movement only applies between those European Union countries which have agreed to something called the Schengen Borders Code. Of course, this was never agreed by the people of those countries. This pseudo-democratic agreement was cooked up by a coterie of Foreign Ministers, or by the EU Commissioners—which, precisely, I don’t know without delving further. Anyhow, the real democratic message is now beginning to get through to the governments of those countries. The French government is perforce having to become officially upset with Italy. Right-wing political parties are on the rise throughout Western Europe, the most recent being the electoral success of the True Fins of Finland (Surprise? Surprise?). Denmark has decided to re-impose passport controls on immigrants on the pretext that they are preventing the smuggling of drugs or weapons. Even the civil service of the UK is at long last being harried by both Labour and Tory politicians to institute some passably efficient method of border control instead of the previous waving through with a nod.

Never mind that the governments of Europe—with one or two exceptions such as Germany or Finland or Belgium with still decent exports—will have to declare themselves bankrupt sooner or later, or will have revolutions, the indigenous people of Europe, rightly or wrongly, have now had enough. They want to be racialists, just as Japan, China, the Islamic countries and many more countries already are in practice. They want more of the contracting number of the decently-paid jobs that still exist.

So what are the answers? To be fair to the increasingly illiberal people of Western Europe, they are already supplying two of the practical answers. They are reducing the size of their families no end because they can no longer afford two children—never mind the civil services which are worried that their index-linked pensions might not be paid. People are increasingly pushing their old and feeble relatives—too expensive and bothersome to maintain—into governmental nursing homes where they are increasingly neglected and cruelly treated. In a generation’s time, and with immigration barriers firmly up, the social scene will be very different from what it is now.

But what is the third answer? The solution is for parents to vastly upgrade the education and training of their children and young people for those increasingly specialized skills which are necessary in the modern world. But here the people themselves are in a difficulty because their governments effectively monopolized education a century ago in order to make children into nationalistic fodder (as we have seen recently in the UK with the royal wedding hysteria). The majority of parents are themselves so deficiently educated that they are not sufficiently aware of how education could best be carried out in order to fully realize the genetic potential of their children.

Except for a revolution that is deeper than most political revolutions of the last few centuries in Europe, and a revolution which revolutionizes education itself, I can see no possible full solution for the people of Western Europe. Perhaps it will have to be evolution after all—the survival of the fittest educational methods—that is, until perhaps West European populations become so reduced that only free market schools remain for those parents who still have jobs.

The kindergarten of the future (700)

Search for “Bach Gigue” on the Internet and you will find a YouTube video of a 5 year-old Chinese girl playing a Bach gigue on a Steinway grand—and very competently, too. I am sure that J. S. himself would have been impressed. However, he wouldn’t have been as surprised as I was when I discovered her this morning. Precocious musical talent ran for generations in the Bach family. Many boy and girl Bachs would have seen and heard the clavier being played so many times by their parents or their older brothers and sisters that, as soon as they could hoist themselves onto a chair at keyboard height, they would soon have taken to playing as a duck to water.

What enables this talent to arise? Is it special genes? Unlikely. Each of us has exactly the same genes with the same functions. It’s true that all our genes have variations, sometimes with many alternative variations to suit different occasions, and each of us has a unique permutation of these. But variations which are rare—as rare as genius or precocious talents appear to be—are invariably harmful variations, not beneficial ones.

The evidence now gathering thick and fast is that the cause of precocious skills—or, indeed, skills of any sort—are due to ‘mirror neurons’ in the brain. These were known, but not named or understood, for many years until their unique character was finally pinned down by Giacomo Rizzolatti and Laila Craighero at the University of Parma in 2004 (which will undoubtedly win them a Nobel prize before too long). Mirror neurons are those brain cells which rehearse the decisions that are actually made by motor neurons when instructing our muscles to perform this or that act. By using MRI techniques (Magnetic Resonance Imaging brain scanning), what Rizzolatti and Craighero discovered was that if person A were merely to observe person B carrying out a skillful act, then person A’s mirror neurons would also be carrying out the same procedures as B’s—even if A didn’t follow through with the same overt actions. Indeed, at that stage, person A may not have ever tried to carry out the same actions, Or, if he did, then they would probably be quite clumsy to start with. Nevertheless, from then on, both his mirror neurons and his motor neurons would become increasingly well-defined with further observation and further practice.

This doesn’t mean that all the Bach children would be gifted musicians. For all we know, some of the Bach children didn’t bother to spend much time indoors and wanted to play with other children or to watch (and copy) the gardener, or the blacksmith down the road or anglers at the local riverside. The chances were pretty high, however, that in a musically saturated household the Bach childrens’ mirror neurons would have been constantly observing—and microscopically practising—a variety of the musical skills being carried out around him.

The discovery of the nature of mirror neurons has been hailed as one of the greatest breakthroughs in neuroscience. Nevertheless, as per usual, new ideas, however great, take at least a generation to work their way through a culture to reach the policy-makers. So what might we expect in the ideal kindergarten in the future? It would be a pleasant and airy building, probably a lot larger than our present typical primary school. It would be filled, however, not so much with teachers and classrooms, but demonstrators and work rooms—dance room, adventure gym, music room, carpentry and handicraft workshop, artist’s studio, a mini hospital and a real baby nursery, computer room, garden, pottery, tailoring room, video workshop, kitchen, shop, lawcourt, engineering bay. In short, a miniature version of the real environment and the real skills that the children will be doing when adult.

Vastly expensive? Of course. But such an education could be afforded when individual skills (and incomes) are taken far beyond the average that now exists — even to the point that the present highly paid jobs that are fiercely protected will have to be shared. Occupying a large area? Of course. But there’ll be plenty of space. Western populations are already close to the point of steeply contracting to much smaller sizes. All this can happen when mirror neurons come into full use again—as they used to be in our hunter-gatherer days.

How will Pakistan save its face? (200)

In my previous posting I suggested that it “might” have been wiser for President Obama not to have been so triumphant about the killing of Osama Bin Laden despite the temptation of enhancing his electoral credibility. I should have written that it would have been wiser not to have announced it at all but let the knowledge seep out. Obama has now succeeded in humiliating Pakistan’s army, secret services, politicians—pretty well all of the politically powerful in Pakistan. The only people who will benefit are the mullahs and the members of various quasiAl Qaeda groups in the country who will now feel strengthened in their hatred of America and anything Western.

Such a public slap in the face doesn’t help the situation of a failing nation-state which already has nuclear weapons and advanced missiles. A faction within the Pakistan army might already be planning some sort of action in order for the country to save its face. The country is already close to a state of war with India over Kashmir. Goodness knows how Pakistan is going to react now.

The Bin Laden danger in all countries

It might have been wiser for President Obama not to have announced the death of Osama Bin Laden so triumphantly but to have let the news leak out from “official sources” in the Pentagon, or from the Pakistan government, or even from Al Qaeda itself. As a martyr, Bin Laden might become more influential than he was in life. He might re-ignite Al Qaeda-friendly groups that are dotted all round the Middle East and in Africa, particularly across North Africa—including, it might be added, the eastern rebels centred in Benghazi. If the latter win in the present civil war against Gaddafi, then Western politicians might wish that they hadn’t supported the anti-Gaddafi tribes.

In his most dangerous period, Osama Bin Laden was one of the middle-class, educated sons of the rich and numerous semi-royals of Saudi Arabia who turned to religion for their ambitions instead of secular careers. Fifteen of the nineteen 9/11 terrorists were of similar ilk. It is almost always the case throughout history that those who protest against existing governmental regimes—their own or foreign ones—and whether inspired with political or religious ideologies—are not from the poor but from a frustrated, educated middle class who have, nevertheless, a great degree of social confidence built into them from their earliest childhood and feel equal to those whom they oppose.

This has always been a danger to governments or other power establishments and this is why they always keep their eyes open to the highly talented of the younger generation and try to select them as efficiently as they can. Most of them can be safely absorbed into the existing power and career structures, but there’s always the danger of a surplus arising. And this can occur in fast-developing and already-developed countries as much as in those countries where their governments or their people want to develop but are, for one reason or another, not succeeding.

If anything, this applies to the advanced countries even more so than the others. We are rapidly moving into an economy which is more science-dependent than ever before. Now that science has produced the Internet there is more scope for self-taught specialists than ever before. Already, individual hackers have been able to penetrate defence and banking systems. Some of those systems could be brought down completely in the future. Now that the four nucleotide components of DNA can be bought off the shelf, there is no reason why a self-taught geneticist or a group couldn’t assemble a dangerous virus (which has little more than a handful of genes) that could kill an uncountable number of people or animals.

So what’s the answer? Ever more vigilant governments? Unlikely. Totalitarian regimes have never lasted long. What it does mean is a far better selection of talent than has existed heretofore. But when is talent discernible? At graduate level? Puberty? Childhood? We now know that talent—whether potentially conformist or rebellious—arises in the earliest months of a child’s life. The quicker that talent can be identified, the better it will be both for the child and society, and the quicker it can be befriended and absorbed. Governments had better shift a great more resources into nursery and parental education than they’re doing now. Failing that—which is likely, given their parlous finances—then they had better deregulate the highly protective teaching unions and allow private education to spread into a far wider market that exists now only for a small minority of children.