Saturday, 14 July 2012

Traditional conservative manifesto

Traditional conservative manifesto:

I won’t you to imagine a party which is committed to the maintenance and improvement of our society, our nation and the good of all who reside within.

This party would devolve power away from the bureaucratic, inhumane, calculating state and give it to communities and the free men who reside within. We would seek to make the UK a working nation once more and a nation. We would reinforce are working class communities by championing community groups and neighbourhood policing and ridding them of the drugs menace.

We would make schools disciplined and safe places, quickly removing those pupils disturbing the learning of others. We would take the same attitude with problem households and criminal families. Communities would be empowered to intervene and remove. We will no longer force communities to suffer the consequences of failed families.

We would free Britain from the European Union reaffirming Britain as the only parliament with the right to pass laws in Britain. We would aggressively pursue a pro export policy, no longer binding exporter hands with endless paperwork or moral foreign policies. We would have lower tax rates for exporting businesses and manufacturing businesses in order to get Britain back working.

We would set the tax rate in order to punish immoral behaviour both personal and in the city but to get Britain back to work We would crack down on and shame those who do not pay their share and kick out businesses that did not pay there’s. We would ensure care the neediest but also crack down on welfare manipulation by both the middle classes and the poor. We would reinforce the NHS and end all government re-organisations, whilst directing it recourses towards the youngest in our society.

We would also encourage an increase in the British birth rate by offering nationalised child care and child tax breaks. We would remember the importance of mothering and families within our society, promoting society to play its role and giving what help we can. We will focus are efforts of communities and families, offering a helping hand but never thinking we know best.

With these principles and many more we shall call this party the Conservative party 

Friday, 6 July 2012

Self-interest and the banks

So why did bankers rig an internal banking rate, well very simply it was in there interest to do so. Actually it will have been in there short term interest to do so.

Before I continue I must admit my starting premise and this is we all act as self-interested individual. We do not operate in either perfect knowledge or wholly freely therefor we act in a limited rational way in the furtherance of our own or perceived self-interest.

So let us look at the starting question again; why did investment bankers rig the interbank rate? Answer, it was in there self-interest at that time. What does that mean, well as they saw it they would get a reward that outweigh the risk of losing their licence to trade and cause a scandal that would harm there means of making a living.

Wow! That reward must have been high. Actually I doubt it; the banks did in the end manipulate this rate to ensure there continuation (thus the risk was much reduced) but before this stage the rigging had already become systematic and the reward at individual banker (the achievement of targets and the reward for doing so) could simply not out weight the risk.  

So what can we conclude from the fact they did. One that they value the risk of being caught, very low; two that the punishment for bad behaviour must have either been no existent or very lenient; I suspect it was a combination of poor monitoring both internal / external and a very lenient punishment for  unacceptable behaviour and hear we have the nub of the issue.

Clearly the banks rewarded risky behaviour (again acting in there limited self-interest) and sought out and promoted risk taking individuals – actually this is untrue. I expect they did seek out risk taking individuals and rewarded successes but more importantly they must have stopped asking questions and demoted people unwilling to take extreme risks in the sight of others. Therefore you have an environment in which risk is rewarded and ill behaviour not punished whilst those unwilling to act in such a manner (for whatever reason) were side lined.

As you can see no memo insisting on the rigging of libor was required, indeed no knowledge of it in the higher Escalon’s would ever be heard, as no one wanted to know or sought to know. Simply by rewarding risk and not punishing ill behaviour an organisation will guarantee some law is eventually broken, as more and more risk will have to be taken to achieve increasing targets. This is the problem with limited self-interested rationality, it is often short sighted and often lacking in prudence, epically when the organisations does not punish ill doing.