O tempore

This written in 2002...."Japan's banks are undeniably in worse shape than Germany's: some of their balance sheets are propped up by little more than regulatory indulgence."

John Lanchester on the UK Bank Bail-Out

Put simply, this is an insurance scheme. The government is insuring the banks against losses on their assets. There’s nothing unusual about such schemes: they’re a standard feature of the banking world. In fact, they are one of the sources of the current crisis. In the commercial world, a deal in which one financial institution insures another against defaults, in return for a fee, is called a credit default swap, or CDS. In effect, the UK government has undertaken a CDS with our imploded banks.

John Lanchester on the rise and fall of RBS

During the 17th century, Scottish investors had noticed with envy the gigantic profits being made in trade with Asia and Africa by the English charter companies, especially the East India Company. They decided that they wanted a piece of the action and in 1694 set up the Company of Scotland, which in 1695 was granted a monopoly of Scottish trade with Africa, Asia and the Americas. The Company then bet its shirt on a new colony in Darien – that’s Panama to us – and lost.[1] The resulting crash is estimated to have wiped out a quarter of the liquid assets in the country, and was a powerful force in impelling Scotland towards the 1707 Act of Union with its larger and better capitalised neighbour to the south. The Act of Union offered compensation to shareholders who had been cleaned out by the collapse of the Company; a body called the Equivalent Society was set up to look after their interests. It was the Equivalent Society, renamed the Equivalent Company, which a couple of decades later decided to move into banking, and was incorporated as the Royal Bank of Scotland. In other words, RBS had its origins in a failed speculation, a bail-out, and a financial crash so big it helped destroy Scotland’s status as a separate nation.

Warren Buffett on airlines

The interesting thing of course is that if you go back in time….from Kitty Hawk, net, the airline transport business has made no money. Just think if you’d been there at Kitty Hawk and you’d seen this guy go up and all of a sudden a vision hits you that tens of millions of people would be doing this all over the world some day. It would bring us all closer together and everything. You’d think, my God, this is something to be in on. Despite putting in billions of dollars, the net return to owners for the entire airline industry, if you’d owned it all, and you’d put in all the money, is less than zero. If there had been a capitalist down there, the guy should have shot down Wilbur. One small step for mankind and one huge step back for capitalism.

NYRB on John le Carre

If you feel that good novels are the lie that reveals the truth, then it will always be thrilling, in any given period, to come across works that manage to be much more revealing than the evening news. John le Carré made that kind of thrill into a genre, capturing the dowdy, fatal, realistic weather of European espionage at a time when the subject was covered on the BBC as if it were merely a parlor game beloved of donnish existentialists.

Even today, with his most groundbreaking novels behind him, le Carré continues to be the world's most reliable witness to the vicissitudes of international paranoia: his books conceive of a Western world that has a costly obsession with its possible enemies; he shows you this world's secret missions, its botched jobs, its manifold attempts to thwart the corrupting and sometimes terrifying idealism of others, while keeping the reader close to the exact lineaments of the way we live now.