Yikes!

Economically suicidal statistic of the day: the EU accounts for 9pc of the world's people, 15pc of its GDP and 50pc of its welfare payments.

Lorrie Moore on Homeland in the NYRB

"Danes nonetheless has put vanity aside for this performance. Compare her with the always pretty analyst played by Jessica Chastain in Zero Dark Thirty.) 

"The main problem with Homeland is not even the writers taking Adderall or whatever they did in the second season that eliminated suspense and brought instead an unhinged intensity of movement that barely allowed space and time enough for the cast members to occupy their roles.

David Runciman on Lance Armstrong

For Armstrong, drugs added an extra element of competition to the sport: the competition to be the person who made the best use of drugs....

When he thought other athletes were taking drugs not available to him ... he informed the authorities and asked that they be checked out....

Accusing Armstrong of doping always seemed in desperately poor taste, given what he had been through. Armstrong himself exploited this advantage ruthlessly....

One of Armstrong's many exquisite hypocrisies was an ongoing suspicion of riders who spent too much time in Spain: he was afraid that they might be taking advantage of the inattention of the local authorities to try out new treatments. If he thought you were a little too fond of "Spanish practices", he would notify his friends in the UCI to warn them.

Dieter Helm on Privatisation of Electricity

If you define the problem as lights going out, he said, you misunderstand everything about the way the new world of electricity markets works. The ideal situation for private electricity firms is one in which there is only just enough electricity to go around. Then they can charge as much as they like, and people will have to pay. "People think insecurity of supply means will the lights go out or not - but that's not the issue," he said. "It's what happens just before they go off."

Julian D. A. Wiseman on IR Swaps in a Euro Break Up

In 1998, new swaps were being transacted against LIBOR in any of ECU, DEM, FRF, ITL, ESP, NLG, and PTE (LIBOR is the London Inter-Bank Offered Rate, and is computed by the British Bankers’ Association). New swaps were also being transacted against FIBOR (the cost of borrowing DEM in Frankfurt, computed by the German Bankers’ Association), PIBOR (FRF in Paris), RIBOR (ITL in Rome), MIBOR (ESP in Madrid), AIBOR (NLG in Amsterdam),BIBOR (BEF in Belgium), HELIBOR (FIM in Helsinki), VIBOR (ATS in Vienna), DIBOR (IEP in Dublin), and others.

EMU brought on a simplification. There are no longer separate London ‘fixings’ of ECU, DEM, FRF, ITL, ESP, NLG, and PTE: there is one fixing of the cost of EUR money in London, and this is copied across for the other currencies. On the continent, the European Banking Federation has created a eurozone fixing called Euribor. And (for example), the German Bankers’ Association no longer fixes the cost of borrowing DEM in Frankfurt; instead it has specified that the FIBOR fixing shall be equal to the Euribor fixing.

For the most part, this has worked smoothly. (The one exception is that the French Bankers’ Association messed up the transition from FRF PIBOR to Euribor*3.)

Consider the position of two parties who have traded a BIBOR swap (the former Belgium-franc fixing), using German-law documentation. This swap is, well, whatever German law says it is. And it settles against, well, whatever the Belgium Banking Association says it does. Of course, for now and the foreseeable future, each jurisdiction’s law says that swaps are properly enforceable, and the various eurozone national banking associations say that their national IBORs have been properly succeeded by Euribor (with a modest exception for the French mess-up). But if either of these countries leave EMU, legal uncertainty would surely increase.
Conclusion

1. The old national currencies are irrecoverable. For good or for ill, Germany cannot recover the old Deutschmark — it has been too stirred up with the other national currencies.

2. A nation can leave EMU, by introducing a new currency. In doing so, it can leave euro obligations to be paid in euro, or it can cause varying degrees of trouble by doing something different.

3. Because governments have a lot of power over their legal jurisdictions, and over the legal definition of their own currency, both past and present, and over the definition of their former national ‘IBOR’, a government that wanted to cause trouble could cause a lot of it.

*3 PIBOR used to settle T+1. So if money was borrowed today for three months, the money would arrive on the business day after the trade date, and be repaid three months after receiving it. Euribor is T+2: money arrives the two business days after trading. The logical thing would have been for the French Bankers’ Association to say that a day’s PIBOR fixing is equal to the previous business day’s Euribor fixing, so that the old PIBOR fixing and the new Euribor fixing always span the same period of time. However, for ‘simplicity’, the French decided that today’s PIBOR fixing is to be today’s Euribor fixing. So, if you had traded a swap that was to fix against 3-month PIBOR on 29 September 1999, you might have thought that you were trading the cost of borrowing money from 30 September 1999 to 30 December 1999. But the rules by which PIBOR rolled into Euribor changed this to the cost of borrowing money from 01 October 1999 to 04 January 2000; changing the fixing from one that didn’t cover the turn-of-the-century weekend, to one that did. That made a big difference, and it seems that the whole sorry business is to end in court. (This problem was predicted in advance by William Porter of LEDR.)

Borat has the last laugh?

Edmund Wilson on Dickens

Edmund Wilson summed up the phenomenon succinctly: “Dickens had a strain of the ham in him, and in the desperation of his later life, he gave in to the old ham and let him rip