Cheaper toys 'are Christmas hits'

- BBC News website, 28 October 2009.

Stop all the clocks, wrote W.H. Auden once, and he had the right idea. One of the irritations of modern western society is an always-on consumption culture that lives not so much in the here-and-now but in the tomorrow-reported-as-yesterday. Or perhaps, in remembrance of George Orwell, we should allude to his definition of advertising: the rattling of a stick inside a swill bucket. Consumer time, in any case, now moves at an accelerated rate, especially when the forces of retailing, in ever more urgent pursuit of the almighty trading dollar, overcompensate for an economy debilitated by a banking bust. So we have to tolerate Christmas lights going up in Oxford Street before Halloween; newsreaders and politicians vying to be the first to wear their poppies with pride (Armistice Day, commemorated as it always has been, on November 11th); and toys reported as Christmas hits before the end of October.

And you thought you had broken even. If investors had bought gold when the Dow first closed above 10,000 in March 1999, they'd be up almost 280%. Put another way, Dow 10,000 a decade ago “cost” 36 ounces of gold, treating each Dow point as $1. When the Dow revisited that level Wednesday, it was worth only 9.276 ounces of gold. In oil terms, the Dow has gone from 609 barrels to 133.

- The Wall Street Journal on "Dow 10,000."

Midway on our life's journey, I found myself
In dark woods, the right road lost.

- Translation of the opening lines of Dante's Divine Comedy.

“Remember, that credit is money.”

- Benjamin Franklin.

About 15 years ago, an older relative who enjoyed considerable status and influence within her local community expressed some surprise about how her bank account operated. She had always assumed that the banknotes that she deposited within her account would literally be kept in some kind of vault for safe keeping and left untouched. She fully expected to see the very same notes whenever she made a withdrawal. The idea that her money would be reused and lent on by the bank – and that the bank notes that returned would not likely be “hers” – came as something of a revelation to her. (Quite how bank depositors manage to earn interest was evidently not something that she unduly worried about. But given that current savers now earn essentially nothing, perhaps her lack of concern on the topic is more widely shared.)

“If you can’t beat them, arrange to have them beaten.”

- George Carlin.

Banking may well be a career from which no man really recovers.

- John Kenneth Galbraith.

You don't take a very responsible job at a time like this and jump after eight months to make money in the private sector.

- Anonymous "Senior City banker" quoted in The Financial Times after John Kingman of UK Financial Investments said he was stepping down.

You're not only wrong. You're wrong at the top of your voice.

- John J. Macreedy (Spencer Tracy), "Bad Day at Black Rock"

“Genius is only a greater aptitude for patience.”

- George-Louise Leclerc de Buffon.

“I am indeed rich, since my income is superior to my expense, and my expense is equal to my wishes.”
- Edward Gibbon.

The brief of Eric Beinhocker's outstanding The Origin of Wealth (Random House, 2007) is to address the questions: what is wealth? How is it created? And how can we create more of it? But it also, almost incidentally, explains how the current banking crisis happened.

Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he's not fixing it. And not fixing it is, in a sense, making it worse.

- Alan Auerbach, economist at the University of California in Berkeley.

“Goodbye, Great Britain. It was nice knowing you.”
- Wall Street Journal editorial, 1975.

“[Gordon] Brown/s Britain is like an episode of Life on Mars.”
- George Osborne, UK Shadow Chancellor, at the time of the Northern Rock Crisis.

“Gentlemen prefer bonds.”
- Andrew Mellon.

All good things must come to an end. While many within the investment community have been wondering aloud whether stocks have entered a new bull market – unlikely, we feel, unless equities have now become inversely correlated to economic fundamentals – some of us have been increasingly wondering whether government bonds, most notably UK Gilts, but not ignoring the 1,000 lb gorilla that is US Treasuries, have entered a new bear market.

Suppose they threw an Economic Recovery but nobody came? The last few weeks have seen all kinds of motley rent-a-quotes pontificating about green shoots, or rather a slowing down in the rate of economic deterioration, but a slowdown in the rate of something worsening is hardly the same as a recovery, not least because all economic data are inevitably subject to subsequent revision. And if existing data are unreliable, how to describe the accuracy of economic forecasts?

The Bank of England, for example, in its quarterly inflation reports uses "fan charts" that reflect various probability distributions. The problem with their latest projections for UK GDP is that they are all over the place; forecast output growth for 2011-2012 is seen at anything from +6% to -2%. Well, thanks for that.

We refused to touch credit default swaps. It would be like buying insurance on the Titanic from someone on the Titanic.

- Nassim Taleb.

“I respect faith, but doubt is what gets you an education.”

- Wilson Mizner

Get a grip on financial regulation! Hedge funds, short selling, spread betting, leveraged buyouts must be curtailed. Regulate them hard! Better, ban them!

- Reader's posting (“PCMyrs, Tonbridge”) on the BBC's G20 weblog.

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

- Simon Johnson in The Atlantic magazine.

We, uh, needed to keep these highly expert people in their seats.

- AIG spokeswoman Christina Pretto to Matt Taibi of Rolling Stone.

The [Japanese] central bank's implementation of quantitative easing at a time of zero interest rates was similar to a shopkeeper who, unable to sell more than 100 apples a day at Y100 each, tries stocking his shelves with 1,000 apples, and when that has no effect, adds another 1,000. As long as the price remains the same, there is no reason consumer behaviour should change – sales will remain stuck about 100 even if the shopkeeper puts 3,000 apples on display. This is essentially the story of quantitative easing, which not only failed to bring about economic recovery, but also failed to stop asset prices from falling well into 2003.

- Richard Koo, The Holy Grail of Macro Economics: Lessons from Japan's Great Recession (John Wiley 2008).