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Congrats on the permanent appointment. Try and get Ed to stay!

These are fascinating times, as I study internation business. Evan Davis makes business fun, which can be hard to do!!!

What about the protectionism within the EU ? I see the butter mountain is back with us, utterly obscene in the current day and age.

Protectionist agricultural policies to protect French and German farmers are costing us all thousands.

Portugese and Spanish fishing is protected, the foirst thing they did with their EU grants was build fishing ports, while our fisherman are devastated as our natural waters are fished to death.

Lets bring back the island mentality.

The danger to whom? The fat cats and people who can't live simply! The IPCC states that only by localising resources, trade and growth can we avoid the catastrophic climate change effects that will result if we continue with Global , hi tech, high carbon growth. This is not a disaster, it's an opportunity to reinvent the way we live and to restore some decent community values.

I don't think you can go against human nature on this. In times of trouble it is natural to "pull in one's horns" so to speak. The banks are already doing this and hoarding their cash rather than lending it out. So with countries too.

This doesn't need to lead to a complete loss of trade between countries or artificial barriers to trade being imposed by governments but rather a more cautious approach: knowing your customer is able to pay for instance; taking currency fluctuations into account for overseas deals; not putting all your eggs in one basket ie several small trades rather than relying on one big one etc etc. Just applying a little common sense in difficult conditions.

Capitalism and entrepreneurship doesn't have to be wrong. On the contrary, it's the only way out of the mess we're in but maybe this time with a little humility and with an eye on the wider consequences of one's actions. Maybe trying to act a little more ethically instead of winning at all costs.

I don't follow this. Isn't the U.S. already firmly heading down the route of protectionism with a mandate (or law, I'm not sure) that Obama has just signed. I think that there is a clause in there that states that all steel needs to be sourced from U.S. suppliers. As commentators have said, of a legal background, the signing of this agreement by Obama was no mistake.

Going on recent form, it seems unlikely that banks will act in favour of anyone other than themselves. The logic of offering up a bottomless pit of taxpayer cash to banks only for them to refuse to lend it out again still evades me. If the purpose of this was to give borrowers access to more cash, we would have been better simply lending taxpayers money directly to taxpayers, cutting out the banks altogether. It would have cost a lot but, let's face it, the current situation isn't exactly going to be cheap!

I suspect bankers will fight against de-globalisation for every area of commerce except their own...

The problem is that the UKs version of globalisation is that everyone else should develop and build the technology and products so that we can buy what we want from them when we want it and use our credit cards or overdrafts to do it.

It's like Crash's latest wheeze to give us all superfast broadband... There isn't a single UK owned company that makes broadband technology so we'll have to either import the lot or buy parts of it from UK based foreign companies so improving their balance sheet not ours........ Barmy!

"As it happens, economic history supports the idea that protectionism is bad at times of global recession."

On the basis of recent developments, doesn't this ensure the use of protectionism?

Hi Evan,

In my opinion, globalisation is the root for the mess and beyond, for example, inequality. Too much liquidity flow across the borders, too much rip-off and speculative investment (greed). Keep on globalisation just another lethal dose, slowly killing the world economy.

PS - your "city uncovered" programm is superb (much better than RP's panorama)!

I can assure you that, to most of us poor saps out here in the manufacturing sector, the words de-globalisation and protectionism sound wonderful.

Globalisation and free trade might have become more safely built into the system, and less open to being undermined, if it had been less one-sided.

In practice, it is extremely difficult for UK or other western companies to export manufactured goods to China or India. If these countries are so committed to the global system, they could prove it by dismantling their hefty trade barriers.

Yes-Americans are in fact retreating from the shops-and rightly so.
For the last 20 years Americans have spent billions of dollars; mostly on credit; for trinkets. I am all for trade, but the amount of disposable, cheaply made and purchased goods must stop. Shopping and products have become entertainment.

We need to become a bit wiser with our money.

Evan:
It's always interesting to hear and read your views. Keep it going!
It seems to me that the solutions currently on offer all include the need to persuade us back into the shops. Capitalism - western style - depends fundamentally on conspicuous consumption; in other words on people buying things they don't need. Such a system is inherently unstable because at any time consumers can opt collectively not to shop; and right now that is the choice they are making. It is also a by-product and bulwark of inequality both within and between nations. Maybe - just maybe - now would be a good time to start looking for a better way of organizing economic life, and exploring what a post (western) capitalist world might look like.

Evan,

Well done on the 'City Uncovered' series and in the Robert Schiller interview ref behavioural finance and bubble speculation.

Schiller proposed an interesting thesis last year with respect to Housing Bubble management, which went something along the lines of.....

a) Traditional speculation in House Prices can currently only be readily made as a one way bet
ie for house prices to rise.

b) Falling price speculation is not available.

c) However, People can evaluate for themselves when house prices are becoming over heated - which as an investment vehicle, would then qualify as a sell.

For example, many bloggers on here have previously pointed out that over the past couple of years, mortgage lending to income ratios was becoming unsustainable.
The bubble was brewing.

d) Movements in average house price can be readily identified via a number of sources including the US Case/Schiller housing index and also via the UK housing price monitor website (name forgotten, my apologies).

The Case/Schiller index monitors price by region and identified early signs of falling markets in eg Miami and other earlier hotspots.

e) Thus armed with the appropriate information, a long/short view can be taken.

f) Futures trading or an Option, on such an index would enable
i) insurance underpinning against falling index price and
ii) opportunity to benefit from rising index price

which together 'should' theoretically produce a damping effect against some of the recent extremes of movement, particularly when lending policy is tied to the index.

g) He then proposes that mortgage lending policy is tied to the index level to identify when lending enters the realm of 'high risk' and hence the probabilty of non-recovery is increased.

Seems sensible

Whether on agrees with his thesis or not, it probably doesn't provide a complete answer but there might be a bit of merit floating around somewhere in there.
Worth thinking about.

This Daily Telegraph link from last year gives a brief outline.

(If unavailable then do a UK Google for
Telegraph Schiller subprime 22 august 2008)



If such a long/short facilty is indeed currently available within the UK, then perhaps some kind soul might point me in that direction.

regards

I think the global political class are trying to have it both ways.

All governments have to focus on their domestic circumstances: this is the only way they will remain as the government of their particular country.

They might appreciate the principle of free trade but that will come second place to staying in control of their domestic economies.

Any alternative is political suicide. High- minded ideals are for the wealthy and comfortable. Life is a bit more crunchy lower down in the hierarchy.

By the way I enjoyed the programmes on the City even though I did fall asleep halfway through the first one. Relaxation is the surest indicator of satisfaction!