I’ve decided to give up writing about politics on this site. The reason is that, with a new business to run, there simply isn’t time.

Writing about politics is an all-consuming activity. It glues you to 24-hour news almost 24/7. It entices you to read all the serious newspapers and political magazines every day of the year. Add to that, time spent trawling the internet, Googling for clarifications and chasing up leads, plus the background research and fact-checking.

Instead, Syntagma will revert to type and concentrate on a melange of finance, philosophy and technology as in days of yore.

I know I shall be tempted to dip inky fingers into the increasingly murky waters as the British General Election gets near, but be assured Reader, my resolve will hold.

Except, of course, to raise a hearty cheer, and glass, when David Cameron walks into 10 Downing Street as Prime Minister.

The rest is silence …

John Evans

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Imagine you are a hardened criminal who has just stolen the Crown Jewels.

Would you (a) melt down the gold and sell off the gems to handpicked buyers associated with the underworld? Or (b) declare them to Companies House as assets on your balance sheet?

The ludicrous declaration by Sir Peter Viggers of the creation of a floating island for his ducks as an aid to his Parliamentary duties, places him firmly in the Laurel and Hardy camp. He made £1600 from the act, but I’m sure he didn’t need it.

There’s a lot of that around. MPs are illustrating just how inept they would be if ever they decided to walk on the wild side of the law. The real question is, does that make them unfit for public office, or, in an endearing sort of way, does it reveal their fundamental honesty?

The Tory claims are generally more colourful than Labour’s. Douglas Hogg’s moat is a good example. You can imagine him exclaiming, “Doesn’t everyone claim for their moat on expenses?”

We’re into darker territory with the many MPs who avoided Capital Gains Tax on a house sale by “flipping” the designation of the property to that of their main residence. The Chancellor of the Exchequer, no less, did this four times in four years. He was in effect indulging in property speculation at public expense. Surely he can’t survive?

Again, to put this in perspective, many buy-to-let landlords do something similar when offloading one of their properties. The technique is to rent out your own house and move into the flat or house you want to sell. Once you’ve been there for six months it becomes your main residence for tax purposes and can be sold without paying CGT. I’m told it’s a common practice in the trade.

Surely the Revenue has cracked that one by now, you may ask? Apparently not. The law lays down the six-month rule, and it’s not illegal to move from house to house. Shady, but within the rules.

The Secretary for Communities and Local Government, that walking rictus Hazel Blears, managed this, we are told, three times in one year without, apparently, actually moving in. A bit excessive? It’s still said to be “within the law”. And the law is made by Parliament.

Clearly, Members of Parliament have to have higher standards than your average Dell Boy down the Mile End Road. There can be no excuse for endearing incompetence for the important folk who make the rules the rest of us have to abide by on pain of increasingly draconian penalties. Laurel and Hardy are for Hollywood not Westminster.

Someone has to draw the line somewhere and it can’t be Gordon Brown. He’s too implicated in the wreckage of everything he’s touched over the past 12 years.

What’s much worse than the occasional Stan and Ollie is a calculating manipulator who deliberately turns every decision and action to his own, and his cronies’, advantage.

Brown is severely damaged goods and must relinquish the reins of power before the fumigation of government begins.

Duckgate is a passing amusement. Smile, and move on. There are much more threatening characters to remove from public life.

Let’s not be diverted. Bring on that General Election now!

John Evans

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We constantly hear about interest rates falling to zero as a means of heading off the imminent prospect of deflation. We are also warned that this is “the last shot in the locker” for monetary policy.

But is it? Can rates go negative, for example, or are there other strategems to fall back on? It’s surprising how inventive central bankers and policymakers can be when their backs are to the wall.

“Quantitative easing”, which sounds more like a medical treatment than an economic transaction, is the hot topic of the moment. It involves central banks printing money and getting it into people’s pockets by any means available.

The famous helicopter drop of banknotes — half-jokingly proposed in the 1980s — is much talked about in these parlous times. In its original form it involved the government stuffing money into empty beer bottles, which are buried underground. Workers are then employed to dig them up.

Perhaps a more seasonal variation might be to hire thousands of Father Christmases to stuff cash into people’s stockings on Christmas Eve. What a Yuletide that would be.

My favourite would be a civil servant knocking on my door and handing me a large bag of gold sovereigns. Well, you never know with Gordon Brown. He loves giving away other people’s money.

No doubt when it comes, as it will, it’ll be much more boring than that — the buying up of corporate bonds or government debt, for example.

There’s just no romance in the political soul, is there?

Apropos of this, Roger Bootle has an excellent primer for dummies on the implications of low interest rates in today’s UK Telegraph. Sample:

There is a clear incentive for policymakers to reach zero interest rates as quickly as possible. If there is even a small possibility that the economy is heading for deflation, it is better to do all you can to prevent it before it begins.

Read: Heading for zero

John Evans

It’s fascinating how the gathering slump has changed topics of general conversation. Nowadays you can catch shoppers in supermarkets discussing the price of Hungarian credit default swaps over the celeriac counter.

Each generation has its version of the Schleswig-Holstein question. Ours is probably the state of the Baltic Dry Index.

As the Iraq war did more to disseminate geographical knowledge of the Middle East than the entire schools system, we are all passable economists these days.

So, since amateur Keynesians are everywhere stalking the land, let’s consider who is really to blame for the problems we all now face.

After much digging around, we can report that, contrary to many attempts to blame investment bankers, as well as retail banks and their customers for the financial fiasco, real seed culpability lies with politicians of the left interfering in the workings of what are sometimes laughingly called “free markets”.

Here’s the timeline:

1977. President Carter passed the Community Reinvestment Act which forces commercial banks and other financial institutions to supply sub-prime mortgages for social housing to low-income borrowers.

1997. With President Clinton in office, Wikipedia reports: “In October 1997, First Union Capital Markets and Bear Stearns launched the first publicly available securitisation of Community Reinvestment Act loans, issuing $384.6 million of such securities. The securities were guaranteed by Freddie Mac and had an imputed AAA rating.” Collateralized Debt Obligations (CDOs) and their near kin were born, with U.S. government approval.

Note that in 1997, Gordon Brown and Tony Blair were coming into power in Britain with a policy of free financial markets and a light-touch regime for regulating the City of London. Can such atrocious bad timing possibly be an accident?

For ten years as Chancellor of the Exchequer, Gordon Brown turned his back on the growing madness in the mulched-up derivatives markets, which he clearly did not understand.

When President George W. Bush arrived a few years later, he was almost immediately swamped by the terrorist crisis of 9/11 that dominated the whole of his Presidency and comprehensively wiped out his authority during his first term.

So the financial crash in August 2007 that has turned a drab cyclical downturn into an event of historic proportions, was started by the liberal interventionism of two Democratic Presidents. The implied government guarantee provided by Freddie Mac (now insolvent) also allowed the securitization of toxic debt and sent an arrow through the heart of financial stability around the world.

Both Presidents and Freddie Mac clearly had the best of intentions, but history tells us that when governments skew the marketplace, the worst is more likely to happen than not.

Let’s hope the lessons are learned or we’ll all end up eating celeriacs for supper.

John Evans

As we have been warning here for the past year, deflation is now the major, persistent threat to Western economies.

The recent sectorized twitches of inflation that clouded many minds and drove policymakers for months, is decidedly off the agenda.

In the UK, big beasts are waking up to the gravity of the situation. Former Chancellor of the Exchequer, Ken Clarke, has dismissed comparisons with the 1970s, ’80s and ’90s, likening current conditions explicitly with 1929/30.

Economically-literate writers, like William Rees-Mogg in The Times (London), have jettisoned terms like downturn and recession and now use “depression” as their label of choice.

Normally cautious Bank of England Governor, Mervyn King, forecasts a 2 percent contraction in the British economy next year, with interest rates falling rapidly to nought percent for the first time in history.

Deflation is now the enemy we must all factor into our expectations in the near-to-medium terms. So why is deflation necessarily worse than inflation — a learned fellow said this morning, “Three percent inflation is heaven compared to deflation.”?

In an era of massive indebtedness, both private and public, deflation increases the burden. As incomes decline, private debts remain the same — at levels signed for in better times. It’s the exact opposite of the apparent wealth created during periods of rapidly rising house prices.

Professor Peter Spencer of York University says, “It is going to be absolute murder in Britain if inflation turns negative. The big difference with past episodes is that we are now much more heavily indebted. Few people owned their own houses in 1930s. Debts were miniscule.”

Another symptom of deflation is that consumers wait for lower prices before shopping, causing job-losses in the High Street and yet more bad economic news. Japan’s “lost decade” of the 1990s is the technically-perfect example of this psychology of fear taking hold. It is still suffering.

So what can be done either to pre-empt or cure the curse of falling prices across the board?

Curiously, Keynesianism which, in its widely misinterpreted version is disastrous in normal times, does hold out some hope in depressive conditions. Expect central banks to start printing money soon and dropping it from helicopters, if they haven’t begun already. Want to buy some rising stock? Buy helicopter shares. [This is not financial advice.]

If you’re one of those noble souls who saved assiduously during the asset bubbles, you will just have to stand by and watch the profligate oafs who caused the problem clean up, while your own responsible hoard of value drains away.

It’s just not fair, but it will probably have to happen “for the greater good”.

You have only one consolation: you can give the politicians who presided over the madness a good kicking at the next electoral opportunity.

And in the UK, that means Gordon Brown. He’s the one with the faux halo.

John Evans

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I don’t suppose you’ve thought much about sausages lately. You should, sausages can be very instructive.

Many people buy supermarket sausages, but most of us prefer not to know what’s in them.

Put them in a pan and the aroma is so lip-smackingly enticing we would forgive our butchers almost anything. The smell arises from a cleverly assembled mixture of herbs and spices designed by food technologists to whet our appetities and taste buds before we’ve even bitten into the succulent pink objects they create for us. In food terms they really are masters of the universe.

If, however, we decide to delve into the innards of these encased and elongated meatballs, we get a completely different picture. For the contents are blended into a reddish goo in which excessive fat is made palatable by chemicals called emulsifiers. The meat itself is sliced and diced from every part of an animal’s carcass, including the bits we don’t normally talk about. If you think you’ve never eaten eyes or testicles or intestinal matter, think on, they are there on your breakfast plate every morning.

The point I’m making — somewhat ellipically — is that most of the old financial system is a dog’s breakfast.

Derivatives in particular, especially asset-backed structured vehicles (what a mouthful for a packet of sausages) bear a great deal of similarity to their culinary equivalents. The minced mush is largely made up of bits of sub-prime mortgages squashed together with a few half-decent ones. The alluring aroma is added by the blue-chip rating agencies, while the packaging is designed by investment bankers — who paradoxically have now almost ceased to exist.

Who would have thought that in 2008 we could make a credible comparison between sausage-makers and the high-flying gadabouts of the celestial world of brokerage and financing.

Today we hear that the two surviving giant American investment banks, Goldman Sachs and Morgan Stanley, have turned themselves into “holding banks”, which will allow them to beg on the streets for any deposits we the people may have remaining after their Attila the Hun rampage through our domestic balance sheets. They will also gain access to Government funds designed to bail out the banks.

In common parlance, Goldman and Morgan and the other stricken titans are signing on the dole.

Of course, most of the movers and shakers have already salted away their massive bonuses and are probably even now relaxing with a cocktail or two on their yachts in Monte Carlo harbour.

They have left us with a colossal mountain to climb. In the UK, house prices have a further 25-30 percent to fall, according to Roger Bootle, and already Britain’s largest mortgage lender, HBOS, has failed. How many other banks will go before we hit bottom?

Who, then, are the people that created this vastly complex set of financial instruments based on the always-temporary phenomenon of rapidly-rising asset prices? And who were their managers who let them do it?

It appears that a large number of them are alumni of the Harvard Business School, even those working in Britain and Europe. President Bush is one of them. British PM Gordon Brown has surrounded himself with such types for more than a decade.

U.S. Treasury Secretary, Henry Paulson, once CEO of Goldman Sachs, is a member of this esoteric band of brothers. Not surprisingly, his main effort currently is to package up all the bad debts of the banking sector into one giant sausage and dump it into the arms of the taxpayer. Not only have the public been fleeced by the Harvard Templars, they have to pay off their debts as well.

Unfair though that may seem I’m aware that it is probably the only way to save world financial markets. The “flight to safety” from U.S Treasury funds mid-week was the Crack of Doom approaching at violent speed. A dollar default was much nearer than any of us imagined.

Here’s a suggestion to the politicians working on better regulation for the City of London, Wall Street and Frankfurt. Item one in the new schedule: Never employ anyone with an MBA from Harvard.

Have a nice lunch. It won’t come free. Avoid the sausages.

There are some things that happen to other people, but never happen to you, right?

For example, identity fraud, credit card cloning and thieving of personal data.

Well, it happened to me today. While making a simple online transaction with a major UK retailer, one of my personal cards was refused three times.

When I rang the card issuer I was told that an outfit called Usenet was trying to obtain a payment. They knew the name, so blocked the card immediately. No money was lost to either side.

But it just shows you how easily your identity and financial infrastructure can be compromised by clever hacks and villains.

The only loss to me is having to wait a week for a new card to arrive.

Just another level of inconvenience to add to the new age of anxiety.

I’m probably not alone in noticing a sharp decline in revenues from standard business activities on the internet — whether that’s from advertising, affiliate sales, or direct selling of products and services.

All the weather vanes are swinging south and, with forecasts that the credit crunch could last for two more years, may stay that way for some time.

How can we buck this trend and not only hold our own, but actually come out ahead? We should look at professional investors, especially the big, successful ones.

The Warren Buffetts and George Soros’s of this world build large cash reserves during bull markets. Buffett has a war chest of tens of billions of dollars and is looking seriously at Britain and Europe for bargain buys during the downturn. There are plenty of them.

For those of us with more modest resources, Soros perhaps is a better example. He it was who sold sterling “short” during the currency crisis of 1992. He is reported to have earned over a billion dollars in a few weeks.

Effectively he bet against the pound’s ability to remain in the European tied currency system — then called “the snake” or ERM — in the face of massive speculation against it.

He was right and did Britain a huge favour by scuppering the crazy political experiment. We owe it to him that the UK is not in the single currency, the eurozone, right now.

So what is “short selling” and how might it benefit internet businesses?

When you “buy long” on a stock or investment, it means buying it for an expected increase in price. But when you go short, you are anticipating a fall.

Short selling is also the selling of a stock that the seller doesn’t own. When you short sell a stock, your broker will lend it to you. The stock may come from the firm’s own inventory, from one of its clients, or from another brokerage firm. The shares are then sold and the proceeds credited to your account.

Now here’s the rub. At some point you must cover the short by buying back the shares and returning them to the broker. If, as you’ve gambled, the price drops, you can purchase them at a lower price and pocket the difference, minus brokerage fees. For example, if you could have predicted the ups and downs of the Microsoft-Yahoo skirmishes recently, you would have cleaned up.

Of course, if the price rises, you lose. Essentially this is about winning in a falling market. With money currently chasing every store of value, like gold, oil and certain other commodities, funds are draining away from many assets and valuations are falling — just look at your house price.

Talking to a trusted broker about short selling may well be a way to replace lost sales in medium-sized internet businesses. With falling markets set to continue, turning logic on its head may be the only way to stay afloat if things get really bad.

Any investment takes a lot of nerve of course — and single-mindedness. A few months ago I was intent on going long on gold. However, another call on my cash intervened and I forfeited the many thousands of dollars I might have made on the spectacular rise in the gold price to around $1000 an ounce.

Going short is one way to survive in a falling market. As sailors say, “any port in a storm.”

Note: This post is not intended as investment advice or to influence your investment choices in any way.

That old pendulum is swinging again and at a speed that threatens disaster for banks and economies alike.

During the Thatcher decade (1980s) the politburo socialism of the 1970s was jettisoned all over the world — apart from in isolated outposts like Castro’s Cuba. Both the Berlin Wall and the Soviet Union crashed to oblivion, and Mao’s China turned to its own version of capitalism.

That long swing to market dominance over centralized control has continued for nearly 30 years. Until now.

It’s about to go into reverse because of the vast mountains of debt built up in the system — an indebtedness that threatens to bring down the whole financial setup, investment and retail banks, and the “real economy” too.

Bank regulators are even now sharpening their swords ready to cut into the once-impenetrable jungle of bonus-led speculation and rampant hedonism that defines the financial markets, once the Rolls Royces of any respectable country.

Should we allow the pendulum — which more and more resembles the scythe of the Grim Reaper — to retrace its path back to the 1970s? Have we learned nothing?

Let’s just glance at the current situation in the markets. A spokeman for French bank Société Générale, itself a victim of the speculation culture, is deeply pessimistic, “We expect global equity prices to fall by up to 75pc from their peaks as a deep global economic downturn unfolds over the next few years.” A 50pc collapse in earnings is on the cards, made worse by an “Ice Age derating of equities”.

A 75pc fall in stocks matches Japan’s Lost Decade in the 1990s when they fell around 80pc.

The danger is that ultra-low rates will fuel another credit bubble which will put the real problem — huge debt levels — off for another turn of the screw, when it will surely be even worse.

Ambrose Evans-Pritchard of the UK’s Telegraph believes, “The capitalist system is now so deformed by debt that it requires ever lower interest rates to keep going. It survives on perma-bubbles. Monetary rigour at this late stage would endanger democracy. How did we ever let matters reach this pass?”

The UK regulator — the Financial Services Agency (FSA), which failed dismally with Northern Rock, has just published a report on the affair which highlights the problems regulators have. The FSA simply lacked the up-to-the-minute expertise on the newest financial instruments of the people it was regulating. To make matters worse, it was grossly understaffed for the job it was asked to do by government.

Rather than going back to the Dark Ages of government control and draconian restrictions, it would be better to do a deal with the banking system to co-opt top bankers for a year to the regulators. They could be paid identical salaries and averaged bonus equivalents as the banks pay out. They would then return to their institutions to keep up with new developments.

This would be expensive and would probably cause outrage in the public sector, but it would be far cheaper and less demoralizing than turning the clock back to the bad old days of politburo socialism.

The depredations of the Sarbanes-Oxley Act in America, following the Enron collapse, is a measure of how to overdo regulation. Let’s learn from the past in order to safeguard the future.

In the meantime the vast columns of red ink splashing across the economies of the world will unwind fitfully and very painfully for years. There is no alternative.

We need to hold our nerve and steady the pendulum.