AT TIMES like these, I turn to Walter Bagehot. In his book "Lombard Street", he cautioned central bankers to beware the "great risk of diffused fear":
by this I do not mean absolute panic, but only a vague fright and timorousness which spreads itself instantly, and as if by magic, over the public mind. Such seasons of incipient alarm are exceedingly dangerous, because they beget the calamities they dread.
A ROUND-UP of some of this morning's top stories in Europe
The European Central Bank injected emergency funds of €95 billion ($131 billion) into the region’s banking system in an attempt to calm jittery markets. The swift action came after BNP Paribas, the eurozone’s second-largest bank, froze access to three funds worth €2 billion ($2.7 billion) yesterday, citing market uncertainty caused by America’s subprime mortgage market. Diplomats from “the troika”—the European Union, Russia and America—begin a three-day tour of the Balkans today in an attempt to re-start talks on the future of Kosovo.SIR —
You describe a deal between the government and the insurance industry trading lower premiums for those at risk of flooding with increased spending on flood defences. But there must be more to this than you suggest. Eeven if one supposes that the government has spent more on flood defences than it would otherwise have done, an individual company has an incentive to reneg on the deal by offering reduced premiums to those less at risk. And how does the industry as a whole benefit anyway? Insurers insure risk, so a reduction in risk (after any temporary benefit has been removed by competition) leads only to a reduction in business.SIR —
You propagate the commonly held belief that cigarette ends are responsible for arson. If you take a moment to try and burn a piece of paper with a lit cigarette you will realise that cigarettes don't
burn hot enough to start a fire (though a prevailing wind may stimulate the embers, I don't know). The most likely cause of forest blazes has not been properly examined, to my knowledge, and public policy is much the worse for it.
For example the 1989 Kings Cross enquiry found that the fire was due to the combustion of debris under a poorly maintained escalator. The press promptly blamed cigarettes and we all banned smoking on the Underground forthwith.
SIR —
It’s not that I’m a believer in reincarnation but I detect the presence of Robert Maxwell’s ghost in Rupert Murdoch’s campaign to capture the Wall Street Journal. I sense it in an acquisition mentality driven by unchained egotism. I feel it in the personal trait of possessiveness that motivates victory any price. I see it the acceptance of the overvaluation of property that is not necessarily born out by the fundamentals of the business. I find it in the similarity of ethical standards practiced by both men. I feel that The Economist erred in placing this story with the business news.
SIR —
I do not contest that non-violent resistance is far from a sure strategy. As in any tactical contest, it is possible that peaceful insurgents will lost. But the exceptions highlighted in your article and the manner in which they are presented demonstrate a common misconception about the practice of non-violent resistance. In making the success and failure of mass protest central to your evaluation of movements in Belarus and Azerbaijan, you overlook the wide array of tactics that non-violent activists have used throughout the past century to slowly erode the edifices of tyranny.
SIR —
In Spain ETA would never be called a "Basque separatist movement" I think that's an absolute shame. They are not a "separatist movement". They are a terrorist organization (recognised as such by the European Union and the US, and suffered as such by the Spanish for more than
50 years) and they have killed more than 900 people. They call themselves a "separatist group" which gives them the aura of idealists and fighters against a repressive regime, and which is the image they have in some places outside Spain, but that is far from reality.
SIR —
You argue that the United States is paying a heavy price for improving its standing with India. I would contend that the United States must do what it takes to improve ties with India, even to the point of bending the Non-Proliferation Treaty's rules. China’s potential should not be underestimated, and its growing power needs to be checked. The United States could be repeating, albeit at a different level, Henry Kissinger’s famous Sino-Soviet split. The United States is aiming to encircle China with its allies, including Australia, Japan and South Korea.
SIR —
You state in light of Dean Karlan and Jonathan Zinman's study that "Despite the demanding terms on offer, those reconsidered for a loan seemed to prosper. Six to twelve months later, they were less likely to go hungry, and their chances of being in poverty fell 19%. Not concidentally, they were also more likely to have kept their jobs, perhaps because the credit helped them to overcome emergencies that might otherwise have forced them to abandon their posts."
This is all well and good, but the author fails to consider those whose quality of life did not improve.
A QUICK additional thought. Richard North on the eureferendum blog challenges the idea that the status of the European Council is left unchanged by the new European Union treaties. He asks why, in that case, the drafters of the constitution went to the effort of making the European Council an EU institution for the first time:
"If the treaty has no meaning, at least in respect of the European Council - and its status is indeed unchanged - why include any reference to it in the new treaty at all?
It the words don't change anything, why change the words?"
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