The full article is copied below the fold, but, of course, go over to the FT site to see it, if you're not coming from there. (And, if you are, welcome!) If you're interested in the topic, recommended reading: Jerome wrote an excellent and more scholarly article almost two years ago for IFRI, the French international affairs research institute: Gazprom as a Predictable Partner. Another Reading of the Russian-Ukrainian and Russian-Belarusian Energy Crises , as well as this background article here on ET in 2005: Ukraine vs Russia: Tales of pipelines and dependence (Dec. 30, 2005).

Note by afew: I reformatted the article for op-ed use with Jerome, and he kindly included me in the byline. It should be clear which of us has the expert knowledge...

There is a more extreme view, though, which points to the growth in finance as a share of output in rich countries and says the overmighty financial sector must become smaller, both to tame its capacity for disaster and to free resources and talent for more “productive” and “real” activities. This view is wrong.

bumped to give readers coming from the FT a different take on the financial crisis: what I call the Anglo Disease

Above: an ETR 500 train in new Frecciarossa livery passes the new Po bridge (cable-stayed, main span: 194 m) in autumn fog. Photo from FS. Below: parallel test run at 300 km/h on the new line by test units ETR 500 Y1 and Y2, filmed by apparent test train driver 44Nikko87.

Let me introduce the line (doing some more parallel bridge blogging) and say a few words about high-speed in Italy below the fold.

Bumped to showcase a recent example of Train Blogging, a regular feature on European Tribune.

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I was tempted into writing this entry upon reading a piece by Mr. de Sousa , especially the sentence

"What is needed now is to bring the debate to the public, dig it out of shady blogs and impenetrable scientific journals."

By way of background, I am a once and sometime physicist. I have plowed through my share of impenetrable journals. So I do feel a certain sympathy for the sentiments expressed by Mr. De Sousa.

That said:

Everyday, I am presented with questions that I cannot fully answer. If these questions are sufficiently important, I educate myself sufficently to form an opinion. If time and circumstance preclude sufficient education, I defer to the opinion of those I consider trustworthy in the matter at hand.

This is dangerous.

If I have not the expertise to form a decision, I naturally tend to agree with a purported expert whose opinion furthers my other interests.

Therefore: If the matter is sufficiently important, I bend priorities and arrange circumstance in order to educate myself.

promoted by afew

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The third and most important lesson is that one should not treat the economy as a morality tale. In the 1930s, two opposing ideological visions were on offer: the Austrian; and the socialist. The Austrians – Ludwig von Mises and Friedrich von Hayek – argued that a purging of the excesses of the 1920s was required. Socialists argued that socialism needed to replace failed capitalism, outright. These views were grounded in alternative secular religions: the former in the view that individual self-seeking behaviour guaranteed a stable economic order; the latter in the idea that the identical motivation could lead only to exploitation, instability and crisis.

Keynes’s genius – a very English one – was to insist we should approach an economic system not as a morality play but as a technical challenge. He wished to preserve as much liberty as possible, while recognising that the minimum state was unacceptable to a democratic society with an urbanised economy. He wished to preserve a market economy, without believing that laisser faire makes everything for the best in the best of all possible worlds.

This same moralistic debate is with us, once again. Contemporary “liquidationists” insist that a collapse would lead to rebirth of a purified economy. Their leftwing opponents argue that the era of markets is over. And even I wish to see the punishment of financial alchemists who claimed that ever more debt turns economic lead into gold.

Yet Keynes would have insisted that such approaches are foolish. Markets are neither infallible nor dispensable. They are indeed the underpinnings of a productive economy and individual freedom. But they can also go seriously awry and so must be managed with care.

If, like me, you missed it while on holiday, you should probably read Jérôme's comments on this.

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front-paged by afew

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1) The conflict started in 1992, not in 2006
2) Russia cannot win a gas war against Ukraine and knows it
3) the real underlying stakes are not about Russia or Ukraine

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After starting the year at just about $100 (indeed, that symbolic threshhold was breached for the first time at the beginning of January), it climbed steadily until reaching $147 in early July. However, it has since undergone (along with the rest of the economy) a radical change, bringing it to a level less than a third of its high in just a few months.

Bets on year-end prices were taken only late in the year in November (on dKos and  eurotrib), but prices were just below $100 at the time. This is reflected in the range of proposed prices, which are, in the majority, above $100. In fact, not a single bet is within $30 of the final price.

Promoted by Colman - the bit after the fold is interesting.

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