Odds and Sods

As we have pointed out before, the News media of today prefers Scary! Now! stories over balanced factual reportiing (it plays to the Run From Danger bit of our Cave-Brain). This is massively amplified by the Social Media SuperMegaphone (we first remarked on this in the Swine Flu Epidemic on Twitter) and its happened again with the saga of the Japanese nuclear reactor that had a cooling system failure after the Earthquake/Tsunami (first jump on our graph) . Suddenly, nuclear power Experts were popping up all over the Meedja, chosen (it seemed to me) chiefly for their ability to advance the "Scary! Now! Doom!" storyline, reaching its zenith with even the (usually) very balanced and sceptical BBC Radio 4 Today morning news program having its own Nuclear Meltdown Morning on Tuesday 15th.

I think the tipping point in Radiation Fervour however was reached this morning when one of said Experts opined that:

The “nuclear safety culture” has failed in Japan, says nuclear safety consultant

I am no fan of Nuclear Power (mainly due to the industry's need for large subsidies and inability to answer the question of how to store spent fuel for the next 1000 years) but at this point I think all but the most fervent ant-nukes were starting to say "hang about - one monster earthquake + one monster tsunami = a small radiation spill - surely that is evidence of the opposite of failure of safety culture"

And the internet being what it is, on Twitter the #nuclearfacts p*sstake was born, matching the Meedja absurd fact for absurd fact, wth the exception that these aren't pretending to be true. Some classics, for your enjoyment:

- Nuclear stations are more efficient at the equator where opposing coriolis forces stop the electrons spinning. #nuclearfacts

- CERN scientists plan to construct a giant tube linking all nuclear reactors in order to create a Huge Hadron Collider #nuclearfacts

- All nuclear reactors contain, at their core, a small black cat. Or perhaps they don’t. Don’t look! #nuclearfacts

- Primark reporting panic buying of lyrca-mix purple jogging trousers. #nuclearfacts

- I always thought "Turning Japanese" was 2nd best song about wanking. Going back to listen for allusion to unspent fuel rods #nuclearfacts [Plutonium in your pencil? - Ed]

- The suffix '-ium' from both Plutonium and Uranium is Greek for "ooh, scary!" #nuclearfacts

And as @nevali (who started the thread) notes:

You can become irradiated simply by watching news footage of a nuclear power station. The longer you watch, higher the risk. #nuclearfacts

That is our Official Health Warning for the Day.

(Serious point - as a Mechanical Engineer, I have some appreciation of the extreme difficulty the guys are having in bringing that station in Japan under control, and I think the real story is how well they have coped so far. I think most people without technical backgrounds have little idea of the huge forces involved, and the problems they must be facing hour by hour with having to bootstrap stuff together following a tsunami and an earthquake and destruction of most of the basic utility and parts supply infrastructure. As we wrote yesterday, putting a reactor on land reclaim at sea level was not the smartest idea, but the people on the ground there now, like the soldiers in Afghanistan, are not the ones who make the dumb decisions. Also, it's not over - they could still lose this one, in which case the Dead Guys are not the armchair quarterbacks in the newsrooms - though I did see a suggestion (on Twitter, where else) that leaks in the radiation shield could be plugged by stuffing in clueless news reporters.....)

Update - it's the 21st of march, the reactors are still critical but getting better and I have seen the first BBC story saying that the Tsunami/Earthquake is the bigger issue.... and as my colleagoe Dave Short points out, no electricty will kill far more in a cold climate

...is a reasonably inflammatory headline to describe this Foreign Policy Journal side by side precis of their positions:

Gladwell:

The lesson here is that just because innovations in communications technology happen does not mean that they matter; or, to put it another way, in order for an innovation to make a real difference, it has to solve a problem that was actually a problem in the first place. This is the question that I kept wondering about throughout Shirky's essay-and that had motivated my New Yorker article on social media, to which Shirky refers: What evidence is there that social revolutions in the pre-Internet era suffered from a lack of cutting-edge communications and organizational tools? In other words, did social media solve a problem that actually needed solving? Shirky does a good job of showing how some recent protests have used the tools of social media. But for his [Shirky's] argument to be anything close to persuasive, he has to convince readers that in the absence of social media, those uprisings would not have been possible.

Shirky

The competitive landscape gets altered because the Internet allows insurgents to play by different rules than incumbents. (Curiously, the importance of this difference is best explained by Gladwell himself, in his 2009 New Yorker essay "How David Beats Goliath.") So I would break Gladwell's question of whether social media solved a problem that actually needed solving into two parts: Do social media allow insurgents to adopt new strategies? And have those strategies ever been crucial? Here, the historical record of the last decade is unambiguous: yes, and yes.

Digital networks have acted as a massive positive supply shock to the cost and spread of information, to the ease and range of public speech by citizens, and to the speed and scale of group coordination. As Gladwell has noted elsewhere, these changes do not allow otherwise uncommitted groups to take effective political action. They do, however, allow committed groups to play by new rules.

.......

Even the increased sophistication and force of state reaction, however, underline the basic point: these tools alter the dynamics of the public sphere. Where the state prevails, it is only by reacting to citizens' ability to be more publicly vocal and to coordinate more rapidly and on a larger scale than before these tools existed.

Methinks the Shirky-ist "Yes and Yes" argument is more dubious than Gladwell's "Show me it woudn't have happened without SocMed" simply because the Gladwell view has at least 1,000 years of evidence that people have quite happily had revolutions pre the Internet Age, but Shirky is right when he says new comms restate the rules.

In fact I see that Mr Gladwell is no longer pushing the weak ties quite so hard, and in the Economist that Mr Shirky had moved from his position here a bit in his original Foreign Policy article:

He notes that the technology's primacy is measured in longer time scales. Its importance lies in lowering the cost of communication and coordination. The argument goes like this: enabling people to communicate among themselves strengthens civil society. This in turn exposes the contradictions between what the authorities say and what truly exists—creating what Mr Shirky calls a "conservative dilemma" (employing a term from media studies). Thus the groundwork is set for reform. The technology simply helped it happen.

Which is not far from Mr Gladwell's position, but it has the useful addition of the idea of timescales to build up the strong links.

Give em another month and they will be in Furious Agreement - with us

Update - my colleague Paul Lancefield expands in the comments on our view, ie both are right - and wrong:

It isn't binary. There is a third case; advances we would not ever give up or reverse are not always pressaged by a clear identified problem to be solved. It may seem like a mundane example, but I still remember clearly how years ago, when the company I worked for were considering implementing email, as difficult to understand as it might sound today, no business case could be made. The IT manager responsible didn't know what to put on the form under the section "Business Case" for justifying the purchase. But that didn't mean everyone, execs included didn't just know it would make anything other than a huge difference to the business. Some improvements are huge, profound, even sometimes critical for, practically speaking, X, Y, or Z are to occur but may be difficult to measure nevertheless. A profound / big impact advance doesn't have to have a big problem To solve before it can rank as such. This kind of advance is much more rare, but not unprecedented and usually seems to involve enhanced communication.

The social psychology by which e.g. Hitler came to power has been much studied and is still not fully understood. To think the volume of communications and comparative instantaneity of social networking might not have a substantial and profound effect on an area involving mass social psychololgy, for me, shows a distinct lack of vision. On the other hand to make unfounded statements lacks academic rigour, so it's clear this will be a thesis rich topic, I'm not sure it is one that will result in a provable, verifiable conclusion. The debate is surely set to continue for some time yet.

I think like many people, I felt something was rotten in the state of NGOLand when (i) I noticed that at TED in 2009 there were NFP/NGO startups popping up in all sorts of areas usually left for businesses and (ii) it later became clear that Haiti was devolving into a "more charitable than thou" situation as literally many thousands ( 3,000 - 20,000 depending on who you read) of NGOs set up shop* - and immediately started squabbling with each other - and a year later we have the unedifying lesson of NGO's declaring heroic victory whereas on the ground things are actually much worse:

In the run-up to the anniversary, some governments and many aid groups are raining a barrage of largely self-congratulatory details about their work in Haiti since the quake. Representatives reel off lists of projects approved and funded, supplies delivered, staff in-country and future plans. This jars with the view, expressed by many ordinary Haitians and a few aid groups, that a year into one of the world's biggest humanitarian and reconstruction operations, there is little to show for so many promises.

Little to show, plus the small matter of a cholera epidemic. Anyway, I started to do a bit of digging using good old Google, and it seems that that firstly huge amounts of money have gone in, but much appears goes to "go elsewhere". - Le Monde:

Following the old colonists, American and European NGO officials are in just about all the camps. With their luxury vehicles and expensive equipment contributing to the traffic snarl-up, they offer “work for wages” to more than 100,000 people employed in the clean-up. The wage, 200 gourdes (under $7 a day), is a small fortune, which in 2009 President Préval found too costly for the Haitian economy; he would not pay it despite a long struggle with the workforce. But in today’s Haiti, NGOs have more financial muscle than the state.

We calculate about 30% of the c £3.3bn of donations to Haiti has been spent, and we hope (and pray....) that the rest is due to be spent there soon - on the poor people, not the 4x4s that is - as it's clear Haiti needs a lot of help still, what with the cholera and all. In fact, the cholera was a bonus opportunity for most NGO's to re-fiill their boots again - Guardian:

It is against this [Cholera Epidemic] backdrop that many non-governmental agencies have launched fundraising appeals, even while their post-earthquake coffers remain filled. The UN's Office for the Co-ordination of Humanitarian Affairs (OCHA) has repeatedly claimed that underfunding of its $174m cholera appeal, launched primarily to benefit private groups, is hampering the response – despite the fact that Haiti is the top-funded UN appeal for 2010. As nearly a million Haitians remain homeless in the face of a full-blown public health emergency, arguments that existing funds are tied up in longer-term programmes ring hollow.

Be good if they were effective, but as The Independent notes that most of the medical care was by (un-NGO-funded) Cubans, for example:

A medical brigade of 1,200 Cubans is operating all over earthquake-torn and cholera-infected Haiti, as part of Fidel Castro's international medical mission which has won the socialist state many friends, but little international recognition.

Observers of the Haiti earthquake could be forgiven for thinking international aid agencies were alone in tackling the devastation that killed 250,000 people and left nearly 1.5 million homeless. In fact, Cuban healthcare workers have been in Haiti since 1998, so when the earthquake struck the 350-strong team jumped into action. And amid the fanfare and publicity surrounding the arrival of help from the US and the UK, hundreds more Cuban doctors, nurses and therapists arrived with barely a mention. Most countries were gone within two months, again leaving the Cubans and Médecins Sans Frontières as the principal healthcare providers for the impoverished Caribbean island.

I haven't even mentioned the whole raft of literature on how NGOs are actually just politics of imperialism or missionary societies by another name, how NGO workers drive the re-establishment of the vices (gals, gambling and golf) as much as anything else, and how Haiti is the testbed for how to reduce the global population to the New Feudalism - but I kept my linkages and writings to the reputable mainstream media articles.

So, the cost of the not-for-profit bizness may be a price not worth paying.....but I am still left with the question of why are there so many of them - after all, in every other ecosphere the eventual tendency ii consolidation and collaboration for efficiency savings (unless, of course, efficiency is not the primary driver, of course....)

In searching for a reason why this profusion of inefficient organisations all doing well out of doing good may have occurred in the first place, I came across this rather interesting paper from the Journal of Clionomics, essentially arguing that NGOs have expanded in numbers from c 800 in 1950 to c 28,000 in 2000 (an increase of 3500%, or 350-fold) whereas the number of disasters, significant issues, etc etc have stayed pretty constant, in the several tens a year (see graph above). Yet NGO expansion has been amazing, espacially in the go-go 1990's

For example, the category “women” by 2009 became the most popular issue in ECOSOC (present in 256 INGO titles). The issue was introduced in the 1940s, while 84% of INGOs addressing it were registered after 1995. Development” (mentioned 179 times) was introduced during the 1970s, but 83% of INGOs addressing this issue registered after 1995.

The conclusions:

.....the rise of enabling technology, the absence of major war and the expansion of the capitalist system – actually tell too little of the story of the great surge witnessed over the last half century to be satisfactory. We have observed that demand side factors, such as issue genesis, while they may explain organizational ‘genres’ (i.e. environment, human rights, poverty), do not explain INGO numbers or their distribution across time, genre, or in geopolitical space. The alternative explanation for the upward trend observes that cyclical demographic-structural processes have increased intra-elite competition over the last half-century. This is supported by evidence of rising credentialism, strong direct correlations with diagnostic cohorts, and indirect support of rising leadership age within IGOs.

Translated this means that the number of new countries, major global issues, disasters, wars, technology changes etc do not even begin to explain the 350-fold increase in the number of NGOs across time, type or geography. The alternative explanation is the "demographic-structural hypothesis" ( that an over-supply of elites and elite aspirants might lead to the creation of auxiliary vehicles for maintaining wealth and status – such as the INGOs). This is suported by evidence of rising credentialism (no haz MBA? - no can run NGO, sorry), direct correlations with what all the other Elites/MBAs et al are doing, and rising age of NGO leaders (a sign of oversupply and competition).

In other words, lots of little princes want little kingdoms to run, and even a 3500% increase isn't enough........ so the chances of this all getting better are pretty slim until donors start to look a bit more closely at how and where their money goes!

Update - I read that Google is finding it hard to reboot it's Philanthropy operation, if you've read the above then there will be no surprises....

* The term NGO and Charity are extremely loose in Haiti - businesses, scamsters, churches, child traffickers, nutters - you name it...

This morning (Friday 28th) I had two twitter streams going - one looking at Davos/World Economic Forum and the other about the events occurring in Egypt. It was a sad but fascinating contrast, and I can't sum it up better than Umair Haque did:

#Egypt: the young desperately fighting for a better future. #Davos: old rich dudes fighting savagely against it.

One stream was full of political and economic posturing and fairly empty promises, of PR and Meedja people excitedly hawking the latest personality on their cameras, of "tweets to let you know I'm here* ", and the 'Neterati spatting about who is more right about whether Twitter or Facebook is actually leading the revolution in Egypt (it's not the Egyptian themselves you see....). The other is about a historical wave of social change across the Arab world, not (yet) led by islamic fundamentalism, and the Egyptian government trying to stem this by shuttting down as much of the comms as they can; of riots, beatings and shootings, of young, secular people trying to architect a different future for their generation. (Update - by this evening, the revolution was in full swing - televised, not tweeted by the way)

Did I see anyything in the Davos stream about, say, protesting the US Senator Joe Liebermann's plan to introduce similar laws to shut down the Internet, or Vice President Joe Biden's support of the Egyptian regime. They may have been there, but I didn't see them in the flood of pimps, primps and blatant pumps (Linked In IPO anyone?).

The other city one is therefore minded of is Rome - as in Nero fiddling while it burned..... the Rich, as they say, are different, but to the extent that they seem to be living in a different world? (Update - this piece by the BBC says it all - enthusing about how hyperconnected Davos was - without a mention of Egypt (this is written a day after the street revolution) - and ironically not realising that self-same hyperconnectness was showing the Rest of Planet what a self-referential bubble the Davos lot were all in)

The thing that really, really worries me though is what we learned from the Wikileaks affaire in December - that one can Tut about the Egyptian government, but the activity of the US Government vs Wikileaks shows you that the reaction of an OECD Government may not be that different.

An update - CNBC summarised the huge gulf between Davos and the "Rest of Planet" well:

The WEF was started as a retreat, which is why the ski resort town of Davos is its home. Later it morphed into media event crossed with a festival. But it recaptured much of its original spirit this week. Maybe it was the weather, with overnight snow and then spectacularly sunny days. It was hard to find much doom, let akin gloom.

Some participants even felt they had to search for something negative. As one central banker told me: "People at [the WEF] are convinced they have to find something to worry about."

And as they descend the mountains from the retreat, they may find a toppling Egyptian government is what was needed to be discussed the whole time.

I suspect we will find that ignoring Egypt has probably done more to discredit Davos than a decade of protesting crusties have managed (Update on my update - looks like Esther Dyson thought the same).

Final update, I promise - UK Sunday Times had only 2 small articles on Davos in the Business section (nothing in the main papers), and this is a marvellous satire on above topic by Reuters' Felix Salmon

An aside, not a lot to do with Tech but a lot to do with #Collapsonomics:

For years, with my system dynamic modeller's hat on, I have been fascinated by the systemic forces behind the paths history takes (apparently this branch of study now has a name - Cliodynamics ) and my instinct - not provable yet, but bear with me - is that we are potentially moving towards a situation last seen before the 1930's move to Totalitarian states. To explain - the West has been moving to a point of income inequality last seen in the late 1800's (the Robber Baron era) that essentially gave birth to the Labour movement, and has for two years shown an unwillingness to tackle the worst of this New Robber Barony's excesses to date - the Banking Crisis - in fact going the opposite way and squeezing money out of the Ants to pay the Grasshoppers. Now (at Davos) they are all visibly balking at the reforms that the politicians in the 1930's were actually able to make. In 1931, the solution to "Banks too Big to Fail" was to make them smaller, in 2011 it's to double-tax the population to guarantee their continued existence. In other words, so far we are probably heading into a worse place than in the 1930's. To find those "Worst Places" you have to start looking at other times when there is:

- massive income disparity
- a political process largely in hock to the rich and powerful
- economic policies "robbing the poor to benefit the rich" (the selloff of publically owned forests in the UK for a pittance of their true value, probably to the very people the public is already bailing out, being the latest poignant example)
- and something more, a sort of "let them eat cake" ignorance that there is a problem from those insulated from it.

The #Collapsonomics group looked at the impact of >20% reductions in public spending and wealth, and the inescapable conclusion is it usually a spark to large-scale unrest and the arrival of repressive, despotic regimes who brutally leverage the general public unrest to seize power (Germany, Spain, Italy, Soviet Union in the 1930's). At the time of course (2008/9) we were scoffed at, as neither Government nor Opposition would contenance a >5% spending reduction - ridiculous, No? But I suggest y'all read a good history of the state of the Ancien Regime and the conditions leading up to the French Revolution, or the fall of the Weimar Republic for an evening's amusement.

You read it here first..... (and here second - nice post by Umair Haque on said issues)

*Sour Grapes re not being at Davos, I hear you cry! Maybe, but read the streams yourself and make your mind up.

Never mind a random walk down Wall Street, far better a random scrape of Twtter - Wired:

The emotional roller coaster captured on Twitter can predict the ups and downs of the stock market, a new study finds. Measuring how calm the Twitterverse is on a given day can foretell the direction of changes to the Dow Jones Industrial Average three days later with an accuracy of 86.7 percent.

“We were pretty astonished that this actually worked,” said computational social scientist Johan Bollen of Indiana University-Bloomington. The new results appear in a paper on the arXiv.org preprint server.

Bollen and grad student Huina Mao stumbled on this computational crystal ball almost by accident. Earlier studies had found that blogs can be used to gauge public mood, and that tweets about movies can predict box office sales. An open source mood-tracking tool called OpenFinder sorts tweets into positive and negative bins based on emotionally charged words.

But Bollen wanted to build a more nuanced emotional barometer. He used a standard psychology tool called the Profile of Mood States, a quick questionnaire that is used frequently in pharmaceutical research or sports medicine.

Thats how it works, what is the correlation?

Mao compared the national mood to the Dow Jones Industrial Average. She found that one emotion, calmness, lined up surprisingly well with the rises and falls of the stock market — but three or four days in advance.

......

The algorithm did pretty well using stock market data alone, predicting the shape of the stock market with 73.3 percent accuracy. But it did even better when the emotional information was added, reaching up to 86.7 percent accuracy.

Eye opening, no? Well, the comments are always illustrative - so here are the downfalls:

- Please note that there is an out-of-sample issue with this paper. My understanding is that the authors require 20 days of future information to predict 3 to 4 days ahead. I have contacted the authors repeatedly over the last week for clarification without response. http://etf-central.com/2010/10.../

- What I think might hurt the Twitter function as a predictor is simply making it public. When someone wants to influence either a stock or the market in general and knows that Twitter is being used, all they have to do is spend hours on the keyboard to create an artificial result.

- Why publish this if it works? One article, a fleeting bit of fame, and a truck load of copycats. It would be more impressive if the article had read: "Researchers, upon discovering tweets predict the stock market, make $100mm before disclosing research to the public." No more need for University grants anymore, much more believable findings. As an aside, data analysis can be tricky. I'm pretty wary of loosely defined research objectives. For example, why is it 3 days? Why is it those 72 words? Over-fitting is a real problem with prediction based stuff.

Still...as holy grails go, this one is fairly profitable, as anyone who has read The Predictors will know.

Eric Schmidt stepping away from the Google CEO position - lots of hot air (see here) so one doesn't really want to add to it, so enough to say that:

1. Google's reputation has been taking a lot of incoming in the last 2 years, and it is coming under increasing scrutiny

2. Some of Mr Schmidt's recent utterings were not helping

3. Despite the denials from the fanbois, Google's core search is definitely not quite what it once was.

Why now? Good financial news, maybe trying to slip it in under the furore around Steve Jobs' stepping down. I believe its good news for Google as its a sign that they are starting to come to grips with the issues emerging.

Update - Grauniad comes to similar conclusion, albeit with far more words

Si non legere latin vade huic paginae et iterum in vertunt urna. Google:

Ut munimenta linguarum convellamus et scientiam mundi patentem utilemque faciamus, instrumenta convertendi multarum nationum linguas creavimus. Hodie nuntiamus primum instrumentum convertendi linguam qua nulli nativi nunc utuntur: Latinam. Cum pauci cotidie Latine loquantur, quotannis amplius centum milia discipuli Americani Domesticam Latinam Probationem suscipiunt. Praeterea plures ex omnibus mundi populis Latinae student.

Illi qui legere Latine videbis non ferro satis eu bene quidem satis meo non discipulus Latine miraculum.

Quid est admodum nice si per verbum super patefactus translationem alio sermonem quoque.

Hoc opinor esse optimum quod operatum Google decennium media sociali Pedicabo orum - Latin porn interpretatione ubi ejus in!

Catullus ...... hic imus

One of the things that fascinates me about so many big debates in the mainstream media is how fact free they are, so you wind up having to decide what is going on in a did/did not yah boo slanging match. So, I decided to solve the issue of banker's bonusses over my afternoon tea break.

First question - how much did the UK taxpayer have to fork over in bailing them out?

The Independent broke it down - c £957bn - say a Trillion between friends:

(Update - that £957 is a typo, the Indy is actually c £857bn, and the typo was in my spreadsheet. But I'm going to stick with the overall "call it a Trillion" number I used in my calculations for this post, as estimates of the bailout range from this to £1.3 trillion, my calculations are high level anyway, and more has been paid in since then - so I do not believe the overall material thrust is invalidated. I just liked this one as it was broken down well)

£76bn To purchase shares in RBS and Lloyds Banking Group

£200bn Indemnify Bank of England against losses incurred in providing over £200bn of liquidity support

£250bn Guarantee wholesale borrowing by banks to strengthen liquidity in the banking system

£40bn Provide loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme

£280bn Agree in principle to provide insurance for selection of bank assets

£32.9m Slaughter & May - Commercial legal advice

£15.4m Credit Suisse - Financial advice on a range of measures, including Bank Recapitalisation and the Asset Protection Scheme

£11.3m PricewaterhouseCoopers - Advice on APS

£8.7m Ernst & Young - Due diligence on APS, Northern Rock

£7.7m KPMG - Due diligence on APS

£7.4m Blackrock - Valuation advice on APS

£5.3m Deutsche Bank - Financial advice on a range of measures

£5m Citi Financial - Advice on Aps

£4.9m BDO Stoy Hayward - Valuation of Northern Rock

£4.5m Goldman Sachs - Financial advice on Northern Rock

£1.5m Morgan Stanley - Financial advice on Bradford & Bingley

£2.5m Other advisers - Financial advice on a range of measures and proposals to revive Britain's ailing economy

Let us subtract the £200 + £250 + £280bn insurances and heroically assume we get our money back on all of those because the banks won't gamble away other people's captive money again, and that their declared assets are genuinely worth what they say they are.....ok, on second thoughts lets assume that lot run at a 20% loss overall (the very kind 20/80 rule) , so it costs us (c 20% of £730bn = say 150bn). That gives us a Total Cost of Bailout of c (1000 bn - 730bn + 150 bn = c 420bn, give or take afew tens of billions between bankers (er...thats' Take I think)


Second Question - what is the Investment Banking Sector really worth to the economy?

PWC did a report in December 2010, that stated that total returns to the UK in 2007, 2008 and 2009 were £67.8bn, £61.4, £53.4 bn respectively - a mean of c £ 60.9 per annum in total.

But from this you have to deduct the money we would have got anyway if those people had been employed in some alternative industry - so, let us subtract the National Insurance and Buildings rent and rates under the assumption that something would be there anyway (such as the retail banking sector, which employs most of the people and pays for most of the square footage in banking anyway). That is about 54% of that contribution, or c 33 bn. This leaves the net contribution (unrecoverable VAT, Corporate tax, Stamp Duty) at £28bn. Let us assume that this all goes to the heroic efforts of the investment banking sector, so that's a profit of £28bn to them (that is, of course, afer the c £7m bonusses they take off first for their herculean efforts.

(ie I shall assume in broad brushes that what I giveth and taketh away comes out in the wash, ie I assume the small costs* of investment bankers' NIC and rates are counterbalanced by the tiny amounts of heroic trading the retail banks do)

Update - The ever erudite Graeme Pieterz emailed me on this, arguing that I had wrongly attributed all the wrongdoing to the "Investment banks" - I admit I had separated "plain old banking " and "casino banking" sectors into "retail" and "investment" - Graeme's view:

All those numbers are for the whole sector, and the big costs are for bailing out retail banks. The root cause was surely lax mortgage lending on high house prices. Nothing to do with investment banks. I do not think that tax is an adequate measure of returns either: they measure payments to the government, not total benefits to the country less opportunity cost. The costs are also misleading: indemnities will probably never be paid, shares bought will eventually be sold. I am no fan of the bailout (I would have let them go bust and then bought cheap, as the government did with Bradford and Bingley), or of the regulatory regime which allowed it, but you need to prove your case by showing that the losses came from investment banking.

Graeme felt that I underestimated potential benefits (eg earning foreign currency) and I was possibly over estimating the benefits back to the taxpayer from the various guarantees, that I had been too kind to Retail banks and too cruel to Investment Banks, and that the losses and benefits will probably be larger than I assumed.

With that in mind, I am going to change the argument below to look at a "Big Banking Black Box" ie sum up all the losses over the whole sector vs the benefits, rather than separate it out, so will subsume this original calculation....

So, what is the ROI of the Investment banking Sector?

A simple measure is payback time - To pay back the £420bn on £28bn a year return will take about 15 years, which as a payback is pretty cruddy in anyone's language. And if I put a 5% interest per annum on that, it will take a generation to pay it back.

Now, if they were to forego their bonusses for all that time, at about a £7bn a year sum (because they have taken consideration of Messrs Clegg and Cameron's finger wagging), we could get payback in about 12 years - see, hardly a difference really, so we may as well pay the bonusses anyway, right?

Erm...actually, wrong - at a 12 to 20 year payback can the UK actually afford an invextment banking sector? One whoopsy every generation and it cancels out all the benefits.

.....within the bigger calculation here. I will assume that Graeme's increased good news is cancelled out by his increased bad news, so we are now left with an overall sector that will lose c £420m, and returns c £61m per annum, of which c £33m is mainly jobs and space rentals of Plain Old Banking businesses. I will also assume that I can run the basic retail banking safely without the casino superstructure (re-mutualisation anyone?), and employ most of the bodies in the industry in said retail structure, as before. I am also going to assume that the much vaunted "invisible earnings" from the sector are either being taxed already in the PWC figures above - or are being evaded/avoided, so the supposed benefit is invisible too.

This means in essence that the whole sector has to pay back its £420bn on a £28bn return - about 15 years, or 12 years if I remove bonusses, and 18 years + if I add in interest as above. So it doesn't change my overall thrus except to say "a pox on all their houses". And it certainly doesn't change my original overall conclusion.

Now, if I was running UK PLC as a "business", the obvious thing to do is keep the bit that is at least not loss making (the retail banks that deal with basic accounts and loans to small businesses etc) and divest myself of an asset so risky it can nearly bring my entire UK PLC down, or ensure that it is run in a far less risky way. Which I don't see happening. In fact, what I see happening is possibly the largest case of "regulatory capture" ever in the UK, where the sector has captured not just the regulator but the government. The Glass Steagal act (which forced separation of retail and investment banks in the US after the Depression for exactly this reason) would never get passed today. And as for paying the money back in a generation, its clearly a great idea, its just that its my kids' generation that are currently doing the paying, not the banks'.

To continue the update, Graeme Pieterz' summarised his view as follows:

Banks should be smaller so that they would not be too big to fail. Once reason more were not treated like Northern Rock was a fear of panic if the same happened to a big bank. Building societies should be encouraged if it is not too late - demutualisation encouraged consolidation and risk taking (savers are likely to be much more cautious than shareholders). Breaking up the big (giant!) banks would provide a clear message that shareholders can expect to lose more next time. Banking mergers should not be permitted if either party is above a certain size.

Regulation should also be better. The use of opaque and easily tweaked complex risk models was a huge mistake, as was the reliance on market driven measures of risk. Unconventional business models like Northern Rock's should not really have a place in retail banking.

I do favour a separation of investment banking and retail banking. I also wonder if it is necessary for banks to do some high risk activities such as proprietary trading at all - that can be left to hedge funds.

Which I heartily agree with, and I think so do most people who fdo not have an interest to vest. But it isn't happening, which means that what happened can easily happen again.

*They can't have it both ways - either the top "casino" bankers earnings are insignificant as a proportion of the total, and thus no discrete "banker tax" is deserved, or they are significant in which case Mr Milliband has a case, given the N year payback calculated above....)

...dead by Sunday?

Very funny pisstake by www.cwora.com. A picture is worth a 1000 word blog post. But I have to say I think Quora deserve every brickbat they get, the new year spamming has been bad even by overhyped Silicon Valley Startup standards.

There is also a rather sharp p*sstake on Goldman Sachs/Facebook over here (did you know GS employees cannot access FB from work?)

For more serious takes on Facebook and Quora, just hit the older posts button below.