Below the bottom of the barrel

By skepticlawyer

In 1997, during the controversy over my first novel, a media organisation obtained an ex-directory landline telephone number. The media organisation in question wanted to talk to me, but I was proving elusive, so it obtained my parents’ number. I had not lived at home for some years. To this day I do not know how they got the number: as various friends who either work for Telstra or know about telecommunications explained, it is very difficult to obtain a landline number without exploiting human frailty in some way. Technical hacking is difficult.

My parents were subjected to a campaign of repeated and intrusive telephone calls where the media organisation in question attempted to locate me, or obtain comments from me. Telstra, fortunately, gave my parents a new telephone number within the week, although the relentless harassment (the number quickly made its way into the hands of other media organisations; funny, that) was very, very unpleasant. They were awfully fond of calling at 5 am in the morning.

The media organisation that obtained my parents ex-directory telephone number, contributing significantly to my father’s ill-health (he died less than a year later) was the ABC. Yes, Aunty ABC.

I am telling this very old story because–if you are aware of current controversies about phone-hacking in the UK–there is a great deal of pious posturing going on by so-called ‘respectable’ media outlets suggesting that only the Red-Tops do this sort of thing. And, let’s be clear, the behaviour of the most offensive Red-Top in this case–the News of the World–is nothing short of demonic.

The News of the World took it upon itself to hack the mobile telephones of murder victims and their relatives with a view to obtaining a ‘story’ (what story, one wonders?). People hacked include relatives of the 7/7 bombing victims (bodies were still strewn around the Underground at the time) and a 13 year old schoolgirl murdered by one of those truly awful serial killers Britain has a talent for producing from time to time. In the latter case, the paper deleted voicemail messages distraught relatives had left on the girl’s telephone once it had already listened to them, leading police and family members to believe that she was still alive, being held against her will.

There is a great deal of content around the British media, and various bodies have all unearthed some new perfidy: the Guardian uncovered the detail about the 13 year old, the Telegraph the information about the 7/7 relatives, the BBC information about bribes paid to police officers for stories, the Independent information about a private dick used to tail a senior detective in the Metropolitan Police, who just happened to be investigating private investigators employed by… the News of the World. Apparently the copper in question was supposed to be having an affair. The television presenter he was bonking turned out to be… his wife.

[I have linked to general coverage of the issue in each publication, as the story is unfolding minute by minute; there is a great deal available].

One of the ironies of the situation is that the initial breach in the News of the World‘s defences was made by Hugh Grant, who ‘bugged the buggers‘ in order to get back at them for the way he’d been treated. I appraised his efforts here; at that stage, it was all very light-hearted and amusing, and journalists could claim that the public weren’t going to be too exercised by actors’ and footballers’ hurt feelings. For a time, it looked as though the only people who cared for those who’d been bugged and hacked were the courts, as they handed out super-injunctions and made privacy rulings, leaving the British tabloids frothing at ‘out of touch’ and ‘unelected’ judges.

Not any more. Criminal lawyers–in England and elsewhere–have long known that the behaviour of the ladies and gentlemen of the press is most damaging to effective policing and fair trials and the criminal justice system more generally. Nasty treatment meted out to the great and the good runs a poor and distant second. The cosy relationship between certain journalists and certain members of the Metropolitan Police is well known (hence, as is pointed out in various places above, the dilatory response of the latter to the former’s behaviour). Hugh Grant was very good on this point on Channel 4 News last night, as well as having the decency to acknowledge that the treatment of Milly Dowler’s family (at that point the other victims had not come to light) was beyond any sort of pale.

Because the worst behaviour is being evidenced by Rupert Murdoch’s News International, and because he is looking to buy a controlling stake in BSkyB, a great deal of ink has gone towards demonising him and the corporation he leads. That is probably fair enough, in that the News of the World does seem to have transformed what was a cottage industry in other media organisations into something of a cross between organised crime, Japanese-style Zaibatsu and Manchester in its heyday.

However, if other media bodies do not behave similarly, then I will eat my akubra. Media organisations are like petulant but canny children: they will cheat when they do not get their own way, as my run-in with the ABC shows. They will then squirm about and flog themselves with a limp lettuce leaf when called to account, as Ken Parish pointed out in relation to another ABC exercise in nastiness directed at yours truly.

As for the upshot, it is difficult to say. At the moment Britain is in ‘outrage’ mode, advertisers are fleeing the News of the World, there will be a Commons debate and an inquiry. The police investigation is ongoing. In the long run, I suspect the toothless Press Complaints Commission will go, to be replaced by a print regulator modelled on broadcasting’s Ofcom. This will probably be bad for freedom of speech: the journalists seeing the competition regulator bearing down on them are right on that score. That said, if the essence of the rule of law is ‘treat like cases alike’, the fact that one set of media organisations is statutorily regulated while another set is ‘self-regulated’ is a situation fraught with danger.

The extent of that danger is now plain for all to see.

UPDATE  July 7 16:48 BST: The News of the World is to close; this Sunday’s edition will be the last. As revelations of the depth of corruption have continued to emerge, the brand has become ‘toxic’ in a business sense, and News Ltd has cut its losses.

More from the Guardian here.


  1. Posted July 6, 2011 at 9:25 pm | Permalink

    SL and others – The hacking by the press and the twitjacking of F*x (the fake F*x News tweets about President Obama being killed) … Any thoughts on relative significance, moral or generic-legal? To me the improper acquisition of information and destruction of evidence in that case of the poor girl is worse than twitjacking.

    My guess is that the F*x twitter account probably had an easily guessable and widely known password – so a quick bit of “lets try a couple of ideas” could have enabled the jacking, whereas hacking into a phone takes a lot more planning.

    But I’m horrified Aunty treated you and your family so badly. Shame! Still, it’s better than the abuses of data misuse and lack-of-care in Centrelink, DIMIA, etc.

    (and, hoping your data is recovered … One of those USB terabyte portable drives used as a super-duper-usb-stick is a good investment)

  2. Posted July 6, 2011 at 10:55 pm | Permalink

    A very good piece on the holier-than-thou posturing going on:

  3. Patrick
    Posted July 7, 2011 at 6:05 am | Permalink

    Amen to DB’s comment on back-ups, with storage so cheap it is really just negligent not to be backed-up these days.

  4. Posted July 7, 2011 at 7:58 am | Permalink

    It’s people who genuinely accept “the ends justify the means” argument. Personally I find it totally pernicious but this is simply evidence of the natural extension of the illegal surveillance rights captured by government (think of RIPA giving surveillance powers to local councils) now being demanded by corporations.

    I’m a “fight freedom’s cause in freedom’s way” kind of gal, but we’re apparently a dying breed.

  5. ken nielsen
    Posted July 7, 2011 at 3:51 pm | Permalink

    A very good, thoughtful piece Helen. It would be a pity if this is treated as just a Murdoch problem. Each episode needs to be exposed.

    It will though be interesting how far up the Murdoch organisation responsibility can be sheeted.

  6. kvd
    Posted July 7, 2011 at 4:02 pm | Permalink

    It is not a justification, but I have an uneasy feeling that all the boring, valuable, incisive “stuff” about which we are informed is basically financed by the sensational, grubby, totally reprehensible “stuff” we despise.

    And Patrick, your “negligent” comment is tempting fate; and almost insulting in fact – given the limited facts you are operating on.

  7. Posted July 7, 2011 at 6:28 pm | Permalink

    DEM’s point about RIPA (or the Patriot Act for that matter) is well made. Governments have accreted this sort of power to themselves, and now a certain sort of corporation wants a slice of the same pie. I don’t think there can be half-measures on this sort of thing: either everyone can spy on everyone else, or no-one can. Neither governments nor newspapers have some sort of bogus ‘higher calling’ that should allow them to get away with this.

  8. Posted July 7, 2011 at 10:14 pm | Permalink

    I have less of an issue with someone obtaining my number whether by fair means or foul, it’s the then using it to harass my family that’s objectionable. As far as I know that’s never happened to me, I’ve never been hacked (which is a great pity as I could really do with the money just now) but I was “lie detectored” in a phone call by the local council because I receive Housing Benefit. Which makes me wonder how long it will be until newspapers feel they ought to have that right as well!

  9. Posted July 7, 2011 at 11:53 pm | Permalink

    UPDATE July 7 16:48 BST: The News of the World is to close; this Sunday’s edition will be the last. As revelations of the depth of corruption have continued to emerge, the brand has become ‘toxic’ in a business sense, and News Ltd has cut its losses.

    More from the Guardian here.

  10. Posted July 8, 2011 at 12:14 am | Permalink


  11. Posted July 8, 2011 at 3:31 am | Permalink

    Amen to DB’s comment on back-ups, with storage so cheap it is really just negligent not to be backed-up these days.

    Not spoken by a technophobe, Patrick. It happens easily enough even to professionals – my team managed to lose an entire month’s computer magazine due to a technical disaster involving our publishers server room and a waterleak from the office upstairs.

    Okay, not so much gloating at the loss of jobs but there are serious questions (fair point was made to the BBC today by the NoW Political Editor that 80% of those involved have moved on so it’s the clean-up crew copping it in the neck today) but we really need to be asking serious questions when such large organisations are bribing police officers and debating about how far accountability does or ought to go. One of the things I always hated about war crimes trials was how personal accountability seemed to be being enforced for corporate decisions. Is that only an artefact of military formations? Where is the line drawn when there is outright criminality going on within a civilian corporation which has the same legal status as an individual? Journalists? Departments? Papers? Publishers? Owners? Does or should the media have additional responsibilities above and beyond the man in the street due to their position like a police or fire officer?

  12. Patrick
    Posted July 8, 2011 at 7:18 am | Permalink

    It certainly happens, but it shouldn’t. It’s like driving uninsured, happens to a lot of people, but that doesn’t make it justified.

  13. Posted July 8, 2011 at 8:42 am | Permalink

    [email protected] – on “lie detectors”, and the phone ones are no better than chance, the critical scientific reviews being suppressed – surely using the things on pollies, suspect cops, and Limited News Corp execs would be both more interesting, and more in the public interest.

    Hell, pollies wired up to the best lie detectors whenever they give a news conference? I’d like to see that. Maybe they’d stop running the dodgy detectors on phone conversations with people like you.

  14. Posted July 8, 2011 at 8:47 am | Permalink

    [email protected] – on the lies about that “lie detector” – I discuss that and have the abstract of the suppressed paper (court order for commercial reasons) at

    The original paper [citation: Eriksson, A. & Lacerda, F. Intl J. Speech Lang. Law 14, 169– 173 (2007)] was entitled “Charlantry in forensic speech science: A problem to be taken seriously”, and in it were explicit statements that claims of “lie-detector” manufacturers had no scientific basis.

    An extract from the abstract:

  15. Patrick
    Posted July 8, 2011 at 12:56 pm | Permalink

    I think the criminal law community (at least the defence bar!) has recognised for some time that lie detectors are worse than useless, and some are developing strong doubts about DNA as well.

    Mobile phone location traces, however, are to my understanding pretty much never seriously challenged (people try and lie about whether they had their phone, but given the precise data available on the usage of phones that’s surprisingly hard to do without looking like a complete liar).

  16. kvd
    Posted July 8, 2011 at 4:03 pm | Permalink

    [email protected] so you’re saying that ‘hacking’ of mobile phone data (as in geo-positioning) is aOK, ’cause it’s in a good cause, and done by the good guys, for good reasons; but ‘hacking’ otherwise is not?

    I won’t defend anything done by NotW if you won’t so calmly suggest that finally, this time, you have anything remotely technological that you can absolutely rely upon.

    And re your comment @14 – fully 50% of law firms I dealt with had NEVER actually checked that the data so carefully backed up every day could actually be successfully restored. Maybe ask someone in your firm how long ago it was that they specifically confirmed the reliability of their restore process.

    Otherwise you’re probably driving uninsured – as you so accurately put it.

  17. Chris Bond
    Posted July 8, 2011 at 4:05 pm | Permalink

    [email protected]: I followed your link, read your post – v interesting and disturbing – and then at the bottom (I am in the UK hence Google’s ad sensors gave me a location-specific relevant ad)…

    Ads by Google
    UK HOME Lie detector test
    UK`s Most Senior examiners, Theft Infidelity,sexual abuse specialists

    (Hoping the “blockquote” button does what I think it should…)

    On the wider implications of the NotW s**t-storm… Labour MP Chris Bryant has been one of the few politicians willing to campaign to raise awareness of News International’s (NI’s) practices. He says he has received various threats from NI as a consequence, and has been targeted for vilification in NI publications. It is said most other politicians don’t raise a murmur about NI because they fear exposure of their peccadilloes if they do. (And, MPs being human, most have peccadilloes to be exposed.) So, how to break the power of news media to hold the politicians at bay in that way? IMHO as an engineer not a lawyer, I think a privacy law is inevitable now. If the politician isn’t doing something illegal, then publishing salacious details of affairs, etc, etc, won’t be allowed as ‘holding them to account’, it will be seen as the blackmail I think it is.

  18. Posted July 8, 2011 at 5:29 pm | Permalink

    You have to admit, Patrick, you are starting to sound like an advert for one of those data storage firms [although their line tends to be more “think of the potential costs of business interruption” rather than “you’re an idiot if you DON’T buy backup” – maybe they should consider it. I know someone who could probably give you a quote on business interruption insurance. 😉 ] There’s a couple offering server space in former nuclear fallout shelters around the UK, but for all you or anybody else really knows our data MIGHT be held in a rusting sheep shed somewhere.

    Am afraid I find it very difficult to take the otherwise excellent Chris Bryant seriously having seen him in his tightie whities. Sorry boys, you’re just so less impressive to us girls when we’ve seen you in your underwear. =8-)

    Dave @16: Fortunately I’d been doing some research and read that original paper a couple of days before it was taken down and about a week before I got the phone call so I wasn’t intimidated, but I’m sure a lot of others less prepared would be. Maybe that’s how it works.

  19. Posted July 8, 2011 at 5:42 pm | Permalink

    I think that the only way for the press to keep its ‘public interest’ exception (where intrusion may be possible if the story is in the public interest) is if it is combined with statutory regulation (Ofcom for papers). They have so egregiously abused their capacity to intrude in the name of the public interest exception that should they stay self-regulated, then legislation should be passed removing the public interest exemption.

    I hate the thought of this (government regulation really does strike me as putting the fox in charge of the hen house), but somehow we have to peel back the blithe assumption that it is all right to perve in other people’s private business, or use their past to shut them up, or justify spying on the basis of their source of income or religious beliefs.

    After that, we need to work on repealing RIPA. Governments shouldn’t be able to do it either – that, in part, is how it finishes up pervading the culture.

  20. kvd
    Posted July 8, 2011 at 6:45 pm | Permalink

    Sorry boys, you’re just so less impressive to us girls when we’ve seen you in your underwear. =8-)

    Well it’s a good thing for the human race that the reverse doesn’t apply – is all I’m thinking I can safely reply 🙂

  21. Patrick
    Posted July 9, 2011 at 6:15 am | Permalink

    Look, kvd, I’m sorry, but we actually have primary storage across both Melbourne and Sydney with offsite overnight tape backup! Sounds primitive but we never lose more than 24 hours data.

    My family has an ugly hard drive which we dump everything to and periodically copy across to another one which we store at my work.

    And one of my best mates owns a bar which burnt down recently… he had business continuity insurance and I guarantee you he does regret a cent of it.

  22. Patrick
    Posted July 9, 2011 at 6:28 am | Permalink

    BTW, I am not defending what NotW has done?

  23. kvd
    Posted July 9, 2011 at 6:34 am | Permalink

    And I apologise as well Patrick. All I’m saying is that you never know if you have valid backup until you actually test-restore it. As a consultant to lots of law firms big and small the one thing I hated to be involved in was data reconstruction.

    From the little firm with a new secretary blindly getting to the end of the third disk, needing a fourth, so putting the first one back in; to the large firm with a brilliant system of tape backup which never checked the log to see that a second tape for the 3 a.m. nightly backup was required while the machine sat dumbly waiting – I’ve seen disasters just waiting to happen.

  24. Posted July 9, 2011 at 9:22 am | Permalink

    Look (I’ve been ignoring this up until now, but may as well respond), realistically, I shouldn’t have or use a computer. I hate them, hate the people who try to snow me because they can use them and I can’t, and hate having to organise my mind using ‘bits’ that I don’t have (the pattern recognition ‘bit’ essential to understanding IT is absent in my left parietal lobe; I have the MRIs to prove it).

    That said, not only can I spell carburettor, I know how to fix one, am a dab hand at anything mechanical or technical and was the classic ‘girl who is better than all the boys’ at technical things (including coming top of the state in Technical Drawing, back in the day; I have super-duper spatial reasoning ability and a 148 IQ to match). Hence my beloved Hornby train set. Whenever I take the (inevitable) IQ and ed psych test at any university you care to name (I’ve now studied at 3, Oxford is only one of them), I’m always asked why I’m not studying engineering or physics. Fortunately I had a far-sighted careers guidance officer at school; he could see which way the wind was blowing with regard to IT and steered me away from engineering and architecture (what I wanted to do) into languages (always a secondary skill for me), because I simply can’t do computers. This is not me being cute or intransigent or whatever. I just can’t.

    ‘Can’t’ is not a word a lot of people on the right want to hear, as disability is so often conceived of as a moral failure, as something that (especially) a smart and talented person (like me) should be able to overcome.

    I can’t. End of.

    If I say I can’t do something, it’s because I can’t. I am not making it up. It means I have tried every possibility (multiple times) and all of them have failed. Going slowly or getting lots of help or coming up with canny workarounds — all of which are routinely suggested by people who don’t have bits of their brain missing — simply don’t work. I can’t. Positive thinking counts for nothing; it would be like an amputee trying to imagine his missing leg back into existence. Not gonna happen.

    This incapacity is so total that, a few years ago, I looked into buying an IBM Selectric (the famous ‘golf ball’ typewriter) second hand, reconditioning it (something that mechanical me can do in a snap) and using that instead of a computer. I can touch-type, am smart and quick enough to be able to hand-draft everything from contracts to novels and then retype them faster than every single computer-bound colleague I have ever met going through the same process, and have memorized the entire Library of Congress cataloguing system. My card catalogue–unless you are very fast and very clever–beats your Google every time, especially in a big library (the Qld Supreme Court, the Bodleian, etc).

    I don’t do backups because within three months I will have fucked up the system, quite possibly corrupting all my data. I email important material to friends on the basis that they will retain copies (sometimes) that I don’t. I can’t remember passwords and so wherever possible manage without them. I don’t alter factory defaults; I can’t remember them once I’ve changed them, and would need to carry around several sheets of A4 with all the passwords you need these days if I ‘gave in’. I don’t do online banking, refuse to update my passwords at every workplace I’ve been employed at, ever, and threaten firms with the Disability Discrimination Act whenever they attempt to charge me more because I want my bills on paper and refuse to sign up for direct debits (I have none, and will never have any).

    And I have always been perfectly upfront about the fact that anyone who attempts to use their computer-savvy to put one over me will have a meaningful encounter with my martial arts and mechanical savvy. I know what a ‘mantrap’ is and I know how to set one.

    /Anti computing rant

  25. Patrick
    Posted July 9, 2011 at 10:17 am | Permalink

    Well, SL, if you worked at my workplace you would last 3 months, precisely, and then I think you’d be gone with your boot password. Lucky for you you don’t!

    Also, you should probably just get a friend who visits reasonably often to plug in a portable hard drive when they do and back-up…

    Kvd, I have no doubt, and we have lots of problems with our data management, 75% related to the idiots who interact with the systems (including the idiots who design them) but email and server back-up is really not one of them.

  26. kvd
    Posted July 9, 2011 at 10:22 am | Permalink

    Well I bet that felt good SL 😉 (or at least – I hope it did!)

    And I’ve absolutely no problem with your (quite minor) disability. The people who sometimes get up my nose are those who casually say ‘you should have made backups’ but when asked have never actually, err, tried to do a restore. Ever.

    One problem in old fashioned IT land (and it may have changed) is that once you accept responsibility for fixing the problem – even though it was actually caused by someone else – it somehow becomes your “fault” if the restore is either unsuccessful, or a week/month old.

    Which is a very longwinded way of saying I defend your right to be differently talented. Otherwise life would be far too boring!

  27. Posted July 9, 2011 at 10:40 am | Permalink

    Well, SL, if you worked at my workplace you would last 3 months, precisely, and then I think you’d be gone with your boot password. Lucky for you you don’t!

    I have had one employer do that, and they did get threatened with the relevant anti-discrimination law. I didn’t have to change my password; they just learnt to live with it. I am good at my job, with relatively minor adjustments (like, no new passwords).

    I have, however, declined interviews with employers who want to subject me to psychometric testing of various sorts, after going through one such where it was clear that the psychometric test was administered in order to weed out any applicant with either Aspergers or dyslexia. If people design institutional structures like that, I don’t want a part of it. Once, however, I’ve shown myself to be the smartest employee in the building, I will use the relevant anti-discrimination law to ensure I keep my position.

  28. Mel
    Posted July 9, 2011 at 12:16 pm | Permalink

    I recently bought a book by Temple Grandin for someone I know who has Aspergers but is otherwise smart. What an amazing woman.

  29. kvd
    Posted July 9, 2011 at 3:39 pm | Permalink

    Easy peasy LE. Just choose the 4/5/6th word from your first post here on the first of each month, and use that. If it is ‘the’ and you need 6 chrs, make it ‘thethe’. Then write it in indelible ink on Eaglet #1’s forehead, and don’t bathe her for a month or a week – whichever appropriate.

    Saves time and aggro all around; and never guessed. And we’ve all had smelly kids, sometimes, for a worthy cause.

    (and ‘PIN numbers’ are more accurately called ‘PI numbers’)

  30. Posted July 9, 2011 at 5:07 pm | Permalink

    On passwords – yours truly with the screwed declarative memory (I cannot even remember a single phone number including my own) is here to help:

    And that routine will keep most password quality systems mandated by regulations happy (and some systems cannot have demands for good passwords turned off)

    So, when n1tw0od (Now Is The Winter of Our Discontent) expires you simply have the next password ready m9sbt5oy (Made Glorious Summer By This Son Of York).

    And beats the pants of “dicky3”

    Seriously, nursery rhymes, shakespeare, the king james…. things you can look up even if you have a senior moment and forget the exact words.

  31. Posted July 10, 2011 at 4:01 pm | Permalink

    If you have trouble with pin numbers, try to remember their pattern on a keyboard. It gives you a different cognitive “in”.

  32. AJ
    Posted July 10, 2011 at 6:29 pm | Permalink

    Write your passwords down:

    Just don’t keep usernames or account numbers with them. If you are paranoid, use a simple cipher like +1. Don’t write the cipher down, obviously.

  33. Mel
    Posted July 10, 2011 at 10:00 pm | Permalink

    From The Guardian

    “Cameron said the shocking new allegations around practices deployed by the News of the World “and possibly elsewhere” was a “wake-up call” for the country as he unveiled a “comprehensive plan to put it right”.

    “The truth is, we have all been in this together – the press, politicians and leaders of all parties – and yes, that includes me.”


    Questions had been raised not just about the media and the police but politicians, too, he added. Citing a number of warnings coming from the media, select committees and the information commissioner over recent years, Cameron said the government of the day – and the Tories in opposition had failed to respond, partly because any move by politicians to make the case for tighter regulation of the media risked being portrayed as parliament trying to stifle a free press or even free speech.

    But he also admitted that the less “noble” reason was that party leaders of all political hues were so keen to curry favour with media editors and proprietors that they turned a “blind eye” to the need to get on top of bad practices. Cameron, who has been linked to private family dinners with Brooks, conceded that Labour and Tory leaders alike had spent time “courting support rather than confronting problems”………

    I have to say this episode, the GFC, a legion of corporate fuck ups and scandals, climate change and the right’s bizarre “war on science” have all pushed me a couple of steps further to the left over the past 3 or 4 years.

  34. Posted July 10, 2011 at 10:50 pm | Permalink

    There’s argument that a particular Sun front page started the rot, driving Blair into Murdoch’s arms, something the Tories have continued to do in the same way (as Cameron concedes). The specificities were not something I was aware of until I moved over here.

    It’s even entered popular culture as a catchphrase:'s_The_Sun_Wot_Won_It

  35. Posted July 11, 2011 at 11:51 am | Permalink

    [email protected] Since the GFC was significantly caused by the Fed screwing up the money supply, amazingly daft housing policies and politicians and regulatory bodies injecting moral hazard into the financial system, it strikes me as pretty much a political wash: lots of blame to go around in all directions. As you would expect from that level of policy disaster.

    And if you want mindboggling levels of corrupt mendacity, try the Atlanta public school system scandal.

  36. Mel
    Posted July 11, 2011 at 5:06 pm | Permalink

    Chortle. Add to my list the lunar right’s rewriting of the GFC.

  37. Mel
    Posted July 11, 2011 at 5:41 pm | Permalink

    Oh I can’t help myself:

    “Since the GFC was significantly caused by the Fed screwing up the money supply … ”

    The Fed was Alan Greenspan. Greenspan was first appointed by “the government is the problem” Reagan. Greenspan learnt economics at a private (capitalist) university, NYU. Greenspan was an Ayn Rand devotee and a believer in dereg and the self correcting nature of the markets. Greenspan was a darling of the right with very little dissenting voices right up to the GFC. Feck, George W Bush even gave him Presidential Medal of Freedom, the highest award on offer for an American civilian.

    In short, Greenspan was the golden haired boy of right wing free market ideology. To try to blame Greenspan on “Government” or some other lefty bogey is just fecking hilarious.

    Much of the mainstream right is just as delusional as the nutty Marxists on the left who still think a proletarian revolution is just around the corner.

  38. Posted July 12, 2011 at 12:59 pm | Permalink

    [email protected] Actually, Greenspan was not problem. He stopped being Fed Chair in January 2006. I don’t buy monetarism’s “long and variable lags”: the thing about monetary policy is precisely that its effects are fairly immediate (much more so than fiscal policy).

    The problem was that the Fed tightened liquidity when the US was undergoing various asset and supply shocks. (This BTW, is also what the Fed did back in c.1930 and 1937.) Since this seems to have been at the behest of inflation “hawks”, you can blame “the right” but the real problem was bad policy, period.

    The question then becomes whether the secret is “good policy rules” or central banking is simply another failure of command economics (i.e. monopoly government control), given the tendency towards lurching between periods of inflation laxity (1970-1980) and wildly inappropriate inflation phobia (1930-3, 1937-8, 2007-?, the Bank of Japan 1992-?).

    One can argue that Greenspan was too permissive on money supply, hence asset prices inflated on the back of easy credit (goods and services prices did not inflate, due to China and India coming online, so expanding aggregate global supply).

    The problem with that argument is that, in that sense, the Oz Reserve Bank was even more permissive and one notices no GFC, or even Great Recession, Downunder.

    What we had was better (arguably much better, but it has not been fully tested) prudential regulation and housing policies which, while not without their little insanities, were nowhere THAT insane as the Yanks engaged in.

    Bailing out Wall St under TARP, no matter how dubious, looks set to make a profit for the US taxpayer. With Fannie Mae and Freddie Mac, it is still not clear where the red ink stops.

  39. Andrew Cowling
    Posted July 12, 2011 at 1:17 pm | Permalink

    [email protected]: “long and variable lags” – is that code for “no measurable correlation”?

  40. Mel
    Posted July 12, 2011 at 8:18 pm | Permalink

    [email protected]

    “… Greenspan was not problem. He stopped being Fed Chair in January 2006. ”

    Even Greenspan himself doesn’t buy that line.

  41. AJ
    Posted July 13, 2011 at 2:48 pm | Permalink

    He stopped being Fed Chair in January 2006. I don’t buy monetarism’s “long and variable lags”

    The U.S. housing market burst in 2006. Bear Stearns was the death rattle, not the beginning:

  42. Posted July 13, 2011 at 7:35 pm | Permalink

    [email protected] In a word, yes.

    [email protected], [email protected] Asset crashes do not automatically lead to financial collapses and massive downturns. Yes, Greenspan’s permissive monetary policy probably did feed the housing booms in various US States, but only some States had housing booms, which meant local conditions also mattered. The the US federal government was effectively guaranteeing massive expansion of loans to low-income folk was at least as important in the scale of the disaster.

    Robert Lucas’s recent lecture pdf provides useful data and commentary. (I think he is, if anything, too kind on the Fed as he does not mention the tightening of monetary policy in the lead up to 2008).

  43. Posted July 17, 2011 at 11:55 am | Permalink

    The best commentary on the rolling crises (housing bust, banking crisis, deep economic downturn) comes from Scott Sumner, particularly in this post.

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