The Part Played by Insurance in the Financial Crisis

Like everyone else, I have been following the financial crisis with morbid fascination, but was surprised when AIG got into difficulties and had to be bailed out by the US Treasury with a loan of $85bn. It was initially difficult to understand how such a huge hole could have opened up on their balance sheet.

This article in the IHT explains it - they were providing a sophisticated form of credit insurance through a financial products unit in London run by a chap called Joseph Cassano. Lloyd's used to have a ban on this type of insurance (though mortagee interest insurance has been commonly used in shipping for many years) as it's so risky - and because it usually involves selection against underwriters as well as accentuating moral hazard.

What worries me now is that no insurer hangs onto to 100% of a risk - they always pass a - usually large - proportion to their reinsurers. This risk may well now be hiding in some innocent-looking treaties waiting to blow up....

Stop Press: But they apparently didn't reinsure the risk - at least from 2005 onwards!

Stop Press: 28th Feb 2009 - the story is clearer now, but no less heinous. See the IHT

Stop Press: 25th March 2009 - More comment on Joseph Cassano from Ariana Huffington here

And further article, which looks rather more darkly at AIG istelf, is here

Sto Press: June 2009- Michael Lewis on Joseph Cassano in Vanity Fair 'The Man Who Crashed the World'

Francis Bacon Exhibition at the Tate

Click the heading for some more photos of the exhibition

I am old enough to deplore the renaming of the Tate as the 'Tate Britain' - a pompous name that has a politically correct ring to it. Why shouldn't it still be 'The Tate' even if the new one is the 'Tate Modern'?

Having got that off my chest, I love the place dearly and go as often as I can. It's light, bright and uplifting, and one can renew one's love of art without condescension. The Turners are superb, of course, unlike any paintings one can see anywhere else, and one can sit in front of that Burne-Jones for ever - but the current Francis Bacon Exhibition eclipses even those unassailable heights. It's one of the greatest exhibitions ever held in London and is brilliantly foreshadowed on the Tate's website with one of the best interactive catalogues anywhere.

When I was there last, there were runners racing through the main halls at one minute intervals; a kind of mini- marathon which invigoraged the place perfectly. I came across an American in a wheelchair who had spent hours trying to photograph them as they raced by. As a means of inspiring artists, it was as inventive and original as the great building itself

Firenze

Kei visited Florence for a week in September and brought back lots of lovely photos. Here are two which remind me strongly of my stay there when I was about her age.

The West Country

Dartmoor

Favourite Scenes

The Sussex Police band playing on the seafront at Eastbourne at teatime on Wednesday 10th September. Click the heading to hear them

Favourite Nursery Rhymes

A jolly fat frog
Lived in the river swim O!
A comely black crow
Lived on the river brim O!
"Come on shore,
Come on shore,"
Said the crow to the frog
And then O!
"No you'll bite me,
No you'll bite me"
Said the frog to the crow
Again O!

"O there is sweet music
On yonder green hill O!
And you shall be a dancer,
A dancer in yellow,
All in yellow,
All in yellow"
Said the crow to the frog
And then O!
"All in yellow,
All in yellow"
Said the frog to the crow
And then O!

"Farewell, ye little fishes
That in the river swim O!
I'm going to be a dancer,
A dancer in yellow."
"O beware!
O beware!"
Said the fish to the frog
And then O!
"I'll take care,
I'll take care,"
Said the frog to the fish
Again O!

The frog began a swimming,
A swimming to land O!
And the crow began jumping
To give him a hand O!
"Sir, you're welcome,
Sir, you're welcome,"
Said the crow to the frog
And then O!
"Sir, I thank you,
Sir, I thank you,"
Said the frog to the crow
Again O!

"But where is the sweet music
On yonder green hill O?
And where are the dancers,
The dancers all in yellow?
All in yellow,
All in yellow,"
Said the frog to the crow
And then O!
But he chuckled, how he chuckled
And then O, and then O!"

Favourite Places

Do you know where this is?

London by Night

Click the heading for some superb photos of London at night from the air by Jason Hawkes

The End of a Special Place

Some places feel special as soon as you walk into them. Our local post office in Balham High Rd was one of those. Cramped and a bit scruffy, it radiated warmth and helpfulness to the many local residents who used it, some every day, for the small but essential services of pension withdrawls, bill payments, the submitting of official forms and the posting of letters. To go there was to be almost certain that you would find someone to talk to in the queue, such was the convivial atmosphere generated by the highly educated family who ran it for many years - the Mazumdars - who came from India in 1967. Mrs Mazumdar was always behind he counter, smiling, helped by Victor, while her husband managed the sales of cards and envelopes in the front.

Now it has been shut down - one of the more than 2,500 local post offices that are being closed by the bureaucrats in Whitehall. True, other post offices exist not far away, but are either much less convenient for elderly residents on foot, or are large and soulless places where people wait in desultory queues for insufficient service, and no one talks to anyone else except to complain.

On 29th August approximately 700 people came to the little post office at various times during the day and were given Indian food and cake while they paid their respects and reaffirmed their opposition to the closure. Most had signed the petition taken last year to keep it open, but their voices had gone unheeded. Further loss of respect for government has been added to the sad chill this unnecessary closure has thrown over the local community.

The Most Moving of All Hymns

I vow to thee, my country, all earthly things above,
Entire and whole and perfect, the service of my love;
The love that asks no question, the love that stands the test,
That lays upon the altar the dearest and the best;
The love that never falters, the love that pays the price,
The love that makes undaunted the final sacrifice.

And there's another country, I've heard of long ago,
Most dear to them that love her, most great to them that know;
We may not count her armies, we may not see her King;
Her fortress is a faithful heart, her pride is suffering;
And soul by soul and silently her shining bounds increase,
And her ways are ways of gentleness, and all her paths are peace.

Words by Sir Cecil Spring-Rice,
Tune Thaxted by Gustav Holst.