I’ve been following F1 since 1955 – and F2 before that. Yes, I’m a cranky old motorhead. Point is the same.

Formula 1 run as the pet preserve of a few incompetent politicos doesn’t need fans who live and breathe the sport – just warm bodies. They can snag a few of those from NASCAR.

I listen to a lot of the American equivalent of Radio 4 (NPR, as it’s called here) and there have been exhaustive analyses of the reasons behind the crash. There have also been as many different reasons given as there have been people disucssing it. One theme I’ve heard more than once is that a change was made to the trading laws allowing a certain type of bond to be created which in turn enabled the sub-prime mortage idiocy. It seems that there’s yet another thing to lay at the feet of the Bush administration’s financial cronyism. Anyway, I found the “how the sub-prime thing happened” rather interesting so I thought I’d share it…

Apparently some new law was passed allowing the combining of multiple assets of different risk levels together and packaging it as a single bond with a rating of more than the aggregate risk. That is to say, you could package junk-bond level stock (for example sub-prime mortage loans) together with stock of AAA rating (for example social security loans or shares in major corporations) and get a AA- or AAA-rated bond. It looks like a good bet, but actually isn’t. The result is a highly-rated bond which is going cheap. Traders would then use these as hedges against more risky trades (hedge-fund stuff) and sell them on the futures market.

This all works nicely until suddenly the housing market takes a nosedive. The sub-prime loans turn out to have negative equity and banks start calling them in. This makes that apparently AAA-rated bond suddenly look like junk, and since they’re tied up as the insurance on these risky futures, you’ve basically sunk all these other trades too. This makes the market plummet in places which have nothing to do with housing. People get worried and start runs on two banks. Governments start spending billions bailing them out, and that’s where we are today.

England didn’t pass the same laws (in part because, I believe, of the negative equity thing that happened around 1999/2000) but you know that whenever someone’s losing money on the market, someone else is making it. Anyone want to bet on who is making it?

As much as I can agree that the Olympic publicity has raised the profile of China’s human wrongs in Tibet, I can not agree with the IOC decision to give them the games.

I some respects the olympic PR has made matters worse for the protestors in that they are now likely to find themselves repressed with more vigour and violence. The Chinese regime will suffer no loss of face in the world spotlight and will IMO stop at nothing to maintain the semblance of unity.

The Chinese rich will get richer and the poor more expendable. Millions will suffer in silence while the world fawns and cow-tows to the magnificence of the spectacle laid on for them. The polution that smothers billions every day will be diverted for a few weeks from the centers of Olympic activity creating a false picture for those foreigners lucky enough to afford the ticket.

The visitor will also be free from the spectacle of locals wearing more than three colours or visiting their neghbours while wearing pyjamas.

I scooped first class hons.

Now officially classed as a girlie swat I plan to get my M.Phil. next.