America's fear

When drowning in debts and facing the world's ever greater lack of trust in your ability to pay them back, it seams like the best investment you can do to keep up your unpaid and unearned lifestyle is to invest in guns... rather than in industries or education, which have the power to let you increase your productivity!

As absurd or stupid as this can sound I am describing the choice of the world's leading country: USA. When you really think about it you realize that it's not so stupid, it's actually quite cleaver: investing in means of production means having to work for the wealth you acquire, while investing in weapons simply means going and taking the wealth you desire. It's a damn smart decision, even if not a very long lasting one. 

Let's take a look at some charts:


Here we have the current cumulative account balance

Source: Wikipedia

We clearly see that America's balance of payments is the most negative in the world.

Here we have the military budgets:

Source: Wikipedia

The US military budget is the largest in the world, accounts for 60% of its discretionary budget (Figure left )

Source: The Economist

and is used to employ about 1% of the american population, making the US DoD (Department of Defense) the largest employer in the world (figure bottom left ):

I guess it's true that attack is the best form of defense... and the best way to keep unemployment under control!

The Cavaliere's exploits - chapter 369

It's not often that one hears a Prime Minister claim his job is a part-time one, even less so because the activities that supposedly take precedence involve a large degree of whoremongering. Sadly though, what makes these allegations even more unpalatable is that they are attributed to the Prime Minister of a G7 country. 


Juicy though they may be, Berlusconi's sexual exploits are not Italy's main plague at the moment. The country has been garnering a lot of unfavourable press coverage this summer due to the festering euro crisis that seems on the verge of ballooning out of control. Last week Standard & Poor's chose Italy as its next victim for a debt downgrade because of the government's inability to respond decisively to the wildfire that is the euro zone. The grotesque spectacle that was the passing of a third emergency austerity budget in two months only serves to lend credibility to S&P's decision. The constant backtracking and watering down of the austerity measures by the government in a populist attempt to please voters and representatives of the special interests that hold Italy's economy hostage, are evidence that the political caste has lost touch with the electorate. Not suprisingly, Berlusconi's approval ratings have plummeted to below 25%.

Berlusconi has not only lost the confidence of the Italians however, but also of Confindustria, the employer's federation, whose boss Emma Marcegaglia has become a vocal critic of the government. She has doggedly attacked the latest austerity measures, pointing out that they patently fail to address Italy's long-term structural problems such as liberalising the job market, eliminating red tape for businesses and decreasing the state's monopolies. Il Sole 24 Ore, the business newspaper owned by Confindustria, urged Berlusconi to go and warned that Italy was well on its way to following Greece into bedlam, blaming “the fragility of its governing coalition, the embarrassing chain of scandals that directly affect the prime minister, his ministers and their immediate associates, [and a] persistent inability to take painful but necessary decisions.”

Furthermore the long chain of trials in which Berlusconi is a defendant on charges ranging from embezzlement to paying for an under-age prostitute make his position even more untenable. The opposition has long been calling for him to resign citing the ad personam laws his government has passed, which tend to reduce the statute of limitations, as evidence of his many conflicts of interest. On September 19th judges overseeing the case in which he is accused of bribing his former legal adviser David Mills, shortened the list of witnesses so as to increase the chances of evading the iniquitous statute of limitations that has always been Berlusconi's saving grace. Berlusconi's lawyers, however, are exceptionally adept at finding ways of eschewing a verdict or churning out another ad personam law aimed at reforming the judiciary (the only type of reform in which his government has been remarkably prolific). 


Berlusconi's legal troubles are not limited to the trials in which he is a defendant. In the past weeks allegations have been emerging that he was blackmailed by Giampaolo Tarantini, a businessman-turned-pimp from Bari, who is said to have provided him with numerous young women, including prostitutes, for his parties. The list of accusations runs from providing Tarantini with an official plane, to including the girlfriend of a gangster amongst his guests and arranging for Tarantini to discuss lucrative contracts with the bosses of Finmeccanica, a defence company partially owned by the state. To top it all off the intercepts between Berlusconi and Tarantini appear to include a slew of denigrating remarks about Angela Merkel; it is hardly the time to belittle Europe's main saviour.


Any other prime minister in a democracy would have resigned way back when if faced with such serious accusations. But Italy has long been bucking the trend and Berlusconi insists he will serve out the rest of his term to 2013, frantically waving the "mandate of the people" in support of this. It is too bad that the people seem to have changed their minds. 


However, as the Economist notes, removing Berlusconi would be no panacea. If he has been able to shy away from implementing the structural economic reforms that are indispensable for kick-starting Italy's competitiveness, it is largely because of the intransigence of the public sector, the trade unions and professional bodies as well as the tacit consent of the Italians.   The harsh truth remains that Italy is a democracy (albeit a very dysfunctional one) and that he was voted into office by the people. The implicit contract between the Italians and Berlusconi, whereby the latter would never "put his hands into the pockets of the Italians" and conveniently never tackled tax evasion with the zeal it requires in return for the support of the electorate, has only recently been broken thanks to the austerity measures which Berlusconi has grudgingly had to pass to appease the markets. 


But nothing has changed dramatically in Italy's economy to fully justify the market jitters; it is merely a case of the market losing confidence in Italy's debt, as opposed to a boom and bust in countries like Spain and Ireland. Italy's economy has been stagnating for almost 20 years and Berlusconi has been in power for the majority of the past decade. Italy's public debt which now stands at 120% of GDP has been steadily and very visibly growing for the past 20 years, but Berlusconi's inherent populism makes him loath to deliver bad news. This led to Berlusconi claiming back in 2008 that there was no crisis in Italy, and more recently his coalition partner Umberto Bossi advocating a fiscal reform (i.e. tax cuts) to re-kindle voter support. 


18 years ago, on the 30th April 1993, angry Roman citizens threw coins at Bettino Craxi, the Socialist Prime Minister, to express disgust at his venality. A similar display of public contempt has not been seen since and is a clear sign that Italians have lapsed into a moral apathy of which Berlusconi is only a symptom; it is time for the young, who are not a party to the implicit contract, to shake off their malaise and quit saying "but if not Berlusconi, then who?"

Tony Blair - Money-making master meets Mother Theresa

Our first outside contribution comes from Wilde, a graduate in political sciences, who has written a piece on Tony Blair's career since stepping down as British Prime Minister.

Since resigning as British Prime Minister in 2007 Tony Blair has become peace envoy to the Middle East, produced the best selling political memoirs in British publishing history, taken on a large number of advisory roles (most notably at JP Morgan), been paid to give speeches around the World, started a faith foundation and established Tony Blair Associates to name but a few exploits. In doing he so he has made himself a fortune, with some estimates claiming he has earned in excess of £20 million since leaving office, not to mention his property empire worth around £14 million, according to the Daily Telegraph. How has the 'whiter than white' ex-PM gone from moderate revolutionary and parliamentary God, to an internationally respected financial and political advisor and the architect of religious understanding and greater peace across the World's most tumultuous regions? Whether as an admirer you see him as renaissance man par excellence, or as a critic you think he is an opportunistic ex World leader using his status to open doors, one thing is clear, he's been pretty damn good at it.

The question seemingly on everybody's lips is, Tony Blair: Saint or Sinner? It is hard to say. His philanthropic exploits have often been admirable, and his attempts at promoting greater religious understanding through his Faith Foundation, form a valuable part of what is without doubt one of the most important and necessary pursuits of our age. There are however, an uncomfortable number of question marks hanging over many of his purported aims in his role as Middle East peace envoy. The Daily Telegraph has said his job as representative of the Quartet has been riddled with “very troubling ambiguity”. And in many respects, I can see why. It is clear that the king of the political sound-bite, has, with his trademark smile and 'call me Tony' aura assisted in brokering some pretty large scale deals for JP Morgan, for which he has been handsomely rewarded; having earned a reported (and conservatively estimated) £6 million from the the US investment bank since leaving office. It has been suggested by some in the City of London that this figure is actually far higher. Take for example, a case highlighted by Peter Oborne in the Daily Telegraph on September 24^th 2011. Tony Blair successfully persuaded the Israeli Government to allow the company 'Wataniya Mobile' to operate in the West Bank. The owner of 'Wataniya' is QTEL (a Qatari telecoms company), and coincidently a “major client of one the former prime minister's most significant paymasters, JP Morgan”. This is just one case out of many which highlight an apparently large-scale conflict of interest, between his role as peace envoy and his business and financial endeavors. Dr Nicholas Allen (a lecturer in Politics at the University of London) has said that 6/7 of the Nolan principles - the ethical code for public servants imposed by Blair himself as Prime Minister - have been “undermined” by his actions. Given that a our dear Mr Blair is still in part funded by the British taxpayer, these are not conflicts of interest that should be overlooked or treated lightly. It certainly wouldn't wash were Tony Blair still an elected official in Britain or indeed if he worked for the World Bank or other such organizations. A money-making machine yet again pulling the wool over the eyes of the World.

So, who really is this man of many colours? What makes him tick? Very few people, I would wager, can answer those questions. We have all been allowed a glimpse at another oddity in his life; his deep religious convictions. His very public conversion to Roman Catholicism, and his willingness to defend and preach his beliefs in an omnipotent tyrant in the sky, has always left me rather confused. In this sense, one sees him more comfortably as a republican inhabitant of the White House than a modern and left-leaning tenant of No. 10. Yet another paradox in the life of the man, for whom the word 'paradox' it would seem, has never had a better subject.

Love him or loathe him however, I think we all, even if  unwillingly, admire and respect him. Fourteen years ago, on May 2nd 1997, this towering figure of British politics formed his first government. Strangely now, his noteworthy political career seems dwarfed completely by his re-birth as international man of the moment. And indeed, I doubt whether the Right Honourable Gentleman will be shying away from public life anytime soon. I wait, with great interest to see where his name will arrive next. 

Maestro; I dislike your politics, I distrust your aims...but my God am I glad, that just once in a while, Britain still produces people like you. 

The death of the middle class... In numbers!

That a capitalist economy has a monopolistic tendency is not a novelty... but now that we are starting to really face the death of our middle class we seem somehow shocked by the novelty.


Income distribution and disparity are the best indicators of this trend, which seams not to be a linear one, but frighteningly enough, an exponential one.


Here are some charts and graphs that I found very interesting and useful to visualize the situation:

Gini Coefficient: The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality. 

Have a look at the article published by the BBC about this theme

And now have look at the income distribution in the United States from 1979 till 2007:

The numbers: BRIC vs. G7

Born as a simple marketing idea, the acronym "BRIC" is starting to symbolize the shift of the needle of the balance of the global economy from the industrialized nations to the emerging economies. 

.... But perhaps all that glitters is not gold, and even if the BRIC nations have been recording an impressive growth in the last few years and can count on a massive labour force and significant resources, they are still far from being comparable with the G7. Their GDP to Population ration is 14 times smaller than ours and the wealth is even less equally distributed than in the G7 countries (with the US being the most unbalanced having a Gini coefficient of 0,47).

Gini Coefficient: The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality.

GDP: Gross domestic product (GDP) refers to the market value of all final goods and services produced in a country in a given period.

Is Italy the next Greece?

The sovereign debt crisis in Greece is still at its dawn, but the repercussions on other weak countries like Portugal, Spain, Ireland... and Italy (whose public debt is 115% of its GDP and 6 times larger than Greece's) is becoming every day a bigger issue. 


Italy has done better than Greece in taking care of its fiscal matters during the crisis but the ratio between its debt and its GDP is still higher than Greece's, and its competitiveness is obviously directly proportional to its debt. This means that even if contagion from Greece is controlled, Italy remains very vulnerable in this uncertain time of post-crisis global economy.


In order to remain a member of the Euro area Italy should take action: adopt a 3 year program to raise its main balance by, minimum, 4% of its GDP and and put together a real devaluation vis-à-vis Germany of at least 6% through wage cuts and far-reaching long term structural reforms. Unlike Greece, Ireland and the Baltic countries, Italy is still in time to take action and avoid the eruption of the economy.
However, political Europe should also make the adjustment easy by targeting a weaker Euro, in which the G20 also has a vital interest as this would aid the continuation of a global recovery.


As in other countries, since the beginning of the crisis, debt in Italy and Greece has grown. In the biennium 2008 2009 Greece had public deficits twice the size of Italy's and added about twice as much debt as a share of GDP. This does not change, though, that Italy's Government debt is comparable to that of Greece.


Debt as % of GDP, Current and Projected

	2009	2011	2014
Japan	218.6	231.9	245.6
Italy	115.1	123.5	128.5
Greece	113.4	126.8	--
Belgium	97.9	104.9	--
United States	84.8	97.7	108.2
France	77.4	86.6	92.6
United Kingdom	72.9	89.3	98.3
Germany	72.5	87.8	89.3
Ireland	64.5	87.9	--
Spain	55.2	66.9	--
Sources: European Commission, IMF, OECD. Actions to recovery: A 3 year plan. Italy must not wait for its economy to break down before addressing its attention towards a recovery plan. In the next 3 years it must increase its primary balance by 4% of its GDP to ensure that the ratio between debt and GDP begins to decline.  Italy shall cut its unit labor costs and put in act a critical structural reform in order to reverse its loss of competitiveness. Critical structural reforms should include: removing rules that create a dual labor market and increasing the efficiency of backbone services on which depends the competitiveness of all firms in the economy.  In conclusion: Europe’s potential debt crises poses a large risk to a sustained global recovery; policy changes are the premiums the world needs to pay to insure against another collapse.

Compulsory freedom: the paradox of democracy

Democracy is founded on the game of the majorities, a silly game, considering that if you are lucky you get 49% against 51%.

Anyway, the will of the majority imposes itself on the one of the minority.

Through voting every person older than 18 can express his/her will.

In democracy everything is permitted, as long as more than 51% of the voting population wants it.

It is also possible to change the constitution, with a bigger percentage, yes, but it is possible.

.... And so one beautiful sunny sunday morning we are all called to the polls (if it's raining they don't even try to have elections because the seats would remain deserted).

I also go, I also go to vote.... of course only if it's a sunny day.

Right, left, center right, center left, moderate, liberal, conservative, republican, democrat, communist, socialist, progressive, constitutionalist, populist... and you are there and have to put a cross somewhere. But where? I think one puts it a little bit randomly, not really convinced, not so deeply informed, only somewhat proud to be a Citizen (with a capital C).

But you know how it is, after a while you get a little bored to randomly cross boxes now and then, and perhaps the weather is not so good, perhaps the government fell during the winter... and the result is that  the voters are less than 50% of the population with right to vote. 

So I ask myself: why do we still have a democracy? The majority has expressed itself very clearly: it doesn't want to vote, but democracy is founded on the notion of voting, which is the basis of our freedom. Ergo the majority does not want freedom... but we don't have the freedom to refuse this freedom. We have the freedom to vote and propose anything except the abolition of freedom! 

I think democracy is a bit out of fashion, perhaps it's time for a bit of dictatorship, or for an elitist oligarchy, or for an illusion of anarchic freedom, or for nostalgic monarchic revival!

Why have we never seen on a ballot such an array of options: democracy, anarchy, dictatorship, monarchy, oligarchy?

Thus in democracy all freedoms are contemplated except the freedom of non−freedom... And this had already been discovered by the mathematician Gödel, who stated, in his

incompleteness theorems, that a system is either coherent or complete, but never both!

Our freedom is compulsory: we can make all the laws we want, but we cannot subtract ourselves from the sweet obligation of freedom!

Allah's way to finance (part 1)

With interest rates and insurance premiums being such normal concepts for us, it is hard to imagine that for a whopping 25% of the world population the above mentioned are “haram” (forbidden); it is hard to imagine that nevertheless this quarter of the world has a financial industry that grows at an yearly rate of 20%.

After 1000 years of silence and financial regression, the Islamic world,  also thanks to the enormous quantities of liquidity provided by petrol, is moving towards the creation of what could be defined “the economy of the future”. The instability of our own markets is, by contrast, making the “Islamic way” more and more appealing to the western investor.

The pillars of Islamic finance, which are directly taken from the Coran, are aimed at keeping a social economic balance and at avoiding both speculation and the distinction between economy and finance. 

Islamic banking, consistent with the principles of Islamic Law (Sharia), is a participant banking with lenders (banks) being partners and not creditors of the recipient of the loan. An Islamic bank is therefore an intermediary between the saver and the entrepreneur, therefore is more interested in the solidity of the investment than in the credentials of of the debtor (if debtor is really the word to be used). Being in line with these principals it is also clear that the individual saver and bank account holder will never be a creditor of a bank, but either a type of shareholder thus accepting the risk to not see the nominal value of his investment reimbursed, or a checking account holder.

Despite the differences between them, the types of contracts such as profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijar), that are stipulated between financial institutions, contractors, savers and entrepreneurs to avoid the forbidden Riba are all aimed at enhancing economic growth in a healthy and socially transversal way. 

The redistribution of wealth is something typical in the muslim society, where by law 2/3 of a person's inheritance gets equally distributed between all of the enlarged family members, thereby giving every individual the chance to realistically pursue economic advancement. Is this the "third way", a socially responsible economic and financial system that stands midway between communism and capitalism? Is this the way to foster and enhance a homogeneous growth of society as a whole, without creating the ever bigger gap between social classes that is today's plague but without, at the same time, demotivating citizens to work hard and be productive by not allowing them to be rewarded for it?

What does all this mean for us, western savers and potential investors, scared by the high frequency of financial crises, which are to be mainly attributed to our unhealthy economy and stupidly insane finance?  It means that sukuk is the way to go, and that more generally keeping economy and finance together could be just the medicine that we need. 

Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds. Since fixed income, interest bearing bonds are not permissible in Islam, Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. A Sukuk constitutes partial ownership in a debt (Sukuk Murabaha), asset (Sukuk Al Ijara), project (Sukuk Al Istisna), business (Sukuk Al Musharaka), or investment (Sukuk Al Istithmar).  Back in 2006 the Economist already pointed out the great potential of this “new, parallel financial system”, but it still seams to be greatly ignored, or perhaps feared, by the average investor. 

The great appeal of Islamic financial products resides not in their incredible yields but, I would say, in their security, which can make them a great long term investment.

A surfeit of choice?

It has often been taken for granted that if having some choice is good, then having more of it is better. After all, being able to choose between alternatives is an expression of our free will; indeed it is the very cornerstone of liberal democracy, as the Economist says. This concept is what lies behind the idea that the state ought to step back and merely have a role in enabling the citizen to act out his or her own life; all the state has to do is provide a wide array of choices, whether these be in healthcare, education or pensions. Anything more and the state is said to be suffocating our free will. 

Yet this logic may not be as infallible as it seems. As Barry Schwartz has argued on numerous occasions, "choice no longer liberates, but debilitates." Mr Schwartz postulates that an increase in choice is a positive thing up to a certain point, after which the benefits levels off. This may be because the effort required to distinguish between all the choices outweighs the benefit to the consumer of the extra choice. Being faced with an interminable array of deodorants which range from the "no white marks" to the "sensitive skin" to the "slows down hair growth" option without the adequate information to make a sensible choice can be a daunting experience; the opportunity costs rise and one is much more likely to regret the choice afterwards because expectations of the "perfect choice" have been excessively inflated. Paradoxically, many people would rather not choose at all or let someone else do it for them. 

Barry Schwartz argues that this social trend has been reflected in the explosion of university courses. The wide array of university courses then tentacles out into a sprawling web of modules that one can mix and match according to one's tastes. Should a student not be happy with a module, he or she can then switch to another one in the first week of term. Indeed, students can sample courses to find the perfect fit. Schwartz claims that today's young  have learnt to "pick" and not to "choose" as they take multitasking to a new level and grow up immersed in a world of choices. However, as the sampling process at the beginning of term exemplifies, they are incapable of making a decision and standing by it. 

An excess of choice can even work against the very principle it aims to uphold, namely free will. As we are submerged with options, the stress of information acquisition and eventually making a decision will lead us to simply fall back on a known or trusted brand, or to follow what others do. This leaves us prey to aggressive advertising and is an unintended abdication of our free will. As Italo Calvino writes in his novel "Mr Palomar", where the protagonist is faced with a plentiful variety of cheese at a Parisian fromagerie: "Mr Palomar’s spirit vacillates between contrasting urges: the one that aims at complete, exhaustive knowledge and could be satisfied only by tasting all the varieties; and the one that tends toward an absolute choice, the identification of the cheese that is his alone,he stammers; he falls back on the most obvious, the most banal, the most advertised, as if the automatons of mass civilisation were waiting only for this moment of uncertainty on his part in order to seize him again and have him at their mercy."

There is a point on which I disagree with Schwartz, however. He maintains that freedom within limits is preferable to unbridled choice. This is true in some respects as mentioned above. However, when it comes to education it may not always be preferable for an institution to provide a pre-defined structure for students. Why is it that one ought to lock oneself into a Literature degree, say, when one is also interested in Economics and Physics? Are these multidisciplinary interests to be frowned upon as indecision or cultivated? The paradox of the surfeit of choice is that we are exposed to such a wide variety of options yet we are expected to only choose one, Mr Palomar's absolute choice; it could almost be said that we are given the choice of our own prison.

A two-tier job market

With the world economy sputtering forward at a snail’s pace and Europe mired in its sovereign debt-crisis, the issue of youth unemployment has acquired a new prominence on the front pages. This is not a novelty, however, and youth unemployment has been festering in southern Europe for around a decade. As the Economist points out, Mediterranean countries (in particular Italy, Greece and Spain) share a similar plight: that of a two-tier job market characterised by an older generation of insiders with permanent contracts and a younger cohort of outsiders who are either unemployed or fumbling along on short-term contracts.

This is largely due to an excessively rigid job market in which it is too costly to fire workers and payroll taxes are overly cumbersome. The upshot of this system is that firms are loth to hire full-time workers and only offer short-term contracts which offer no protection to the worker, as the New York Times reports. Temporary contracts had been introduced to render the labour market more flexible, yet they are now the bane of southern Europe’s youth. The example of Francesca Esposito, who despite her excellent credentials had to work as an unpaid trainee lawyer for Italy’s social security administration, is but the tip of the iceberg.

Couple a job market in a straitjacket with an economic crisis and sluggish growth across much of the Western world, and you end up with entrenched youth unemployment. The Economist makes the point that the young are often the first to suffer when the economy hits a standstill because they are less skilled and easier to fire. However, this was usually redressed in the subsequent upturn as the young had better prospects of re-entering the job market. Not so this time around. In the words of the Economist, the "rigging of the labour market in favour of incumbents and against the young makes what new jobs there are inaccessible”.

This is why southern Europeans often live at home until their thirties, a phenomenon which is too easily attributed to men being “mammoni”. It is not necessarily a choice for the more than 7m Italians aged between 18 and 35 to live at home. On the contrary, when faced with endless temporary contracts which pay little and provide no security, young people feel they cannot take on the obligation of a rental contract, let alone a mortgage. This is a vicious circle for the stay-at-homes were more likely to be unemployed than those who had moved out.

Faced with such a bleak and inaccessible job market, scores of young people choose to emigrate. Italy is in the paradoxical position of being the only net exporter of graduates among rich European countries. The brain drain phenomenon is more commonly associated with developing countries which have not yet developed a satisfactory education system, or a skilled job market. In fact Italy is not exporting blue-collar workers, but a well-educated elite. Sadly, I count myself as one of the many young Italians who opted to study abroad for better job prospects afterwards.

There is no panacea to youth unemployment and what works in one country cannot be used as a blueprint for job creation. It has been plastered on every newspaper that one of the main priorities should be fostering growth. If the economy continues to plod along weakly as it has done so far, then new jobs will not be forthcoming. Italy in particular has had a decade of lethargic growth and the political class has done precious little to alleviate the problem (it is not a coincidence that politicians can count themselves as belonging to the “insiders”).  As bond markets have put politicians under increasing pressure, these have rushed to hash out draconian austerity measures that will strangle what little growth there is. This is not to say that the balance sheets ought to be left to gather dust in a corner, but there is no hope for a country to balance its budget if it does not grow.

Yet even with a re-kindled growth, the young will not be able to benefit from it if structural reforms are not implemented across much of southern Europe. These include an overhaul of the pension systems, deregulation of the labour markets and eliminating red tape so that businesses will be more willing to invest in the region. The latest austerity budget passed by Italy showed that its politicians would be more adept at haggling over prices in a fruit market than being put in charge of solving the myriad of problems that afflict it.

Entrenched youth unemployment marks the deviation from a trend in the developed world which has been taken for granted for decades, namely that the younger generation was almost guaranteed a better quality of life than their parents through hard work. Not only does the sense of betrayal felt by many of today’s young engender a deep sense of malaise and resentment, but this “lost generation” is brewing and bound to reach boiling point at some stage. It is a veritable hollowing out of society encouraged by the two-tier labour market. As the older middle class approaches retirement age, there is no new generation to fill the gap; it has been left behind on the slow speed train.