Part I of the series on: Learning from Failure and the Justification that They’re for the Sake of the Learning Curve

Let me turn to you the attention of one article that would probably not have grabbed your attention: CNBC's "How Start Ups Can Climb the Global Growth Learning Curve". But how do know we are in a learning curve situation? Let’s put it another way. How do we know that we have to agree that failure in the beginning is almost a superior alternative to success. Had we been successful, little would have changed; and for the long-term it’s a more advantageous proposition. Or is it, that we use this as an excuse to justify our failure after we have committed the crime of a long-termism and forgotten the ‘short picture’ or the ‘small picture’ as one might put it?

“The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive. It will often be exercise when wrong, but better so than not to be exercised at all. I like a little rebellion now and then. It is like a storm in the atmosphere.”

The world wonders. A statement that sums up how every country perceived America’s gun-laws after Newtown. But what came afterward was an almost a childlike credulity that there exists despite the distinct degree of path-dependency in the focal lens of how American’s gun laws have evolved. Over the past twelve years about one half of Americans have applied to renew or to obtain a gun license. Over the past year alone approximately 18 million new applications were made.

Monkeys like flashes from the past. The little forms of nostalgia, the throwback of hitherto advice delivered as a way of fishing from the past, from the recycle can of our desktops, wiping it off, painting over the ugly parts and restoring it for more than it's worth.

Everyone knows we should be careful to those who supply it. In this case, I'd like to point the glaring over optimism in the forum and the possible pitfalls to listening to it – a meta-view of Wall Street Oasis if might allow me to say so.

To many, the market will rebound, at variance from the occupation in finance you're in, no matter how deleterious the after effect of its long hours on the mind, the toll it takes on your body, be it IB, Trading, or PE.

Thanks to the recent Oscars of World Travelling, I'm writing this in a fairly non-de script café/pub off the rue of the Royal Mile, enjoying a coffee and a flattened panini. What could be more authentically Scottish? Alas, the napkins are also emblazoned with ‘Gracious por su vistia’.

I suppose this is how many Scots feel when they travel to Edinburgh and find that while the country had, at one point, five banks to England’s one and the drivers of its industrial revolution, the UK’s slide into decline allows one to imagine the British economy's bar code being pulled back and we find that those banks are now owned out of Westminster and not in dreary Edinburgh.

Should George Osborne find himself Chancellor of the Exchequer in three years hence, with an independent Scotland having emerged from political and fiscal turmoil at the heart of the Westminster and the City of London system, whatever the first Scottish PM’s decision is it should not be the consideration of either a monetary or debt union with England. The equivalent enfranchisement from H.M. Treasury and the Bank of England (BoE), as the late Sir Neil MacCormick had envisioned in his magnum opus, the Questioning Sovereignty: Law, State and Nation in the European Commonwealth, that past a critical point (of independence) control over its entire economy future could at once be guaranteed so as long as England retains specific areas that were rooted in its economy.

Max Wünsche (left), a hard-nosed leader in his late twenties, with more combat experience than any Allied soldier in France on that day, and awarded every major decoration one would want, had taken charge of five thousand 14-16 year olds, and was now sitting down in a war conference with two others. He had faced off with an entire Anglo-Canadian advance by the 21st Army Group consisting of 250,000 men, 2500 tanks, 800 artillery guns earlier that morning. Colliding with one Canadian and two British armoured divisions, he held his ground until they were stalled in the Bocage countryside near Caen, in three roads trying to close in on their objective: the Caripet Airfield and the city of Caen itself.

Many of us might have an opportunity to pop over to Dublin someday. So I have complied a list for the you can do and can hack it types. Be warned: this list is graphic and may dispel any myths about Ireland you would have learned had you gone to Notre Dame.

Tip One:

When the first time you see a set of girls who are getting out of a cab and forget everything in it except for a half-drunk vodka bottle, then perhaps that tells you something about their national character at night in one image you can keep for the whole night.

Tip Two:

There are two or three night clubs but the best one by far is ‘Coppers’.

Tip Three:

In a recent tour of Brussels, I was forced into the ever-so uncannily decrypt in-roads of the various European think tanks that have been taking over the Union since Maastricht in 1993. The majority of which are German; full of, yes, gluttonous Germans. Large chunky men with big suits, well-shaven and crisp, sharp blue eyes, grey hair, PhDs from Heidelberg, or some other small town that had once harboured support for Fascism in the 40s’.

Now, they’re in Brussels, allaying visitors of any fear that they want to take over the European Union – far from it they are here to help, their stretched hand full of their own native lands’ best, new export: tax payer money.

Intro
For the first time in the sacred back channels of of banking history, bond managers hold much less information than their politician and central banking counterparts -- that is both in the private and public kind.

Odd since politicians are usually the most uniformed individuals on next to nothing but the private sector. Have a dinner with a Member for Parliament and you'll instantly be transported to his or her vast knowledge the latest TV hit shows, celeb personalities and latest in-house gossip.

But even the central bankers, who often wear loose suits, have the general charisma of a damp-rag and the looks of low-grade bank clerks, are totally disconnected to the game. They have no more skin in the game than a prestigious sabbatical from a brick-and-mortar Ivory League tower, a ticket as vaca' from teaching so they can add on to their already very expensive-to-print CV.

But bond managers are still screwed, epic competitive advantage gone, and specifically the idea that they know more than the other two do -- people have become billionaires with less.

Why
In this case they've put their institutions in order. We thought, as the old saying goes, Europeans like the idea of laying down your shovels, sit on your asses, lite up a Camel, and that this, post-war Europe is now the new Promised Land. But this has changed and perhaps because of a higher-rate of collaboration between the different governmental departments.

Institutions within the vast EU infrastructure like the Council of the European Union, which represents the various countries and OKs provisional reforms that are shortly sent to the European Parliament, and the European Central Bank now talk on a weekly if not daily basis during crisis times. Patrick Honohan commented in a recent talk that rather than speaking in their individual silos, it's much more a recent phenomenon where intra-departmental agencies are working closely and collaboratively. The number of leaks and the fallout of using secret, private information has been next to nil, thereby increasing the trust and confidence these institutions have over the need to connect to the bond market.

But economic history has been a war between creditors and debtors, with the nature of bonds as the battleground, and it was not always like this. When third world countries – I mean emerging markets – like Argentina defaulted in 1999, it played by a so-called set of informal “rules”. In the 1990s, when it pegged the peso to the dollar, a recession struck, and the country was left with huge debts denominated in a foreign currency. No capacity to regain its competitiveness could be found beyond exports without devaluing their currency, a familiar problem in Europe today. President Kirchner opened up his country's accounts, and while the IMF watched as each page in their books was turned slowly over, the bond market began trusting Argentina again, albeit with some memory.

Europe today

Turn again to Europe today, and no such offer has been made to either the bond market or the IMF. We neither know the true state, in either the numbers game nor simply in the form of informal information on each country -- be it Spain, Portugal, Ireland, Greece, France, or Italy -- can repay its debt. How exactly can repayment be achieved and where are the numbers for it? Austerity? Bond sales that will enable some form of stimulus in the near-future?

Yet the bond market continues taking the word of each individual central bank Governor over the lack of information that pervades the Eurozone Credit plight. The ancient philosopher Anacharsis put it best: “rules are like spider webs t gets the little ones but lets the big ones get away”. Argentina was forced to reveal, while the European countries shriek away at the possibility.

Even before other developed countries like the Australian banking crisis of 1893 hit, or J.P. Morgan’s bailed out the entire U.S. federal government in 1895, in each case the full-scale of the respective government's financial tomfoolery rose beyond the pile of tattered trash and political fool play, and every digit and transaction was eventually found. But now doing any of this frowned upon; using private information for discretionary policy infringes on the very rule bond managers depend upon -- know who you're dealing with.

What's now enacted in every European central bank, the ECB, the European Commission (the EU's regulator), is private information is weighted heavily over public information. Freedom of information act? No, that will never exist here.

We will never see how Eurozone countries like Greece and Ireland, who will refinance their debt in the next two weeks, may or may not be able to repay it, or if the ECB will continue to back-stop them. TARGET 2, the system that enables the Bundesbank to take a large write-down of liabilities and coordinates the transactions and bailouts between the ECB, and the various individual central bank, is so complex no one is sure of how it works.

But it's Europe's central bankers, especially Patrick Honohan, and not bond managers who will be laughing, when they find their "ECB-backed bonds" trading at 5% when they should by all accounts be at crisis hit-levels 100 to 150 basis points higher.

It makes sense. European institutions have gamed the system for five years now, coordinating constantly information that no one else has or will ever obtain. TARGET 2 conceals the real liabilities, the EFSM may or may not have 60 billion Euros. The ECB could bank roll more bailouts, but unlike the Federal Reserve, we're not entirely sure what line of policy it's following. Is it the Taylor Rule? Is it another rule? Which rule is it Mr. Draghi? We can't be sure.

Conclusion
It's as one ECB paper said on the topic of private information weighted higher by central banks than that of public information. If it's too noisy, then it is the central bank's responsibility to keep it quiet, if and only if it maintains the stability of the financial system over the cull of transparency, and trust that it permeates with the rest of the market (Baeriswyl 2011). If requiring any internal data to not be published for years, despite this data usually going into the fixed-income models that banks usually use, then so be it. Somehow, they believe and have led the bond market to believe that taking their word for it is as good as seeing the data itself.

But in this 21st century coordination problem, a classic economic conundrum that keeps Nobel-prize winners publishing, the ECB doesn't have to tell the world that it has stolen your shovels, taxed the public's asses, raised the price of Camels ever so higher, and mortgaged the Promised Land to pay off record debt, but this is a dime a dozen. It’s as the famed British trade unionist Aneurin Bevan, the man who implemented Atlee's socialist policies, once said when he learned Britain was joining the Council of Europe, “open that pandora’s box and you never will know which Trojan horse will jump out” and in this case the fake horse released an elephant into the room and its name is the Euro.
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1. Romain Baeriswyl & Camille Cornand, 2011. "Reducing overreaction to central banks‘ disclosures: theory and experiment," Working Papers 1141, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.