Friday, 24 October 2014

Little Homily

I am reminded by this of a little story that I'd like to share.

The last 'family' holiday my mother dragooned me into was a visit to Paris with her, my old man and my sister.  I must have been about 17.

We stayed at a hotel just near the Arc de Triomphe and did all the usual touristy things.

One evening, in the bar, the old man (who'd been a citizen soldier in the Western Desert and Italy) got into conversation with two other tourists of the same age as him. This was in about 1969 so he'd have been about 63 - about my age now.  The other two tourists, one a German bloke and the other an American were about the same age and discovered that they had also been in the Western Desert and Italy.  Things went well from then on. Their respective wives went to bed. They got stuck into the Kummel.

My mother knocked on my door at some ungodly hour and asked me to go down to the bar to find out how things were.

By that time the three of them had gone through at least two bottles of Kummel, and the overall opinion of the meeting was that WW2 was a bit of a mistake - and entirely the fault of the French anyway...

Thursday, 23 October 2014

Here's Another Gem...

From here:

Exhibit 1

Me: Ah, but DH has 'earned' a tax free £1.5m ish on his house....

Mountainousipswich: No he hasn't. Not until he sells it, if he sells it. And there could be a property crash before then. He may even - amazingly - want to live in it and pass it on to his kids.

Me: That's just silly. Of course he has it. If you bought shares and they went up you'd be richer. And all asset prices fluctuate. If his house price goes down he pays less tax. Really, come on now...?

Mountainousipswich: Shares are not money, where did you get that idea from?

If I buy ten shares in Apple at $10 a share, then I have $100 worth of shares, not dollars. Those shares might increase in value to $20 each, but I would only make an extra $100 if I sold them at that point. The shares may also decrease to $5 a share. But at no point do I have money until I have sold the shares and received the cash in hand.

Warren Buffett - who owns several billion in shares - would be completely penniless tomorrow if the world markets completely crashed.

I mean, really? Am I missing something?

Well, Well, Well.

From - very surprisingly - Conservative Home.


You really couldn't have better arguments for LVT/CI.

Supermarkets and their suppliers

The Daily Mail has published a supplier's eye view of those Tesco charges.


What the article doesn't explain is the so-called "£263 million black hole". AFAIAA this is no such thing, all quite simple and a question of judgment.

i.e. if Tesco charges a supplier an upfront, non-refundable fee of £1 million to reserve a certain amount of shelf space for the next X months or Y years, should it book that as income on the day it is received or should it time apportion this over X months or Y years?

I'm not sure it matters as it's only a timing issue, so while profits are possibly overstated in the early years, once it's up and running, you end up with a fairly reliable profit figure - because while you are booking all of this year's charges as income, you are not including the corresponding fraction of earlier years' charges either.

(It's the same as fixed asset additions and depreciation. In the early years, it will spend more on fixed assets than it charges in depreciation, but after a few years, the two figures are very similar, i.e. the business is now charging 20% depreciation on the total additions of the last five years.)

And how much of this is just "rent"?

From City AM:

FITBUG, a little-known Aim-listed firm that makes wearable fitness trackers, saw its shares rocket more than 350 per cent yesterday, after revealing that Sainsbury’s and a leading US retail chain would begin stocking its products next month.

The Fitbug Orb, which retails for £49.95 and connects to a smartphone app to track daily routines and nutrition, will be sold in 293 Sainsbury’s supermarkets from 9 November and all 1,800 Target stores in the US.

Fitbug’s shares soared from 0.37p to 1.7p yesterday on news of the deal, the company’s largest distribution deal to date, pushing its market valuation from £630,000 to over £3m.

We know from the recent Tesco episode that supermarkets charge new entrants a fee to stock their goods, in other words, the supermarkets are renting out shelf space. If the "internet" (i.e. glorified mail order) were really such a threat to bricks and mortar retailers, then clearly this wouldn't happen.

We don't know how much Fitbug paid Sainsbury and Target, if anything, but as the market capitalisation of the company went up by nearly £3 million, so in theory, those two chains could have charged Fitbug a signing on fee of £2 million or so.

And whether or not a signing on fee was paid, the lucky shareholders have made an overnight gain of nearly £3 million.

Is that really all earned income? It can't be, because that's the net present value of the additional future profits. Emphasis on "future" - it hasn't been earned yet, somebody else has to do the earning.

And being a shareholder is like being a mini-monopolist. Although there's nothing to stop other people developing and manufacturing these fitness gadgets, there is a limited number of Fitbug shares, and Fitbug have stolen a march on their competitors by being on the shelves first.

And so on.

Wednesday, 22 October 2014

"Children unite for Ex-Pop stars in Need"

From the BBC:

Children are to unite for their annual exposure to pop stars who ceased being famous before they were born.

Tina Barrett, Paul Cattermole, Jon Lee, Bradley McIntosh, Jo O'Meara, Hannah Spearritt and Rachel Stevens will perform a medley of their greatest hits on the BBC appeal show on 14 November.

The BBC also provided free publicity to the group in 2000, when they released Never Had a Dream Come True, which reached number one as a result.

"This is going to be, er, interesting," the children said, "We ended up watching BBC Ex-Pop stars in Need last year as well, mainly because our parents wanted to watch it. Didn't recognise any of them, if truth be told."

Student Loans

From the BBC

An activist group in the United States has been carrying out deeds that some might think the stuff of dreams - buying and cancelling other people's student debts.

Rolling Jubilee has purchased and abolished $3.8m (£2.35m) of debt owed by 2,700 students, paying just over $100,000 (£62,000), or as it says, "pennies on the dollar".

Blimey, that isn't much of a slice of the amount owed.

The group pulled off the deal to illustrate how cheaply the money owed can be sold on the secondary debt market, she says.

"We wanted to question the morality around repayment," she says.

"Your debts are on sale. They are just not on sale to you."

Which if true, is just terrible.

Many of Everest Colleges' debtors are single mothers and are on low income, she says.

"It is documented that they end up worse off and have no better chance of getting work than if they simply finished high school," she says.

Ah, right. So, the reason the debt was "pennies on the dollar" is because most of them took out student loans and are really bad risks. Single mothers on low incomes are not going to be paying back anything on their student loans, will struggle to get jobs that will mean they have to start paying back money or finding a rich man to pay it for them. A few will find something that pays well enough to start paying back and that's where the 1/40th of the original amount comes from.

Incidentally, I listened to a You and Yours program the other lunchtime about students saying they were worse off than their parents, that included a student complaining that she had to do a really boring job because there were no jobs for composers with her music degree (unlike Elvis Costello who worked as a data entry clerk and Mark E Smith who worked in a shipping office) and some freelance film bloke who for some reason had to be in London. Of course, the flip side was the idiots talking about how young people had lots of electronics, as though £600 for a phone is any more than a rounding error on people's costs compared to £250K for a house (I think when my father bought his Amstrad computer that it cost about the same as 2 months' mortgage).

Various Anti LVT Entertainments

From here:

You are confusing "rent-seeking" and development for profit. If a landowner does not develop land with potential for improvement he does not lose anything (take set-aside as a case-study) but if he develops the land your increased "location" tax becomes a drain until the development is passed on. It becomes a giant pass the parcel until someone wealthy enough to hold the developed land acquires it. In fact what it does is ensure that it passes to the very "rent-seekers" you are trying to eliminate. LVT is a great reason NOT to develop or improve property.

If you are getting services and benefits you should be making a contribution (however small) towards them.

The Left's hatred of anyone who rents out a property or owns land is envy, pure and simple.

As long as you tax the rental income properly, don't allow tax free gains on the properties and stop developers just hoarding land, a healthy rented sector is good for the housing market and for society as a whole.

Guess what happens when you put a tax on rents. They go up.

The whole concept of council tax is based on their belief you own nothing and your home is theirs to charge rent for.

etc. etc.

Edge of Tomorrow (DVD/streaming) Review

Something that hasn't really been explained in the past few years is the demise of "star value". There was once an era that Tom Cruise's name over a film would automatically get an initial audience in who would either rave about it (Rain Man) or tell people to avoid it (Eyes Wide Shut). Star names have been replaced more with franchises, or even studios. The Pixar and Marvel names will bring in crowds in a way that Tom Cruise or Will Smith don't.

I'm mostly ambivalent about this, but I generally rather like the films that Tom Cruise is in. Of all the movie stars out there, I think he's generally selective more on quality than pay cheques, which means you've got a good chance of getting good value going to see a film with his name on.

It's the only reason I can think of that the Edge of Tomorrow was a bit of a flop at the cinema, although the movie seems to be rebranded as Live. Die. Repeat, so maybe the name was a problem. It's brilliant, and a rare thing, an action sci-fi movie that thrills in the action, and has some sci-fi that's logically consistent and doesn't fall apart before the end. It's also funny at times, with some dark humour in it. Well worth 3 or 4 quid.

The Good Old Days

Simon Jenkins in yesterday's Evening Standard:

The new proposed rate of £3,000 ['Mansion Tax' on homes worth £2 - £5 million] will come on top of the average of £2,000 that H-band properties already pay in council tax. Indeed, London valuations are so out of date that many bands E, F and G may pay mansion tax.

But the total tax will still be way below what such properties would be paying had the old rates been indexed rather than abolished (for the poll tax) in 1989. Tony Travers, the local government expert at LSE, estimates that the rates on “mansion-taxable” properties would today be in the range of £6,000 to £20,000 a year.

It's not that far off actually, if you add Council Tax and Mansion Tax together. So anybody who bought pre-1989, i.e. all the Poor Widows In Mansions, has no reason to complain; that's what they signed up for.