Once again, the discerning readers of this 'blog have got it right. On a low turnout of 28 votes, the most chosen option in my Fun Online Poll was the correct one:
"In the meadow we can build a snowman ...but we won't because Snowmen are racist." (9 votes)
In case you think I am making this up, here's an article from The Sunday Mirror ...
In a 15-page paper on "Representation of snowmen in Christmas cards" art historian Dr Tricia Cusack (someone actually PAYS her to do this job?) says that because they are always white and male, snowmen are both racist and sexist.
All that remains is to wish one and all the very best of luck for the New Year. We'll need it.
Wednesday, 31 December 2008
Once again, the discerning readers of this 'blog have got it right. On a low turnout of 28 votes, the most chosen option in my Fun Online Poll was the correct one:
The Daily Express* gives a new report by The Taxpayers' Alliance on public sector non-jobs a good airing here.
... a Treasury spokesman said: “The Government has made a priority of fair remuneration for teachers, nurses, doctors, police officers and other public servants.
Well he would say that, wouldn't he?
Just to remind ourselves of the numbers, there are a total of 1.3 million "teachers, nurses, doctors, police officers" which by subtraction leaves 6.7 million "other public servants" working in 'Education, health and public admin'** per Table 5(2) of this.
The TPA are not complaining overly about pay for nurses, teachers or police officers, although it seems fair to mention their pension arrangements every now and then. The TPA are specifically addressing the issue of non-jobs (of which there must be millions). I can't find the "Annual Non-job Report for 2008" on their website yet, but the Annual Non-job Report for 2007 lists a few actual examples on the very first page. That is what the TPA are talking about - not "teachers, nurses, doctors, police officers"...
* Via Mark's Any
** Yes, some education and health is provided and paid for privately, but only a tiny fraction.
Tuesday, 30 December 2008
Many Land Value Taxers reckon that a high tax on annual site-only rental values would prevent bubbles in land and property prices. On the basis of actual evidence, I strongly suspect that this is not true.
1. I base this on the real-life example of Business Rates (also known as National Non-Domestic Rates), which are the closest thing we have to LVT in the UK (it's a progressive property tax with a few tweaks). Broadly speaking, NNDR are calculated as 47.1 per cent of the annual rental value of the whole property. In other words, if you are a tenant paying £10,000 rent to the landlord, you also have to pay £4,710 in NNDR.
2. Economic theory tells us that as the supply of business premises is fixed in the short or medium term but demand is price-elastic, the tax is borne by the landlord - in other words if it were scrapped, the landlord in this example would just increase the rent to £14,710, leaving the tenant no better or worse off. There are plenty of real life examples in the UK that bear this out, i.e. successive governments have declared certain areas exempt from NNDR from time to time, and all that happened was that landlords put up rents, or the market value of owner-occupied business premises increased.
3. The British Retail Consortium (who represent tenants rather than landowners) is perfectly aware of this phenomenom, which is why they recommended replacing NNDR with Land Value Tax in their submission to Sir Michael Lyon's Review of Local Government Finance at para. 6.43:
Land Value Tax (LVT) has a number of advantages. These include not distorting behaviour in the same way as taxes on income and profits do, LVT’s potential effectiveness in incentivising the efficient use of land (as all land would incur a charge even when it was not being used for productive activity) and taxing land values could also enable local governments to profit from some of the increase in value as a result of a prosperous local economy.
4. For simplicity therefore, let's assume that the landlord charges the tenant an inclusive price of £14,710 in rent and pays £4,710 NNDR. Unless the landlord is a tax exempt body (pension funds, Crown estates, CofE Commissioners etc) then there's income tax or corporation tax to pay as well, after deducting maintenance and interest costs, but let's ignore that for now. That equates to a tax of 32% on the total rental value.
5. The split between the rent paid for the location and for the building depends on what type of premises and where. In the case of used car lots or petrol stations, with very little in the way of buildings or improvements, NNDR is more or less the same as LVT, which is why (at least in East London), many of these sites were converted to residential use in response to the increase in residential property prices. Conversely, the split for a well maintained office block in a not-so-desirable area may be 90% for the building and only 10% for the location.
6. For simplicity let's assume that on average, one-third to one-half of the rent that businesses pay is for the location and the rest is for the buildings and improvement. Thus it wouldn't make much difference overall if NNDR were replaced with a tax of somewhere between 64% and 100% of the site-only rental value of each plot, payable by the landlord.
7. In the medium term, wages, business profits, share prices and rents all increase in line. Per Treasury figures (Excel, Table C4), over the last few years, total revenues from NNDR were as follows:
2001-02 £17.9 billion
2002-03 £18.5 billion
2003-04 £18.4 billion
2004-05 £18.7 billion
2005-06 £19.8 billion
2006-07 £21.0 billion
2007-08 £21.4 billion
which is a compound growth rate of 3% nominal (slightly less than I would expect, but hey).
8. Research by CB Richard Ellis (Powerpoint, Slide 16) shows that between January 2004 and July 2007, rents had risen by about 10% (also about 3% compound) but capital values had risen about 45% (about 10% per annum compound) - since when capital values have fallen by about 20%, but that's a different story.
9. To summarise so far, NNDR are pretty much the same as an LVT of between 64% and 100% of site-only location values, but they did not dampen the bubble in commercial property prices in the slightest; according to The Nationwide, the average UK house price increased by 'only' 37% over the same three-and-a-half-year period.
10. As we know, capital land values are merely a balancing figure between the value of a finished building and the cost of building (or replacing) it. It is futile to argue whether a bubble in property prices leads to a bubble in land values or vice versa. We also know that a half-way sophisticated investor looks at net present values and compares yields on different types of investments. We also know that property price bubbles and credit bubbles go hand in hand. For a constant annual rental stream of £10,000, if the landlord can borrow at (or earn interest on his cash at) 7% he is prepared to pay up to £142,857 for the building - but if interest rates fall and landlords can now borrow at (or only earn interest on his cash of) 5% (and expect this state of affairs to continue for the foreseeable future), he is now prepared to pay up to £200,000 for the same building. It is only mug investors who buy on the basis of expected capital growth.
11. Ignoring the 3% annual increase in rents and NNDR, it is therefore pretty much a truism to say that NNDR, as a fairly high % tax on location/land values has little or no dampening effect on bubbles in commercial property prices.
12. Which, to summarise yet again, is why I think NNDR (along with all other property- or wealth related taxes, such as Council Tax, Stamp Duty Land Tax, Inheritance Tax, Capital Gain Tax, TV licence fee etc) should be replaced with a tax on capital location/unimproved land values. Assuming that landlords and investors expect a return of 5% on the capital cost of land, a tax of 10% on the capital site-only land value would collect about two-thirds of the annual rental value thereof (the tax wouldn't apply to the buildings and improvements of course, for the reasons outlined by the BRC at point 3. above) and be a pretty straight swap.
13. Under such a tax, capital values could and would not increase by a ludicrous 45% in three-and-a-half years. Going back to CB Richard Ellis' figures (link above), for a £100 capital investment in UK commercial property in January 2004, rents would have been about £7.25 and the NNDR bill would have been £3.41. The LVT bill under the system I suggested in point 12. would have been £100 capital value less two-thirds relating to buildings/improvements = location value £33 x tax rate 10% = £3.33 (i.e. pretty much the same).
14. By mid-2007, capital values had risen to £145 and rents had risen to £8. Under my LVT suggestion, capital values simply would never have risen this far - LVT would have risen to £7.10 (£145 less indexed cost of buildings and improvements £74 x 10%). This would have made the return on investment negative (once other costs are taken into account) so the more sophisticated investors would have bailed out by 2005 or so. Yes, we know that there are mug investors who pile in just as a bubble is about to burst, who are prepared to accept negative rental yields in the hope of making capital gains, but firstly there's not much we can do to educate people like this, and secondly, the capital losses they will suffer from buying at £145 in 2007 are considerably higher than they would have been had the bubble in capital values been dampened by LVT and peaked at (let's say) £130 in 2005.
15. You may say "To hell with the property investors, why should I care?". It is important though - had the property price bubble been dampened then the credit bubble would also have been dampened, and the property price crash and credit crunch would, to some extent have been averted and we wouldn't now be staring at the wrong end of a recession, or even a Second Great Depression.
I took the kids to see Bedtime Stories today, it's nice enough as it goes and pretty much what you'd expect from the trailers.
There is one absolutely brilliant scene though. Imagine the most implausible comedic scenario in sit-com history:
1. Adam Sandler (a likeable version of Ben Stiller) is a humble maintenance man who has been given a chance to present his ideas for a theme for a new hotel;
2. If he manages to impress the Big Boss Man, he gets the top job at said new hotel;
3. His tongue has swollen to improbable size as a result of being stung by a bee that was on his ice cream, so he can only mumble incoherently;
4. Russell Brand, his side-kick, dressed in a hula skirt and coconut fake breasts, offers to interpret his ideas; obviously he messes some up like saying "alligators" instead of "elevators".
This probably sounds incredibly un-funny, but it isn't. Honest.
John B reckoned that the USD dead cat bounce will end in 2009 in the comments here. Going by this chart (USD against basket of currencies 2005 - 2008, click to enlarge) it looks to me like the dead cat bounce is over and USD is on its way down again:
To put that in perspective, USD reached a peak of over 1.2 in early 2002 and has been sliding ever since.
They allow their spokesman to express support for the government's Loony Idea Of The Day, being speed-limiters in cars.
Monday, 29 December 2008
I popped in to the shop by the Tube Station today to buy half an ounce of Old Holborn. A butch but not unattractive woman, who was standing in for the usual bloke, told me that she thought they were sold out. Nonetheless, she dutifully scratted round under the counter and actually managed to find one.
I was about to say "Top man" and decided against it a split second too late - once mouth was engaged I couldn't stop. The alternatives "Top woman" and "Top girl" were dismissed on the hoof, so I stuck to Plan A and said "Top man!" anyway.
She took it pretty well, all things considered.
I swapped my play money from JPY to AUD in late October, when AUD was about 39.5 pence. By today it had climbed to 47.2 pence (a 19% profit, in GBP terms) and as my nerves are now shot, I have converted it all back to GBP, which, I am happy to add, brings my total GBP gains on my two FX trades for the year to about 70%. Which is nowhere near as heroic as it sounds, as I was down about 5% over the previous three and a half years, not having earned a penny interest in the meantime.
Yes, I know the UK economy is spiralling downwards, and news will remain bad for a good while longer, but there is always a distinct possibility that GBP has overshot its 'fair value' (whatever that is) i.e. is undervalued, i.e. is worth buying. It's not like all the other economies aren't going to tank as well.
I haven't the time to update that chart, but in the past week or two, GBP has slumped to well below 0.8 times its long run average against a basket of other major currencies, which is one heck of a drop.
Sunday, 28 December 2008
If at all possible, it would be nice to have a free market in everything. You can't really have a free market in public goods or core functions of the state*, but that's only five or ten per cent of the economy or overall activity.
The only other half-way sensible thing that a government can do is redistribution and/or subsidising merit goods, i.e. education and health. Given our starting point, it is politically a non-starter to call for the entire welfare state, NHS and State education system to be scrapped, but we can arrive at something approaching free markets via universal benefits and vouchers.
Completely private schools, barring the usual collusion, would compete to provide the highest standards at the lowest cost; but children of poor families who aren't lucky enough to win a free place at a posh school would have to make do with a much more basic education, or end up in schools run by sects.
OTOH, if you give all school age children a voucher worth £5,000-plus, then as far as I can see, everybody wins. It would shave £20 billion off the schools budget (overheads and waste are enormous) so the taxpayer's happy; wealthy people with kids at private school are laughing because they no longer have to pay twice for education (once for the 'free' places they don't use and again in cold hard cash); the not-so-wealthy can now afford private education and children of poor families who can't afford much of a top-up to the vouchers still have a much wider choice of school - even if it's only a choice of state run schools without top-up fees.
Remember also, education is to a large extent a common good, i.e. having a good education is primarily for your own benefit, but even if you are an under-achiever, you are better off in a well-educated than in a poorly-educated society.
The same sort of principles apply to health vouchers, as ably expounded by Health Minister Dick P.
For some reason education and health vouchers are seen as right-wing, probably because they have been proposed by the Tories. But exactly the same principles apply to the Welfare System. The Citizen's Income idea is seen as left-wing because it involves (forcible) redistribution, but it is no more redistributive than education or health vouchers, and the same general rules apply.
In the absence of a Welfare State, we'd have hardly any single mothers (which is the root of a lot of problems) and more people working, albeit for low wages. But it is not fact that we have redistribution that causes this, it is the way the Welfare State has been designed, for example:
a) It actively rewards the feckless, i.e. an unemployed single woman boost her income by £120 or so a week if she has two children. If a married, working woman with a working husband gives up work to have two children, they lose the mother's income (obviously) and the welfare state gives them a derisory £24 or so.
b) It actively discourages stable families.
c) It actively discourages taking up temporary, part time or low paid work (to the extent that the National Minimum Wage hasn't destroyed many of those jobs anyway) because you lose as much in benefits as you gain in net income.
The idea behind the Citizen's Income scheme is, broadly, 1. Take the entire amount that 11 million pensioners, 5 million working age adults, 1 million students and 12 million children currently receive, plus the billions lost in fraud and administration costs; 2. Extend the class of those entitled to stay-at-home parents (of which there are only about a million or two) and better-off students (of whom there are only a few hundred thousand) and 3. Dish it out as non-taxable, non-means tested weekly payments (lower rates for children and higher rates for pensioners, obviously). To avoid overlaps with the tax system, there'd be a choice - claim the CI payment or a much higher personal allowance.
This would still be redistribution and a safety net against poverty, but the way I see it, would completely avoid problems a), b) and c) listed above, provided of course that Child Benefit were considerably less than the cash cost of bringing up a child to prevent 'baby farming', to reinforce this, it could be restricted to the first two or three children-per-mother.
* Although you could have half a free market in e.g. police, street lighting, refuse collection if local councils had one source of revenue and one source only, i.e. Land Value Tax. Property prices in areas with cleaner, safer and better lit streets would of course be higher than in crime-ridden areas. If the council in the crime ridden area wants more revenue (which is just human nature) they will have to concentrate on doing those things which push up property prices, i.e. make it more desirable, i.e. that add value - like reducing crime and so on. To the extent that councils make a surplus by concentrating on doing sensible things, you would hope that this is returned to the voters in tax reductions or spent on other stuff that adds value, so that ultimately cost to taxpayers = value of services they receive = cost to the council of providing those services, which is the ideal of free market capitalism.
If the mood takes me, I shall explain why LVT, unlike existing property and wealth related taxes (which are pure revenue raisers and/or jealousy surcharges) makes the land market more like a free market in a later post.
Saturday, 27 December 2008
What puzzles me about driving a car is that although I am normally one of the most impatient people alive, I get the opposite of road rage. Once I'm behind the wheel, music on, cigarette in hand*, a strange inner peace descends over me, which insulates me against all but the very worst 'traffic calming measures' that e.g. the London Borough of Waltham Forest** can throw at me.
* I'm not sure if this is still legal. It will certainly take the fun out of it when they ban it. I open the windows if the kids are in the car, honest.
** It's a good job I live out in Essex now.
Here's the website you need if you want to do quick comparisons of house prices in different parts of the country.
The data they use is not new or original, but it is very quick to load and you don't need to register or anything. All in all, an instructive way of whiling away those spare minutes at work.
Truly, these experts cook up some insane plans which are then duly reported as if they were sensible.
Here are some snippets from a recent FT article:
Jean-Claude Trichet, president of the ECB ... did not rule out the possibility of the ECB buying government debt at some stage, even though such an option was not currently being considered.
... The BoJ cut rates to nearly zero on Friday, stepped up its purchases of government bonds and said it would buy commercial paper...
... senior Fed officials do not think quantitative easing was a big success in Japan. The Fed says its own strategy is to stimulate the economy by driving down actual borrowing rates – increasing reserves only as a by-product– and it prefers to call this credit policy or credit-based easing.
Even the BoJ does not think quantitative easing was an enormous success, and denies that what it is doing now amounts to the same thing.
Take it from me, all these central banks are now trying what Japan has been trying for the past ten years or more, it hasn't worked so far, it won't work now.
The idea that you can fix a recession by allowing the central bank to buy government bonds appears to be without any merit whatsoever. That's just government departments swapping bits of paper with numbers written on them.
Even worse is the idea that governments should lend directly to or invest in businesses, that's taxpayers' money straight down the toilet, and we'll end up with a load of loss-making nationalised and subsidised businesses (the State hates admitting it's backed the wrong horse).
Friday, 26 December 2008
This may or may not work.
UPDATE I seem to have solved most of the problem by simply deleting the 'Post feed redirect URL' from my 'settings/site feeds' tab. Weird. Comments are still chopped off as at 3 December (rendering my 'Recent comments' widget useless) but at least I get updated in other people's 'blogrolls.
This is a test post, obviously.
Wednesday, 24 December 2008
NB - this is not my most recent post. I set the date so that it stays on top for the time being
I have been using the one from Tips For New Bloggers for ages, but it stopped working a couple of days ago. I have spent a couple of hours trying to replacing it with the Haloscan one (like Snafu and Pommygranate), but I can't get that to work either.
UPDATE: thanks for the suggestions, I have tried them all and I think it is the comment feed itself that is broken, not the widget - i.e. this:
only shows comments up to 3rd December.
That Somali-pirates-hijack-oil-tanker story appears to have disappeared off the front pages. So those who chose the option "Do nothing. How would they sell 2 million barrels of oil?" in my Fun Online Poll (17% of the votes) get a retrospective pat on the back.
Chucklesome is the fact that on 17 November, Brent Crude was trading at $50 a barrel; but it's now down to $37. I wonder, could the owners of the oil sue the pirates in the civil courts for their economic loss of $26 million? Would the pirates be able to claim that these damages should be mitigated by the fact that they were only asking for a $25 million ransom anyway, which they later dropped as low as $10 million, allegedly?
Maybe TFB can opine on this.
"I saw them gradually worn down, whimpering, grovelling, weeping - and in the end it was not with pain or fear, only with penitence. By the time we had finished with them they were only the shells of men. There was nothing left in them except sorrow for what they had done, and love of Big Brother. It was touching to see how they loved him."
... He [Winston Smith] gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark moustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.
From Nineteen Eighty-Four by George Orwell.
"Tony Blair used to say his mission would be complete when the Labour Party learned to love Peter [Mandelson]"
From an interview with Peter Mandelson in last weekend's FT.
Tuesday, 23 December 2008
To get us all into the festive spirit, it's a Xmas-themed challenge this week (click link to vote or use widget in sidebar).
Can you remember how the line from the timeless classic "Winter Wonderland" ends ..?
"In the meadow we can build a snowman ..."
... and pretend that he is Parson Brown
... and watch MMGW make him melt.
... but we won't because snowmen are racist.
... wot? It's more likely to snow in April!
... and kick his head in.
I'm calling this one after six days. A big thanks to the eighty people who managed to make that agonising decision.
The runaway winner is "We should now join the Euro because sterling is 'weak'" with 70 % of the votes cast.
In second and last place is "We should have joined the Euro in 2000 while sterling was 'strong'" with 30%.
Prime Minister & Other Bits And Pieces
Prime Minister - Obnoxio The Clown
Public Sector (Halving The Size Thereof) - The Fat Bigot
Local Government - Woman On A Raft (e.g. in the comments here)
Electoral Reform (and Religious Affairs) - Neil Harding*
Family (Getting The State Out Thereof) - Harry Haddock**
That's it. Finished.
* Aw, c'mon, I've got to have a token leftie.
** I wasn't sure where to put this department, but it is important.
From today's FT:
Ponzi schemes are much more common than is generally supposed.
Millions of ordinary people borrow from one provider of credit solely for the purpose of repaying another without the remotest expectation of being able to repay their latest loan until they have obtained the next.
David W Green, Financial Reporting Council, London.
Monday, 22 December 2008
The slump in sterling has reduced the value of the UK's international aid budget by the equivalent of up to £334 million since Gordon Brown became Prime Minister, Conservatives said...
Apart from the point that this 'blog's motto is "trade not aid", as any fule kno, what our gummint laughingly refers to as aid payment are largely export subsidies to UK business and grants to various quangocracies. Ergo whatever happens to GBP, the value of goods and services that the donee countries receive is largely unaffected by currency fluctuations.
Foreign Office & Defence
Foreign Secretary - Vindico
Defence - Remittance Man
Armed Forces - Richard North
International Trade - John Band
Aid - Umbongo (in the comments here)
Tomorrow - Prime Minister and other bits and pieces.
UK banks are in a bit of a Prisoners' Dilemma: acting individually, it is in every bank's interest to foreclose on every mortgage loan that looks in the slightest bit risky as soon as possible, because there is an advantage to being the first to bail out. However, this will merely speed up the house price crash. Acting as a cartel therefore, it is in the banks' collective interest to hang on as long as possible.*
Whether RBS NatWest will decide that this is a PR disaster and hastily back track remains to be seen...
The Addymans have been threatened with repossession, even though they've never missed a payment on their mortgage. Peter and Marian Addyman say NatWest gave them a week to repay the £226,000 loan or face losing their home, and the deadline has expired. The ultimatum - for which they say they have been given no explanation - comes despite the bank's nationalised parent company, Royal Bank of Scotland pledging not to carry out any repossessions for six months...
Mr Addyman, a 32-year-old pharmacist, and his wife, who works for a mental health unit, have three sons. They bought their newly-built five-bedroom home in St Leonards-on-Sea, East Sussex, for £250,000 in 2004. About two years ago they consolidated their debts by taking out a second mortgage for £100,000 with a finance company, but insist they were entirely open with NatWest about this.
... NatWest wrote to them in September to say that after 'reviewing' their arrangement it was withdrawing the mortgage. They had 30 days in which to secure a new loan or it would begin recovery action and inform credit rating agencies of the debt. The letter concluded: 'We assure you that we have only reached this decision after careful consideration. However our decision is final and we are not prepared to enter into any discussion in relation to it.'
The couple tried to make alternative arrangements, but say the fall in property prices has left them unable to find a new mortgage deal.
* All cartels face a similar problem, for example for oil-producers, there is a collective advantage to restricting supply to keep prices up, but an individual advantage to breaching a quota to exploit the artificially high prices.
Sunday, 21 December 2008
Administering Education Vouchers - Tim Worstall
Housing - Alice Cook
Administering Health Vouchers & Denationalising the NHS - Dick Puddlecote
Family Planning - Trixy
Postal Services (and Gun Control) - Simon Clark
DCMS, DCLG & DBERR (Shutting Down The) - Tim Almond
Tomorrow - Foreign Office & Defence.
Saturday, 20 December 2008
...HBOS has come out with a warning that bad debt provisions for the current year will top around £8 billion which is nearly half of the £15.5 billion of emergency capital raised earlier this year.
1. About a fifth of UK residential mortgages are with HBOS and I estimate the total losses to UK banks thereon at £40 billion, a fifth of £40 billion is £8 billion.
2. These are provisions, not actual losses, which may turn out to be a bit more, or indeed less. Then you can add on stuff for lending to businesses and investments in US sub-prime rubbish and so on.
3. It's hardly headline news if they end up losing all their emergency capital - that's why they raised it, n'est-ce pas? Seeing how difficult/expensive this is, you'd expect them to raise just enough to cover their losses, so it's reasonable to expect them to actually lose it all as well.
Given the prevailing mood of insecurity and austerity, it seems inappropriate to do any new Xmas posts, so I'll just recycle one I did last year:
You'll probably hear ['White Christmas' by Bing Crosby] several times over the next few weeks, just like you've heard it hundred of times before. Yeah, yeah ... it's that time of the year ... blah blah.
But you have to listen to it! It is pure unbridled genius!
The song is so slow that you cannot actually tap your foot to it; towards the end, the backing musicians actually nip out of the room for a comfort break, leaving Bing to stretch out "... and may all your ..." just long enough for the musicians to rush back in and pick up their instruments again.
And there's whistling on it. And it was recorded in one take in 1947. And so on.
UPDATE: it is claimed by the asbestos removal lobby that the snowflakes used on the film set were 'lethal' asbestos particles. Poor old Bing - he only survived another thirty years or so ...
Both major parties have been rumbling on about "encouraging the banks to lend to small businesses" and appear to have entered an arms race whereby each party promises something more generous than whatever it was that the other party just promised, at the moment, government guarantees for such lending are top of the agenda. Essex and Kent County Councils have even seriously suggested setting up their own banks.
Right, we all know that the government is bad at most things, but quite how bad, I wonder? The UK has long had a scheme whereby the government guarantees 75 per cent of loans of up to £250,000, I think that this is partly recycled EU money. According to yesterday's FT:
Defaults on loans covered by similar schemes since 1981 have run at 28 per cent...
Department Of The Evironment
Energy - Nick Drew
Planning And Infrastruture - Neil Craig
Climate Change (Debunking Myths Thereabout) - Devil's Kitchen
Countryside And Fisheries - Gregg Beaman
Roads - Martin Cassini
Tomorrow - Public Services
Friday, 19 December 2008
From today's FT:
A headline on your front page of December 17 read: "Falsified records hamper Madoff inquiry."
To paraphrase Claude Rains in Casablanca: "We are shocked ... shocked ... that there was falsification of records going on in this Ponzi scheme."
George J Grumbach Jr, New York.
From The Metro:
Conservative leader David Cameron today pledged to help working families get through the economic downturn and said he would help by freezing council tax for two years... "One of the first things we would do is freeze the council tax, because after your mortgage that is one of the big bills that you have to pay, and we have identified savings in the Government - the stuff they spend on advertising and consultants - and use that money to freeze your council tax for two years to try and help at this time."
Council Tax is not 'a bill', it is 'a tax' which raises about £20 billion a year, or £1,000 per household. The taxes on incomes and production (income tax, National Insurance, VAT and corporation tax), that are ultimately borne by 'households' raise about £340 billion a year, an average of £20,000 or so per working age household.
So, tell me Dave, which number is bigger - £1,000 or £20,000?
And as any fule kno, taxes on incomes and production are the ones that stifle an economy, and are the ones that should be reduced first. Contrast that with taxes raised to cover about a quarter of local expenditure (notwithstanding that councils waste shed-loads of money, different topic) - these do not particularly stifle the economy - if anything, they encourage people to work that little bit harder to raise the money to pay the Council Tax.
Finally, what about tenants? The people at the bottom of the pile*? All things being equal, if Council Tax goes up, this depresses the amount of rent that landlords can charge, so a Council Tax freeze does not particularly benefit them.
* I'll exclude the sell-to-renters from this group, as that would be special pleading.
Chancellor of The Exchequer - PragueTory
Banking And Financial Services - Lola
Pension Simplification - FormerTory (in the comments here)
Welfare Reform - Mark's Any
Small Print - Mrs Smallprint
Tomorrow: The Environment
From the BBC:
Decades after a notorious experiment, scientists have found test subjects are still willing to inflict pain on others - if told to by an authority figure...
This seems like a fair summary of our current system of government, where most powers have been passed up the chain to the EU, whose edicts then trickle down again via national governments and result in, e.g. local councils fining residents for putting the wrong type of waste in the wrong type of receptacle. On the basis of CCTV evidence.
UPDATE: Or tracking the movements of newspaper boys who "Other than not having the correct paperwork ... were working legally", via Harry Haddock.
This story will run and run. My personal highlights are:
FORMER TV golden girl Anthea Turner last night sobbed as she revealed she’s lost an astonishing £100 MILLION in the credit crunch. The Perfect Housewife presenter told how her husband Grant Bovey’s buy-to-let empire had collapsed, and wept: "Our backs are against the wall — we may even lose our mansion."*
... Anthea told us of her fears for the future. "I’ll be 50 in 18 months’ time and now I don’t even know whether we can keep our home," she said. "The property industry has been caught with its knickers around its ankles."
She and Grant revealed they are "very seriously considering downsizing"** from their £5 million Surrey mansion in a 57-acre estate complete with £100,000 polo field, stables full of horses and a £500,000 tennis court with pavilion and floodlights.
* "Let them eat cake!"
** I am sure that the bank will be happy to nudge them along.
Via Anti Citizen One.
Thursday, 18 December 2008
It's a quiet newsday, so I shall pick up the baton from Mark's Any and nominate my 'Bloggers Cabinet.
The Home Office
Justice - Julia M
Immigration - Phil Thomas
Drugs (Legalisation, Regulation & Taxation Thereof) - Jock Coats
Data Security - Longrider
Police & Prisons - Steve Allison
Narrowly failed to qualify as Home Secretary: Old Holborn
Tomorrow - The Treasury
Wednesday, 17 December 2008
This week's brain-teaser:
Which statement is more irritating:
A. We should have joined the Euro in 2000 while sterling was 'strong'.
B. We should now join the Euro because sterling is 'weak'.
Vote in the side-bar or here.
Notwithstanding that each statement is based on flawed economics and includes the giveaway word 'should' (which usually means that the speaker is confusing his personal opinion with logic), Euro-philes trot out these statements glibly and almost interchangeably, without noticing that actually the two 'arguments' cancel each other out, to the extent that either is a valid argument for anything, of course.
The tricky bit is deciding which statement is more irritating.
Lola drew my attention to this on Robert Peston's 'blog. Assuming it's factually correct, the salient bits are as follows:
...about $1000bn of "old world" companies' borrowings in the form of tradable debt has to be paid back during the next 12 months - with something like $800bn of this owed by financial companies and $200bn by non-financial companies. That would be a colossal sum to pay off at the best of times, and is equal to about five times what's been repaid in 2008...
Their desperate plight - their almost complete inability to raise vital finance - is shown by another Bank of England chart. It plots the market price of European leveraged loans - banker-speak for the debt of companies with big borrowings - which has collapsed to 65 cents in the dollar on average.
To translate: companies with large debts are only expected to pay back two thirds of what they owe, which doesn't make them a sound banking proposition in our harsh new world of tighter-than-tight credit...
The trick for government, therefore, would be to rescue fundamentally viable businesses, while somehow leaving feckless management to swing in the wind.
Ahem, why is this "the government's", i.e. the taxpayers' problem in the first place? These banks have a few options:
1. Do nothing, bury heads in sand. If I were earnings millions as a director of a bank, I'd be sorely tempted to hang on as long as possible and damn the investors.
2. Do the decent thing and approach bondholders now, offering to exchange each £1 of nominal bond due next year with a new 65p bond due a few years hence, plus shares with a nominal value of 35p (to keep the books tidy). Commercially, this merely crystallises the latent loss that bondholders have suffered so far. Quite what the market value of those shares is and the extent to which existing shareholders are diluted is up to negotiation between the parties concerned. If bondholders refuse to co-operate, the bank can always point out that a few well-placed rumours will see ordinary depositors rushing to withdraw their money. This is what is known in the trade as a debt-for-equity-swap.
3. Hope against hope that various governments find another couple of hundred billion of taxpayer's finest to cover the one-third shortfall when repayment is due. There is always the possibility that no such money will be forthcoming, in which case bondholders and other creditors will end up taking over the bank anyway.
Tuesday, 16 December 2008
Having nationalised half the UK's banking sector and established a shiny new quango to "protect and create value for the taxpayer as shareholder, with due regard to financial stability and acting in a way that promotes competition.", Nulab are now going on the safe side and hiring yet another two hundred and sixty taxpayer-funded penpushers to oversee the bits that are left.
Ironically, the bits that are left are mainly HSBC and The Nationwide Building Society, which appear to have been soundly managed and in no particular need of closer supervision.
Hmmm. I wonder what the real reason might have been ..?
Today's wizard wheeze is giving FTB's an interest free loan of 30% towards their new home, it's only a matter of time before they go the whole hog and give FTB's a cash grant, as I suggested here, I suppose.
I like this bit best:
Shadow housing minister Grant Shapps said the scheme 'is yet another example of media-orientated policy being announced on the hoof'.
Exactly! It reminds me of something that I posted six months ago...
From the weekend FT:
"Grant Shapps, shadow housing minister, said it was time for the government to take measures to help consumers buy homes ... The most urgent need was to scrap stamp duty for most first-time buyers purchasing homes worth less than £250,000, Mr Shapps said in an interview with the FT..."
F***ing hellski, it's almost as if they've been taking advice from Krusty Allsop ... oh ... they have!
Twats, the lot of them.
Monday, 15 December 2008
An earlier Badger was on Channel 4 News this evening (feel free to hunt for a clip here) in a head-to-head with Will "Nobody Know What My Qualifications Are. Because I Don't have Any" Hutton* and some banking PR guy from HSBC on the topic of whether we should join the Euro.
Having spent the last sixteen years ruing the fact that he happened to be Chancellor of The Exchequer on White Wednesday, Lord Lamont politely let Will "Nobody Knows [etc]" Hutton ramble on for a bit, and then hit back with the following simple points, IIRC:
1. What makes you think they'd have us? For example, UK public borrowing is far in excess of the three per cent of GDP upper limit seen as a precondition for Euro-membership (altho' they waive this for France on regular occasions, of course).
2. What makes you think they'd have us at this particular rate?
3. The fact that the GBP/EUR exchange rate is fast approaching parity is a numerical quirk and irrelevant in the grander scheme of things.
4. Even if they let us join at today's rate, the example of Italy (which joined at an artificially low rate) shows that any perceived competitive advantage for exporters is soon competed away, as joining at a too-low rate merely stokes inflation in that country.
Like most of my political heroes**, Lord Lamont is perceived as a bit of a failure, and I never thought I'd say this, but frankly, tonight ... he rocked.
* According to Will's Wiki biog, he is "weekly columnist and former editor-in-chief for The Observer in London (which ought to set alarm bells ringing) and currently Chief Executive of The Work Foundation".
Like all self-respecting quango's, The Work Foundation is registered as a charity and it burns its way through £5 million of taxpayers' finest every year. It describes its income as 'consultancy' in its accounts, but of course it's only government departments like DBERR, The British Library, the BBC, the DCMS, and Channel 4 who "... are among those who have benefited from the lens provided by Public Value. Indeed it has been so successful that financial support was secured for a second phase of research which commenced in January 2007. This phase will examine how public institutions understand what the public values as well as how they shape expectations and demand."
** Neville Chamberlain, Jimmy Carter, Sir John Major etc.
From the BBC's report on the chap who claims to have run a $50 billion Ponzi scheme:
France's BNP Paribas estimated its exposure to be more than $460m... "While BNP Paribas has no investment of its own in the hedge funds managed by Bernard Madoff Investment Services, it does have risk exposure to these funds through its trading business and collateralised lending to funds of hedge funds," BNP said in a statement.
I'll take that as a yes, basically.
Sunday, 14 December 2008
A: When landowners do it.
Longrider in the comments at 14/12/08 at 3.35 pm (with whom I otherwise agree on most things) said that my idea of replacing all existing property and wealth related tax (Council Tax, Business Rates, Stamp Duty Land Tax, Inheritance Tax, Capital Gains Tax etc) with a flat rate tax on all land values would be ...
... a bad idea. Not necessarily because the idea of the tax is automatically a bad thing, but because it is being sold as a justification for some pretty unpleasant social engineering.
In the same comment, he also stated:
Some years ago, Bristol Rovers tried to build a stadium next to our street. They were eventually defeated. Despite trying to convince us that this would be an amenity, it became obvious that we did not want this amenity - if I wanted to live next door to a football stadium, I could have bought a house in Ashton Gate. I don't, so I didn't.
Which gets us back to the initial problem - what is the least-worst way of balancing out competing property rights? I responded:
LR, what social engineering?
... As you say, if local residents don't want a football stadium, they will vote against it. You have answered your own question as to whether the stadium would have 'added value' - quite probably it wouldn't, that's why you voted against it.
So given that your land value has increased ever so slightly as a result of depriving the owner of the land on which the stadium would have been built of an opportunity of making a profit, is it so unfair to pay a bit extra for being able to exercise that right?
Would you describe the collective efforts of you and others in campaigning against the stadium as 'social engineering'? I certainly wouldn't - it was your choice and you exercised it. Half a free market is better than none, surely?
LR continues the debate over at his.
This pine cone appeared in the middle of our patio overnight. A couple of the 'scales' had been pulled off and were lying near it.
Our back garden is pretty big, there are no pine trees for at least fifty yards and the wind was not particularly strong last night, so I can only assume that a squirrel dumped it. But look at the size of the thing - it's about six inches long and it weighed in at seven ounces. Can squirrels really carry things like that?
Saturday, 13 December 2008
The Goblin King and The Badger never tire of telling us that "Britain is well placed to withstand a recession" and as they have lied about everything else, we automatically assume it is not true.
But think about it - if the exaggerated/simplified view of the UK economy is correct, perhaps in a funny way they are right.
The exaggerated/simplified view is that the UK produces nothing, and that our economy was based on a massive credit bubble/property price bubble. We borrowed shed-loads of money on the back of rising property prices and spent it all on cars, flat screen TVs, holidays etc, all financed by loans from abroad. On the other hand, the hard-working exporting countries like Germany, China and Japan have been churning out all these goodies and selling them to us on credit.
This model has now ground to a halt. But seeing as most of our spending was 'discretionary' (once you have a car and a flat screen TV, you don't need to buy another one for ten or twenty years, and a holiday in the sun, while welcome is hardly an essential) we can easily tighten out belts for a while. On the other hand, Germany, China and Japan have now lost an important export market. Faith in the ability of UK borrowers has collapsed and with it our currency, so the amount that we will have to repay them is a lot less (in their terms) than what they expected.
So we now have received a twenty-five per cent retrospective discount on all those goodies, and what do Germany, China and Japan have to show for it?
We are being bombarded on all sides by financial commentators, economists and politicians telling us that governments need to cut interest rates to stimulate the economy. Notwithstanding that governments (or their puppets, central banks) should have no rôle in setting interest rates - that is best left to the markets - it is quite easy to show that this is complete and utter nonsense:
There are two types of households: borrowers and savers.
1. If borrower households are given interest rate cuts then they are less motivated to go out and earn the money they need to pay the interest. In extremis, if the UK government is mad enough to actually offer people two-year interest free holidays when their incomes fall, they actually encourage people to work a bit less or take a lower paying or easier job.
2. If savers suffer interest rate cuts, then they have less spendable income, so they have to cut back as well. OK, you could argue that they will then work longer hours of seek a higher paid job to make up the difference, but this doesn't apply to pensioners (who have given up work for good) or to pension funds who hold large chunks of deposits with banks (who will just tell their members, tough, the value of your future pension has fallen).
The situation with businesses that are funded by bank borrowings is slightly trickier, of course. But as interest is just the price of money, a reduction in interest rates will, all things being equal, increase demand for loans and reduce the amount of loans that banks wish to make, and as banks have the final say on this, interest rate reductions reduce the amount of credit available to businesses. In any event, businesses are complaining about overdraft facilities etc being reduced or cancelled, and not about the interest rate that they pay being too high.
To illustrate this, look at Japan that has had a central bank base rate between zero or 0.5% for the past ten or fifteen years and it hasn't done them any good at all.
From yesterday's London Lite:
DAVID CAMERON could easily save the Irish from the pain of a second referendum on the Lisbon Treaty. Pledge as Prime Minister to hold the long-promised referendum [in the UK] and that should kill it off for good.
Dr D R Cooper, Maidenhead.
The full, unedited version appeared in The Scotsman.
Friday, 12 December 2008
Missing words round:
"Southern US hit by rare ............."
From the BBC:
The Advisory Committee on Mathematics Education welcomed the announcement. "It has long been felt that a single GCSE does not reward the level of difficulty and the workload compared to other subjects, and that [splitting up a Maths GCSE into two separate GCSEs] will help address this."
Er, which level of difficulty would that be, then?
From today's Telegraph:
"David Cameron says that savers are the "forgotten victims" of the financial crisis and pledges to help them if the Conservatives win the next general election."
A good start. I don't like the use of the word "help" as a euphemism for "give money", but hey. And how is he going to do this? By de-nationalising banks and allowing them to set their own interest rates again, perhaps?
The campaign calls on the Treasury to suspend all taxes on the interest pensioners earn on their savings and on the cash dividends they are paid on their shares.
OK, there should be no tax on dividend income at all*, as companies pay plenty enough tax at source, but what's the point of the first bit? Even ignoring the fact that there are plenty of savers who aren't pensioners, what's better; a sensible interest rate, let's say 5% with 20% income tax deducted (net 4%), or a laughable 3% tax free? If I had a spare elderly relative**, what's to stop me lending them a wodge of cash so that they can earn the interest tax free and hand it back to me?
Ah, of course. This is treble-pandering to the same constituency; Dave knows that eighty per cent of pensioners are home-owners, and he is probably thick enough to think that keeping interest rates artificially low will boost house prices (so that rules out calling for interest rate hikes), so instead he offers them a very modest tax break; the other twenty per cent of pensioners are council tenants and they probably don't have much taxable income so they're not bothered.
If he seriously wanted to do something specifically for pensioners, he could of course suggest introducing a Citizen's Pension, but that's too obvious, I suppose.
* I am sure that for most pensioners there's no tax on dividend income anyway, as long as their total income does not fall into the band which reduces the age-related personal allowance and is not over the higher rate tax threshhold of £42,000-odd. In the former case, it is then only notional and not actual tax that is paid, but that's just details.
** Provided that the value of their home plus the cash I lend them is less than the nil-rate band for Inheritance Tax, of course, I wouldn't want to pay 40% Inheritance Tax on getting my own money back.
Thursday, 11 December 2008
Fifty people* responded to this week's brain teaser:
Here's a follow-up question from a GCSE maths paper:
Write five thousand four hundred and twenty four in figures (34%)
Write 41,980 to the nearest thousand (34%)
Write down the value of the 7 in the number 25,750 (24%)
Write the number 7,180 in words (8%)
In true Nulabour fashion, everybody gets an A-star grade for their Maths GSCE!
All the options given were taken from a recent GSCE paper, according to James Barlow** in the comments to the previous GCSE question, so whatever you clicked, you get a prize.
* Thanks to Obo for linking.
** If you don't believe me (yes, I mean you, Prodicus), take it up with him personally.
A. When he's a landowner.
In the comments, I suggested Land Value Tax as a free market solution to the question of whether the State should be allowed to permit ramblers access to coastal paths even where they cross somebody's land. I don't think that The State "should" as it happens, but as a quid pro quo, under LVT, landowners would pay extra for exclusive access to the view over the beach, the sea and sky (which is what this is all about, really. I don't see how the owner of a cliff-edge plot can claim to 'own' these) and came in for the usual ill-informed flak.
FWIW, I concluded with this:
LVT is not a tax on "mere ownership of property", it is raising tax in the least bad way (per Milton Friedman) by expecting payment in return for the right to restrict the activities of others and for those particular benefits that accrue to you* but for which you do not otherwise pay. LVT does not apply to shares, incomes, moveable property, bank accounts or buildings or any other form of property (except maybe landing slots at airports and other special cases)
* A good example is owning a house near a railway station. The rental value increases merely because it is near a station, even though it is the passengers who pay for the railway, not the landlord.
If you are really a libertarian, then I assume you believe in free markets?
OK, if you own a plot of land, as a true Libertarian you say "I can do what I like on my land" but as a faux-Libertarian you then say "But I don't want my neighbour to do what he likes on his land because that reduces the value of my land". But in restricting what your neighbour does, you are infringing HIS 'property rights'.
As a free market enthusiast, I can only say that the best way to balance these competing interests is LVT. If your neighbour builds a block of flats that takes away 'your' sunlight, then your land value goes down and you pay less LVT. Your neighbour obviously pays more LVT. Automatic compensation, problem solved.
Free markets are easy to understand and they work. There is no special pleading or favouring one group over another, it all sorts itself out.
From today's FT:
Sir, Your excellent account of the events unfolding with the car manufacturers of Detroit reminds me of Russian government protection for AvtoVAZ, maker of Lada cars. The Russian story lacked the flamboyance of publicly staged performances - but then who can beat the Americans in this department?
For the last decade Russian officials levied taxes on the importers of passenger vehicles with a view to helping AvtoVAZ. Guess the result? AvtoVAZ continues to produce the cars that are slight variations of the Fiat 124 that itself was a decent motor car for the early 1960s.*
Anton Krylov, London.
* My Dad bought one of these in the mid-1970s, it was still pretty decent then. But I doubt they export very many, i.e. Russians get poor value for money and the overall net increase in Russian exports is probably nil.
Wednesday, 10 December 2008
At the bottom of the same article covered in my previous rant we find this:
Mr Purnell said: ... "There's a danger of saying, as David Cameron did in the Sunday papers, that all five million people on benefit are potential Karen Matthews. I think that's offensive to people looking for work."
He said the Government was spending an extra £1 billion over the next two years on more Jobcentre advisers and other help. Mr Purnell said that the lone parent changes were aimed at giving young people more "aspiration". But he admitted that "if there isn't childcare, that would be a good reason for not going to work". Today's White Paper features moves to increase sanctions on those who avoid work, with a range of penalties from losing one week's £60 jobseeker's allowance to being forced to work for the benefit.
However, Right-wing think tank Civitas hit out at the proposals for being "too soft". It claimed that allowing single parents to simply "monkey about with their CV" was a "waste of time".
As ever, clowns to the Left of me, jokers to the Right.
1. I've bolded the important bit; "an extra £1 billion over the next two years on more Jobcentre advisers and other help". I make that about 20,000 extra tied Nulab voters come the next election (20,000 x typical salary £25,000 x 2 = £1 billion).
2. As to 'childcare', it's not my decision if single women choose to have children. They ought to think about 'childcare' before they have 'em. Yes, I am perfectly happy to scrap Child Tax Credits (which are a straight bung for single parents actually) and roll them into a higher Child Benefit of (say) £30 a week (or whatever is fiscally neutral), but of course I'd restrict it to the first three children per mother to prevent baby-farming à la Karen Matthews).
3. The real point is that welfare claimants have no strong motivation to find a job because they lose more in benefits than they can earn in net wages. Until the Powers That Be grasp this simple fact, all this tinkering achieves nothing.
4. Civitas make superficially fair points actually, but I've read plenty of their pamplets and while they are good at diagnosing the reason why the welfare system is so corrosive (the perverse incentives and poverty trap), to my knowledge they haven't twigged that the key to all this is simply reducing the savage withdrawal rates. Such a measure would probably more than pay for itself (total withdrawal rates of seventy per cent-plus are quite clearly on the downward slope of the Laffer Curve).
From The Evening Standard:
FEARS over the value of the pound deepened this afternoon as it crashed to a record low against the euro. Growing alarm about the British economy sent sterling trading down to its weakest level since the birth of the single currency in 1999. At its lowest point, one pound bought just €1.139...
FFS, against a basket of other major currencies, GBP has been sliding for two years; this latest fall is hardly 'news'. We are now below the levels reached after White Wednesday, as it happens (click to enlarge):
The article continues ...
The latest slide in the value of the pound comes as the first skiers of the season head out to France, Italy and Austria to face prices up to 25 per cent higher than last year because of inflation and currency movements.
Wow! These journalists understand the effect of exchange rates on relative prices! I'm sure that our all hearts bleed for these poor people who can only afford to "head out to France, Italy and Austria". Serves them right for not buying Euros when they booked their holiday. They can count themselves lucky they're not off to the land of the Swiss Frank.
Let's hope Richard doesn't forget to turn on the patio heater!
From today's FT:
Sir, Phillip Stephens ("Never mind the recession - save the pound", December 9) claims that, had Britian decided to join the Euro, "the boom would have been moderated, and so would the bust".
From the beginning of 2003 to the end of 2007 official European Central Bank rates were 200 basis points, on average, below those of the Bank of England. It seems patently obvious that had we been a member of the eurozone during those years, the housing market bubble would have been even bigger, debt would have been considerably higher and the bust we are now facing would have been correspondingly blown up.
Oh, and I almost forgot; the exchange rate would not now be cushioning the effect of the housing bust on the economy. In other words, we would not have reduced the amplitude of the UK cycle but would have super-sized it.
Paul Mortimer-Lee, London.
This is not idle theory, BTW, just look at Ireland - they were in the Euro and had an even bigger property price bubble than the UK (despite having a much lower population density and massive expansion of housebuilding!) and they are even further up shit creek than the UK. "Celtic Tiger"? What a joke that turned out to be.
... in Northern Ireland.
Nice to see that our Government Of All The Thieves is helping the little guy:
Drug-addicted or alcoholic thieves will escape jail from next month if they can prove their crimes are driven by their need for a fix. Instead, they will be given treatment orders or community orders under new rules announced yesterday. Offenders will also get a lesser sentence if they return property they have stolen or if, in 'exceptional circumstances', the courts find they are poverty-stricken and desperate.
The guidelines ... also allow for under-18s who breach their Asbos to be handed a lesser sentence if they can demonstrate they were being influenced by an older or more experienced offender or if they did not 'fully understand' the terms of the order...
Stephen Alambritis, of the Federation of Small Businesses, said: "Shoplifting is shoplifting, it doesn't matter about what state the offender is in..."*
But a Ministry of Justice spokeswoman insisted: "Community orders with drug rehabilitation requirements offer courts an intensive, demanding and effective way of tackling the drug misuse and offending. They are particularly effective when dealing with the most serious and persistent drug-misusing offenders who commit a high volume of theft."**
* Dinnae ye fret, Mr Alimbritis! The gummint has now offered to bail out all businesses, as called for by that economics guru Dave The Chameleon.
** Yeah, right.
Tuesday, 9 December 2008
Robert Mugabe has joined the international community and called for US President George W Bush to step down within six weeks and appoint a Son Of Africa as his successor. Or else.
From today's FT:
Sir, Yugo Kovach (Letters, December 5) rightly points out that state subsidies for mortgage interest amount to preferential treatment for homeowners at the expense of equally cash-strapped tenant neighbours.
This government preference is nothing new: it goes back at least as far as the "right to buy" council housing and has been maintained throughout the New Labour period so that today we are witnessing the unsurprising consequences of a housing policy (not to speak of an economy) fixated on home "ownership" and mortgage debt at any cost.
One little-discussed aspect of all this means the misfortunes of Mr and Mrs Prudence may not end where Mr Kovach left them. When Mr Prudence lost his job and the couple moved to a lower-rent property, their new buy-to-let landlord, Mr Hazard, engaged in extensive vetting of his prospective tenants and their ability to pay. However, the Prudences have no corresponding right* to check on the landlord's credit situation, and should Mr Hazard's bank foreclose, they will have no defence when the bailiffs turn up at their door...
Mr Matthew Hyland, London.
* That's not strictly true, but such a request is not going to endear you to a prospective landlord.
Actual headline on BBC website today:
Earthquakes can 'spark eruptions'
From The Metro:
A crackdown on takeaways to tackle childhood obesity is threatening the future of the high street, business leaders warned on Monday. The move to block fast food outlets opening within 400m of schools, youth centres or parks will lead to streets 'riddled with charity shops and hairdressers'. Although the restrictions are backed by children's secretary Ed Balls and chef-turned-healthy-eating-campaigner Jamie Oliver ...
I've bolded the key word there for you.
The mechanism by which free markets ensure fair quality and prices is competition. So existing take-aways in the now restricted areas will be protected from new competition. Inevitably, some take-aways in those areas will go out of business*, so the remaining ones will have an ever larger share of the captive market. These survivors can respond to this by keeping prices constant (and having longer queues) or by hiking prices slightly (there's no point in letting the queue get so long that people walk out of the door again), or indeed they might reduce quality slightly, or any combination of the above.
Further, most of these shops are tenanted, so if you're the landlord of one of the survivors, you'll be able to hike the rent to capture part of the super-profits, enhancing the value of your freehold without you lifting a finger. Brilliant. It's like Land Value Tax in reverse.
* I'm assuming that councils won't actually force existing take-aways to close, even though this would have much the same effect.
Least week's Fun Online Poll Question was:
A nuclear power station is to be built. Which of these two statements argues in favour of siting the nuclear power station in an area?
A It will provide more employment in the area.
B. Any release of radioactive material would be very dangerous.
Proper science teacher Philip Thomas has kindly confirmed that A. is the correct answer in the comments.
I am delighted to announce that eighty-two per cent of entrants (me included) achieved a coveted A-star grade for their Science GCSE. The other eighteen per cent will have to make do with a straight A or maybe even a B (or whatever Newspeak for 'fail' is nowadays).
This week's Fun Online Poll: Maths GCSE (courtesy of James Barlow). I'm not sure if it was designed as a multiple choice question, but just do your best.
Monday, 8 December 2008
Let the ISP's and 'blogosphere get all het up about the album cover of "Virgin Killer" by the Scorpions if they so wish.
Just wait 'til they find out what the cover of their 1978 album looked like...
The back cover shows that no models were harmed during the making of the front cover...
Unless they did the back cover first. Hmm.
From The Metro:
A USB stick dropped by a Leeds City Council employee was found in a car by a member of the public. It had been reported missing but its owner told the council it did not contain any sensitive information.
In fact the unencrypted data on the device included the names, dates of birth, ethnicity, addresses and telephone numbers of around 5,000 nursery-age children living in the Leeds area.
It also contained confidential information about child protection and whether or not the children's parents claimed state benefits.
A Leeds City Council spokeswoman said: "We take issues of information security very seriously and are very sorry that this breach has occurred. We have guidance in place which seeks to prevent such incidents occurring including advice on using memory sticks.
From The Metro, some politically correct madness from Australia:
Supreme Court judge Justice Michael Adams ruled in Australia that child cartoon characters could depict a real person. He upheld a magistrate judge's decision to convict Alan John McEwan of possessing child pornography after the internet cartoons were found on his computer.
The animation depicted characters modelled on Bart, Lisa and Maggie Simpson engaging in sex acts. McEwan, from Sydney, was fined £1,300 and told to enter into a good-behaviour bond for two years. The magistrate had said he would have been jailed had the images involved real children.
For once, I hope that English courts apply the law just as strictly. That way they'll be able to arrest the people who published that famous sketch of Lisa Simpson giving a headless man a blow-job:
You see it all the time don't you? They light up, take one drag and then throw it on the floor.
From today's FT:
Sir, Martin Wolf ("Global imbalances threaten the survival of liberal trade", December 3) notes that the aggregate excess of savings over investment in surplus countries will be just over $2,000bn in 2008. On the very same page, Nouriel Roubini ("How to avoid the horrors of stag-deflation") notes that the overall credit losses from the financial crisis are likely to be close to $2,000bn.
Coincidence? I think not. When there's too much money chasing too few (good) investment opportunities, bubbles are as inevitable as the busts that surely follow.
Dwayne Grant, Glasgow.
Sunday, 7 December 2008
From the comments over at LabourHome:
I can't help but think of healthcare assistants, teaching assistants, binmen, groundsmen and care workers etc who make up the vast bulk of the public sector.
But they don't!
Only about one quarter of the eight million taxpayer funded jobs fall into the above categories i.e. 'doing something identifiable and of value'. Heck knows what the other six million do all day long.
Saturday, 6 December 2008
Excerpt from a longer version at EUReferendum:
Brian Crowley MEP: With all respect, Mr. President, you will not tell me what the Irish think. As an Irishman, I know it best.
President Vaclav Klaus: I do not speculate about what the Irish think. I state the only measurable data which were proved by the referendum.
... concluding with ...
Hans-Gert Pöttering: ... In the conclusion - and I want to leave this room in good terms - I would like to say that it is more than unacceptable, if you compare us, compare us with the Soviet Union. We are all deeply rooted in our countries and our constituencies. We are concerned about freedom and reconciliation in Europe, we are good willing, not naïve.
President Vaclav Klaus: I did not compare you with the Soviet Union, I did not mention the word[s] "Soviet Union". I only said that I have not experienced such an atmosphere, such style of debate in the past 19 years in the Czech Republic, really.
Thanks to Christina Speight for emailing me the link.
Friday, 5 December 2008
As we well know, Nulab-sponsored publicity shots have to include at least one older person, one woman and one Black and Minority Ethnic* person. Here's a fine example** (note which two are laughing at the other one):
* The expression "ethnic minorities" is now otiose, BTW. The race relations industry use the abbreviation "BME" and not "BEM", so by reverse logic, they must be referred to as "minority ethnics". The further leap of logic to distinguish "black" from "minority ethnic" is beyond me.
** For background, see here.
The wonderful taxpayer funded two-year interest free mortgage holiday will be asset means tested of course; "... only those with less than £16,000 worth of savings will be eligible."
Er, right, so Mr & Mrs A have a mortgage of £384,000 and no savings, their income has dropped, so they're eligible. Mr & Mrs B next door have exactly the same circumstances, but their mortgage is £400,000, and they would be eligible but for the fact that they also have £16,000 in savings.
Notwithstanding that people who have a large mortgage and a lot of savings are daft anyway (you usually pay more interest on your mortgage than you earn in interest), what is Mr & Mrs B's most likely course of action:
a) Make sure the savings are with a different bank to the one holding the mortgage and "forget" to mention it when applying for the interest-free holiday?
b) Use the £16,000 to make a one-off mortgage payment and apply for the interest-free holiday straight away?
c) Use up the £16,000 savings to cover the next eight months' mortgage payments and then apply for the interest-free holiday?
As a separate issue, asset-based means testing is even more evil that income-based means testing. There is a taper applied to most UK benefits, if you have savings of £16,000 or more (or £8,000 for some benefits). Given that you are only earning a few hundred pounds a year in interest on that level of savings, this is an effective marginal tax rate on savings income of several thousand per cent.
From the FT:
Featherbedding the owner-occupier
Sir, Mr and Mrs Bellemaison gambled on the property market ("Brown throws homeowners a mortgage lifeline", December 4). Mr Bellemaison loses his job and has to accept a lower-paid one. The state steps in and subsidises their interest payments.
Next door, Mr and Mrs Prudence are tenants. Mr Prudence also loses his job and has to accept a lower paid one. The state does not step in to subsidise their rent*. The Prudences are forced to move to a lower-rent property.
Why the difference in treatment?
Yugo Kovah, Twichenham, Middlesex.
Lex on the back page summarises the madness of this in more depth.
* Unless Mr Prudence fails to find a new job, of course, in which case they can claim Housing & Council Tax Benefit.
Thursday, 4 December 2008
In case you're wondering what the song is in the Sony Centres TV commercials (the ones with the CGI and the rainbows), it's "Sonic Boom Boy" by Westworld, which was one third of Empire (two thirds of which consisted of the half of Generation X that didn't make it into GenX)* plus Ms Westwood on vocals and some drummer chappy.
* GenX in turn split up into Billy Idol and the other half of GenX (being a quarter of the original Generation X line-up) formed Sigue Sigue Sputnik. These being basically some of my favourite bands of all time.