If the Daily Mail were written by economists...

From The Daily Mail:

House prices are becoming more affordable in nearly every region in Britain, amid hopes that next year could be excellent for the housing market.

Official figures from the Land Registry revealed that affordability improved in eight of the ten regions in England and Wales in November. London and the South West were the two exceptions. The speed of the improvements in affordability has picked up. In July, affordability was improving in four regions; in August, five; in September, six, and it has now reached eight regions. In just one month, affordability improved by 3.4 per cent in Wales, the best-hit region, making it £4,250 cheaper to buy a typical home.

The average home in Wales still costs a ludicrous £120,290, a modest improvement on the clearly ridiculous ‘peak’ price of just over £141,000 in January 2008. The figures confirm growing hopes that the housing market is starting its second big move towards affordability since the credit bubble went *pop* three years ago. Last month, house price affordability improved by 0.6 per cent across England and Wales. It is the third consecutive month that houses have become more affordable, with the majority of economists predicting that housing will become even more affordable next year.

It ends an extraordinary period between May 2009 and August 2010 when house prices became less affordable every month, except one, because of the government's desperate attempts to make housing unaffordable. The majority of housing experts predict that houses will become even more affordable next year, according to a poll of 56 economists by the Financial Times.

Most expect housing to become more affordable by between five and ten per cent. Chris Williamson, chief economist from the consultancy Markit, said: ‘I expect the traditional three-bed semi outside of London to see the biggest improvements in affordability as superfluous public sector employees suffer reduced pay or job cuts.’

With an average house price in England and Wales at a nigh-unaffordable £164,773, the cost of a home is still far above what a worker on the country’s average salary can afford. For a person in their twenties, who typically earns just under £21,000, the average price is nearly eight times their salary, which is clearly insane.

But the registry figures show that London remains insulated from the improvements in affordability in the rest of the country. The average price in the capital is a completely surreal £341,009, more than double the average in the rest of the country. Every day in September, the latest available figures, 13 idiots paid more than £1 million for a home in London.

Experts say the affordability improvements in the rest of the country are being fuelled by a favourable combination of an end to reckless lending, the imminent tax rises which will help kill off the economic recovery, the superfluous public sector jobs bloodbath and a widespread anxiety about the state of the economy.

Paul Hunt, managing director of mortgage software firm Phoebus Software, said: ‘Another modest improvement in house price affordability indicates that lenders have realised that their insane reckless lending practices have to stop. They are not overly concerned about the impact of higher taxes on the rest of the economy and lower public spending in the New Year, because bank bail outs don't come cheap and the government has to get the money from somewhere.’

H/t Titanic Captain at HPC.

Friday night gear change - belated Xmas edition

Petula Clark's "Christmas Cards" has a truck driver's gear after 1 minute 56 seconds, a nice crisp semi-tone up. Which is exactly the same as what she did at 1 minute 53 seconds into her biggest hit Downtown, making her a repeat offender.

More Fun With Tax Benefit Model Tables

You can now download the original Excel file from the DWP website and muck about to your heart's content.

Here's my effort for today, which shows the overall total tax/benefit withdrawal rate for three basic household types (assuming one earner working more than 30 hours a week). I worked out the rate by dividing [net income before housing costs if in work minus net income before housing costs if unemployed] by [gross earnings] and deducting the answer from 1. As it happens, it makes no difference whether you compare both figures before or after housing costs; the £ change is the same (click to enlarge):
To give a worked example of what this means: a couple with 2 children where one parent earns £800 (i.e. in the second-to-top decile of earners) have an overall tax/benefit withdrawal rate of 81%, i.e. they are better off by [19% x £800]=£152 per week than a couple with 2 children where both parents are unemployed.

So that's an overall effective tax bill of 81% x £800 x 52 weeks = £33,696. It gets worse of course:

The worker's employer also has to pay £4,593 Employer's National Insurance, giving us an overall tax bill of £38,289 against [gross earnings + Employer's NIC] of £46,193, giving us an overall tax rate of 83%

And if the employer's business is VAT-able, the employer has to charge and pay at least another £8,084 VAT on top of [gross earnings + Employer's NIC] just to break even on that employee, giving us a total tax bill of £46,372, against [gross earnings + Employer's NIC + VAT] of £54,276, giving us an overall tax rate of 85%.

Really, bearing in mind these tax rates and the massive burden of red tape, EU regulations etc, it amazes me that anything ever happens in this country.
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There are various other conclusions we can draw from this.

I'll do a few more tomorrow, but the obvious point is that we'd expect a family where the main earner is on £41,600 a year to be living in a semi-detached house costing approx. £367,000 (using my patented formula House price = [average earnings for area - £6,750] x 10.53 from an earlier post).

If we scrapped benefit withdrawal (i.e. had a Citizen's Income system) and replaced all taxes with a Land Value Tax of approx. 8% of the total value of land and buildings, this family's LVT bill would be approx. £30,000, which is a darn' sight less than any of the total tax figures mentioned above. For a double-earner family, the tax saving would be even bigger.

Central European Cow Attack Round-up - December 2010

Bavaria, 6 December 2010: "Das neun Monate alte Rind war am Samstag ausgebrochen und auf die Dorfbewohner losgegangen. Obwohl ein Tierarzt die Kuh nach zweistündiger Jagd mit einem Schuss aus dem Betäubungsgewehr traf, lief sie davon.

Am Sonntag tauchte das Rindvieh im Ort wieder auf. Es folgte eine vierstündige Hatz, kreuz und quer durch die Höfe und Gärten von Oberrieden. Als ein Schuss mit Betäubungsmittel seine Wirkung erneut verfehlte, wurde im Anschluss an die Sonntagspredigt die Kirchengemeinde um Hilfe gebeten. Diese entdeckte die Kuh am südöstlichen Ortsrand. Auch der nunmehr dritte Versuch des Tierarztes, die Kuh zu betäuben, misslang. Deshalb musste die Polizei das Tier erschießen."

Nine-month old calf went on two day rampage, was shot twice with tranquilizer darts (which failed to stop it) and was finally shot dead by the police.
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Bavaria, 10 December 2010: Beim Ausladen von vier Stück Schlachtvieh auf dem Schlachthof kam es am Mittwoch gegen 9 Uhr zu einem Unfall mit einem Schwerverletzten... Unter den Tieren befand sich auch ein ca. 750 Kilo schwerer Stier. Dieser attackierte unmittelbar nach Öffnen der Laderampe den Fahrer und drückte ihn gegen die Wand. Dabei erlitt der 21-Jährige massive innere Verletzungen.

Der Stier konnte unter Kontrolle gebracht werden. Der eintreffende Notarzt übernahm die Erstversorgung des Mannes, anschließend wurde der Verletzte vom BRK in das KH Cham eingeliefert.

Four head of cattle were being unloaded at the slaughterhouse. As soon as the ramp was opened, a 750 kg bull attacked the driver and squashed him against the wall, causing severe internal injuries.
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Austria, 13 December 2010: Ein 56-jähriger Landwirt ist am Montagnachmittag in Meiselding (Bezirk St. Veit) von einem 1.000 Kilo schweren Stier attackiert worden. Das Tier fügte dem Bauern schwere Verletzungen am linken Oberarm zu. Der Landwirt wollte den Stier im Stall seines Anwesens in Meiselding anbinden, als es plötzlich zur Attacke kam. Die Rettung brachte den Bauern ins Friesacher Krankenhaus.

Farmer wanted to tie up 1 tonne bull, which attacked him and badly injured his left arm.
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Austria, 23 December 2010: Ein Landwirt in Gestratz ist am Vormittag von einer Kuh schwer verletzt worden. Der 46-Jährige hatte einer seiner Kühe die Klauen geputzt, als er vom Tritt einer danebenstehenden Kuh am Kopf getroffen wurde. Er wurde mit schweren Verletzungen in eine Unfallklinik geflogen.

Farmer was cleaning a cows's hooves when another cow kicked him in the head. He was flown to hospital.
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It appears to have been a quiet month, that's all I can find after Googling around for an hour.

History reasserting itself

As I've said before, until the second quarter of 2009 (i.e. quarter 10), the current house price crash had been tracking the previous one very closely, then New Labour hurled everything they had at it, and managed to stall things for a year or so. As much as the Lib-Cons would love to continue propping up house prices, there is clearly not enough money to hurl at the banks to hurl at borrowers* so the pattern seems to be reasserting itself. Click to enlarge:

The blue series shows quarter-on-quarter price changes from Q1 1989 onwards; the red series shows quarter-on-quarter price changes from Q1 2007 onwards.

The post-1989 crash continued for another few years after the end of that chart, but rises and falls were no longer so spectacular - however, the forced increases during 2009 (which would have been decreases had history been allowed to run its course) will have to reverse at some stage in the future, so I would expect house price falls for the next few years to be far more noticeable than in the early 1990s.

Source: Nationwide's UK House prices adjusted for inflation (choose from the drop down box labelled 'UK series').

* The Lib-Cons are sticking with the old favourites, like depressing interest rates, which is merely a random transfer of £30 billion a year from 'savers' to 'borrowers' (with their chums at the banks being able to double their profit margins), and a complete block on any new development.

Desktop meme

Duly tagged by Health Minister Dick Puddlecote, I present:It seems like nearly three years since I last did this. Whatever happened to that window?

I tag LadyThinker; Steven_L; Lola; and Adam Collyer.

Awesome spreadsheet

The DWP have changed the format of their (most useful) Tax Benefit Model Tables. Instead of just showing the results, they now publish the spreadsheet so that you can see the underlying formula (and bodge them to your heart's content).

My favourite is the formula for calculating Housing Benefit:

=IF(Rent30-HBtaper*MAX(MAX(F37+G37+H37-IF(Adults=1,IF(chn=0, IF(WTCamt30>0, Rates!$F$58+Rates!$F$61, Rates!$F$58), IF(WTCamt30>0, Rates!$F$60+Rates!$F$61, Rates!$F$60)), IF(WTCamt30>0, Rates!$F$59+Rates!$F$61, Rates!$F$59))-IF(Chcost>0, IF(chn>0,MIN(Chcost, IF(chn=1,175,300)),0),0),0)-HBapp30,0)0, Rates!$F$58+Rates!$F$61, Rates!$F$58), IF(WTCamt30>0, Rates!$F$60+Rates!$F$61, Rates!$F$60)), IF(WTCamt30>0, Rates!$F$59+Rates!$F$61, Rates!$F$59))-IF(Chcost>0, IF(chn>0,MIN(Chcost, IF(chn=1,175,300)),0),0),0)-HBapp30, 0

But the most important figure is the 'replacement ratio':

Replacement Ratios are the net income after housing costs if out of work and reliant upon benefits as a percentage of net income after housing costs when the head of the family is in full-time work. A replacement ratio of less than 100 per cent indicates that the family has a higher net income when the head of the family is in work than if unemployed and in receipt of benefits.

The replacement ratio for a family with Dad, Mum and two kids (assuming that one parent is working at least 30 hours a week, i.e. using the 30-hour Table) starts at 79% and doesn't drop to 50% until the working parent is earning £938 a week (nearly double the UK average wage).

At that level of gross wages, the family's net income (£482) is double what it would be were they just on benefits (£241), so it still woefully understates the average marginal tax/benefit withdrawal rate - even though the working parent earns £938 a week gross, the family is only £241 better off, which is a marginal tax/benefit withdrawal rate of 74%.

And remember that this rate does not include Employer's National Insurance or VAT (which add 'about' twenty per cent to the true tax rate), so when I generalise and say that people in the UK have an average tax rate of 50%, it's just as likely that I am understating as overstating the real horror of all this.

Awesome science experiment

My little lass' science homework was an experiment where you tie an elastic band between two chair legs and use it to launch a toy car across the kitchen floor. You had to pull the car a bit further back each time and write down the results, which were as follows:

Stretch/distance travelled (centimetres):
3 - 9
4 - 15
5 -23
6 -39
7 -44
8 -65
9 -89
10 - 104
11 - 119
12 - 150
13 - 172
14 - 207
15 - 226

I admit that we did a tiny little bit of applied climate science and redid two or three of the tests to get the readings to fit the model, but they still filled my mathematically minded heart with joy.

Collyer's Crystal Ball for 2011

Over at Adam Collyer's.

House prices vs earnings, England and Greater London

Sources:
1. Average price for a semi detached house in each local authority area from the BBC
2. Mean gross annual pay from Table 8.7a from the NSO
3. I then bunged the two data sets into a spreadsheet, deleted local authorities for which I had earnings but not house price (or vice versa) and did a couple of X-Y scatter charts, click to enlarge:
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That doesn't look like much of a correlation, but Excel tells me that the correlation is 0.75, which is high enough for these purposes.

The line of best fit is House price = (earnings minus £6,750) x 10.53, which makes sense. People have to pay for the bare minimum of existence first and the bulk of whatever is left over goes on housing. With an average marginal tax rates of about 50%, and average mortgage interest rates of 5% (or average rental yield of 5%), for a single-earner household, nearly all the extra income you can earn by moving to a higher wage region (assuming you want the same standard of housing) goes in extra rent or mortgage payments.*

The bulk of the fluctuations can be explained by how desirable an area is to second-home owners, for example an average semi in Torridge in Devon costs £195,583 and average earnings are £16,980; and an average semi in Colchester costs £203,921 and average earnings are £30,466.
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The figures for Greater London are, as ever, completely off the scale, but the correlation between house prices and wages is even higher than for the rest of England at 0.86.

The line of best fit is fairly nonsensical, it approximates to House price = (earnings minus £24,195) x 45. This would suggest that Londoners need two or three times as much money (after tax) to cover what they consider to be essentials as do the rest of England, but once those essentials are covered, they are prepared to spend more than the rest of their income on housing - unless, of course, rental yields or mortgage interest rates are very, very low (about 2%).

In a house price bubble (which is popping slowest in London), people see hoped-for capital gains as a source of cash income and deduct them from interest costs (or add them to rental income), i.e. it is the same whether people expect house prices to rise 3% and interest rates are 5% or whether people expect house prices to stay flat and interest rates are 2%.

Other people for whom the effective interest rate is 2% or less are people who have paid off their mortgages - they could in theory sell up and start renting, so the cost of being an owner-occupier is the interest foregone on the theoretical pile of cash. As it is difficult to earn more than 2% after tax on a savings account with a UK bank, their effective/notional interest cost is thus 2% or less.
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Nonetheless, the overall picture is, as we would expect, that there is a fairly high correlation between earnings and house prices (taking England as a whole, including Greater London, the correlation is 0.79), so replacing all taxes on incomes and output with a flat tax on land/building values doesn't seem particularly radical to me, i.e. at my suggested rate of 'about' 8% of current averaged out selling prices in each area, and assuming 1.5 earners per working age household, eighty or ninety per cent of people would be paying the same or less in publicly collected tax (i.e. those households with a house price-to-gross income ratio of seven or lower).
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* This is as suggested by Ricardo's Law of Rent, because labour within the UK is mobile but houses aren't. So if people expect the same living standard wherever they are and net wages in Town B are £10,000 more than in Town A, people will move from Town A to Town B, thus increasing demand for homes in Town B, thus hiking rents and prices in Town B. This process continues until rents and mortgage payments in Town B are £10,000 more than in Town A, at which stage there is no advantage in moving from Town A to Town B and the whole thing reaches a new equilibrium.

Conspiracy Theory That Turned Out To Be True Of The Year

Award goes to Planning Minister Neil Craig, the only person to have been wailing on for ages about NATO and the Kosovans colluding to kill people and then sell their organs.

I had assumed he was exaggerating wildly at best, it turns out he wasn't.

Anti-clockwise round the M25

The whole journey took us 5 hours 15 minutes, but that's including 20 minutes from our house to the M25 (and 20 minutes back), about 60 minutes at the airport dropping off one of my grown up sons (plus about 5 or 10 minutes each way on the M23) and at least 45 minutes stuck in the queue for the Dartford Tunnel.

Most of the road widening works from 3 to 4 lanes seem to be nearly finished, especially in the southern half where it's 4 lanes for most of the way, and there weren't that many stretches where you can only do 50 miles an hour.

It's a once in a lifetime journey ("Never again!"). But one day no doubt I'll succumb to the temptation of trying it clockwise.

Fun Online Polls; Pantomimes and housing

The results to last week's Fun Online Poll:

Look out, he's behind you!

Oh no, he isn't! - 9 votes
Oh yes, he is! - 27 votes
Oh no, he isn't! - 14 votes
Other, please specify - 25 votes.

I think I'll call that one for "Oh yes, he is!" Of the 25 people who chose "Other, please specify." honourable mentions go to:

Pods: He would have been behind you, but the result of his CRB check means he's no longer able to work in the field of children's entertainment.

Onus Probandy: He would have been behind you, but the current residents got wind of the application for planning permission, installed a shill on the planning committee and had the whole process tied up in red tape until the panto season was over.

Boodledug: Crowd: It's your career.
Actor: Where ?
Crowd: It's behind you ...
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This week's Fun Online Poll is fairly self-explanatory.

Vote here or use the widget in the sidebar.

Killer Arguments Against LVT, not (85)

Xmas blogging break is over, so it's back to the grindstone. I've probably done this one before, but just for completeness:

Comment 4 here by Right To Leech: "Mark, loss of a job or forced retirement and the land tax becomes an unsupportable burden. 'Move to a cheaper area' will be your reply... all good for lawyers, stamp duty receipts etc, but such dramatic u turns would wreck plans for so many."

In general terms...

1. The point about Stamp Duty is a non-starter, because like all other taxes - including of course taxes on incomes, output and profits and existing taxes on land 'ownership' like Council Tax or Inheritance Tax - it would of course be scrapped.

2. LVT is not an end in itself, the idea is to use the proceeds to pay for core functions of the state and to dish out the rest as a Citizen's Income/Citizen's Pension* and health or education vouchers. So for a median household in a median house, the LVT payable would more or less net off with the Citizen's Income etc that it receives, it would neither be a net taxpayer nor a net welfare recipient. It is the closest we can get to a tax-free world, remembering that land rents are an irreducible minimum of taxes - they cannot be competed away or even imagined away, it is just a question of whether they are collected publicly or privately.

3. The advantage of LVT over all other taxes is to discourage people from trying to grab the largest share of land 'ownership' and thus to increase their share of privately collected taxes. The total value of location rents would be continuously returned to 'the nation' which created them.

As a more specific reply...

4. Paying LVT is akin to paying rent for the value of the location where your home (or place of business is). Is it possible to imagine a society where there's no income tax, where everybody has a 'private' income of a few thousand pounds a year and everybody rents? Yes of course it is.

5. The value of location rents are set entirely by the markets. As the cost of production of the location (to the owner) is precisely zero, there is no minimum price that has to be charged, so the price is set by how much people are willing to pay in rent, purchase price or mortgage repayments.

6. When people take out a mortgage it is usually for twenty-five years, so existing first time buyers ('FTBs') are all making some sort of estimate as to what their net income and housing needs will be for the next twenty-five years. Assuming people act rationally (and ultimately, most do), FTBs only take out mortgages which they will be able to afford to repay. Sure, some of them will lose their jobs for whatever reason, but that can be covered by insurance or by saving up a bit of money to tide them over.

7. Under LVT, the FTB will have a much larger disposable income (once income tax, VAT etc are scrapped and the Citizen's Income is added on it will double, let's say) and the rational FTB will, as now, allocate a fixed amount of future income towards housing costs, being mortgage repayments, utilities, repairs, LVT etc.

8. So people will be perfectly capable of taking out insurance or putting aside an extra amount each month to cover housing costs during periods of unemployment to smoothe out such fluctuations - this is a splendid way of encouraging people to save, is it not?

9. Finally, another advantage of LVT is that it has no dead weight costs; it does not create unemployment and it encourages saving while discouraging speculative land price and credit bubbles, which are what causes recessions in the first place (as any Austrian will tell you). So the chances of losing your job, and the chances of not being able to find another one, are both greatly reduced.

Here endeth.

* We could either make the Citizen's Pension far more generous so that most pensioners can afford to stay living where they had been living before retirement - even if they haven't bothered saving up for this eventuality - OR we could give pensioners exemptions, discounts or a deferment option, OR any combination of the above, depending on whether you prefer economic logic or political necessity.

Xmas Quiz - answer

Congratulations to DBC Reed, who guessed that there were 230 lights on this tree (correct answer is in fact 220, even though it looks like less than that):

Friday night gear change

Yup, our Xmas number one is a shit song from a shit TV show sung badly with a shit semi-tone upwards truck driver's gear change at 3 minutes 11 seconds in:
Shit, isn't it?

Good beer!

I just received an email from Miliukov Egor as follows:

Hello! I very like your beer, it's perfect! I have a small request to you. I collect beermats, labels, cover from all over the world. But they are very difficult to search.world. I already have a small collection. Please make a small contribution to my collection beermats, labels, cover. I would be very glad! I hope you will attribute with understanding. With the best regards.

My mail adress: Novosandetsky street, House 16, Apt. 30, Ulyanovsk City, ZIP 432064, Russia.

I don't own any beer mats, but he didn't ask for my bank details or anything, so I assume it's a genuine request. If anybody fancies sending him something, please do so.

Xmas Quiz

Can you guess how many lights are on our Xmas tree? PS, the lights are wrapped fairly evenly round the whole tree.

".....been nice knowing ya"

Quick! Pop over to Mummy Longlegs and tell her not to be so silly!

(Which is why it's best to blog under your own name, once you've abandoned your right to anonymity, you have nothing more to lose).

This is not going to have a happy ending...

Spotted by Julia M in The Metro:

Car registration numbers

From The Metro:

Car salesman Ben Holdaway is hoping to make thousands by selling a rude-looking number plate. The 35-year-old bought FF11 KED and used a Scrabble website to make as many words as possible using 11 as a ‘U’...

He bought the rude registration earlier this month when seven million new plates went on sale... Each plate cost £399 from the DVLA. He has already sold BO11AXX for thousands of pounds to a private buyer.

Isn't this a fine example of voluntary taxation, and the distinction between public and private tax collection?

1. The government imposes the obligation for all cars to bear a registration number (let's assume rightly so, on balance).

2. Private individuals notice that some people are prepared to pay thousands of pounds for the right to drive round with a certain combination of numbers and letters (such as their initials), so start selling them 'second hand'.

3. This is clearly privately collected taxation, as these vendors did not impose the obligation to use number plates nor do they protect the purchaser's exclusive right to use those number/letter combinations (that'd be the traffic police doing that).

4. But is is also entirely voluntary taxation - if you're happy to drive round with the number plate that happened to be attached to the car when you bought it, you pay nothing extra.

5. So the government finally wakes up (this happened years ago, but decades after number plates were 'invented') and starts auctioning off numbers in advance, the current starting price is £399. Obnoxio and others will be disappointed to learn that some letter/number combinations are not available.

6. A larger share of the voluntary tax is now being collected by the government. Clearly they aren't as good at spotting desirable combinations as Mr Holdaway from the article, but hey.

7. As a big enthusiast of voluntary forms of taxation, when I'm in charge you'll no longer be able to transfer fancy number plates from one vehicle to the next for free - all such numbers will be auctioned off on an annual basis, thus ensuring a steady flow of revenue from people willing and able to pay it.

8. In other words, exactly the same logic applies here as it does with land values.

Missing Words Round

From The Guardian:

"Stockholm bombing: We need action not just words to prevent it happening again. In the wake of the Stockholm bomber, all of us Swedes must unite against..."

Choose a, b, c or d to complete the sentence. If you want to check your answer without giving the Guardian the satisfaction of clicking through, click and highlight the next line:
answer d) is correct

a) Uncontrolled mass immigration
b) Islamism
c) Political correctness
d) Islamophobia.

PS, I've just noticed that this is my/our 5,000th post.

Home-Owner-Ist Logic Fail

From The Daily Mail:

House prices look set to tumble next year but a shortage of homes on the market should prevent a total collapse in value.

Property values are likely to fall by 2 per cent during the coming months but the lack of supply should help to stabilise the market at some point during the first half of next year, the Royal Institution of Chartered Surveyors said. Prices could then begin edging up again during the latter part of the year, to leave property values close to where they started the year by the end of 2011.

1. The Home-Owner-Ists want house prices to go up, fair enough. This makes us collectively poorer, not richer, but like all good Socialist élites, these people want the biggest slice of the pie and don't care how small the pie is.

2. The only possible benefit from rising house prices is if you can sell your home, use part of the money to buy a cheaper one and bank the cash difference. Selling-to-rent is a non-starter, because renting is of course for scum; but being a landlord is seen as A Good Thing. Which is a bit like despising drug addicts but lauding the entrepreneurial skills of drug dealers.

3. The Home-Owner-Ists admit that if enough people sell up, then this will push prices down.

4. Therefore, to maintain the value of your house, the logic goes, you should avoid selling it.

5. Taken to extremes, Home-Owner-Ist logic says they should engage in a seller's strike and never sell a single house again. Ever. In which case, where's the benefit of your house being nominally worth more (to the extent that a price can even be established), if you can't ever sell it?

6. How on earth they can predict that prices will start going up again in six months is beyond me, will that be the impact of falling interest rates or something?

NIMBYs Of The Week

From the Dorset Echo:

VILLAGERS in Puddletown fighting a 15-home development in their community have become early beneficiaries of new planning guidelines.

The guidance recently issued by the Government to prevent ‘garden grabbing’ was one of the reasons cited as West Dorset District Council’s development control committee rejected a planning application by Wyatt Homes for the development south of the village High Street...

Following the meeting, local vicar the Rev Roy Bennett said: “I am very pleased because it was an inappropriate development for that small site in the centre of the village. We are not opposed to development – we are opposed to shoe-horning in houses overlooking neighbours to the extent that they were.”

As you can see from Google Maps, it was a choice between 'shoe-horning' aka 'garden grabbing' or not building at all, as there is absolutely no other land in the vicinity on which these fifteen homes could possibly have been built:

View Larger Map

George Moonbat on top form

I don't normally link to CiF articles (fish, barrel etc) but this is a classic of the genre:

That snow outside is what global warming looks like. Unusually cold winters may make you think scientists have got it all wrong. But the data reveal a chilling truth...

The global temperature maps published by Nasa present a striking picture. Last month's shows a deep blue splodge over Iceland, Spitsbergen, Scandanavia and the UK, and another over the western US and eastern Pacific. Temperatures in these regions were between 0.5C and 4C colder than the November average from 1951 and 1980.

But on either side of these cool blue pools are raging fires of orange, red and maroon: the temperatures in western Greenland, northern Canada and Siberia were between 2C and 10C higher than usual. Nasa's Arctic oscillations map for 3-10 December shows that parts of Baffin Island and central Greenland were 15C warmer than the average for 2002-09. There was a similar pattern last winter. These anomalies appear to be connected...

According to Nasa's datasets, the world has just experienced the warmest January to November period since the global record began, 131 years ago; 2010 looks likely to be either the hottest or the equal hottest year. This November was the warmest on record.

There is much hilarity and mirth in the comments section, I like this one best:

geoffthechaste: At last Monbiot has reverted to his true role of investigative journalist. He has unearthed the fascinating fact that the anomalous warming is where there are no inhabitants and no thermometers. This could be the scoop of his career.

What puzzles me is why he compares the November average for the cooler areas with the November average for the period 1951-80; states that other areas were warmer 'than usual' but without stating the period he's using for comparison; he then compares the December figures for the warmer areas with the average for 2002-09; he then rounds off by claiming that the January to November 2010 period was the warmest in 131 years.

I reckon that climate change 'scientists' are just overgrown schoolboys who are trying to get their revenge on maths teachers who always insist that you have to "show your workings".

"But I don't want to show my workings, sir, it's so boring! Anyway, I'm going to get a job where I don't have to show my workings, like climate change 'scientist'. So there!"

Apart from that, the wedding went as planned...

From The Daily Mail:

A bridegroom gunned down his wife and best man at his wedding reception after announcing to horrified guests that he had a 'surprise' for them.

Rogerio Damascena, 29, then committed suicide at the event in Camaragibe, outside the city of Recife, in north-east Brazil, on Saturday. Renata Alexandre Costa Coelho, a 25-year-old lawyer, and best man Marcelo Guimaraes both died at the scene.

Which doesn't answer the question...

... what do consultants actually do?

I would assume that being a consultant entails nothing more than being mates with somebody fairly high up in a government department and/or making the occasional large donation to the political party which happens to be in power, but I might be wrong.

Those who live by the sword...

From The Metro:

Lawyers for WikiLeaks founder Julian Assange said he was the victim of a smear campaign after details of two alleged sexual offences in Sweden were leaked.

Bjorn Hurtig, Assange’s Swedish lawyer, said he would lodge a complaint and call for an inquiry into how the material emerged. He added: ‘I do not know who has given these documents to the media but the purpose can be only one thing – to make Julian look bad.’

Swedish police papers reportedly revealed one of the alleged victims said he deliberately tore a condom during sex in August, while another woman said she woke up to find Assange having unprotected sex with her.

I was present at a judgment by The Court of Public Opinion yesterday, and Mr Assange was unanimously declared 'not guilty' of these offences, which is good enough for me, but I still can't help thinking about pots and kettles.

Fun Online Polls: Localism and Xmas pantomimes

On a good turnout of 117 votes, the results to last week's Fun Online Poll were as follows:

I'd like local people to able to decide:

None of the [below] 66 votes
Whether there should be new roads or houses in their area - 50 votes
What type of businesses can be carried on in their area - 33 votes
Who is allowed to buy a car in their area - 16 votes
How many children families in their area are allowed to have - 17 votes
What jobs children in their area should do when they leave school - 14 votes

I was delighted that over half of respondents chose 'None of the above' (which produced the message 'Congratulations! You are a libertarian'), but given the self-selecting nature of any blog's readers, I suppose that might not be too much to ask.

I can't say I'm surprised that over third thought it was a good idea to allow 'local people' to block the construction of new roads or houses in their area, as this is the rich seam of small mindedness which the Lib-Cons are trying to tap into with their whole 'localism' agenda.

But what's terrifying/depressing is that over ten per cent of people thought it was a good idea for 'local people' to be able to decide what type of businesses are carried on; who is allowed to buy a car, how many children people are allowed to have; and what jobs other people's children should do when they leave school.

If we scale the results to reflect the real world, in which only about twenty per cent of people are relaxed about new developments in their area, the findings are pretty scary indeed. Is it really possible that well over ten per cent of the people in this country are authoritarian to the point of being an actual fascist, or who think that the Soviet Union or PR China was/is a good way to run a country?
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Anyway, I shall resist the temptation to do a Fun Online Poll "Are you stuck at the airport?" and reinstate the previous poll to the sidebar, let's see how much more hilarity we can wring out of that (some good comments so far).

More Swindon-related land valuation fun

1. Using the Big Bath approach (see points 2 to 4 of my post of yesterday), we establish that with a single tax/LVT system, the rate for developed, non-agricultural land in Swindon would be about £24/sq yard/year.

2. We could of course just leave it at that. There is an automatic reduction for people who live in a block of small flats (for whom the tax bill would be about £3,000 - £4,000 a year) and an automatic increase for people in detached houses with huge gardens, for whom the tax would be over £20,000 a year, so it would be inherently 'progressive'. Don't forget to knock off people's Citizen's Income from that, which would be about £3,500 for a single adult, and £11,000 for Mum, Dad and two kids.

3. Or we could sub-divide Swindon into postcode sectors and work out relative values depending on the relative average selling values of semi-detached houses in the last two or three years (prices taken from houseprices.co.uk) and then pro-rate the £24 up or down accordingly. The results are shown in the second column from the right in the table below, and range from £12 to £46.

4. This approach is probably going too far - it would be 'hyper progressive'. The chances are that the houses in the cheaper postcode sectors (in particular SN2 5.., which appears to be ex-council houses if Google Maps is to be believed) have smaller gardens, so to apply a lower rate to a lower tax base would give them a double-discount. Conversely, houses in the more expensive areas will have bigger gardens, so to apply a higher rate to a larger tax base would be bordering on punitive.

5. I can't be bothered working out how big plot sizes are, but without further ado, we can average out the Big Bath figure of £24 and the figure from the more detailed workings (between £12 and £46) to give us rates for £18 in the cheapest postcode sector and £35 in the most expensive postcode sector (the outlying villages of Cricklade, Ashton Keynes and Latton etc).

6. Remember that this rate is set to give the wiggle room of 20%, i.e. whoever is in charge of working out the values, setting the rate and collecting the tax can exempt about a fifth of land and buildings - whether he or she uses that wiggle room to exempt pensioners, churches, people with big gardens or any combination of the three is up to him or her. Click to enlarge:
PS, it took me all of two hours to do to do 29 postcode sectors, once I had the spreadsheet set up (there are about 10,000 postcode sectors in the whole of the UK, so doing the whole of the UK would take me six months, full time). HM Land Registry could no doubt do the whole job in a few weeks.

PPS, the birthday party was snowed off so the few hardy survivors gathered at our house instead.

All Roads Lead To Swindon

1. We had a go at working out what the tax rates would be in a full-on LVT-only tax system, taking one part of Swindon at random. The conclusion was that the rates/sq yard/year for residential land in the six postcode sectors that make up the postcode district SN3 (which in turn is one of the six postcode districts which make up the postcode area Swindon) would be between £23 (for SN3 2..) and £38 (for SN3 1..).

2. There's another way of guesstimating the rates, which is to think up a figure for total required tax revenues (call it £300 billion), add on 20% to the rate so that there's a bit of wiggle room for giving exemptions/discounts to pensioners etc, then divide the resulting figure of £360 billion per year by the total amount of privately 'owned' developed land (whether residential or commercial) in the UK from the Generalised Land Use Database. If you pro-rate the figure up for the whole of the UK, this is about 2.4 million acres. This gives a mathematical average rate of £31/sq yard/year.

3. We can also download recent average selling prices for semi-detached houses in each of 350 local council areas from the BBC website (this only gives one figure for the whole of Scotland, so I bunged in an extra thirty lines to adjust for that), arrange them in order and re-work the rate for each area so that it is proportional to average selling prices.

4. The mathematical average (mean) of £31 is heavily skewed by a few very, very expensive areas in London and the relatively expensive areas in the South East/London generally. We find that the median rate is in fact £23 and Swindon is just above that, with a rate of £24. As it happens, Business Rates/sq yard of land in Swindon is a bit more than that anyway (as businesses would benefit from all other taxes being scrapped, I see no pressing need to reduce the LVT rate to lower than what Business Rates were).

5. Nationally, the lowest rate would be in Blaenau Gwent in Wales, at £12/sq yard/year and the rate for the top of the ninth decile would be £44/sq yard/year for Waltham Forest, which is one of the cheaper areas in Greater London.

6. I was halfway through repeating the original exercise for all the thirty or forty postcode sectors in Swindon, which took me about three-quarters of an hour (the rates in SN1 would be between £27 and £45 and the rates in SN2 would be between £18 and £32) but proceedings were interrupted because I had to go to a birthday party. More anon.

Friday night gear change - Xmas edition (4)

I bought this album* when it came out five years ago, so I must have heard this song dozens of times, but I only noticed the truck driver's gear change a couple of days ago because it is of the kicking Bishop Brennan up the arse variety, i.e. if you are blatant enough about something, people often don't realise that you are doing it.

So Billy Idol just smoothly moves up a semi-tone 2 mins 32 into "Yellin' at the Xmas tree" and then continues as if nothing had happened. Cracking video by the way.

* I have always bought all the Generation X, GEN X, Empire, Billy Idol, Westworld and Sigue Sigue Sputnik albums as soon as they hit the shops (except those that I have never heard of), but - to put this kindly - it's the only one of his solo albums that I would recommend to a disinterested third party on musical merit alone. His actual Xmas album is just embarrassing.

Epic Fails

Hartlepool is not in Northern Ireland.

Tandridge is nowhere near Swindon.

And Another Thing....

Read this'n....

Exactly as predicted by me.

When it became obvious as the banking system imploded (sort of) and that the the FSA had failed, my instant reponse was that in the next few years the FSA would start to metaphorically shoot people. This is the standard operating procedure of failed bureaucracies.

It all goes tits up.
Blame the public.
Shoot them.

Ths Stasi did it. Why shouldn't the FSA?

There's Something Going On here, but I can't quite put my finger on what...

First read this.

Now then, I really couldn't understand this paragraph:-

Following a slowdown in the annual growth of rental property prices, the total annual return on a property has fallen from its peak of 13.4% in May to 7.3% in November. This is now the equivalent to £11,857 - £7,359 in rent, and £4,498 in capital gains. An investor entering the market now could expect to make a total annual return of £3,433 per rental property .

Reading the article it looks like that in my area, (Eastern England) where I know that property prices are declining, and the article confirms that rents are also declining, the logic would be that landlords are paying their tenants to rent property.

OK lads, pull up the drawbridge!

From The Guardian:

Community groups will be given the right to... vote on new housing developments under powers to be unveiled on Monday as part of the government's "big society" project...

The bill will create:

• A community right to build, allowing homeowners to add extensions or loft conversions, or new homes to be built, as long as a simple majority in the area votes in favour.

Summa summarum, once these local groups of self-appointed fascists* are in charge, existing homeowners will almost automatically be given planning permission to stick on an extra room or two (thus banking the latent gain when the total value of the house increases by more than the cost of the work done, which it does in most cases); but there won't be any more new housing built for those who would like to be homeowners, so they'll have to settle for renting in perpetuity or buying somewhere much smaller (thus paying additional rent for permission to use duly enlarged existing buildings).

Applied to the business world, this is tantamount to saying that red tape for existing businesses will be reduced but you can only start a new business if you first obtain permission from all other businesses in the area.

* Interestingly, it was Nulabour who insisted on sticking the word 'community' into every sentence, which was their code for 'looking after our special interest groups' (this reached its apogee with the catch-all gibberish phrase in the community). The Lib-Cons have now merrily hijacked this and 'the community' is now code for their own favoured special interest groups; the NIMBYs and Home-Owner-Ists.

Don't blame me, I voted UKIP

From the Evening Standard:

Cameron ready to approve euro bail-outs without a referendum: David Cameron clashed with Tory Eurosceptic MPs today as he offered to approve a new scheme to bail out the single currency without holding a referendum. At the start of an EU summit in Brussels, the Prime Minister signalled his support for a permanent new emergency rescue mechanism for economies in trouble.

But British diplomats were rebuffed when they tried to obtain a cast-iron guarantee that under the proposals the UK would never again have to pump taxpayers' money into the rescue of countries in the euro. More trouble brewed as Mr Cameron and other EU leaders planned to push through the bail-out plan as an amendment to the EU's contentious Lisbon Treaty without a referendum.

The BBC spins it thusly:

The eurozone stability mechanism will require a change to the EU's Lisbon Treaty - but the wording has now been agreed, diplomats say. As the UK uses the pound it will not have to contribute to the fund, UK Prime Minister David Cameron has said.
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Also from the Evening Standard:

New power plants could put bills up: Energy bills could rise by hundreds of pounds under plans for the construction of a new generation of power plants unveiled by the Government... Energy Secretary Chris Huhne said private-sector investment of £110 billion in new power stations and grid upgrades is needed over the next decade* to replace ageing plants, to hit the UK's climate change targets and to ensure that the lights do not go out...

Additional financial support for the construction of reserve plants to provide a "safety cushion" as Britain increasingly relies on electricity from intermittent sources such as wind; and a cap on CO2 emissions of 450-600 grammes per kilowatt/hour generated, which should ensure that all future coal-powered plants use carbon capture and storage (CCS) technology.

Which the BBC spins thusly:

Price comparison website uSwitch has estimated that bills will rise by £500 a year if the measures are introduced. But Mr Huhne told the BBC that the average electricity bill of £500 a year would rise by £160 a year over the next 20 years, and if the new measures were not put in place, bills would rise by £190 a year.

In fact, the Treasury has calculated that the average annual household electricity bill will be between £4 and £28 higher in 2016, but should be between £20 and £48 lower by 2030.

Right, they can forecast electricity prices twenty years ahead, can they? Best of luck with that.

* These forecasts are also usually wildly understated, see also Olympics 2012, but let's take £110 billion over ten years at face value, that's £11 billion a year, two-thirds of which will be paid by households, unless we somehow imagine that private investors will pay for this out the goodness of their own hearts, that's about £300 per household per year.
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From The Sun:

Banned driver Aso Mohammed Ibrahim, 33, left Amy Houston, 12, to die under the wheels of his Rover car and fled the scene following the accident.

But the Iraqi Kurd was today told he can stay in Britain after judges said deporting the dad of two would breach HIS human rights following a seven-year legal battle.

Taxes paid by the UK financial sector

According to City AM, the UK financial sector paid about £53.4 billion in taxes last year. The figures in the article are a bit jumbled, so let's go straight to the actual report by PriceWaterhouse Coopers on the Corporation of London's website, and extract the following figures:

Taxes 'borne' by FS sector:
Corporation tax - £3.8 billion*
Employer's NIC - £9.1 billion
Irrecoverable VAT - £5.5 billion
Business Rates - £3.2 billion
Stamp Duty and other - £1.3 billion

Taxes 'collected' by FS sector:
PAYE income tax and Employee's NIC - £19.6 billion**
Income tax withheld from interest paid - £5.6 billion
Stamp Duty & Insurance Premium Tax - £2.7 billion***
Net VAT - £2.7 billion***

Jolly good. In the single tax world I envisage, they'll still be paying LVT i.e. Business Rates (maybe £6.4 billion), but so that (a) they don't let the fact that income tax, corporation tax etc have been scrapped go to their heads and (b) in order to keep the banks down to size, what I envisage is a flat tax on their total UK financial assets (excl. land and buildings).

UK banks claim to have total assets of £6,000 billion-odd (if we exclude the non-UK stuff shown on e.g. HSBC's balance sheet), so in order to collect (say) £47 billion, we'd need a tax of 0.75% per annum. The banks will then of course fall over themselves to shrink their balance sheets (i.e. deleveraging, i.e. formally writing off bad debts, dumping all the inter-bank stuff etc.) down to (say) £4,000 billion, in which case the tax goes up to 1.2%, so they'll then shrink their balance sheets down closer to their true value of about £2,000 billion, in which case the tax goes up to 2.4% and so on until some revenue-maximising rate is arrived at (might be more or less than 2%, who knows?).

The percentages would be lower if we extend this tax to insurance companies (but then we have to distinguish between 'risk' insurers and life insurance/pension insurance, which are conceptually different).

Remember that banks can earn a margin of at least 2% on their lending/borrowing operations in their sleep, so this income is akin to 'rent' and therefore can be taxed at very high rates without doing any harm to the economy. If they can spot lending opportunities with a higher return that this - like lending to businesses, then the extra money they make is truly earned and is theirs to keep.

Hey presto, banking sector downsized, taxes simplified, taxes collected and damage to the economy reduced to an absolute minimum. What's not to like?

* Elsewhere in the report it says £5.6 billion

** Elsewhere says 'total employment taxes £24.5 billion', which is less than £19.6 billion + £9.1 billion Employer's NIC. Perhaps the latter figure includes £4 billion bank bonus tax accrued but not paid in the year in 2010?

*** It is not clear why they consider some VAT or Stamp Duty to be 'borne' and some to be 'collected', but hey, differentiating between the legal and economic incidence is a tricky topic and let's assume they got it roughly right.

NHS Reform - I don't think so

While leafing through the Sunday Times last weekend I came across some job ads for senior monitoring and other positions connected with the NHS. In the light of the coalition's aim to "reform" the NHS, I couldn't help noticing what is required of those to be appointed.

In addition to the usual diversity bollocks, candidates must have "significant board level experience in a complex, high-profile organisation and the stature to be effective in the Whitehall environment" or "a public or health sector background, with some knowledge of personnel and pay issues and an appreciation of the policy and financial constraints on pay decisions affecting the public sector". They should be committed "to the NHS and its values with the ability to apply their skills and experience to the advancement of the Trust’s business and strategic goals".

The message of the ads is clear. The NHS, despite a cursory nod in the direction of the parlous financial state of the country, wants more of the same: only apply if you have a bureaucratic mindset (honed in large private or, preferably, public sector entities), won't rock the boat and will commit to business as usual. I don't think "reform" quite catches the flavour of such appointments: perhaps "stasis" is more accurate.

This behaviour is not restricted to the NHS. Every similar position in every part of the public sector draws from the same well of smug, already generously-rewarded, uninspiring apparatchiks who have risen without trace in a multitude of non-jobs in dysfunctional organisations. As living examples, each time a scandal erupts in a public sector organisation you will find a senior sinecure holder blinking in front of the TV cameras telling the mugs – again - that "lessons have been learned".

To a lesser extent Big Corp is also a victim of this plague. The same slimy reservoir was apparently dragged to land the non-executive (and many executive) members of the boards of RBS, Northern Rock and Lloyds before these outfits disappeared into the taxpayers' arms. It is no surprise that the FSA – another pit of expensive non-talent – asserted that there were no corporate governance issues involved in the debacle at RBS. Even so, the private sector, generally speaking, has to deliver something consumers want at a reasonable cost and, more to the point, can go elsewhere to obtain. Accordingly, in theory anyway, a minimum of efficiency and executive competence must be achieved or the enterprise will go bust. Nevertheless, the business wing of the political class protects its own. Thus, for instance, in memory of his distant glory days at ASDA, Andy Hornby - despite bankrupting HBOS at minimal financial or, incredibly, reputational cost to himself - was appointed to run Boots.

What Lansley and others in the coalition should do is take a day off and read Antony Jay's Management and Machiavelli. One of the major lessons taught by Machiavelli and highlighted by Jay is that, if you want to reform anything, don't ask those with a stake in the existing set-up to manage the changes required . Needless to say no-one in the coalition would be interested. They'll blunder on and the apparatchiks currently on the payroll – together with those to be appointed per the ads in the Sunday papers - will hold on until Labour returns to re-reform the NHS and, while it's about it, shower them with a new splurge of other people's hard-earned money.

Umbongo

No, that's not "astronomical".

From The Daily Mail:

England's litter problem has not improved in the past year and may get worse as public spending cuts bite, a report has suggested. A survey by Keep Britain Tidy found sweet wrappers, drinks, fast food and smoking-related rubbish had all increased in the last 12 months.

It found eight out of 10 places are blighted with cigarette butts - an increase of 5 per cent...

A spokesman added: "We know that for a lot of people, local environment quality is very important to them and £858 million was what it cost last year to clean England's streets. We are spending an astronomical amount of money on it and if that was to reduce considerably, it could lead to worsening litter."

Sweeping the streets is a perfectly legitimate core function of the state, but divide that £858 million by a population of 52 million (assuming he really means 'England', even though his organisation calls itself 'Keep Britain Tidy') and that works out at £17 per person per year (money well spent IMHO).

The net cash transfer from smokers to each non-smoker is in the order of £150 a year, so even if the entire cost of litter collection were down to cigarette butts (which it quite clearly isn't), yer average non-smoker is still better off to the tune of £133 per year.

And the fact that a large proportion of the extra cigarette stubs in the street is down to the smoking ban probably escapes them.

"Ex-minister in call to decriminalise all drugs"

From the BBC:

A former minister with responsibility for drugs policy has called for the decriminalisation of all drugs. Bob Ainsworth, who oversaw the issue at the Home Office in Tony Blair's government, said the approach of successive administrations had failed.

The Labour MP for Coventry North East, also a former defence secretary, said the current policy left the drugs trade in the hands of criminal gangs. Ministers have insisted they remain opposed to decriminalisation.

Mr Ainsworth is the most senior politician so far to publicly call for all drugs, including heroin and cocaine, to be decriminalised. He said he realised while he was a minister in the Home Office in charge of drugs policy that the so-called war on drugs could not be won. Mr Ainsworth has called for a strict system of legal regulation under which different drugs would either be prescribed by doctors or sold under licence.

It's a bit late now, but it's all good, I suppose.

The Apprentice: Season Finale (deleted scene)

"Acronyms not in battle over non-publication of non-existent report"

From the BBC:

A row has not broken out over why the Financial Banking Authority (FBA) has not published a non-existent report into what did not go wrong at Royal Services of Scotland (RSS).

Lord Turner, chairman of the government's banking supervision quango the FSB said that the government-controlled bank SSAP had refused to give the regulator permission to release a non-existent study. However, SAP disputed this, saying that it would "engage constructively to facilitate production of the report".

The FRC ruled on 2 December that the RSPCA had made some decisions, or possibly not, but cleared it of any wrongdoing when judged subjectively by those neither capable of making those judgements nor with any interest in finding those conclusions to have been wrong. Lord Adair made his comments in an unpublished open letter on Wednesday to Treasury Committee chair Andrew Tyrie.

He said the FPA is only legally able to make a unilateral decision to publish the details of its whitewash if consent can be obtained from his fellow government employees with whom he regularly plays golf. And this is not the case with RoSPA.

In its response, an RMT spokesperson explained that the institution - whose legal status was unclear - would help to facilitate the re-write of the KGB's adolescent scribblings "when they have has actually bothered to compile the confidential material they wish to release publicly. In which case it wouldn't be confidential, would it? So we'd be back to square one."

Fog blamed for 1,370 car pile-up in South-West China

From The Metro:

A pile-up involving 1,370 cars and lorries on a motorway in south-west China is believed to have been caused by a bout of very heavy fog.

Nobody was killed in the accident outside Chengdu, but at least ninety people were injured. The pile-up on a highway in Sichuan province was caused by visibility of less than five inches during a period of dense fog.

Emergency workers at the scene of the accident said that some cars landed on top of others during the crash. The first collision took place at 07:17 in the morning and the last reported collision happened at 14:22 in the afternoon several miles away.

The driver of one of the fleet of two hundred rescue trucks said: "Some cars flew up in the air, and landed on the top of other cars on top of other cars. It's dangerous back there. Oh look! There goes another one."

The accident caused traffic jams on the motorway that are expected to last for several weeks.

Reader's Letter Of The Day

My occasional email friend got one into yesterday's FT:

Sir, There is a defect in Martin Wolf’s thoughts on the effects of low interest rates, namely that he does not ask what the optimum rate of interest is (Comment, December 9).

I suggest the optimum is the rate at which the benefit of borrowing for borrowers equals the cost of forgone consumption for lenders. This optimum is only attained where for every borrower who wants to borrow £X for Y years there are lenders who knowingly forgo £X of consumption for Y years.

Unfortunately fractional reserve banking and maturity transformation stymie this optimisation, and bring artificially low rates of interest.

To illustrate, where a bank creates money out of thin air for someone who wants to fund a home extension, that new money forces a reduction in consumption somewhere in the economy (assuming the economy is at capacity). For example, less must be spent on schools, beer, etc.

A “forced reduction in consumption” is not the same as “knowingly forgoing £X of consumption”.

Ralph Musgrave, Durham, UK

I don't think this is the final word on the matter, but it's heading in the right direction - in times of a house price/credit bubble, it is in fact the borrower who is suffering from a forced reduction in consumption, as he's paying twice as much in mortgage repayments as he would otherwise be doing etc.

The vendor who suddenly has a load of money in the bank is not forgoing consumption at all, he is gambling that the future consumption that he can buy with the money is of greater value than the future consumption value of the house. If the vendor happens to be a farmer who's been given planning permission over some fields, well for him it really is money out of thin air.

[Intermission] The New Localism

I've put this week's Fun Online Poll on Xmas Pantomimes on hold for the time being to turn my attention to more serious matters.
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There's been lots of a-whoopin' and a hollerin' in Home-Owner-Ist circles over the Lib-Cons' new idea to allow NIMBYs to block all new development in their area. They disguise this affront to 'free market liberalism' as 'direct democracy'.

But why stop there? If 'local people' (i.e. homeowners) are allowed to prevent other people from building houses or starting up particular types of business, why not apply the same logic to cars? The people who complain most bitterly about all the traffic are car drivers, and one of the NIMBY mantras is that 'more housing will put pressure on parking spaces'. So why not make people apply to their local Neighbourhood Committee before they are allowed to buy a car and hence use a parking space?

The restrictions on new residential construction hit young couples hardest -buying your own home is all part of 'settling down' and a precursor to having children - so why not cut to the chase and make women apply to the Neighbourhood Committee for permission to have a baby? Don't NIMBYs always wail on about "Pressure on local schools?" Wouldn't reducing the number of children help relieve that pressure?

And having gone that far - deciding what type of businesses can be carried on, whether people are allowed to own the means to commute to other towns and how many children there should be - why not go the whole hog and allow the Neighbourhood Committes to decide what sort of education, training or job young people 'in their area' are allowed to do?

This is a dark and dangerous road - so cast your vote here or use the widget in the sidebar.

Cross posted at HPC.

Pigs on the run

From The Metro:

A herd of 100 pigs escaped being turned into Christmas crackling when their truck overturned on the way to the slaughterhouse. The porkers fled into woods at Ostroda na Mazurach* and kept police and wildlife experts at bay for six hours.

Firemen finally rounded up less [sic] than 50 of the beasts who were taken back to their farm. The driver, say police, is facing an un-merry Christmas on drink drive charges.

We used to do this on the school bus. Coming up to a certain roundabout, everybody upstairs would go over to the right hand side and once we picked up speed going round, we'd all dive over to the left. It does require a bit of co-ordination though.

On one particularly hair-raising occasion, when we got the 'bus to a 45 degree angle, the driver actually stopped and came upstairs to give us a bollocking. It was difficult to take him seriously because one wing of his glasses had snapped off and so they were balanced diagonally across his nose. Happy days.

* For unknown reasons, this story of pigs escaping in Poland is accompanied by a photo' of escaped pigs in Germany.

Rogering 'em

There's a nice bit of shroud waving on the BBC by the super-quango Teenage Pregnancy Independent Advisory Group (TPIAG), who having been threatened with closure two months ago are now trying to justify their continuing miserable existence.

I could try and make a few serious points here, asking whether it isn't maybe the welfare system that encourages so many young, single women to have babies in the first place rather than the lack of contraceptives and so on, but by force of habit, the first thing I did was to look at the TPIAG's list of members (see second link above) to see whether the UK's most hilariously and inappropriately named quangocrat is still listed.

Yup, he is.

Epic Logic Fail

From Property Week:

Neill drops £400m empty rates bombshell on small businesses. Empty rates relief for small properties has been scrapped in a move likely to cost businesses £400m a year.

Vacant properties with a rateable value of less than £18,000 a year had previously been exempt from paying business rates. But communities minister Bob Neill yesterday announced that the threshold would drop to £2,600 from 1 April, estimating that to continue with the exemption would cost government £400m a year...

Liz Peace, chief executive at the British Property Federation, said: "If the government is pinning its hopes on a private sector led economic recovery then this is a damaging and retrograde step. Empty rates is a tax on hardship at the worst possible time. The majority of the properties affected by this announcement will be in areas that are already economically disadvantaged, and so this will be a further blow."

Yesterday’s announcement came despite heavy criticism of the tax from The Morbidly Obese One and business secretary Vince Cable while in opposition.

WTF?

It strikes me that 'vacant premises' and 'somewhere where economic activity is taking place' are two mutually exclusive states. A tax on one is, by definition, not a tax or a burden on the other.

Even if they doubled Business Rates on vacant premises (so they were taxed at a punitive rate rather than being exempt), it would not affect active businesses (you know, those entrepreneurs who are trying to build up something; those people who want to go out and work, all the stuff that'll help get us out of the recession) one iota, and if anything, it would stimulate economic activity, because those vacant premises would be renovated in a twinkling and the landlord would make damn' sure that he got tenants in pronto.

And yes, I've heard all these tales about 'landlords tearing the roof off' which is why a tax on the site value alone would be even better than Business Rates without exemptions, that's just details. And Vince Cable, who has often held himself out as a moderate Land Value Taxer really ought to know better.

Tuition fees

Saw this article over at the Daily Mail

As this relates specifically to my own career I thought I'd make comment.

I started out my career path to accountancy as a university student, got myself a small pile of debt circa £13k as I was lucky enough to start under the previous system before fees were upped from £1.2k to £3k.

Having seen this announcement of plans by Deloitte to start looking more into apprenticeship style placements I have to commend them for bringing this route to a professional career more into the mainstream. As a college student I studied A-Level accountancy and I have to say that this route was almost totally glossed over when discussions were had over next steps and university courses are actively encouraged. So like a good little sheep at the time I applied for university, was accepted and subsequently studied the first two years of my course.

It was only after beginning my work placement year that I discovered not only can you obtain the professional qualification on a purely work-based learning basis but that the ACCA also have a degree partnership with the Oxford Brookes University by which you turn 9/14 exams into a BSc via two written pieces of work.

To put this into perspective it is possible to achieve much the same end result but one route potentially puts you into ~£40,000 debt!! where the other you earn a wage and obtain a degree just the same. The additional fee on top of the professional exams you ask? £95!!

After working for a year in a small accountancy practice along with discovering this information, my own decision was as a rational human being to ditch university and head out into the world of work. Instead of increasing my student debt I am now already paying it off whilst continuing along the path to obtaining my exact same end result.

I hope that more people will do the same.

Negative Equity - more fun with numbers

To follow up yesterday's post, that 500,000 households are in negative equity (source: City AM), I shall quote from The Daily Telegraph*:

Shelter’s survey of 2,000 Britons found 3 per cent of households admit to being in arrears with their rent or mortgage, the equivalent of 835,000 – up from 405,000 a year ago. A third of these turn into repossession cases at court, according to Shelter. It equates to every two minutes someone facing the real threat of being evicted from their home.

Home owners are struggling to escape their misery by selling up as estate agents warn they are doing just one transaction a week amid a drop in demand from buyers who are unable to obtain affordable mortgages... It comes amid historically low interest rates, which financial experts expect to rise next year amid rising inflation.

For sure, being in negative equity (or 'underwater') is a different concept to being in arrears, and the bank only cares if you are underwater and in arrears. And for sure, Shelter have their own agenda - historically, they were on the side of the 'dispossessed' but now they are much more Home-Owner-Ist, and are bound to exaggerate things. But that's a heck of a lot of people in arrears, even despite the artificially low interest rates that a lot of them are paying (and despite all the subsidies like Support for Mortgage Interest)

* Via Growler at HPC.

EU Consultation on Tobacco

FOREST are gathering together responses to the EU wide consultation on further restrictions on tobacco products. I got the link to the easy to fill out objection to the proposals via Man Widdecombe who got it via Dick Puddlecote.

Not that it will make the slightest difference to the outcome but feel free to add your [raspy and throaty] voice...

Life Copies Satire: The UK switches to grass-based economy

There's an article in The Onion's compilation book Our Dumb Century called "Cambodia switches to skull-based economy" (I can't find it online).

I'm always reminded of it when I see crap like this:

That new homes bonus could have netted North Somerset Council something in the region of £80m for the South West Urban Extension. But its deputy leader, Elfan Ap Rees, says all that money would have made no difference.

"The greenbelt is more important than money," he says. "Clearly in some areas of the country more homes will get built and there will be local people who really want new houses. I have to say it's the complete opposite here. For a long time, people have been saying here that they're fed up with all this residential development swamping us."

I'm at a loss to make sense of this.

If all NIMBYs lived in tents or caravans and said there was no need for houses in their area, then that would be intellectually coherent*. But if somebody who lives in a house says that other people don't need houses, it just doesn't add up. And who on earth wants to buy a house other than 'a local person'? Doesn't somebody become 'a local person' the minute he buys a house and moves in to it? If it is true that 'local people' don't want houses, then everybody who bought a house would promptly have it demolished, surely?

What have I missed?

* To give an example, there are strict vegans who oppose all animal husbandry, vivisection etc. They don't want anybody else to eat meat and they would refuse to be treated with drugs tested on animals. Whether or not you agree with this viewpoint (and I don't) at least they mean what they say and I have a grudging respect for them.

Parody Singularity

From the BBC:

Children living in flats have 45% more exposure to tobacco smoke than those in detached houses, a US study says. Researchers from Harvard and Rochester Universities say that is because the smoke seeps through walls and shared ventilation systems.

They tested cotinine levels in blood samples from 5,000 children across the US for the study in Pediatrics. Action on Smoking and Health (ASH) said there was a "strong case" for making blocks of flats smoke free.

This has got to be up there with the notion that if you smoke in car, opening the window does not make any difference as the smoke blows straight back in (the link to this claim is over at Dick Puddlecote's somewhere).

Negative Equity - Fun With Numbers

From City AM:

CLOSE to half a million British households could be facing negative equity, according to survey released today by the Bank of England...

And more people could fall into negative equity if house prices drop further. Close to one in five mortgage holders have debts exceeding 75 per cent of the value of their properties, “not much changed” from last year, the report says.

Ho hum.

Let's ignore everybody with a loan-to-value ('LTV') of 75% or less and assume that one-fifth of borrowers have a mortgage of £180,000 on a house currently worth £200,000 (i.e. 90% LTV, the average of all those people with LTV between 75% and 105%).

If house prices were to fall by a quarter (similar to the fall post-1989), the average nequity of that one fifth of borrowers will be £30,000 (£180,000 mortgage minus house value £150,000).

Multiply £30,000 by two million borrowers and we have a potential shortfall of £60 billion. Let's assume half of those in nequity now default; go bankrupt; AND have house repossessed and dumped at the new lower value.

The total loss to UK banks would be a laughable £30 billion (£60 billion x half), or less than half-a-per cent of what UK banks claim to have as total assets (about £7,000 billion).

In truth, UK banks wildly overstate their assets and liabilities to make themselves look 'too big to fail', so in truth that £30 billion loss would be slightly more than one per cent of total UK bank assets (which are primarily mortgages secured on land and buildings), but hey, it's not going to bring the country to its knees or anything.

Fun Online Polls: Elected police commissioners & Xmas Pantomimes

Thank you to everybody who took part in last week's Fun Online Poll. On a very good turnout, the results were:

Locally elected police commissioners: what do you think?

Probably a good idea - 74%
Probably a bad idea - 25%
Other, please specify - 2%

Five people left comments explaining why they thought it was a bad idea, these are valid arguments, but not enough to make me regret having voted for 'Probably a good idea'. So that's that settled. We'll see how well in works in practice next year.
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For a bit of light relief, this week's Fun Online Poll is on the topic of Xmas pantomimes.

Vote here or use the widget in the sidebar.

The 29th Day Of December

Here's my brother in law's Xmas song for this year:Or watch the lo-tech video: