Wednesday, 30 April 2014

"That's it - cheese! We'll go somewhere where there's cheese!"

Further to recent Cheese Discussions in the Comments

To put the cheese dispute to bed once and for all, this, informative video/song should resolve all outstanding points of debate. 

Voices of the Industrial Past

Rather good programme on Radio 4 that dispels the myth of the grim Industrial Revolution

Voices of the Industrial Past

Are Our Maps Upside Down?

I was watching a generic History of Britain - Viking Era documentary recently and one of the throw away lines was that the Norman Invasion changed Britain's orientation from North towards Scandinavia to South towards France.

For various strategic reasons the orientation has stayed that way for a very long time. But Britain, and more so in the best parts (i.e. the stabby northern parts from whence I hail), is not really like France and Spain towards which it is pointed on most maps. Britain is a lot more like the Netherlands (the last successful invader I guess) Germany (the last successful dynastic transplant) and Scandinavia.  

And if you turn the map upside down, the fit seems much more natural, with France and pensioner depository Spain much further away than as are consciously considered. 

I am not suggesting that a guerrilla army be formed to storm every school and turn around maps (hmmm, or am I?). But it is an interesting thought as to how something mundane and arbitrary can shape our perception of the world.

I assume that they look at the same charts as everybody else...

From The Evening Standard:

The historic owner of swathes of Mayfair and Belgravia today said it had sold off hundreds of millions of pounds worth of “super prime” property in London because of fears about the capital’s overheating market...

Grosvenor’s sell-offs included 11-15 Grosvenor Crescent, which it sold in December last year for £114 million to private developer Wainbridge. The company pumped sale proceeds into rental schemes in more affordable areas of London such as Bermondsey.

Here's a chart of Nationwide's average prices in London compared to the rest of the UK (excl. Outer Metropolitan), if they published the figures for Central London it would be far more extreme:
Assuming your aim is to collect as much rent as possible and you are indifferent to absolute house prices, it would have been a good strategy to simply sell up in London and buy 'everywhere else' at the peaks and then buy back into London in the troughs. Which is presumably what these ultimate rent seekers are doing.

Tuesday, 29 April 2014

"Dirty Harry, Crazy Larry"

From Wiki and Wiki:

A NASCAR hopeful, driver “Crazy Larry” Rayder (Peter Fonda) and a serial killer calling himself "Scorpio" (Andy Robinson) successfully execute a supermarket heist using a high-powered rifle from a nearby rooftop to finance their jump into big-time auto racing.

SFPD Inspector “Dirty Harry” Callahan (Clint Eastwood) finds a ransom message demanding a supermarket manager (Roddy McDowall in an uncredited role) pays them either $100,000 or $150,000 in cash by holding his wife and daughter hostage.

In making their escape, Scorpio also promises that for each day that the city refuses his demand, he will commit a murder. They are confronted by Larry's one-night stand, Mary Coombs (Susan George). She coerces them to take her along for the ride in their souped-up 1966 Chevrolet Impala.

The chief of police and the Mayor (John Vernon) assign the unorthodox sheriff, Captain Franklin (Vic Morrow) to the case, who obsessively pursues the trio in a dragnet, only to get involved in the shooting by Callahan of a naked man with a butcher knife chasing a woman in the city's Fillmore District.

While in a local diner, Callahan observes that Franklin’s outmoded patrol cars are unable to catch Larry, Scorpio and Mary. After they ditch the Impala for a 1969 Dodge Charger R/T 440 at a bank robbery, he kills two of the robbers; he wounds a third, challenging the man lying near a loaded shotgun:

“I know what you’re thinking: ‘Larry's vehicle has entered an expansive walnut grove, wherein the trees provide significant cover from aerial tracking, and the many intersecting roads ("with sixty distinct and separate exits") make road blocks ineffective.’

“Well, to tell you the truth, in all this excitement, I’ve kinda lost track myself. Did he evade several Dodge Polara patrol cars, a specially-prepared high-performance police interceptor or even Captain Franklin himself in a Bell JetRanger helicopter?

“But being this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question ‘Will I randomly collide with a freight train pulled by an Alco S1 locomotive? Do I feel lucky?' Well, do ya, punk?”

The UK: a house price based economy with a house price based currency.

The first chart is house prices adjusted for inflation since Q1 2004 from Nationwide. The second is the British Pound (GBP) averaged out against other major currencies (6-month moving average) since 1 Jan 2004. Surprisingly similar.

SumoKing's Libertarian Corner

That the conservative opposition to too much government control is not a matter of principle but is concerned with the particular aims of government is clearly shown in the economic sphere. 

Conservatives usually oppose collectivist and directivist measures in the industrial field, and here the liberals will often find allies in them. But at the same time conservatives are usually protectionists and have frequently supported socialist measures in agriculture. Indeed, though the restrictions which exist today in industry and commerce are mainly the result of socialist views, the equally important restrictions in agriculture were usually introduced by conservatives at an even earlier date.

Friedrich Hayek: Why I Am Not a Conservative

Maybe Boris Johnson understands more than he lets on?

From The Daily Mail:

While some Tory ministers were under pressure from voters to oppose the HS2 Bill at second reading last night, Mr Johnson declared he had always been a fan of big infrastructure.

In a swipe at critics, he told Total Politics magazine: "It’s b*llocks. They’re not campaigning for forests, they’re not campaigning for butterflies. They pretend to be obviously, but what they’re really furious about is that their house prices are getting it."

Mr Johnson added: "People are in the humiliating position of having to pretend that there’s some environmental objection that they have, that the great crested grebe is going to be invaded or whatever. What they care about is their house prices. It’s tragic we have protest groups talking about ‘this ancient woodland’ when actually there’s no tree in this country that’s more than 200 years old."

He added that the average life expectancy of a tree could not be ‘more than 60 years’.

Mr Johnson urged the government to adopt the ‘French approach’ and wave an ‘absolutely massive chequebook’ at concerned residents to buy their homes off them for ‘top dollar’.

"Then when the whole thing goes in and is a success and generates a movement to the area, lifts the economy and the prices go up, well who’s quids in? The Government," he added.

"How our love of debit cards is killing off cash"

From The Daily Mail:

Cash is being killed off by the banks as they push customers to switch to cards, automated payments and a new service which is linked to mobile phone numbers.

Notes and coins now account for only £17.99 of every £100 spent, down by £3.03 on a year ago, according to the Halifax.

They are obviously not John Lewis shoppers, or else that would be "£18 of every £100 spent". Pennies are for the little people.

Monday, 28 April 2014

Ricardo's Law Of Rent (part 94)

From Lloyds Banking Group:

Homeowners in local authorities with the largest falls in the unemployment rate have seen the value of their property rise by almost £136,000 over a decade, according to new research by Lloyds Bank.

The average house price in the ten local areas that recorded the largest falls in the unemployment rate in the decade to March 2014 rose by 68%, or £198,709, to £334,404. The unemployment rate in these areas fell by 1.3% during the period...

At the other end of the spectrum the top ten areas with the lowest house price performance and a higher unemployment rate are generally concentrated in Northern Ireland and outside southern England...

The top ten areas with the lowest price performance have an unemployment rate that is on average 2.2% higher now than in March 2004.

Well, duh.

It's not just that people with good jobs have more money to spend and some of that money goes on higher rent/house prices; it is also that people are prepared to pay more to live in areas with higher employment rates - the extra income justifies paying the extra rent (or you could say: landlords will charge an entry fee nearly as high as the extra wages which people can earn if they live in that area).

Another one of those fire death stories

As somebody who spends a fair amount of time scanning headlines and reading the odd article, it struck me a while back that nine times out of ten, if there's a headline about a mother and children/relatives being killed in a house fire, the story reveals them to be Muslim-Indian-Pakistani.

Sheffield fire deaths: Three generations of a family killed

For some reason, fathers/husbands are hardly ever killed in these fires, go figure.

A surprising U-turn...

From The Metro:

Smokers are turning to e-cigarettes in their droves, new research suggests.

More than 2million adults now regularly use the tobacco-free devices – three times as many as in 2012.

And despite fears that e-cigarettes are a route into smoking real tobacco, only one per cent of non-smokers polled by YouGov and Ash have tried 'vaping'.

Deborah Arnott, chief executive of Ash, said:

"It is important to control advertising of e-cigarettes to make sure children and non-smokers are not being targeted.

"But there is no evidence from our research that e-cigarettes are acting as a gateway into smoking."

It was only her and her ilk who ever made such a ludicrous assumption in the first place - see Dick Puddlecote et al, and even if it were true, then so what? - but it's heartening that she finally backtracked.

Fun Online Polls: Snails & Christian countries

THe responses to last week's Fun Online Poll were as follows:

Have you ever thrown a snail into a neighbour's garden?

Yes - 41%
No - 28%
I don't do any gardening - 31%

Thanks for responding. that seems about right to me.

The Royal Horticultural Society society did a similar survey and only a fifth of gardeners said that they did. Maybe they did their survey face-to-face and people were somehow ashamed to admit it?
This week's Fun Online Poll.

David Cameron made the claim, for reasons best known to himself, that England was a Christian country, which generated many acres of verbiage, response and counter-response, a fine example by Peter Hitchens here.

So that's the question: "Is England (still) a Christian country, and is that a good or a bad thing?"

Vote here or use the widget in the sidebar.

Saturday, 26 April 2014

Economic Myths: "Workers should own the means of production"

... is one of those things which the Lefties like to say.

Whether or not this is a desirable aim in itself, they have sorely missed the point. I have often struggled to explain it to them, to little avail.

The productive economy has a certain level of output, i.e. total sales, the consumer surplus arising from all this goes by definition to consumers, most of whom are "workers". It's difficult to measure but it is a huge figure.

The total amount which businesses receive as turnover/sales can ultimately only go three ways (ignoring taxes and rents for the time being, as these reduce the amount which ends up being split between workers and owners of capital).

a) It can be paid out as wages.
b) It can be paid out as dividends.
c) It can be re-invested in the business, which benefits future workers and shareholders in the same ratio, so we can ignore this.

(Of course, most businesses will spend a lot of money buying stuff from other businesses, but those supplier businesses in turn can only split the money three ways ad infinitum).

So how much is paid out, in the UK, under (a) and (b)?

Total taxable income in 2011-12 according to from HMRC was as follows:

Employment income - £635 bn
Self-employment income - £73 bn
Pensions - £111 bn
Property, interest and dividends - £60 bn

According to Capita Registrars, total dividends paid out by UK companies in second half 2011 and first half 2012 were £77 bn, and total taxable profits of UK companies is around £150 bn (so half it paid out as dividends).

This is more than that declared to HMRC as taxable income, because about half of all dividends are paid to pension funds, so they ultimately show up as "pensions" (which is deferred employment income) rather than as dividends. And dividends are paid abroad, not declared etc.

It gets really tricky once you try to factor in rents and taxes; most rental income in this country (the rental value of owner-occupied homes) is completely off the books, that £200 bn does not show up in these statistics, and the rental value of owner-occupied business premises (about one-third of all business premises) is recorded as business profits, not as rental income.

So although most individual workers have little "control" of the means of production in the legal or day-to-day sense, who's to say that businesses would be run much differently, or that their terms and conditions of employment would be much different if they did? And as it is clear that "workers" receive around eighty or ninety per cent of everything that is paid out, i.e. for every £1 you earn, "shareholders" (around half of whom are former workers receiving pensions), they already sort-of own the means of production.

So why, and this was the second point of the post, are the Lefties so keen to tax workers? Aren't they depriving them of a large chunk of that part of the means of production which they do own (i.e. themselves and their own labour)? Or should we assume that this cancels out, because about half of what you pay in taxes is then paid out as wages or pensions to current or former workers?

Friday, 25 April 2014

How many people jumped off the building in this video?

From the BBC:

Sky divers Vince Reffet and Fred Fugen have set a new world record by base jumping from the world's tallest building, the Burj Khalifa in Dubai.

Unless I am very much mistaken, three people jumped off the building - the two in the picture and the cameraman, who as per usual doesn't get a mention, despite having the harder task.

This might be like 1988 all over again...

From Wiki:

Mortgage interest relief at source, or MIRAS, was a scheme introduced in the United Kingdom by Chancellor of the Exchequer Roy Jenkins in 1969 in a bid to encourage home ownership; it allowed borrowers tax relief for interest payments on their mortgage.(1)

In the 1983 Budget Geoffrey Howe raised the tax allowance from £25,000 to £30,000. Unmarried couples with joint mortgages could pool their allowances to £60,000, a provision known as Multiple Mortgage Tax Relief.

This remained in place until the 1988 Budget, when Nigel Lawson ended the option to pool allowances from August 1988. Lawson later publicly expressed regret at not having implemented the change with effect from the time of the budget, as it is generally accepted that the rush to beat the deadline fuelled a sharp increase in house prices.(2, 3)

1) As we well know, the first really big post-war house price bubble was between 1970 and 1973, probably largely as a result of this subsidy, which duly popped.

The UK government then rushed to stoke inflation in order to mask the resulting house price declines. Back in the day the UK still had fairly strict currency controls, so they could do this quite easily and so nominal prices did not really go down at all.

2) So maybe part of the explanation for the recent meteoric rise in house prices, in London and the South East at least, was people rushing to beat the deadline before the new Mortgage Market Review came in:

From 26 April lenders will have to stress test borrowers' affordability to take into account the impact of expected future interest rate increases with reference to market expectations over the next five years...

Coreco director Andrew Montlake says: "Lenders are now stress testing against rates of around 7 per cent, so for those borrowers who do take lower fixes initially they are already being underwritten as being able to afford a higher rate when that expires in two years' time."

Crikey. Seven percent!

3) Getting rid of Domestic Rates and replacing it with the Poll Tax managed to maintain the price momentum for another year or so, but we all remember what happened to house prices after that double sugar rush had worn off - see chart from (1).

"Adverse interest rate movements"???

From the BBC:

London's Gherkin skyscraper has been placed into receivership by its creditors after one of its owners was placed in insolvency.

Germany's IVG Immobilien, which co-owns the 40-storey Gherkin with private equity firm Evans Randall, filed for insolvency last year...

"Adverse interest rate and currency movements" added to the building's debt burden, said Deloitte, which led to defaults on the debts dating back to 2009.

The skyscraper, designed by Foster and Partners, was built by reinsurer Swiss Re in 2004 and was sold to IVG and Evans Randall in 2007 for £600m.

Very strange.

Haven't interest rates been drifting steadily downwards for the last forty years or so?

Thursday, 24 April 2014

If you peel potatoes, you lose a quarter by weight.

I had to boil potatoes today and the kids said that they'd prefer them peeled first.

So I weighed out the regulation 8 oz per person (275 grams in new money) and peeled them as carefully and gently as possible using an authentic German swivel blade peeler.

Just for the fun of it I weighed the peeled potatoes. To my surprise/horror, I'd lost a quarter by weight.

On the off chance that I'd messed up the original weighing, I then weighed the peelings as well and it all added up nicely.

So maybe they were right, back in the day:

Those who have the will to win,
Cook potatoes in their skin,
Knowing that the sight of peelings,
Deeply hurts Lord Woolton's feelings.

"Police raid City of London and arrest everybody"

From The Evening Standard:

Police today smashed everything being run from offices in the heart of the Square Mile.

Fifteen thousand smartly dressed office workers were arrested at computer terminals in various offices in connection with a long series of frauds and swindles, which in some cases had been going on for centuries.

Financial advisers and commissioned bank staff were said to have bombarded victims with glossy advertising, meaningless projections and cold calls using similar techniques as those shown in Leonardo Di Caprio's Wolf of Wall Street film.

The fraudsters claimed that their firms would take money from individuals to invest in "tax-efficient savings and investments" while at the same time lending the same individuals the money back again to buy overpriced housing.

In reality, detectives said, there were no tax-breaks, or only a tiny amount that did not match the claims, and it was mathematically impossible for individuals to improve their position by paying a premium to use their own money to try and outbid others who had done the same in order to 'get on the property ladder'.

"Cornish people granted serf status"

From the BBC:

Cornish people have been granted serf status under Prince Charles' new rules for his now independent Duchy.

Chief Secretary to the Treasury Danny Alexander will make the announcement on a visit to the country later.

Dick Cole, leader of Mebyon Kernow, which campaigned for Cornish devolution, said: "This is a fantastic development. This is a proud day for Cornwall. We salute our new overlord!"

The Cornish will gain the same status as communities in mediaeval and feudal times. Elections have been deemed unnecessary and the leaders of Mebyon Kernow will be burned at the stake.

A spokesman for Prince Charles, who is due to visit Bodmin as soon as they have finished building a castle for him, said:

"Cornish people have a proud history and a distinct identity. I am delighted that we have been able to officially recognise this and afford the Cornish people the same status as their forefathers."

The Girl With The Dragon Earring

From and

This English-language adaptation of the Swedish work of fiction by author Tracy Chevalier, tells a story of a disgraced journalist, Mikael Blomkvist (Daniel Craig), as he investigates the events surrounding the creation of the painting "Girl With a Dragon Earring" by 17th century Dutch master Johannes Vermeer (Colin Firth).

Blomkvist follows the disappearance of the girl in the painting, it is speculated that she was a wealthy patriarch's niece from 40 years ago. This masterful film attempts to recreate the mysterious girl's life.

He is aided by the pierced, tattooed, punk computer hacker named Griet (Scarlett Johansson), who is a maid in the house of painter Johannes Vermeer.

As they work together in the investigation, she must somehow secretly pose for the crucial painting without the knowledge of Vermeer's wife (Alakina Mann).

They uncover immense corruption and cruel gossip in the world of 17th century servants beyond anything they have ever imagined.

Wednesday, 23 April 2014

Unlikely causes of acid rain, part 94: Ammonia

From The Metro:
Cows and sheep release 37 per cent of the world's methane, which is 23 times as warming as CO2....
Yup, that would appear to be true.
Livestock also produce more than two-thirds of the world's ammonia, one of the main causes of acid rain...
Jeez, I don't remember much from my O-Level chemistry, but that doesn't sound quite right to me.
Let's check at Wiki:
Ammonia is moderately basic, a 1.0 M aqueous solution has a pH of 11.6...

Daily Mail on top form

From our favourite roving crime reporter-cum-estate agent:

Three disabled children have been found dead at their home and a 43-year-old woman has been arrested on suspicion of murder.

Police were called to a £1.2million property in New Malden, south London, last night where they found the bodies of a girl, four, and three-year-old twin boys.

We're really not sure. But we definitely know.

From the BBC, a couple of days ago:

For most of the 20th Century crime rose and rose and rose. Every time a new home secretary took office in the UK - or their equivalents in justice and interior ministries elsewhere - officials would show them graphs and mumble apologetically that there was nothing they could do to stop crime rising.

Then, about 20 years ago, the trend reversed - and all the broad measures of key crimes have been falling ever since.

Offending has fallen in nations whose governments have implemented completely different policies to their neighbours.
If your nation locks up more criminals than the average, crime has fallen. If it locks up fewer... crime has fallen. Nobody seems to know for sure why.

But there are some people that believe the removal of lead from petrol was a key factor...

OK, in the spirit of Sherlock Holmes: "when you have eliminated the impossible, whatever remains, however improbable, must be the truth".

The lead explanation seems pretty unlikely, but it's the best we've got so far (I believe the Freakonomics/abortion explanation has been shown to be rather doubtful)...

Oh no it isn't..!

From The Guardian, today:

Cost of alcohol credited for drop in serious violence in England and Wales

... "Violence is falling in many western countries and we don't know all the reasons why," Shepherd said. But he said changes in alcohol habits was a probable explanation.

"Binge drinking has become less frequent, and the proportion of youth who don't drink alcohol at all has risen sharply. Also, after decades in which alcohol has become more affordable, since 2008 it has become less affordable. For people most prone to involvement in violence – those aged 18 to 30 – falls in disposable income are probably an important factor."

UPDATE: as Pub Curmudgeon points out, if alcohol is getting more expensive, how do the bansturbators reconcile this with their bleating about "pocket money prices"?

"Fusion reaction created in microwave oven"

From the BBC:

Scientists have outlined how they managed to create a fusion reaction using a household microwave oven.

Nuclear fusion is a nuclear reaction in which two or more atomic nuclei collide at a very high speed and join to form a new type of atomic nucleus. During this process, mass is not conserved because some of the mass of the fusing nuclei is converted to photons (energy).

An Irish-UK team placed hydrogen and helium (used in party balloons) into a 800W microwave oven, then added water and dishwashing liquid, and left on full power for several hours.

The results are reported in the journal Nuclear For Beginners.

Tuesday, 22 April 2014

"Community generated land values" part the manieth

From the Evening Standard:

The arrival of Boris bikes has fuelled a rise in the rental value of homes in areas considered to be property “backwaters”, estate agents claimed today.

Research by Benham & Reeves found rents had increased by up to 25 per cent in areas such as Sands End, Walworth and Haggerston since hire bikes were introduced.

The survey, of around 200 homes, has been approved by Transport for London. It was commissioned after tenants began to puzzle agents by requesting properties in specific streets.

Marc von Grundherr, director at Benham & Reeves Residential Lettings, told the Standard:

"Over the space of two or three months, I had a couple of tenants saying I don’t want to rent in that street, I want to rent in this street.

"They said it’s because there is a bank of bikes next to the property. I started to think whether there was a correlation between the bikes going in and price increases."

Research found substantial rent increases in areas not served well by the Tube, such as Cubitt Town (12 per cent), Haggerston (16 per cent), Olympia (20 per cent), Walworth (22 per cent) and Sands End (25 per cent). Average rents across London have risen by five per cent over the same period.

Previously many tenants dismissed these areas because they are a 10-minute walk or more from the nearest Tube or train station. The bikes are said to be the “missing link” in the public transport network.

Tuesday afternoon gear change

Grateful Dead "Sugar Magnolia". The song is in A, but after 2 minutes 42 seconds they shift up to B for the last half minute.

Unlike swearing, gear changes are not big and they are not clever, whoever does them.

Russian gas: Monopsony vs monopoly*

From The Daily Mail:

Energy prices in Britain will rise unless urgent action is taken to prevent Russia holding countries to ransom by cutting off gas supplies, a minister has warned.

Energy Secretary Ed Davey warned aggression from Russian President Vladimir Putin could quickly force up costs for families in the UK. 
Energy security will be high on the agenda of a meeting of the G7 meeting in Rome early next month.

A quarter of Europe's gas comes from Russia, half of which passes through Ukraine which has been the focus of mounting tensions after the Crimea region was annexed by Moscow.

Last week President Putin insisted it was 'impossible' for Europe to stop buying gas from Russia...

According to Wiki, European Union countries use 460 bn m3 a year, so they import about 115 bn m3 from Russia. Russian exports are 173 bn m3 a year, so two-thirds of that goes to Europe.

So we are dependent on them - but they are equally dependent on us.

If the EU, or European countries acting in concert, really wanted to do something they would draw the lessons from the way Thatcher dealt with the miners or the way supermarkets squeeze their suppliers, and simply set a cap on the price which they are all willing to pay for imports of gas. This price can be any figure they like, as long as it exceeds the extraction and transport costs.

I can't see Russia's other customers buying all the spare capacity, indeed they could join the buying cartel, hence the exporters will just have to accept it.

(The only reason why the EU/European governments wouldn't do this is if a lot of the senior people are in the pocket of Russian oligarchs, which they probably are, it is certainly true for German politicians.)


* OK, technically that is probably oligopsony vs oligopoly.

Sumoking's Libertarian Corner - How regulation works

With a little (paraphrased) help from comedian Doug Stanhope, because he is 1. funnier than me, and 2. I am buggered for time to do a proper post (though one is slowly coming together, maybe, by 2018). 

"They say if you give a man a fish, he'll eat for a day, but if you teach a man to fish.... 

  • then he's gotta get a fishing license, but he doesn't have any money.
  • So he's got to get a job and get into the Social Security system and pay taxes, and now you're gonna audit the poor bugger, 'cause he's not really good with maths.
  • So you'll pull the HMRC van up to his house, and you'll take all his stuff. You'll take his black velvet Elvis and his Batman toothbrush, and his penis pump, and that all goes up for auction with the burden of proof on him because he forgot to carry the one,
  • 'cause he was just worried about eating a fucking fish, and he couldn't even cook the fish 'cause he needed a permit for an open flame. Then the Department of Rural Affair and the Environment Agency is going to start asking a lot of questions about where are you going to dump the scales and the guts. 'This is not a sanitary environment', and ladies and gentlemen if you get sick of it all at the end of the day...
  • not even legal to kill yourself (this is a bit american focused but for Sucicide in the UK, it was decriminalised in England under 1961 Suicide act and not really ever directly a crime in Scots law, but, if you don't keep it private it might be a breach of the peace, consolation for those commuters held up by someone jumping in front of their train).

Monday, 21 April 2014

Daily Mail on top form

From The Daily Mail:

"Those invited to attend the funeral service will be able to gather in the grounds of Geldof's home and use a side gate which leads directly into the church, avoiding the gaze of any media or members of the public.

It is understood the funeral service will be held somewhere between 11am and 1pm, but it is not known yet if there will be a burial or cremation.

According to the Sunday People widowed Thomas Cohen is looking to put the £1million house in Wrotham, Kent on the market immediately.

Fun Online Polls: Girls Aloud & Garden snails

A low turnout but a high percentage of correct answers in last week's Fun Online Poll:

Which was not the title of a song or album by Girls Aloud?
Biology - 1 vote
Can't speak French - 1 vote
Chemistry - 0 votes
Deadlines and diets - 1 vote
Money - 1 vote
Pure maths with statistics - 30 votes
Whole lotta history - 1 vote

According to the BBC:

A fifth of British gardeners have thrown snails over their neighbour's fence, according to a survey.

Some 22% of people questioned for the Royal Horticultural Society (RHS) said they had tossed a snail into their neighbour's garden, compared with 78% who said they had not.

Londoners were the worst culprits, with 30% admitting they had done it. Gardeners in Scotland were least likely, where 14% admitted they had thrown a snail over a garden fence.

Only a fifth? I thought everybody did it. My theory was, if there is a snail in my back garden, it must have come from a neighbour's garden, so all I am doing is returning it whence it came.

So let's see if we get the same responses here.

Vote here or use the widget in the sidebar.

Sunday, 20 April 2014

Food Banks

Undercover Investigation of food banks in the Daily Mail concludes with this:-

Last night the Trussell Trust said it would investigate allegations of abuse, adding: ‘There is no evidence to suggest that awareness of the food banks is driving an increase in visitors, rather that food bank use is meeting a real and growing need.

I don't think you really need evidence in this matter. There are people out there that if it's worthwhile will lie to get free things, even more so if there's no risk of prosecution from lying, and if you make them aware of more free things, they'll take them.

In the example, someone sees the CAB, spends time doing an interview, gets £40 of food vouchers. I'm guessing it took less than an hour, which is more than most people earn, so if someone had no moral objection to doing it, why wouldn't they do it? Are food banks even running out of food, or has the demand just created even greater supply?

We're looking at something like 800,000 parcels per annum. About the same as the number of burglaries each year, just to give you some perspective on the level of people who will break normal acceptable moral behaviour in this country. I'm not saying that some of the rise isn't based on benefits, but it's not exactly challenging to ask if a great deal of these people are just mooching.

Easter Opening Times

Just going to throw this out there for debate...

Generally, I'm against bank and public holidays because they're a classic case of Bastiat's broken window fallacy - that you get a "free" day off, when in reality, someone has to pay for that and it's going to be the employee, so giving people a public holiday means either that someone gets less money or more realistically that they take a day off at a time when they'd rather not and creates uneven demand for roads, beaches, zoos with all sorts of bad effects.

But I do think that there's something useful about Xmas Day and Boxing Day in that it's a time when families get together, most people participate in it, and so they don't have to muck around booking time off as you have it by default. Two days means one day with his family, one day with hers.

When it comes to Easter I don't think it has that for most people, though. Where Xmas has become a time of merriment, a time for family and pushed out nearly all the Christian aspect and become universal, Easter really is more something for the Christians, who represent a rather small percentage of the population. Today is just Sunday for me - bacon sandwiches, roast dinner with the family, play Minecraft with the kids, watch The Man in the White Suit. And for most of my extended family, the same is true. It's just like any other Sunday, except I can't go and buy some plants for the garden.

UK House price to earnings ratio vs RPI inflation since 1948

It appears to be agreed that the rate of inflation is to a large extent down to what the government does (or doesn't do) and IMHO, the UK government stokes inflation as hard as it can once house prices peak and then start falling:
It's largely an electoral thing, because UK governments which allow house prices to slide nearly always lose the next election, so even if real house prices are sliding, the government can mask this by cranking up inflation.

Inflation also provides the Homeys with a wonderful justification: "Land is the only thing which beats inflation".

Well yes, of course, because the whole game is rigged. That's about as valid as saying "Solar panels and wind farms are a good investment." From the investor's narrow point of view, they almost certainly are... but only because of subsidies and tax breaks for the investor, which 'everybody else' has to pay in tax or higher electricity costs. Until and unless these forms of electricity generation become cheaper/more efficient than existing forms. It appears that solar panels will reach this stage in a couple of years, but that is a separate topic.

Suffice to say, the government and the subsidy collectors cannot justify the subsidies for solar on the basis that solar produces inflation-beating returns.

If the government were funded out of the rental value of land instead of taxes on earnings and profits, people would then get used to the idea that "Land is the only thing which doesn't beat inflation."

It's quite difficult to stoke inflation in the absence of currency controls, (in fact, currency controls are in themselves a cause of inflation), so after 1980 or so, inflation in the UK was never anywhere near what it had been in the 1970s and hopefully never will be, but that's not for lack of trying (0.5% bank base rate, QE, Funding for Lending, Help to Buy, VAT increases and so on):

Saturday, 19 April 2014

Car insurance - it really is that simple.

Hitherto, I have let Her Indoors deal with this because she enjoys paperwork and I don't.

This year we got our renewal quote slightly earlier than normal, about three weeks before renewal time, but otherwise it was as expected, a couple of hundred quid more than when we started with them two or three years ago, so Mrs W dutifully wasted several hours on moneysupermarket and so on, but was not able to commit herself to going somewhere else and saving a couple of hundred quid.

Plenty of people have told me that all this changing-your-insurance-each-year is a mugs' game, all you need to do is ring your current insurer, tell them you've got a much cheaper quote elsewhere and then they drop their premiums to just above whatever you say the competitor's quote was.

Her Indoors told me if it's that simple, then why don't I sort it out?

Which I did. The lady in the call centre was as nice as pie, and clearly had a script prepared for the occasion. She assumed incorrectly that I was low-balling but correctly that I didn't like paperwork so would not bother insuring elsewhere if her quote was only a bit higher than the competitor's quote.

So she dutifully hummed and hah'ed and waffled something about "Let me see if I can get that down a bit for you."

The upshot was, she knocked off exactly £150 from the original quote to a price slightly above what she believed the competitor's quote to be, we shook hands (metaphorically) on the deal and that was the end of that, it took all of five minutes.

Thomas Piketty's "global wealth tax" nonsense.

Whatever the merits or otherwise of a general "wealth tax", it fails for practicalities, Tim W outlines some of them here.

Unlike most people who waffle on about this, I have actually prepared wealth tax returns for people, back in the early 1990s when I worked in Germany and they still had Vermögensteuer. I've still got the Beck-Texte handbook, 1991 edition, it's over 400 pages, just as long as the Corporation Tax handbook and nearly as long as the Income Tax handbook.

There were so many exemptions and exceptions that what it boiled down to was a surcharge on income tax, it raised as little money as you would expect (about DM 9 billion in its last year of operation in 1996 = approx. £3 billion), so they then got rid of it.

There's a favourable write-up of Mr Picketty's book in the FT; putting practicalities to one side, the author is stumbling along the right lines BUT he (and the reviewer, and indeed Tim W):

- assume that increasing inequality is inherently A Bad Thing. It is not, whether it is A Bad Thing or not depends entirely on why it is happening. If some people or businesses work harder or smarter than others, they get richer than those who don't. Fair enough, that's capitalism and benefits everybody overall. But if the government introduces a taxpayer-backed Help To Buy scheme to pump up land prices and mortgages, this increases inequality and is clearly A Bad Thing.

- fall into the trap which the Neo Classical Economists (early Faux Lib's) set a century ago, which is to confuse the difference between a) real personal wealth or capital on the one hand (which is a very good thing) and b) monopoly privileges (primarily freehold land titles, with a few bits and pieces like patents, barriers to entry etc).

If you make these two cardinal errors and decide that an annual wealth tax would help, you would then set the tax at a flat percentage on both kinds of wealth (real wealth and monopoly wealth). Let's say 1% to get the ball rolling, the same as the German Vermögensteuer.

The effect of that 1% tax on real wealth, which perhaps has no annual return (like a painting or jewellery) would be that people just don't declare it or spend years arguing about the value; the effect of that 1% tax on shares or cash in the bank (not directly wealth, but claims on underlying wealth) in an age where dividend yield is only 4% or so and bank interest is maybe 2% would be like increasing income tax on dividends from 25% to 50%, and increasing the income tax rate on bank interest from 20% to 60%.

The effect of that 1% tax on business capital (cars, lorries, machinery, buildings) on which the annual return is (say) 10% would be like increasing corporation tax from 20% to 30%.

The effect of a 1% tax on monopoly wealth might help a bit, but as the total return to monopolies is far, far higher than the return to anything else, at least 10% per annum compound, this would merely slow the rise of inequality at the expense of damaging the real economy to everybody's detriment, including those who live off their wages alone and own little or no wealth of either type.

And we'd still get all the bleating about Poor Widows In Mansions.

The total yield would be small (going by the German example), administratively it would be a nightmare, there would be mass evasion/arguments and it would harm the economy in much the same way as higher income tax and corporation tax rates.

However, a tax on monopoly wealth alone, primarily the rental value of land, would raise significant amounts of revenue because it can levied at up to 100% of the income/benefit arising. There would be no need to define all the stuff that wouldn't be taxed and think up all sorts of exemptions for them. There would be no scope for evasion and no damaging economic effects (as well as a lot of positive economic effects). It's the very opposite of Help To Buy.

In the UK, for example, such a tax would/could approximate to a flat 3% charge on the current selling price of land and buildings and would be enough to get rid of council tax, business rates, stamp duty, inheritance tax and capital gains tax just for starters; the remaining bulk of it would be enough to get VAT down to the EU-dictated minimum of 15% and eliminate National Insurance (super-tax on employment) and higher rate/additional rate income tax entirely.

So it wouldn't be downwards redistribution of cash, it would be a sideways redistribution of the cost of government from rent generators to rent collectors. Workers and businesses (and shareholders) would end up better off, not because they are being given money that the government took away from somebody else, but because less money is being taken away from them.

This also deals with the KLN that "Land Value Tax is a step towards a Wealth Tax". Clearly it's not, as you can raise more money from LVT alone than from a general wealth tax. If you started with full-on LVT and tried to extend it to all wealth (however defined, and that's impossible), the annual % rate would have to fall so steeply that total revenues would be lower (even ignoring the damaging economic impact).


UPDATE: Tim W refers us to an article by Matt Yglesias at who comes to much the same conclusion as I did. It's a longer article but nice and clear and step by step.

Friday, 18 April 2014

Georgism without Land Value Tax (2 or possibly 3)

Two commonly used KLNs are that "there will be too many losers in the short term" and "LVT will never raise enough money to replace all other taxes."

I'm not sure that the second one is true and it's certainly not relevant to anything, even our 'biggest' tax, income tax, barely raises a fifth of what the government spends each year; tobacco duty (which lots of people think is great) only raises one or two percent.

But hey.

So here's a thought experiment at least:

We work out how much each household or business is currently paying in total tax, things like VAT will have to be apportioned somehow between suppliers and consumers; occasional taxes like Inheritance Tax can be annualised etc.

Then we abolish all these other taxes, and the tax bill for each home, plot of land, farm, shop, office etc is simply set at whatever the occupant's current total tax bill is.

So in the short term, there are no winners or losers at all, everybody's disposable income is worth exactly the same as before and there is no disincentive to getting a (better) job, making higher profits, increasing your turnover or realising capital gains etc.

For sure, people's incomes and business' profits change. If it goes up, households will move somewhere nicer, and businesses will move into larger/better premises; if it goes down, the reverse applies.

By and large, movers will be competing against people with similar gross incomes, so whoever has the highest gross income out of that small group of similar bidders will be the new owner or tenant of each particular building/plot. The tax on that plot is then simply re-set at whatever the business' or household's total tax bill would have been under the old rules (however estimated). That might be lower or higher than the previous occupant's, that doesn't matter. By and large people will be swapping places, trading up and trading down.

Over time it will all level out, and some bright spark will point out that the total tax bill on similar homes in the same street, or shops on the same High Street is pretty much the same etc, at which stage you simply average out all the tax bills for similar premises in the same area.


"London's first-time buyers caught in ... trap, research shows"

The Evening Standard is at its Homey best again. They publish a handy contour map showing how minimum selling prices rise from the outer suburbs to form a peak in the City, which would be of no surprise to anybody who takes an interest in land values*... and then they wail on about the "stamp duty trap":

Yes, Stamp Duty Land Tax, like all taxes on transactions (such as VAT, PAYE etc) is an awful tax, but what costs you more? The SDLT or the home?

* The increase in land values towards the centre is far steeper than the map suggests, because the centre is much more densely built up than the suburbs. It's easily a ratio of a hundred-to-one between the centre and the outer fringe.

Thursday, 17 April 2014

Movie Review: Frozen

For many years, Disney animation was in a bit of a bleak place, producing lots of not-too-great movies, while hiring Pixar to make terrific movies that appealed to both kids and adults. Then Disney bought Pixar from Steve Jobs and Disney put John Lasseter, the chief creative in charge of creative decisions at Disney. And since, then, we've seen a revitalisation of Disney's animation with films like Princess and the Frog and Wreck-It Ralph and now Frozen.

Despite Lasseter taking over at Disney, Frozen is much more of what I consider a Disney movie than a Pixar movie. It's a fairy tale with princesses and castles and magic and songs. It follows the line of films like Cinderella, Beauty and the Beast and Enchanted.

So, this review probably isn't so much for you as for your daughters or nieces, who will absolutely love this movie. It's beautifully made, has a good story, good characters, and has an infectious set of songs that you can't get our of your head.

It's currently out on DVD and Blu-Ray and I suggest that if you're buying it for your kids because they won't watch it once.

Interesting Article About San Francisco, Tech Startups and Rampant NIMBYism

The interesting thing that affects all cities in this piece is about how people are getting married later, which means they stay in cities longer, which hadn't occurred to me before.

But reading this, I can't help but think that tech companies will start finding somewhere else to base themselves soon.

How Burrowing Owls Lead To Vomiting Anarchists (Or SF’s Housing Crisis Explained)

[Heathrow expansion] Yes, but that's not really a "cost", is it?

From This Is Money:

Failing to build a third runway at Heathrow will add £300 to the cost of an average return fare from the airport by 2030, according to a new study.

The report by consultancy Frontier Economics, commissioned by Heathrow, said there was no doubt the South East needed new airports.

And it warned costs would soar at Heathrow if no new runway was built, with demand for flights significantly outweighing supply...

The study also estimates that passengers are paying an extra £95 at present at Heathrow than they would if it had another runway.

Yes, let's assume that because demand has increased but supply is constrained, the amount which airlines can charge for tickets is £95 higher than it would be if there were more supply (more runways).

That's clearly a "cost" from the passenger's point of view.

But the total real "costs" to the airlines and airports are entirely unaffected by demand, their fixed overheads are unaffected and the per-plane cost (fuel, staffing) is also entirely unaffected.

So what this means is that airlines are making a £95 per passenger super-profit (also known as "rent").

It's the same when demand suddenly falls (post 9/11, for example) or when flights are halted because of bad weather or Icelandic volcanoes. The air travel industry's costs were largely unaffected but income fell, so they made losses.

The bitter irony here is that the NIMBYs and anti-expansion campaigners are doing whoever owns the scarce landing slots a huge favour.

Multiply that £95 by 95,000 passengers per day (half of arrivals+departures) times 363 days a year, that's a cool £3 billion extra rental-monopoly-artificial scarcity income.

Further irony is that Air Passenger Duty raises about £3 billion a year, so all the government is doing is clawing back the rental income (in a very crude and inefficient fashion). This duty is, from the point of view of the airlines a real cash "cost", but does not add much to ticket prices.

Movie Review: The Raid and The Raid 2

Martial arts films generally don't interest me, but I heard so much buzz about The Raid that I gave it a go. And for £4 to own on Blinkbox, it seemed worth a punt.

The story is about a team of police going into a tower block that is owned by a criminal kingpin that also houses all his criminals (mostly drugs). The job of the team of police is to get to the top of the building and get the kingpin. Along the way, they have to fight all his mooks that are there to protect him. There is some story and revelations along the way and it holds together, but fundamentally, it's a martial arts movie. What sets it apart from many other movies is that it's faster, more highly choreographed than most of these movies, and also full of imaginative scenes.

The Raid 2 is more ambitious. It still has the martial arts, although it pumps it up even more, throws in an insane car chase and a few offbeat characters that are more like something out of a comic book or video game (particularly Hammer Girl). But its story is fundamentally one about rival crime families that strays into the territory of Godfather 1 and 2, and work well. It's a little saggy in the middle, but the last hour is pretty full-on action. And while you have to suspend disbelief a little, it's also highly enjoyable.

Both films are subtitled from the original Indonesian, but they aren't dialogue heavy.

I do reiterate the BBFC's warning with regards to the second film (that also applies to the first) that they "contain bloody violence and gore". They don't delight in the violence, but try and make it as real as possible.

Wednesday, 16 April 2014

"Your home probably earns more than you"

Nothing really new, but a good headline nonetheless in The Metro:

The average property in Britain now costs £253,000, rising to £458,000 in the capital, the Office for National Statistics said.

A would-be buyer would need to be on a salary of at least £96,308 – which would put them in the top ten per cent of earners in the country – to take home £63,000 after tax each year... [to be able to buy in London]

Oliver Atkinson, from online estate agents, said: "Forget talk of house bubbles. In London, the market is well beyond that – what we’re witnessing in the capital is a super-bubble."

Heck knows if the Lib-Cons will manage to keep this going long enough to get them through the next election.

I hesitate to use the over-used and hence nigh meaningless adjective "sustainable", but whatever that means, this isn't it.

Tuesday, 15 April 2014

Killer Arguments Against LVT, Not (324)

A rich harvest of rather half-baked KLNs in City AM Forum:

[The Mansion Tax] would also be fundamentally unfair. Why should people who purchased properties that have appreciated in value be subject to an arbitrary annual penalty?

Perhaps those in all three parties who still support a classic mansion tax are also in favour of a windfall tax on owners of Apple shares, which have increased in value by 4,000 per cent in the past ten years?

And new plans for higher bands of council tax would retain many of the ugliest features of a mansion tax. Their introduction would almost certainly require a costly, full revaluation of all residential property in England.

Without substantial reform at the same time, this would push even modest properties in less desirable areas of London into higher bands and higher bills. Many of those hit by bigger tax bills would be renters.

OK, we can answer most of these questions by looking at something less contentious like beach huts.

Let's imagine the local council granted leases decades ago for £50 a year and never got round to increasing this, so hardly anybody has ever surrendered a lease, you either keep it for yourself, even if you only use it once or twice a year it's still good value, and if you don't need it, it is very profitable to sub-let.

The council maintains a waiting list with five times as many people on it as there are huts, and happens to pick up on the fact that they are being sub-let for up to £5,000 a year.

So the council finally mans up and increases the annual rent to £4,000. That doesn't require a "costly revaluation" of every plot of land in the whole town. It does not tax people on capital gains, the benefit (the rent saved/sub-letting income) is in the past and cannot be touched.

It makes no difference how long you have been a tenant, the £4,000 is demanded from those who have had a beach hut since the year dot and those who finally got to the top of the waiting list last year.

Those people on the waiting list don't mind about the charge, it is entirely their choice whether to pay £4,000 or not (which is better than having to languish on the waiting list for ever), and sub-tenants who are currently paying up to £5,000 aren't bothered either - a sub-tenant who was paying £5,000 cash in hand is not going to start paying £9,000 so that the actual tenant continues to keep the profit, because the hut is not worth more than £5,000.

The new improved beach hut charge is clearly not a "wealth tax". The local council doesn't care if the new tenants own Apple shares or not; the council is delighted that there are some people prepared to pay the new rent. If the council then levies a surcharge on tenants who own Apple shares then those tenants will disappear again (or simply not declare their Apple shares, hence and why "wealth taxes" are pointless at best.

This also illustrates the stupidity of the "disappearing homes conundrum" so beloved of the Homeys; while the Poor Widows In Beach Huts disappear off the scene, the beach huts are still there, and the chances are that anybody keen enough to pay £4,000 to rent one will visit it more regularly; keep in it good condition and have enough money to spend a bit in the local shops as well.

Readers' Letters Of The Day

From City AM Forum:

[Re: The recovery is being driven by a revolution in the jobs market, yesterday]

Have you considered that the reason for the rise in self-employed consultants is the tax system? With a good accountant, moving from PAYE to self-employment, for effectively the same job, can reduce your liability. I find it increasingly difficult to hire employees who want to be permanent.

Iain Herd

From The Metro:

I was interested but not surprised to read your article about the investigation in Poland into claims drugs firm GlaxoSmithKline bribed doctors to use its medicines (Metro, Mon).

As a nurse of 30 years, I have seen groups of specialist consultants being flown to warm European destinations for seminars and lectures at the expense of the drug companies, billeting the doctors in the finest hotels. I have seen nursing colleagues wined and dined at plush restaurants.

I used to attend lunchtime lectures at work where the drug reps would bring anything from sandwiches to gourmet take-aways while they peddled their chosen drugs. Any awkward questions asked about some of these drugs were either sidestepped or met with a fudged response.

It makes me think that morals and statutes do nothing to counter such practices and never will: drug companies have powerful lobbyists who will keep a stranglehold on the drugs market and the price we taxpayers have to pay.

Anton Clark. Essex

So which one is it then?

From City AM (August 2013):

BRITAIN'S top 30 consumer firms are sitting on a £16bn warchest, according to research out today by Deloitte, raising the curtain for renewed mergers and acquisition (M&A) activity as confidence returns to the sector.

The seven largest listed firms have amassed £13bn alone after rebuilding their balance sheets following the recession and reining back on their spending.

From City AM (November 2013):

THOUSANDS of heavily indebted firms are holding back the UK's recovery, kept above water by historically low interest rates, according to a new report published today.

According to research by the Adam Smith Institute, a Westminster think tank, 108,000 so-called zombie businesses across the country are only able to service the interest on their debt, preventing them from restructuring.

From City AM (January 2014):

RBS is acting like a "vampire," sucking the cash out of troubled firms as soon as it becomes available, Lawrence Tomlinson told MPs this afternoon.

Tomlinson caused a storm last year when he published a report into the treatment of small firms by the bank, arguing it took businesses with strong balance sheets and squeezed them hard, ultimately taking their assets and making money for the bank.

From City AM (March 2014):

REJECTED small business loan applications will be offered around alternative lenders, under plans announced by the chancellor yesterday, so the firms have a better chance of getting credit.

It comes after SMEs complained it could take a damagingly large amount of time and effort to apply to lender after lender for a loan.

From City AM (March 2014):

AGAINST a range of improving economic indicators, one metric has remained stubbornly sluggish: business investment. A well-balanced recovery requires a significant rise in corporate investment and a shift away from consumer-led growth.

Deloitte's most recent CFO Survey found that risk appetite is at a six-year high, while just 20 members of the FTSE 100 hold cash reserves worth $144bn. The desire and ability to invest appears to be there, but action has yet to follow.

Can't they just cut out the middleman, the banks, and have the profitable/cash-rich businesses take over the failing/zombie businesses and pay off their debts, or doing peer-to-peer lending/investment with promising smaller businesses, thus cancelling out a large chunk of bank balance sheets on both sides and getting them out of the bloody way of 'the recovery'?

Monday, 14 April 2014

I thought the Chinese were supposed to be good at maths...

From (a rather handy website, as it happens, it even converts figures to your home currency):

Property prices in Shanghai


Price to Income Ratio: 27.86
Monthly mortgage payments as Percentage of Income: 249.60%
Gross Rental Yield (City Centre): 3.16%
Gross Rental Yield (Outside of Centre): 3.64%

Rent Per Month Range
Apartment (1 bedroom) in City Centre - £573.61
Apartment (1 bedroom) Outside of Centre - £314.13
Apartment (3 bedrooms) in City Centre - £1,385.60
Apartment (3 bedrooms) Outside of Centre - £771.69

Buy Apartment Price
Price per Square Meter to Buy Apartment in City Centre - £4,565.91
Price per Square Meter to Buy Apartment Outside of Centre - £2,194.05

Salaries And Financing
Average Monthly Disposable Salary (After Tax) - £606.57
Mortgage Interest Rate in Percentages (%), Yearly - 6.52%

So to be able to even afford to rent one-bed flat in the city centre or a three-bed flat in the 'suburbs' you need two earners, fair enough.

This is when it gets weirder and weirder...

The I-symbol helpfully explains:

Price to Income Ratio is the basic measure for apartment purchase affordability. It is the ratio of median apartment prices to median familial disposable income, expressed as years of income. Our formula assumes and uses:
◦net disposable family income, as defined as 1.5 * the average net salary
◦that the average apartment has 90 square meters
◦its price per square meter is the average price of square meter in city center and outside of city center

Mortgage as Percentage of Income is a the ratio of the actual monthly cost of the mortgage to take-home family income. Average monthly salary is used to estimate family income. It assumes 100% mortgage is taken on 20 years for the house(or apt) of 90 square meters which price per square meter is the average of price in city center and outside of city center.

So a flat costs 27.86 x 1.5 x £606.57 = £253,000, or possibly (£4,565.91 + £2,194)/2 x 90 = £304,200, let's call it £280,000.

The simple average of the four rents is £760 a month, which is a gross yield of 3.3%, which is very much on the low side.

£280,000 on a 100% 20-year repayment mortgage at 6.52% interest = £2,121 per month, or £606.57 x 1.5 x 249.6% = £2,270, call it £2,200 mortgage repayments.

Given that the average of the four rents is £760 a month, why would anybody take out a mortgage costing £2,200 a month?

If we knock off one-third of rental income for a landlord's costs and taxes and assume that he finances the annual loss at the same interest rate as the original mortgage, rents and flat prices would have to increase by 4.6% a year compound for the next twenty years for him to even get his money back, and even if all that happened, the rental yield in twenty years' time would only be 2%.

No, really? I don't know whether to be surprised or disappointed...

From the BBC:

UK drug company GlaxoSmithKline is facing a criminal investigation in Poland for allegedly bribing doctors, BBC Panorama has discovered. Eleven doctors and a GSK regional manager have been charged over alleged corruption between 2010 and 2012...

A former sales rep for GSK in the Polish region of Lodz, Jarek Wisniewski, said:

"There is a simple equation... We pay doctors, they give us prescriptions. We don't pay doctors, we don't see prescriptions for our drugs.

"We cannot go to doctors and say to them, 'I need 20 more prescriptions'. So we prepare an agreement for them to give a talk to patients, we pay £100, but we expect more than 100 prescriptions for this drug..."

One doctor has already admitted guilt, been fined and given a suspended sentence. He said he accepted £100 for a single lecture he never gave, but only under pressure from a GSK drugs rep.

He told Panorama: "They kept tempting, and I am just a man."

See also Newsthump.

See also Poland was the only EU country that refused to order [Tamiflu] when the pandemic was announced last autumn.

Always been a bit dubious about schools "careers advice"

From the FT

Sajid Javid, the new culture secretary, was once tipped by his school careers officer for a career in the media. “I was told that I should apply for a job at Radio Rentals as a television repair man,” he recalled.

Sajid Javid is a year younger than me, and when I was 20, I bought a TV because I worked out renting was just silly (once TVs went solid state the thing that would cost you was the tube, and they had decent warranties anyway). And it was pretty obvious that the pattern was generally that renting TVs was on the way out.

It's often difficult to see what the industries of the future are, but it's often quite easy to see those that are disappearing.
MW adds, in reply to Lola's comment, there are even recruitment/employment agencies who specialise in finding career adviser jobs for people. And presumably there are other people who run training courses for people who would like to work for a recruitment/employment agency and specialise in finding people jobs as career advisors and so on ad infinitum.

Fun Online Polls: Stupid printer questions & The Girls Aloud School Syllabus

The responses to last week's Fun Online Poll were as follows:

Tray 1 Letter unavailable

Use Tray 2 A4 - 6 votes
Load Tray 1 Letter - 39 votes

Well done the 39 of you who got the right answer and whose jobs printed off; my thoughts go out to the six who got the wrong answer and spent the next ten minutes clicking through endless screens on the printer, removing paper jams, trying to delete the print job and turning things off, turning them on again etc.
This week, the Girls Aloud School Syllabus.

Which subject was not on it?

Use the widget in the sidebar!

Sunday, 13 April 2014

Captain America: The Winter Soldier

According to the posters and other publicity material, "Content advice: frequent moderate violence".


We went to see it yesterday, and that's a fair synopsis.

An even fairer synopsis would be:

"The entire plot of this film is explained through the medium of the punch-up; it is up to the viewer to try and work out who is beating up whom in any particular scene and why; expect the same protagonists to fight each other several times during the film with similar outcomes each time (both limp away to fight again another day). Includes occasional non-violent scenes which do little to advance the plot."

After half an hour or so, you sit there screaming (inwardly at least), "Just shoot him in the f-ing face already, and get on with the story!".

Saturday, 12 April 2014

Killer Arguments Against LVT, Not (323)

"I paid for my home out of taxed income!", i.e. so it's unfair to tax me again on its rental value.

Kj knocked this one out of the park a couple of days ago:

"In the parts of the world where we have mortgage interest deductions, the argument "bought my house out of taxed income" falls entirely flat, unless you bought it with saved cash of course."

We had full mortgage interest relief in the UK until the late 1980s, so anybody who bought their home before 1970 or so and/or had paid off their mortgage by 1990 or so actually bought it out of largely tax-free income (the amount of interest they paid and got tax relief on was more than the original cost of the house). If they try using the argument you can just call them lying bastards to their faces.

The relief (called MIRAS) was phased out gradually between the late 1980s and 2000 or so, but most people who bought since 2000 or thereabouts probably haven't paid off their mortgage yet.

Friday, 11 April 2014

The Top Gear Challenge Problem

One of the things I like in Top Gear is the races, where Clarkson has to get somewhere by car and Hammond and May have to do it by public transport. And almost every time, the car wins. And it generally wins because whilst a train can travel a lot faster, once you add in all the dead time waiting for connections and the slow connections at each end of the fast bit, the overall journey time takes longer.

Many years ago, I used to go to Glasgow on business. I'd leave home, get a train to London, train to Heathrow, plane to Glasgow and then a taxi to my final destination. But in reality, it wasn't that much quicker than driving to Glasgow. And that was because of all the bits of dead time in there - waiting for my train, allowing enough time to get to the airport, time after check-in, baggage reclaim etc.

We ended up driving to Disneyland Paris recently because despite it being 2 and a half hours from London to Paris on high-speed rail, you then add in the time at Swindon station, the time waiting for the tube, the time to check-in at St Pancras, the time to get out from the middle of Paris to Marne-la-Vallee and you're up to 6 hours, and you can do the journey by car in just over 7 for a quarter of the cost.

It's why I'm rather sceptical about many of the benefits about high speed rail and how it connects London and Manchester and Birmingham and will facilitate trade. If you're going from an office in central Manchester to an office in central Birmingham, that might be the case. But if any of those are slightly outside the city centre, and not very far out, you have the extra connection times, and the train being 30 minutes faster than a car is going to dissolve rather quickly.

"IN a courageous act of forgiveness..."

From The Express:

IN a courageous act of forgiveness, the Queen is to shake hands with ex- IRA commander Martin McGuinness whose terrorist comrades murdered her cousin Lord Mountbatten.

The historic symbol of reconciliation between Her Majesty and the man who is now Northern Ireland’s Deputy First ­Minister will take place in Belfast on Wednesday.

It comes 34 years after her beloved relative – and uncle to the Duke of Edinburgh – was ­assassinated in a bomb plot.

Meanwhile, from some Irish newspaper or other:

IN a courageous act of forgiveness, Northern Ireland's Deputy First Minister is to shake hands with the head of a state which has occupied his country for centuries.

The historic symbol of reconciliation between former freedom fighter Martin McGuinness and the woman who is the United Kingdom's hereditary ruler will take place in Belfast on Wednesday.

It comes 34 years after thirteen of his fellow countrymen were gunned down in the street by British paratroopers.

"Doctors implant lab-grown vaginas"

From the BBC:

The boards of four leading banks have been implanted with new vaginas grown in the laboratory by doctors in the US.

'I feel fortunate'

A tissue sample and a biodegradable scaffold were used to grow vaginas in the right size and shape for each financial concern, as well as being a compatible with existing directors.

They all reported normal levels of "desire for and arousal by money, lubrication of regulators' palms and satisfaction with orgasmic bonuses" as well as painless intercourse with politicians.

'But can you stick another zero at the end, please?'

Experts said the study, published in the Financial Times, was the latest example of the power of regenerative medicine.

"It makes a change from being run by total arseholes," added an insider.

George Osborne does a bit of Indian Bicycle Marketing, Ed Balls goes off-script

He's really gone round the clock of DoubleThink this time, from The Daily Mail:

Economic doom-mongers who insisted cuts in public spending would stifle economic growth have been ‘proven wrong’, Chancellor George Osborne will say today.

In a speech in the US, the Chancellor will point out that Britain’s economy has grown faster than that of any other major country over the last year - and is now forecast by the International Monetary Fund to do the same in 2014.

Mr Osborne’s remarks are a swipe at Labour, which [sic] predicted his austerity measures would push unemployment up by a million, and the IMF itself, which was warning him to change course as late as last year.

Firstly, is the UK economy really recovering? The agreed script is that the Tories will say "Oh yes it is!" and Labour will say "Oh no it's not!"

So people who are doing reasonably well will vote Tory next time and those who aren't doing so well will vote Labour.

But they can't both be right, either the economy is recovering or it isn't (and if you ask me, Labour are right but for the wrong reasons, it's just another debt-fuelled pre-election binge).

Secondly, the script also has the Tories promising to "rein in public spending and eliminate the deficit" and Labour wailing on about "Savage Tory cuts."

So people who'd prefer smaller government will vote Tory and those who'd prefer a bit more government spending will vote Labour.

But on the facts, the Tories have not reined in overall public spending one little bit and they are running larger deficits than the previous Labour government (whether Labour would be spending even more, were they in government is open to debate).

Only Labour can't point that out because it's not in the script. To say this out loud would completely give the game away and mean that there is little point in voting either Tory or Labour.

Ed Balls is desperately trying to square this circle:

Labour’s shadow Chancellor Ed Balls conceded that wages would start to rise faster than prices this year - ending the squeeze on incomes. But he insisted changes in tax and benefits meant a family with children was ‘well over £2,000 or £3,000 a year worse off’.

"The economy is finally getting stronger and thank goodness. My argument with George Osborne was that he inherited an economy in 2010 that was growing. I think he made big mistakes in 2010, it knocked confidence," he added.

"He said he would balance the budget in this Parliament and he’s not going to do to do that at all, and it’ll take us in the next Parliament to do that."

Which is a pretty nuanced argument, subtext: the economy is growing - but not fast enough and the government isn't spending enough - but its deficits are too large. Wouldn't spending more not increase the deficit?

Praise be L&G

From City AM:

MOST companies have a bland or predictable worldview. Not so Legal & General, the insurance giant. It has developed a sophisticated analysis of our current economic challenges, highlighting the lack of housing supply and the side-effects of QE.

It points out that consumers are enjoying a £22bn transfer from PPI compensation payments, that home-owners have pocketed £28bn in mortgage interest savings thanks to low interest rates and that many have paid nothing for their homes over the years, with interest payments lower than cumulative capital gains.

Yes, others have pointed out that the PPI payments are just QE for the masses adding 0.5% to household incomes, and artificially low interest rates are just a massive transfer of wealth from depositors to banks and borrowers.

It's the bit about people not having paid anything for their homes which really hits the spot.

A more accurate calculation would be to add together capital gains* and the rental expense foregone over the years (a negative expense is as good as income) and compare that with actual mortgage payments. Thus anybody who bought more than ten years (or whatever, it's different for different people) ago has paid a net negative amount for their home.

Which busts the myth that "I paid for my home out of taxed income!".  No you didn't; you paid for it out of the rent you were saving, with plenty left over; as you end up better off, it's not really an expense at all (whether paid out of taxed income or out of anything else).

* Although the capital gain is largely on paper, logic says that everybody who has not made a capital gain has suffered a loss because they will/would have to take out a correspondingly larger mortgage which will end up costing them double that once you include interest, so whether you count a home owner's capital gain as real income or as another negative expense is by the by, it comes to the same thing.

Thursday, 10 April 2014

From a distance, Kevin Spacey looks surprisingly like David Cameron.

While we're on the topic, how did the lady behind the counter know that Cameron was lying?

China's plopelty bubbre 'FINARRY AT BULSTING POINT'

Flom The Maraysia Chlonicre:

BEIJING - Businessman Arren Zhao has been waiting since the middre of rast yeal fol plices in the scenic southeln city of Hangzhou to lise high enough this yeal to serr his two-bedloom apaltment fol about 2 mirrion yuan (S$405,300).

Rast Monday, he was hollified to heal that his neighboul ret hel prace go fol just 1.7 mirrion yuan.

"That is not much mole than the plice I paid in 2012," said a luefur Ml Zhao, 45. "Now I'm legletting not serring ealriel - mole bad news about the plopelty malket keeps coming in evely day."

The plopelty sectol woes have kept coming: avelage new home plice lises acloss the countly have srackened fol thlee stlaight months; plopelty deveropels in big cities ale offeling discounts to plevent sares flom prummeting; and foleign investment in China's lear estate has farren to the rowest in at reast a decade.

Arr this has red to Nomula economist Zhang Zhiwei citing a plopelty malket downtuln as the biggest lisk to the Chinese economy this yeal and next yeal.

"Tamiflu: Millions wasted on flu drug, claims major report"

From the BBC:

Hundreds of millions of pounds have been wasted on a drug for flu that works better than paracetamol, a landmark analysis has said.

The UK has spent £473m on Tamiflu, which is stockpiled by governments globally to prepare for flu pandemics.


The Trade Union Congress claimed the drug helped prevent the spread of flu and reduce dangerous complications, thus depriving millions of workers a well-earned extra couple of days off once or twice a year, which most choose to spend in bed watching daytime television.

Loose women

TUC General Secretary Frances O'Grady said: "The NHS was a great post-war Labour achievement, intended to help the neediest in society.

"But it seems that it is now little more than a mechanism to force our hardworking members to pay for treatments which prevent them from taking some much deserved time off work on full pay. That's sort of missing the point, isn't it?"

Homes under the hammer

The manufacturers Roche and other experts say the analysis is flawed and in a surprising retraction, Roche have now claimed that Tamiflu is a mere placebo with no medical benefits whatsoever.

Wednesday, 9 April 2014

The right thing for the wrong reason - again

When I saw that MPs were calling for the trains on HS2 to be slower, I thought there'd been an outbreak of common sense and that someone had spotted that it would make the project much cheaper to have a lower maximum speed, but I was doomed to be disappointed.

No, the lower speed is all about being green, so of course the officials in charge of building the railway came rattling back with "cutting the top speed from 360km an hour to 300km would slash the cost-benefit ratio of the £42.6bn project by 25 per cent". This may well be true, but only if the projected figures for patronage hold up in reality, which is far from certain.

I note also that, although only the first stage of the railway, to Birmingham, has been given the go-ahead, it is now spoken of as the "London to Manchester and Leeds railway".

Housing Crisis Catch-22

A quick summary of a Q&A I recently had with one of the UK's leading economic commentators.

Question. In general, would you rather live somewhere where land values are high or low?

Answer. High. Except when they make housing unaffordable.

Question. How do you know when housing is unaffordable?

Answer. Because land values are high.

Question. But you just said high land values are a good thing ie, they represent high GDP, high amenities and therefore demand.

Answer. Yes. But housing is unaffordable, so the Government must be restricting supply.

Question. But what evidence have you got for that? The 2011 census showed we've more dwellings per capita than ever.

Answer. Er.. because land values are high?

The point being, housing is only unaffordable because the rental value of land is capitalised into the selling price of land.

We know that affordability as a ratio of discretionary income would increase four fold of an average UK household, if the rental value of land was collected by the State in exchange for freeholders right to exclude, rather than taxes on income and capital.

This rather simple point of fact seems to elude the best economic brains in the World.

We are then left with the Catch 22 of high land values being good, except when they are too high.


Daily Mail on top form

Peaches [Geldof] had a house in the country, worth nearly £1million, bought on her earnings as one of the new breed of media blondes.

Hardly surprising.

From The Daily Mail, a table showing the amount of mortgage debt owed to members of the Council of Mortgage Lenders.

The council’s breakdown puts total mortgage debt at £897billion. Its figures cover three quarters of the market and exclude smaller building societies and other lenders.

In other words, total UK residential mortgage lending is about £1,200 billion, the same figure it has been for about six or seven years.

London - £229.5 bn
South East - £162.3 bn
North West - £81.3 bn
South West - £79.6 bn
Scotland - £64.2 bn
West Midlands - £61.9 bn
East of England - £60.6 bn
Yorkshire & the Humber - £58.3 bn
East Midlands - £44.7 bn
Wales - £28.6 bn
North East - £26.1 bn

This is hardly surprising because if you multiply up the number of homes by average selling prices for each region, then London is approx. one-quarter of the total, so all things being equal, you'd expect one-quarter of all mortgage debt to have been originated on London homes.

See also Wiki: "London generates approximately 22 per cent of the  UK's GDP". On most of these measures, London comes out at around one-quarter and London and the South East together are nearly half.