My son's Nerf collection

The two 'shot guns' are not actually Nerf, they are Buzzbee, but they are just as good.While I'm downloading pictures, they're building an office block next door to me. They've spent the past two weeks putting down this rebar for ground floor:I watched a block of flats being built in Germany (also next door to where I lived, but I lived somewhere else then) and they used to do a whole reinforced concrete floor in rather less than a week. And their rebar looked about twice as solid.

She should have bought a bigger caravan.

Let's take this story in The Daily Mail at face value:

A frugal woman who saved more than £22,000 out of her benefits has been left penniless because she did not tell officials about her nest egg.

Pauline Ford, aged 58, lived in a rusty mobile home, never went out, smoked or drank, and only spent the bare minimum she needed to feed herself and her 15-year-old dog. She wanted to build up her savings for her old age but fell foul of the law by failing to declare her assets when she applied for means tested benefits.

There would have been no problem if she had spent all the money but now she has been forced to repay more than she saved and has been left with nothing at all. Ford, of Valley Walk, Plymouth, who is unmarried, had admitted three counts of benefit fraud and was jailed for four months, suspended for two years by Recorder Mr Jeremy Wright at Plymouth Crown Court...

I don't like means-testing for lots of reasons, not least because it is savage taxation of the income and assets of poor people, but what sickens most is the fact that housing 'wealth' is completely ignored. If this woman had used the £22,000 to pay off a mortgage on a house worth considerably more, then she would not have lost a penny in benefits, and if she played her cards right, the DWP might have stepped in to 'help' her pay off the mortgage as well.

Meaningless statistic of the day

From The Daily Mail:

In a list of places where people do drugs, it's probably one of the last you would expect to find a class A substance. However, incredibly, traces of cocaine have been found in more than nine out of 10 baby-changing units in the north west, research has found. An examination of more than 100 units - including facilities in public toilets, shopping centres, police stations, courts and churches - found that 92 per cent of them carried traces of the class A drug...

You'd need nerves of steel to take cocaine in a police station or court, and I didn't know that churches had toilets, but apart from that, so what?

It is, for example, quite possibly the case that cocaine residue is very difficult to clean away and/or that baby changing units are not cleaned very often or very thoroughly. So if a baby-changing unit has only been used for sniffing cocaine a single time in the past few days, which might mean a single visitor out of dozens or hundreds, it still shows up as positive.

Or possibly nine-out-ten UK babies are addicted to cocaine, but that does seem unlikely. How would they fund their habits, for a start?

We scrimped and save, I tell you! Scrimped and struggled and sacrificed and did home improvements!

Or alternatively, George Osbungle obliged with some new rail links at everyone else's expense. Spotted by Former Tory in The Daily Mail/This Is Money:

A select group of homeowners, househunters and developers will be feeling a little happier this week, thanks to Chancellor George Osborne.

For those who missed the Chancellor’s Autumn Statement on Tuesday, he announced 35 transport initiatives that will boost a number of locations: in particular North Cambridge, North Bucks/Oxfordshire and Battersea, South London. These rail and road schemes could be an important factor in choosing where to live, and might even bolster local house prices.

‘New or improved transport infrastructure can make a significant difference to the market, especially if it becomes easier to commute into a nearby city,’ says Grainne Gilmore, head of UK residential research at Knight Frank. ‘Ease of travel is high on any list of priorities for new buyers.’

Gilmore cites the opening of the Hindhead tunnel in Surrey in July this year as an example. Prices in key areas south of the tunnel, such as Grayshott and Haslemere, rose faster than surrounding areas in anticipation of the scheme, and Knight Frank forecast that they could outperform the general market by five per cent over the next year.

So that's one group of land owners who benefit at everybody else's expense, but sticking with the principle "They own land! Give them money!" no doubt the government will run a compensation scheme* to make sure that those people whose sites fall in value because they back onto a new railway without being near the station don't lose out.

* Disclaimer: The last house we bought backed onto a railway line, and houses on that side of the road were selling for about £15,000 less than the houses opposite (i.e. £95,000 against £110,000) which backed onto a little park with nice big trees in it, which belonging to the local school, was gated off and seldom used. The other thing that depressed the value of houses on my side was the fact that a motorway was being built on the other side of the railway, this had been clearly marked on local street maps for at least ten years, but the general route was announced circa 1960.

The motorway was duly finished and opened about two years after we bought the house. The motorway didn't make the blindest bit of difference of course, because we were already used to the much noisier railway, and the price we paid had already been reduced to account for this.

To our pleasant surprise, the Highways Agency then sent us a letter telling us that as the motorway noise affected our house, we were entitled to compensation of ten per cent of the current value of our house. Houses had shot up in value, so the HA sent us a nice cheque for £15,000. So we got a double-discount or our tax-free windfall capital gain to date was increased by a quarter, however you want to look at it. Complete and utter madness.

Is HM Treasury really this thick?

From City AM:

THE TREASURY will kick off a consultation on the Vickers Commission banking reforms today that could deliver a major lobbying victory for HSBC after its tough talking on capital rules... Any signal of a watering down would be a major victory for HSBC and Standard Chartered, the two banks that have led the lobbying against the suggestion that they should have to raise billions in new unsecured debt that can absorb losses if they go bust...

HSBC has consistently been critical of the capital proposals, saying they penalise safer banks. The bank has also spoken to Hong Kong regulators about moving its headquarters abroad. And as City A.M. revealed recently, banks submitted a confidential lobbying paper warning that front-running the Vickers capital proposals in the UK before they are implemented in the EU could trigger a credit crunch in Britain worse than the one already underway on the continent.

The paper said: “Adopting a regime which is at odds to that which prevails internationally would have serious consequences for UK banks’ ability to attract funding and therefore the UK economy more broadly.” HSBC would be particularly badly hit if the Vickers Commission’s proposal on extra capital were to apply to its global operations because of the vast size of its non-UK balance sheet.

HM Treasury's first act of stupidity is not to restrict UK rules to UK activities and assets as a matter of course. The old Midland bank is merely the UK subsidiary of a vast international bank called HSBC, which happens to have its head office in London and is quoted on the London stock exchange. Our only concern is that the UK bit is properly capitalised and supervised, if our rules demand minimum share capital of nine per cent of total assets, then common sense says that means that the UK subsidiary's share capital has to be nine per cent of its UK assets, what the rest of HSBC gets up to and how it is financed, or indeed where it got the money from to pay up the nine per cent share capital is of little interest.

HM Treasury's second act of stupidity is to fall for HSBC's line that "a regime which is at odds to that which prevails internationally would have serious consequences for UK banks’ ability to attract funding and therefore the UK economy more broadly". For sure, the bank will have to pay a higher interest rate on bail-in bonds than it would on senior bonds, but by the same token, holders of senior bonds will accept a lower interest rate if they know that somebody else will have to bear any losses, so it all comes out in the wash. And if HSBC is as well capitalised as it claims (it might well be), then it will not have to pay a higher interest rate on bail-in bonds anyway, because there will be so little risk attached.

More detailed musings here.

And HSBC's comment about "serious consequences for... the UK economy" should have been greeted with snorts of derision, this is feeble blackmail along the lines of "Nobody move or the puppy gets it!"

Virgin NTL's approach to customer service

Those who have read any of my earlier posts on the topic will be able to guess how it ends, but here goes anyway.

Over the past couple of months, my broadband had slowed down more and more, the router needed to be turned off and on again nearly every time I wanted to log on etc, so I decided to bite the bullet and give Virgin NTL a call. The automated message told me that there were no problems recorded in my area but that because of problems elsewhere, their engineers were very busy and you'd have to wait for at least an hour before calls would be answered. Fair enough.

So I tried again the next day and got through after about twenty minutes. I told them that I suspected it was their router itself (the little black box on my desk) which had died a death after three years, they checked the connection from their end and told me there were no problems up to the junction box (which I knew anyway, as they replaced/refurbished this about a year ago).

We'll need to send out an engineer, the man said, we've got a slot tomorrow morning between 8 and 12 and another one in a couple of days' time. I asked if they could send him round the next morning, so far so good. I'd pencilled in a nice lie-in until he turned up, but as per usual the engineer turned up at quarter past eight on the dot, he mucked about for a few minutes, plugged in a new router, tested it, and then we logged back on and it all worked tip top fine again.

The old router only had one out-socket, so to get wireless in the house (my wife and daughter prefer wireless to cables) I used to have to then connect it to a wireless splitter/connector thingy, which added to the faff when you needed to 'turn it all off and turn it on again'. They cost about £80 each and none of them lasted much longer than a year.

The new router also has four out-sockets and built in wireless, which is password protected (so my neighbours can't use it for free). So I am a tiny bit miffed that they didn't send me a new wireless router as a matter of course, which would have saved me a couple of hundred quid over the years, but apart from that, I've absolutely nothing to complain about.

I normally give their engineers a tenner, this particular chap had to make do with a fiver because that was all I had on me at the time.

Poll: How much does your mortgage/rent + council tax add up to *PER WEEK*?

Over at Fraggle's.

Fun Online Polls: EU & Britain's least funny comedian

Thanks to everybody who took part in last week's Fun Online Poll, results as follows:

What would you have done in David Cameron's position?

Exercised your veto - 78%
Nodded through the proposed EU Treaty changes - 3%
Other, please specify - 19%

Good, we are all pretty much agreed on that one.

The irony is that the main reason why Cameron refused to co-operate was because he and his banker mates don't want to have a Financial Transactions Tax (FTT). Now, the FTT is just about the stupidest kind of tax you can invent (it's like Stamp Duty), it will either distort the way all these payments are currently processed or just not raise very money money (to be collected by persons unknown and spent on purposes unknown), and the FTT will certainly not dampen down credit and land price bubbles or discourage government deficit spending, which are the things which got us into this mess.

I just wonder, do the Eurocrats really not know this? Why did they give Cameron such a good excuse for refusing to play ball? And why is everybody making such a big fuss about some proposed Treaty changes not being nodded straight through? Didn't we have a new-ish Treaty/constitution a couple of years ago? Etc etc. The whole thing is a mystery to me, but that's all the more reason to stay out.
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And lo, to this week's Fun Online Poll. I have sifted through your nominations here and here and those who were nominated by three or more people go through to the final round.

Cast your votes (you can vote for as many as you like) for Britain's least funny comedian here or use the widget in the sidebar.

Xmas Fridge

Killer Arguments Against LVT, Not (185)

In part 184, we examined Murray Rothbard's bizarre claim that "A 100% tax on rent would cause the capital value of all land to fall promptly to zero. Since owners could not obtain any net rent, the sites would become valueless on the market."

The first claim is probably true, but his conclusion is clearly nonsense.

As I explained, there is no real difference (in the short or medium term) between renting a site (whether that's from a private owner or from a branch of the government); buying an LVT-free site with an interest-only mortgage (whether the loan is from a private bank or from the government); or buying a site subject to LVT for a nominal amount. The annual cash expense will be much the same in all three cases. So the 'market' is entirely unaffected and the value of the site is unaffected, it would just be measured slightly differently.

The Fat Bigot, who is a barrister and thus conditioned to only ever look at one side of the equation, regardless of the evidence stacked against his case or his client, waded in with this:

Of course it would make a difference, in fact it would make two massive differences.... Were he to rent/pay LVT on part the overwhelming likelihood is that the end of the ten-year period will result in a massive increase in cash terms just to maintain the real value to the recipient.

This is a typical Home-Owner-Ist arguing strategy - refuse to address the topic in hand and just hare off in completely another direction, ideally ending up with an unsubstantiated sob story about a potential "massive increase" in the tax bill. But it looks to me as if he hared off in the wrong direction. There can only be a "massive increase" in the tax bill if the value of that site on the market had increased massively. So he, possibly inadvertently, agreed that Rothbard's claim is nonsense.

Now let's look at those very emotive words "massive increase", shall we?

A few hard facts:

i. Ignoring price bubbles (which are exacerbated by low interest rates and restricted supply), house prices depend largely on local rent levels, which in turn depend on local wage levels.

ii. House prices and rents also depend (in the absence of overt subsidies such as Housing Benefit) largely on on the amount that working younger people (who are more likely to be tenants or first time buyers) are willing and able to pay.

iii. So in the medium or long term, we would expect houses and rents to be just about affordable for younger people.

iv. Further, younger people tend to earn less than the middle aged (especially in white collar but to some extend also in blue collar jobs) and are more likely to have young children which reduces their earning capacity further (mothers at home, and the mother's pay gap) and imposes large fixed costs on them.

v. As it happens, house prices and rents tend to rise ever so slightly faster than wages in a growing economy (maybe one per cent more every year, which also exacerbates bubbles as people try to pre-empt future increases) but LVT rates would always be limited by the spare financial capacity of younger people (lower earnings, higher fixed costs).

So the claim that a purchaser can afford the rent, interest-only mortgage or LVT today (by definition, or else he'd have bought somewhere cheaper), but the "overwhelming likelihood [of a] massive increase" in LVT on that site means he won't be able to afford it in future, is quite clearly hokum as well.

And nobody said that we would always and forever have to charge LVT at 100% of site rental values anyway, if LVT is 90% to start with, after ten years the rate could be allowed to fall to 80% and it would still collect the same amount of revenue (adjusted for inflation and wages growth). In political terms it's just a question of whether it's better for a majority to benefit from a higher Citizen's Income or for a minority to benefit from a reduced LVT rate (cheerfully ignoring the fact that most governments love wasting and stealing tax receipts).