Monday 28 February 2011

Health Scare Story Du Jour

From The Metro:

Ogling too much internet pornography can make you impotent, according to a study by Italian scientists. However, they stress that the effects on the ability to get an erection are only temporary.

The revelation comes from the Italian Society of Andrology and Sexual Medicine, which surveyed 28,000 men on their porn-surfing habits. Researchers explained that many of them were being turned off sex over time by looking at explicit internet images. Many had become addicted to blue movies by the age of 14 and showed signs of ‘sexual anorexia’ by their mid-20s, or as the study says - ‘anorsexia’.

The head of the team, Carlo Foresta, said: ‘It starts with lower reactions to porn sites, then there is a general drop in libido and in the end it becomes impossible to get an erection.’ But he stresses that the effect is entirely reversible. ‘With proper assistance recovery is possible within a few months,’ Foresta said.

Fun Online Polls: Land ownership and the Irish bail out

On a low-ish turnout (so special thanks to those who took part), the results to last week's Fun Online Poll were as follows:

Land ownership is based on...
Legal concepts - 49%

Private contracts - 25%
Social contracts - 18%
Other, please specify - 8%

Whoever thought that land 'ownership' is based on private contracts scores an F-. For sure, when Mr A sells to Mr B, Mr B assumes Mr A's rights to exclusive possession under a private contract, but those rights themselves are granted and/or guaranteed by 'The State' - the subject matter of the contract, the thing being sold is created by 'The State'.*

'The State' is of course all of us, not just the police who go after burglars or squatters; HM Land Registry which is the final arbiter on who owns what; or the court system which props up house prices by making it difficult to evict borrowers in arrears balances the interests of mortgage lenders and borrowers. Those 'institutions' are there for our convenience and we are not here for theirs.

So the next possible - and most popular - answer is 'legal concepts', but those concepts in turn are based on 'social contracts' (which are in turn sometimes imposed by military force, e.g. Normans in England; whitey in America or Australia etc). If there were no popular support** for the idea that everybody respects everybody else' right to exclusive possession (and that includes a tenant's rights vis-a-vis his landlord) which is more or less fundamental to the efficient working of the economy, even the Communist countries accept this, then we wouldn't have these legal concepts.**

No doubt you can guess what this is all leading up to: the fundamental point that if a car manufacturer makes money by manufacturing and selling cars, why shouldn't the government derive its income from doing what it does best, i.e. by creating and guaranteeing land titles?

* As a useful contrast, consider the sale of a second-hand car, this is a private, legally enforceable contract, but the subject matter is a car which a car manufacturer - a third party to the contract - has created. You can't trade in cars until somebody has built them first. Unlike with land, the manufacturer has no legal relationship with the subsequent purchaser; but when you buy land you assume privileges which The State will continue to provide for the foreseeable future, so The State is always a party to the contract.

** Again, we can contrast this with the trade in illegal drugs or prostitution, which is based entirely on private, legally unenforceable contracts and they are only illegal because 'society' in its infinite stupidity wisdom has decided they 'should' be.
Just about every party running in this week's Irish general election mumbled something about renegotiating the terms of the EU-IMF bail out, for background see e.g. The Telegraph, so that's this week's Fun Online Poll - what sort of success do you think they'll have?

Vote here or use the widget in the sidebar. You can choose more than one possibility as they are not all mutually exclusive.

I'm starting to like Philip Hammond.

Two stories from The Daily Mail:

Exhibit One: Motorway speed limits could rise to 80 mph to shorten journey times and boost the economy under a radical review of road safety, Transport Secretary Philip Hammond signalled today.

He is concerned that anti-car campaigners have for too long used 'road safety' as a convenient excuse to both stymie raising speed the limit on motorways from the current 70mph, and to push for more 20mph zones* in urban areas - even when they are inappropriate.

Exhibit Two: Residents’ groups, some councils and several Tory MPs are firmly against the [high speed London-Birmingham rail link] and there are concerns that the planned 2015 start date for the scheme will be hard to meet. The 140-mile first phase could cost £17 billion and plans for extensions to northern England and Scotland will take until the 2030s.

Mr Hammond said: "Until now, the people who are opposed to it because it is in their back yard have made all the running. Now that we are getting to the real crunchy bit, the people who are going to benefit from it – which is everyone in the UK except those who have got it in their own back yard – are beginning to mobilise and articulate the significant benefits that will be delivered."

* I'd say that this is up to the people living on each individual street to decide.

Sunday 27 February 2011

Store cards, price discrimination and price skimming

Wiki does its usual excellent summaries of price discrimination and price skimming, which like most things in economics are blindingly obvious, but nonetheless it's nice to put names to them.

Simply put, price discrimination and price skimming are when a supplier charges different prices for the same product based on a consumer's willingness or ability to pay, to illustrate the examples which Wiki gives:

* First degree price discrimination - I have no idea what they mean.

* Second degree price discrimination - where a supplier gives bulk discounts to wholesalers, because, for example, the supplier's fixed selling costs per unit are lower with bulk orders and because the wholesaler bears more of the risk that the final retail price of the goods or services will fall. This does not just happen with physical goods, the same can be observed with media buying companies who block book advertising space in newspapers or on telly weeks or months in advance and then try to sell it on to the end customer at a price that is higher than what they paid but lower than the media outlet's current quoted retail price.

* Third degree price discrimination - where the supplier has all the infrastructure in place and significant fixed costs; low marginal costs; and demand which fluctuates strongly over time. So the supplier demands lower prices at certain times of day, week or year. This works best with services or goods consumed at point of sale such as bus companies or cinemas offering cheaper tickets outside the rush hour or in the daytime, restaurants which offer cheaper meals on Monday and Tuesday evenings; or package holiday companies which demand lower prices out-of-season or during school time.

[As an aside, there is little degree of price differentiation between different geographical areas where easily transportable physical goods are concerned (e.g. dresses in Primark on High Street, Anytown cost the same as dresses in Primark on Oxford Street, London - see footnote) but there can be huge differences where you pay for things consumed at point of use - a cup of coffee at Leicester Square or Trafalgar Square costs £3 because you are paying for the view, not just the coffee, but a cup of coffee in a back street somewhere might be only £1.50. Let's not even get started on the price of housing, which by definition has to be consumed exactly where it is.]

* Price skimming - where new products are sold for a high price when first introduced, and the price then falls steadily. This is particularly noticeable with high technology, such as DVD players or CD burners, which cost hundreds of pounds each a few years ago but you can now buy them for £15, or even get them installed 'for free' when you buy a new computer. The same applies to clothing - the unit cost of buying a dress is minimal, say £10, but retailers never know whether they have ordered something that will be in fashion when it hits the racks, so they start by selling them for £100 and then keep dropping the price until you can pick them up for a mere £5 in the end-of-season sale.

So where do credit cards offered by high street shops, which can only be used to buy goods from the issuing shop, fit in?

1. We notice that most shops which offer store cards are clothes and eletronics retailers, who face a price curve which declines over time; they'd rather shift a dress for £100 now while it's in fashion than for £5 in the end-of-season sale. They'd rather sell the newest computer now for £1,000 than for £500 in a year's time.

2. It's in their interests to shift as much stuff as possible as quickly as possible while it's in fashion. Seeing as the additional value of a new dress or a new computer is rather ephemeral and subjective, one way of doing it would be to somehow work out how wealthy their customers are and to charge the wealthier people £100 for the dress and poorer people £50 (which is what doctors used to do in pre-NHS days), but this fails for impracticality.

3. The other way of doing it is store cards. We know that some people get a bit carried away with store cards and run up tens of thousands of pounds of debt on them, half of which ends up being quietly written off, but from the point of view of the retailers, the write-offs don't particularly matter:

4. They could:

a) Stick to cash-only selling and sell 500 dresses for £100 and 500 for £5 in the end-of-season sale, total revenues £52,500 (we can ignore fixed costs in this example), or

b) Introduce store cards, sell 500 dresses for £100 for cash, and an additional 250 for £100 to people using store cards when they are in fashion; and then only end up selling 250 for £5 in the end of season sale, total revenues £76,250.

So by introducing store cards, the retailer has boosted his gross revenues by £25,000, and ends the season with £25,000 outstanding on store cards (although if you look at the small print, these credit cards are usually issued/underwritten by an existing credit card company).

5. Of course, the retailer would like to collect as much as possible of that £25,000 (quite how the losses are split between the retailer and the actual credit card company is an unknown), but even if half of it ends up being written off, the retailer is still ahead of the game, and the fairly savage interest rates they charge (usually over 20% a year) soften the blow to the retailer.

6. Quite how they decide whose debts are written off and not pursued is also an unknown, but by and large we expect that it will be lower income people who simply have no assets and are thus not worth pursuing. Thus by a very indirect route, what they are actually doing is demanding higher prices from wealthier people (who pay cash up-front or actually repay their store card debts) and demanding lower prices from lower income people (who are more likely to pay by store card and more likely to have their store card debts cancelled) - which is alluded to in para 2. above.

7. Also worth noting is the psychology of the retail industry, which is to focus on 'sales growth' and 'market share' as much as net profits, which also encourages retailers to issue store cards, even if this is at the expense of the bottom line.

Here endeth today's lesson.

Footnote re Primark - although they charge the same prices in their flagship Oxford Street store as in their branch on High Street, Anytown, they can shift ten times as many units per square foot of retail space in Oxford Street, so they can make ten times as much in gross profits so the total rent they pay for their Oxford Street store is ten times as high as the rent for a unit on High Street, Anytown. This is subtly different to the price of a cup of coffee; it's £2.50 on Oxford Street but only £1.50 on High Street, Anytown where the 'rental' element of the price is immediately obvious to the consumer.

Saturday 26 February 2011

Short List

Today's short list:

Sports traditionally played by girls in England which have been adopted as national sports in the USA and which, for some bizarre reason, are considered 'manly' over there.

1. Rounders (known as 'baseball' in the USA).
2. Netball (known as 'basketball' in the USA).

Next week's list: Singers who wrote a completely new song for their solo career which had exactly the same title as one they'd written and performed with their old band.

Friday 25 February 2011

Kate Middleton

Killer Arguments Against LVT, not (96)

Let's deal with the Poor Widow Bogey once and for all, as played for the zillionth time here:

Just because someone lives in a £1M house does not mean they are rich or have massive amount of disposable income. it could mean they are pensioners struggling to get by but paid for their home over the decades.

Forcing people to sell their home just because the Labour party think "property" equals "fat cat" is ridiculous. Taxing objects already purchased is fundamentally wrong - tax income.(6)

I have suggested discounts or deferment schemes to get round this issue; or simply exempting pensioners, full stop, and all of these schemes would 'work', but you know what, sod it.

It is far simpler to tax all land (or land and buildings) at the same rate and for pensioners the get-out would be that they would be awarded an additional state pension, payable for life, based on whatever the tax bill is on their sole and main residence on the day the tax is introduced; and this is payable regardless whether they stay in that house or move.

So, assuming a Full-On Land Value Tax has replaced all other taxes, a widow shivering in an ex-Council flat in Glasgow pays £2,000 a year LVT and receives an extra £2,000 pension for life; another widow who struck lucky and is in a Hampstead Mansion pays £100,000 a year LVT and receives an extra £100,000 pension for life.

What's the point of the government taking with one hand and giving with the other?

1. To provide the nigh-perfect argument to the Poor Widow Bogey, no pensioner is 'forced to sell their home'.

2. Because it's easier and less distortionary to tax everything at the same rate and patch up the survivors via cash redistribution than it is to exempt people.

3. To ease the transition (and yes, we'd need to phase this out for subsequent cohorts of retirees, i.e. people who are 55 years old now will only get 50% paid back as a pension when they retire, and people who are 45 years old now will have to fend for themselves, or whatever). The end game would be that each pensioner gets a Citizen's Pension sufficient to cover basic cost of living for one person (food, eletricity etc would become much cheaper once all other taxes are scrapped) plus an additional amount equivalent to slightly more than half the LVT on an average or median home, how they choose to spend it is up to them.

4. The pension would be payable for life, so the Hampstead Widow might well decide to trade down a bit to somewhere where the bill is only £20,000 a year, and has £80,000 a year extra to spend (or to pass to her heirs; if she continues with the same lifestyle, by and large her heirs will inherit just as much as if she dies today and the heirs sold the house). So the on the tax-raising side, we still have an incentive for more efficient allocation of housing (a younger, productive couple can now trade up into that Hampstead Mansion).

5. It would highlight exactly how our Home-Owner-Ist tax system redistributes income and wealth from the productive economy to land owners:

Under current rules, our Hampstead Widow could trade down and buy an annuity with the proceeds of (say) £80,000 a year. So the money flows directly from Young, Productive Couple to her. With LVT in place, but with her hallowed 'property rights' guaranteed by the state, that couple would still be paying her, only indirectly. And if our Hampstead Widow chooses to stay put, at least it's clear to all and sundry that she does indeed get £98,000 more in pension than our Widow Shivering In Ex-Council Flat.

6. Wot? Taxing income is 'fundamentally wrong' - taxing 'government-protected quasi-monopoly rights' is the way forward!

So there.

Killer Arguments Against LVT, Not (95)

Commenters at The Spectator foamed at the mouth over Vince's proposed Mansion Tax, except for the reliably sensible Ian Walker, who chips in with this (Nov 30, 12:09 pm):

A mansion tax is a stupid, envious, silly policy. Taxing property on its value as the basis of personal taxation, though, is a pretty good idea.

Taxing income has become virtually impossible [but] The attractive thing about property is that you can't hide it, offshore it, disguise it as something else or otherwise avoid a tax on it. If you want to live in this country, then you need to either buy or rent some property here, and at some point the tax on that property will be passed on to you.

With a fair valuation system (index-linked to last open market sale price) and a flat tax across the board (tax everything, and tax it at the same rate, so there is no advantage or disadvantage to changing the occupancy) it could work extremely well.

Fair enough, you might think. But a total innumerate then pipes up (Nov 30, 12:28 pm):

I think you are showing some rather crass ignorance here... "a fair valuation system (index-linked to last open market sale price)". Linked via what index? CPI? Some building society's house price index? The FTSE? Something in between? (1)

Why should someone who bought sensibly during the last property downturn and who sat out this boom knowing that it was unsustainable nonsense see a grab on their income (2) just because some number which is not relevant to them has increased?" (3)

1) Well duh, index-linked to sales of similar buildings in that area.

2) And income tax, National Insurance and VAT aren't a "grab on your income" because..?

3) What worries me is that most people in this country are so bad at maths that they might fall for this 'argument', which is of course nonsense. The LVT purists say that the tax would be based on rental values, which don't fluctuate as markedly as buying and selling prices, and we can point to the real life example of Business Rates to illustrate this. HM Govt decides how much tax they want to raise in Business Rates and then divides that by the total rental value of all commercial premises (so even though selling prices may have doubled or trebled over the past fifteen years, the total amount of the tax only went up in line with inflation).

But even if you based the tax on selling prices, it is relative and not absolute values that matter:

a) What the total revenues from a flat tax on land (or land and buildings) would be depends entirely on which other taxes you'd like to replace; whether you want big government/small government; redistribution upwards or downwards; how generous a Citizen's Income you want to have; how fast you want to pay off the National Debt, but that is just the top bit of the fraction ("A" = tens or hundreds of billions).

b) The bottom bit of the fraction is the total value of land (or land and buildings) you wish to tax ("B" = thousands of billions).

c) The actual flat rate applied to each plot is then A/B (could be anywhere between 1% and 10%, AFAIC).

d) Therefore, if all values all across the country ("B") were to double, the tax rate (A/B) would halve and everybody would still be paying the same amount as before. It is only if the value of your plot increases by more than the overall increase that your tax bill would go up.

e) Ergo, if we'd introduced LVT at the bottom of the last house price cycle (mid 1990s), then most people in the country who "bought sensibly during the last property downturn" would now be paying less than they were back then, because the bulk of the overall increase has been concentrated on about one-quarter of the country (and London prices have gone through the roof).

... and finally they came for the water users!

The BBC wheel out their fakecharity template article.

1. There's a "should" in the headline, repeated in the first sentence, which is a signal that what you are about to read is complete fabricated bollocks.

2. Then there are some rent-a-quotes from the National Trust, RSPB and World Wildlife Fund etc.

3. It rounds off with a government spokesman agreeing that "more must be done".

So far so good.

Now, I can understand Them going for smokers, drinkers, fatties, skinnies, gamblers, pornographers etc, because those are all minorities; They launch occasional skirmishes against car drivers, but they are the majority so it's half-hearted at best; but what makes Them think they can humiliate water users? That's all of us, surely? Even tramps have to visit public toilets or take the occasional communal shower in a drop-in centre or something.

PS, water is indeed "a precious resource" but there is no lack of the physical substance itself; the cost is collecting it, storing it, purifying and pumping it.

You learn something new every day.

I always had the impression that when these space rockets take off, first a load of fire comes out of the rockets; then there's a great woosh of white steam (they have a swimming pool sized tank of water directly beneath the rockets to prevent them setting fire to everything); and a second or two later, the whole thing begins to accelerate vertically.

Not so.

The BBC showed a clip of the shuttle Discovery taking off yesterday (viewable here), and you can see that the thing lurches a few feet upwards right after the countdown gets to "One", hangs in the air for a split second, and then resumes its assent before the impressive jets of fire have even started coming out of the engines.

Is NASA using anti-gravity machines to power these things, with the 'fire coming out' bit just to cover their tracks?

Thursday 24 February 2011

Complete and utter moron

As background, John Redwood is a lifelong politician, and an MP for the pro-EU party known as the Conservatives (aka Tories).

If truth be told, he likes the current voting system ('First past the post') because it makes it easier for him to get re-elected and easier for his party (one of the two large parties) to obtain an absolute majority in Parliament; and he doesn't like the 'Alternative Voting' system (whereby each voter can rank candidates in order) because he knows that a lot of Conservative voters would give their first vote to a smaller anti-EU party known as UKIP (even though it is broadly accepted that most of these voters would still give their second vote to the Conservatives, so it is unlike to affect the outcome of the election very much).

But being a politician, he can't admit this and has to pretend he is doing this out of principle. He even tries using "logic" and falls flat on his arse:

Let us suppose that in a marginal the Conservatives last won with 37% of the vote. Labour had 31%, Lib Dems 22%, UKIP 3%, others 7%. If the UKIP theory is right and numerous Conservatives switch to UKIP on first preference, the AV first round result might be Conservatives 27% (10% switch to UKIP), Labour 39%, (they are currently well up on their 2010 result) Lib Dems 12% (as they are well down in the polls currently), UKIP 13%, others 9%.

Second preferences would easily give this seat to Labour, with the UKIP voters’ second preferences not coming into play.

Before we even discuss whether his final sentence is logically correct (it's not, it's complete and utter bollocks), is it not the case that Labour would have won this vote under First Past The Post anyway, having got more of the vote (39%) than the Conservatives would have obtained (27% + 10% = 37%)?


James Ward decided to email the No2AV campaign:


A couple of days ago, an advert for the No2AV campaign appeared in the Birmingham Mail featuring a picture of a baby girl and the message “She needs a new cardiac facility NOT an alternative voting system”.

The advert explained that the £250million which would be spent switching to AV could be better spent on a new Children’s Heart Centre at Birmingham Children’s Hospital. I was just wondering if you had any background information on who the baby is and what her condition is. I really don’t want the baby to die just because I voted “yes” and so I want to have all the facts at hand before I decide how to vote.

This is the deciding factor in whether I vote “yes” or “no”, so any information would be very much appreciated.

I hope they reply soon, my vote hangs in the balance.

On the infinite stupidity of the UK welfare system...

From The Daily Mail:

Evicting a woman from her council home for failing to pay rent would breach her human rights, judges ruled yesterday. Town Hall chiefs wanted to evict Rebecca Powell, who receives thousands of pounds in benefits, after she ran up more than £3,500 in arrears on the accommodation she was given because she was homeless.


As I said over at HPC, the benefits system is stupid - because of all the to-ing and fro-ing and separate benefits and paying and clawing back by different departments - and encourages this sort of behaviour.

What's wrong with rolling all cash benefits into one payment (e.g. Citizen's Income or Universal Credit) and then deducting the council rent and council tax from that amount before paying over the net balance? That way it would be impossible for welfare claimants to run up arrears*.

Anecdotal: I was once tidying up a flat after the tenants had left and there were two envelopes from the council. One was a cheque from the Housing Benefit department for the rent; the other was a red reminder for unpaid Council Tax. The cheque and the demand were for similar amounts and we can safely assume that the tenants banked the former and ignored the latter.

* And instead of having means-tested Housing Benefit, it'd be far simpler (and come to much the same thing mathematically, just with less admin, faff, fraud and error) to deduct the rent directly from social tenants' wages, i.e. instead of paying them HB to cover most or all of the rent and then retrospectively reducing the HB by £x for every £100 they have earned (and at which stage they might be out of work again and so don't have the money to make up the difference), just let them live there for free and give them a PAYE code which tells the employer to deduct an additional x% from their wages. Hey ho, no more poverty trap.

Welsh Assembly Government's 'fun-free society' aim

From the BBC:

Plans have been unveiled to dramatically reduce contendness levels in Wales with the ultimate goal of a "fun-free society". Playgrounds and all NHS property could be made fun-free zones, as the assembly government aims to reduce happiness levels to 16% by 2020.

Around a quarter of adults in Wales occasionally enjoy themselves. The chief medical officer also wants to start a "debate" on listening to music in cars carrying children.

Dr Tony Jewell said: "Just as Wales took a bold step in creating laughter-free environments in public places, we recognise that the time is right to champion new approaches to further protect children from the harms of recreational activities. The plan proposes that local authorities will be encouraged to remove playground equipment from playgrounds and to initiate a debate on playing I-spy in cars carrying children.

"The NHS should set an example when it comes to creating fun-free environments and encouraging staff to stop enjoying themselves. The NHS should also encourage patients to give up all their hobbies, particularly before elective surgery."

Wales brought in a ban on telling jokes in enclosed public places in April 2007. The assembly government's new plans are outlined in a consultation to reduce happiness levels and exposure to other people's laughter. Proposals include lobbying the UK government on issues such as increasing the price of CDs and DVDs through taxation, and continuing to discourage children from playing with their friends.

The consultation says relaxing in front of the telly continues to be the largest single preventable cause of ill health and premature death in Wales, causing around 5,650 deaths each year.

Dr Jewell also wants to protect children from their parents' smutty banter at home and in cars after speaking out on the issue last year.

"Reducing children's exposure to innuendos will help to protect the most vulnerable in society and promoting silence in cars carrying children will bring home to parents the risks of talking out loud," he said, "Children are not able to protect themselves from this exposure and it must be shown to be a serious public health risk through the development of legal protections, where appropriate, and policy initiatives."

AV: Fun With Numbers

The FPTP gang claim that the counting procedures would be prohibitively expensive under AV, which intuitively is complete bollocks (the real cost is the people updating the electoral register, printing the ballot papers, manning the polling stations, ferrying around the sealed boxes to the final count etc, all the TV and press coverage etc, not the last bit of paper shuffling).

I trust that even the most hardened FPTP supporter is prepared to accept that the system should be geared up to bearing the cost of a 100% turn out? Seeing as there's usually only a 60% or 70% turnout, then as long as the number of votes recounted (however many times) is not too high, the total cost of the initial count and the redistributing would still be less than the cost of counting all the votes were there to be a 100% turnout under FPTP.

OK, so let's assume that at the next General Election, held under AV, people vote in similar proportions to the 2010 General Election; that the median number of preferences indicated by any voter is 2 (so at each elimination stage, half of ballot papers of the lowest-scoring candidate are recounted and half are discarded); and that there is no particular correlation between how people cast their first, second and subsequent preferences.

The simple fact of the matter is that the number of times a ballot paper is picked up and put on a pile is only 28% more than under FPTP, see if you can follow the maths:The nice bit is that instead of 74% of votes being 'wasted', only 62% are 'wasted' (which must be an improvement).

"Aha!" shouts the crowd, "What if people are suitably emboldened at the next election and first preferences are spread far more evenly?"

Doesn't make a big difference. Let's now assume the BNP gets 10% of first preferences and the other five candidates get 18% each, the total number of times a ballot paper is sorted onto a pile is still only 37% more than under FPTP. In this example (assuming the Tory candidate would have edged in) only 68% of votes are 'wasted', which is still an improvement on the 76% that would be 'wasted' under FPTP.To sum up:

Will AV increase the cost of running elections? Nope, not materially.

Will AV change the outcome (in terms of which parties get how many MPs)? Probably not much.

Will AV embolden the smaller parties and add to the gaiety of the nation? Yes of course.

Will AV remind MPs that none of them represents anywhere near a majority of voters? Yes - and that is surely the whole point.

Wednesday 23 February 2011

Tractor Beer Statistics

From The Telegraph:

"Normalising the beer production market and classifying it as alcohol is totally the right thing to do and will boost the health of our population," Yevgeny Bryun, the ministry of health's chief specialist on alcohol and drug abuse, said. "We have been talking about and have wanted such a measure for ages. I take my hat off to the parliament."

The new law would restrict beer sales at night, ban its sale in or close to many public places such as schools, and limit cans and bottles to a maximum size of 0.33 litres...

Regularly rated among the heaviest five drinkers in the world, the Kremlin estimates that Russians consume 32 pints of pure alcohol per capita per year (1), more than double the World Health Organisation's recommended maximum. This appears to have seriously dented population growth.

Russia's population fell by 6.4 million between 1991 and 2009 and the federal statistics agency has predicted that it could fall to less than 127 million from just under 142 million now by 2031 in a worst-case scenario.

Meanwhile, Russian officials estimate that 500,000 people die for alcohol-related reasons every year (2), a state of affairs that has prompted President Dmitry Medvedev to declare the country's drinking problem "a national disaster".

1) OK, beer is approx. 5% alcohol, so 32 pints of pure alcohol = 640 pints of beer, divided by 365.25 days a year = one-and-three-quarter pints of beer a day. Vodka is (say) 40% alcohol, so that also equates to one-sixth of a bottle of vodka a day (assuming they use 0.7 litre bottles?)*. And that is naff all if you are used to it.

2) Eat you heart out Ian Gilmore! If you're going to make up statistics, then GO LARGE! With a population of 142 million and a life expectancy of 63 years, we'd expect around 2.25 million deaths a year, so what they are saying is that nearly one-in-four Russians die for 'alcohol-related reasons'. The feeble tossers who invent fake statistics in the UK are currently only claiming that one-in-forty deaths is alcohol related.

* At least I hope that's right. 32 pints x 0.568 = 18.18 litres; 18.18 litres pure alcohol ÷ 0.4 = 45.4 litres vodka; 45.4 ÷ 0.7 litres/bottle = 65 bottles; 65 ÷ 365 days/year = 0.178 bottles a day (or one-and-a quarter bottles a week, if you find that easier to envisage).

Sun readers thick: official

From The Soaraway Sun*:

The 'No' vote last night soared to a seven-point lead in a Sun YouGov survey. Forty-one per cent said they want to stick to the current 'first past the post system', while 34 per cent want to change it to the complicated Alternative Vote.

So semi-literate Sun readers can manage to find their favoured candidate on a ballot paper and mark an "x", but finding their favoured candidate and marking it with "1" is beyond them? Maybe even the few borderline literate-numerate Sun readers might even manage to mark their favoured candidate with a "1" and then mark their second choice with "2"?

As Neil Harding explains:

If you ever said to someone going to the shops - "Get me a coke or if they haven't got that, I'll have a lemonade", then you understand the principle behind AV voting. It only sounds complicated if you explain it badly, which the No campaigners are doing on purpose (finding the most wordy academic text they can).

He duly extends the analogy**:

If you order a chicken curry at a restaurant, but are told that has sold out then decide to have a lasagne instead, you have only had one meal. The same is true for AV, only ONE of your preferences will count towards the end result. Don't be fooled by propaganda saying otherwise.

* Spotted by Denis Cooper, who's firmly in the AV camp.

** For the benefit of Sun readers, an "analogy" is a simple example used to explain something, and has nothing to do with the study of people's bottoms.
PS, if you have ever attended a count, you'll know that the extra work involved with AV would be fairly minimal. Under FPTP, tellers make a pile of ballot slips for each candidate (in bundles of twenty or something) and then the biggest pile wins (they count them again, under the eyes of the candidates, if it looks fairly close).

The same basic system would apply under AV, only if no candidate gets more than half the first choice votes (which will happen in most constituencies), they'll just grab the smallest pile and redistribute it; and then the next smallest pile and so on. Mathematically, it's unlikely that more than the thirty or forty per cent of the ballot papers would have to be picked up more than once or twice, and as there will only be a few dozen or a couple of hundred in the smallest piles, that's no big deal.

Apart from a few dedicted anarcho-democrats who rank all candidates in reverse order of how likely they are to be elected, I doubt sorely whether most people will use more than their first and second votes, which reduces the amount of re-allocating even further.
PPS, I can only assume that Rupert Murdoch (who owns The Sun newspaper) has established that he's happy 'doing business with' a Labour government or a Tory-led government, but doesn't have the time or inclination to have to 'do business with' (i.e. bully and bribe) a load of smaller parties as well.

Tee hee!

Unabashed feminist and pornographer Rowan Pelling in The Telegraph:

[Jacqui] Smith’s disingenuousness continued yesterday with her declaration that she decided to make a documentary on pornography because most people, herself included, “don’t know very much about it” – which leaves you mystified, given that she [used to be Home Secretary and thus] was the person who was meant to legislate for its control.

Honduras shows us how to do it!

From The Times of India:

Lighting up a cigarette at home could bring a visit from Honduran police if a family member or even a visitor complains about secondhand smoke.

A new law that took effect on Monday banning smoking in most public and private spaces doesn't actually outlaw cigarettes inside homes, but it does have a provision allowing people to file complaints about secondhand smoke in homes.

Violations would bring a verbal warning on the first offense . After that could come arrest and a $311 fine — the equivalent of the monthly minimum wage in the country.

Even some anti-smoking advocates suspect that part of the law may not work. Armando Peruga, a program manager at the World Health Organization's Tobacco-Free Initiative, said the clause allowing family members to call police on their smoker relatives is confusing.

The clause "does not make much sense since the law clearly does not prohibit smoking at homes" , Peruga said. Some also say that the law will be almost impossible to enforce in a country of 8 million people with a rampant crime problem and only 12,000 police officers.

Note that the bansturbator-in-chief does not say that the law is completely insane and repressive; he merely says that it's "confusing", which is short hand for "an outright ban would be nice and simple".

That police-to-public ratio of 1:667 is impressive, that's about half European levels.

Tuesday 22 February 2011

NIMBYs On The Titanic

A couple of British home owners manage to push their way to the front of the life boat queue and are the first aboard. Once HO2 is aboard, HO1 casts off the lines and pushes the boat away from the sinking Titanic and starts rowing madly.

HO2; "Aren't there supposed to be 24 people in this boat?"

HO1: "No, there's only room for two, one at the front, on at the back. Shut up and get rowing."

HO2; "But if we leave now, then some of those people will drown."

HO1: "No they won't, there are plenty of life boats to go round, surely the White Star Line will have seen to that."

HO2: "No there aren't. I overheard to Captain admitting as much to Kate Winslett. And even if there were, they'd have budgeted for twenty four people in a boat."

H01: "Exactly. So some people are going to drown anyway, what do a few more matter? And look at it this way, we've paid for our ticket and our cruise holiday is ruined. I think the least we can expect is a bit of extra food while we wait to be rescued."

H02: "Oh look, there are some people in the water, just ahead of us, they seem to be in pain. Shall we not stop to pick them up, or else they'll surely drown?"

HO1: "Good grief, what are you thinking? Hard a-port or the blighters will scramble on board! Did I plant that iceberg? Did I ask them to jump in the water? No! So it's up to them to help themselves. They should have got into the queue in time."

HO2: "To be fair, we did push our way to the front a little bit, didn't we? There was that one little boy you pushed overboard."

H01: "Serves his feckless mother right for bringing children in to the world that she's not going to look after him properly. What was the slattern thinking of allowing a young child to run about at midnight? He should have been in bed."

H02: "True... it is an overcrowded planet. This younger generation is just so selfish, isn't it? But look, should we not stop to pick up a few survivors?"

H01: "No certainly not. Do you realise how crowded it is back in England? There's no room for any more people, not since all those Irish navvies came over, stealing our jobs and eating our food. Look at it this way - we're doing the rest of England a favour by thinning out the population. Think how much our food security will improve if there are a few thousand fewer people demanding that houses be built?"

H02: "If you put it like that... and I suppose it's nice to have a bit of space here in the boat. Do you fancy a biscuit? Plenty to go round!"

NIMBYs Of The Week

From The Westmoreland Gazette:

ANGRY Grange-over-Sands and Allithwaite residents held up placards and chanted their disgust at plans to build more housing in the towns. Cars beeped their approval to the protesters as they drove by Victoria Hall on Main Street, where dozens of people were gathered...

They were opposing aspects of South Lakeland District Council’s land allocations document, which identifies where hundreds of houses could be developed over the next 15 years. Their fears were over the increased flood risk of new houses, more traffic in towns which they say are already struggling to cope, and the effect more housing could have on tourism, among other concerns.

One set of residents protesting were the Grange Fell Action Group, who were chanting ‘Hands off Grange Fell’ during the rally. The group opposes an SLDC potential site to build up to 36 houses on Spring Bank, which consists of two farms behind the Grange Fell Bed and Breakfast on Grange Fell Road...

As APILN says, "You could hide an airport in the area and nobody would notice":
View Larger Map

Killer Arguments Against LVT, Not (94)

The Home-Owner-Ist Coalition insist that LVT is a 'tax on wealth' or even an 'attack on wealth' itself, e.g. Allister Heath in the CityAM:

There was time when aspiration was rewarded in Britain; this is no longer true. Individuals are being double or even triple-taxed on the same income. At least the stamp duty hike is not as damaging as Vince Cable’s mansion tax, a purer and more devastating form of wealth tax.

Remembering that the existing tax system (mainly income tax, VAT, National Insurance) is itself a massive attack on wealth creation, it takes away around half the value of all the goods and services produced and exchanged, how can a tax system based on LVT in any way be considered as an attack on wealth?

There are three main reasons why your house would go up in value:

1. Home improvements

If you go out and do some overtime and scrape together £10,000 and spend it on replacing a tatty old kitchen with a nice new one, with a bit of luck, the value of your house goes up accordingly. Under current rules, you have to earn about £20,000 to leave you with enough money after tax to pay for the kitchen; with a full-on LVT system, you'd only have to earn £10,000 more to pay for your kitchen, so if anything people would be able to spend more on improving their houses, and the amount of your LVT bill would not go up as a result of your new kitchen (and there'd be no VAT on the cost of the kitchen either).

2. House price and credit bubbles

As we saw, between the mid-1990s and 2007, house prices doubled or trebled without homeowners having to lift a finger. Was this an increase in real wealth? No, not at all. If you remained in your house without selling or adding to your mortgage, you were neither better nor worse off; it was only if you cashed in and sold to rent/downsized that you personally could have realised a gain.

But if you added to your mortgage, or if you or your children bought houses at the end of the bubble period, you are worse off as you are in the same houses but with bigger debts (and the banks are correspondingly better off). LVT would have the effect of dampening these house price bubbles, so it would at least protect us from becoming worse off; or you could argue that as land prices = debt, LVT is the opposite of a tax on wealth; it's more like a tax on negative wealth (if there is such a thing).

3. Job opportunities and transport infrastructure

The other reason why house prices or rental values go up in a particular area is because of better job opportunities and/or better transport infrastructure (the two seem to go hand in hand). Now, having more job opportunities and better transport infrastructure is clearly 'wealth', but who created it? It's difficult to say, but it certainly wasn't any individual person who happens to own a house in the affected area (let's take the extreme case of a landlord who lives overseas or a house which has been derelict/vacant for years); and so if they didn't create it, they can't seriously claim to 'own' it unless they pay for it, so LVT in this instance is a tax (or 'user charge') on the land 'owner' proportional to the benefits that accrue to him because of the efforts of other people (whoever they may be).

People who have to pay the tax can grumble and moan as much as they like, but replacing taxes on output, incomes and profits with LVT will encourage/motivate people to set up businesses, go out to work etc, and (with a bit of luck) the government would be motivated to focus public spending on things like transport infrastucture where the increase in future LVT receipts more than covers the cash cost*.

So there we have it.

The current tax system is a massive attack on wealth; conversely, LVT encourages wealth creation (or at the very least, doesn't discourage it). The only difference is that under current rules, the people who create the wealth and the people to whom it accrues are two quite different categories of people (many will be members of both categories, but that is a secondary issue); under LVT you keep every penny of what you earn and only pay for 'what you take'.

* The calculation is the same as that faced by a rational landlord - he does not pay for repairs and improvements out of the goodness of his own heart, he does it because it makes commercial sense; the fact that his tenants end up with somewhere nicer to live is a bonus.

Tax rises & behavioural change

A post not from the desk of Mark Wadsworth:

Reports are out today of a January surplus £700 million higher than forecast: Daily Mail, Guardian

What they gloss over though is the main reason for income tax receipts being so high.

Alastair Darling & Gordon Brown being the intelligent sort of chaps they are introduced a 50%(42.5% on dividend) top rate of tax for incomes over £150,000.

As people were sufficiently forewarned of this, those who own & operate private limited companies and pretty much have total control over their reported income in any given year took massive dividends in the 2009/10 tax year. They did this in order to pay the tax at 32.5% in January 2011 (hence the surplus) rather than pay it at 42.5% in January 2012.

Ken Clarke

George Osborne

Monday 21 February 2011

Well they would say that, wouldn't they?

The FT gave a fair bit of coverage today to the concept of the debt-for-equity swap (now referred to as a 'bail-in') as an alternative to taxpayer funded bank bails outs. They get marked down for crediting the idea to the European Union (who had no qualms about bailing out French and German banks at the expense of Irish and Greek taxpayers) or the bald (and grammatically incorrect) lie that "Bail-ins is a novel concept...", but let's get to the nub:

... bondholders and many bank executives warn that such moves could have negative consequences for the wider economy. (1) Banks finance most of their customer lending through bonds. (2) Raise the risks of bond investors losing money, and they will charge more in interest. (3) If banks’ borrowing costs rise, that in turn will be priced into the costs of mortgages and other customer loans. (4) Regulatory efforts to protect taxpayers could unintentionally expose them to a permanent rise in the cost of credit.(5)

1) Well they would say that, wouldn't they?

2) That is simply not true. I've looked at bank balance sheets and the correct figure is approx. one-third (if you consider both 'customer deposits' and 'bonds' to be 'finance'). Of course, if you count bond holders as owners rather than as creditors, then it is true, but once you count them as owners, a debt-for-equity swap seems like the obvious next step.

3) Yes, they probably would. But we are starting from a position where the whole credit-bubble-Ponzi-scheme has yet again turned out to be built on sand. Had there not been an implicit government guarantee for bond holders (or easy political capital to be made from rising house prices), then investors simply wouldn't have lent so much money so cheaply to banks in the first place; so there wouldn't have been credit and house price bubbles; and so bank bonds would have been a far less risky bet.

4) The wider public has a choice: pay extra taxes to subsidise other people's risky behaviour or accept that interest rates might go up a bit. But wasn't it artificially low interest rates that got us into this mess in the first place? For savers, higher interest rates are A Good Thing anyway, and for future home buyers, higher interests are (counter intuitively) also A Good Thing - if interest rates rise then the price of houses will come down to compensate, and in the medium term, they will end up paying less in total mortgage repayments out of a marginally higher net income.

5) Oh wow... *head spins*... are they really saying that taxpayers have to be forced to bail out - i.e. subsidise* - bond holders in order to protect the self same taxpayers from a "permanent rise in the cost of credit"? What happens if you're a saver or a taxpayer who lives within his means and doesn't want or need 'credit'? What if you're a potential first time buyer who's being forced to pay extra taxes in order to push down borrowing costs in order to prop up house prices in order to increase your total mortgage repayments? And that out of a lower net income?

* Never forget The Golden Rule - subsidies don't make things cheaper, they make them more expensive.

Archbishop with foot fetish has the last laugh...

From The Daily Mail:

The archbishop of Dublin washed the feet of victims of clerical abuse yesterday in one of the most visible acts of contrition for the systemic mistreatment of children that has shattered the Irish Catholic Church.

Shaun in the comments nails it

From The Daily Mail:

They dreamt of a better life on the Costas. Now villa values have HALVED, pensions have crashed - and they can't afford to come home. Now for the really bad news, it's about to get even worse...

Shaun, Leeds, bats it straight back at 'em:

They took money from an over inflated class here and ran to Spain with it where the reverse happened. What about the people that paid £875,000 for their house [in England]... was that a sustainable price in relation to people's income?

Fun Online Polls: St Valentine's Day spending & Land ownership

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

How much did you spend on St Valentine's Day-related stuff this year?

Nothing - 67%

Up to £10 - 16%
£10 to £50 - 12%
More than £50 - 3%
OMG I forgot! So that's why my other half is sulking! - 1%
Other, please specify - 1%

I'm glad to see that only two of us forgot outright, and I am surprised that two-thirds of people get away with spending nothing (I'm in the "£10 to £50" bracket). Or maybe a lot of female readers took part, they can of course reliably getting away with spending nothing, and I doubt that most blokes would notice or even mind.
M'learned colleague at work suggested I do a poll on which Middle Eastern despot will be deposed next, but that's going to end up too complicated, and AFAICS, all they do is hand over to another slightly-less-bad despot.

So this week's Fun Online Poll is just to see how many people have put any thought into the subject of what 'land ownership' really is and/or have been paying attention to my ramblings.

Vote here or use the widget in the sidebar.

The New Maths: small number x big number = big number: Shock.

It's difficult to fight this level of propaganda, as trailed on R4 this morning:

Poor alcohol regulation could cost up to 250,000 lives in England and Wales over the next 20 years, doctors warn. Writing in The Lancet, leading liver disease specialists say measures including a minimum price of 50p per unit are urgently needed...

Hold it right there!

250,000 (being a wild estimate) divided by 20 = 12,500. There are about 500,000 deaths in the UK every year, from whatever causes, so even if they were right (and they aren't), they are talking about 2.5% of all deaths, which is within the bounds of measuring error anyway.

In any event, the rather more reliable NSO reckon that there are currently 9,000 'alcohol-related deaths' a year in the UK, and even those figures are dubious as they claim that the number of 'alcohol-related deaths' more than doubled since 1992.

So the Bansturbators-at-large aren't even talking about an actual reduction of 12,500 a year, they are talking about the reduction of a hypothetical increase.

In related news: "Smoking set to kill entire UK population over next six centuries".

Sunday 20 February 2011

Abdullah II bin al-Hussein

"Motorcyclist killed after hitting cow on U.S. 41"

From Tampa Bay Online:

According to the Florida Highway Patrol, Maurice Anthony Fugere of Cottage Grove, Minn., was navigating a curve in the highway just south of College Avenue about 7:30 p.m. when he struck the cow, which was standing in the road.

Fugere, who was not wearing a helmet, was thrown from his 1995 Harley-Davidson, troopers said. He was pronounced dead at the scene.

Spotted by Joseph Takagi, who adds, "Yeah, sure the cow just happened to be standing there..."

Ayatollah Ali Khamanei

Bashar al-Assad

Colonel Gaddafi

Saturday 19 February 2011

Why depositors are powerless and why bank bail outs make things worse.

Two related issues came up at post-film discussion yesterday where people's thinking appears to be a bit confused, so for the benefit of anybody who's interested:
1. There is a theory that if a lot of depositors ganged up and all withdrew their money from a bank on a particular day, then if more than ten per cent of deposits were withdrawn, they could bring the bank to its knees (in which case depositors would demand, what? Higher interest rates on their savings?), see e.g. Cantona's Cashpoint Revolution.

Most people ignored Cantona, but what if they hadn't? Well, it would have been a good old fashioned bank run like on Northern Rock, and the government would have just stepped in and lent the bank(s) the spare cash.

Remember that people would have to withdraw their savings in cash (merely taking it from one bank account and putting it in another achieves very little), and a bank note is just an interest free loan that you are making to the government (it is your financial asset and the government's financial liability).

Therefore the government can easily provide loans to banks which are equal to the cash withdrawn. Before the depositors' strike we have this position:

Banks -> owe £ billions to - > people with cash in the bank

And afterwards, we end up with the following:

Banks -> owe £ billions to -> government -> owes £ billions to -> people with 'cash under the mattress'.

If people are too worried about being burgled, they will put their saving in the safest place possible, i.e. the government-run National Savings & Investments, which makes the picture even clearer.
2. Why don't savers demand higher interest rates? Well, they do, I suppose, but the banks aren't offering them and that is the end of that. It is a cartel which has most successfully managed to widen its profit margins after the downturn, because the banks know (or have good reason to believe) that if they can't get enough money from savers or bond investors, they can borrow it cheaply from the government (and they have done, in spades).

I mean, why would a retailer bother paying a supplier £100 per unit if the government were offering them for £50 each?
3. As I tried explaining before, the politicians claim that they are bailing out the banks to 'protect savers' money' which is hokum, of course.

The analogy I used was a bit left field, so let's assume that Farepak is a bank and they have managed to lose four-fifths of their savers' money, or £400 per saver.

Now, let's assume that the government had previously enacted a law saying that Xmas club savings accounts were guaranteed by the government/taxpayer, and Farepak went *pop*. Does it make more sense for the government to:

a) Give the savers directly the £400 they lost (or whatever higher or lower amount an individual saver lost) and have done with it (chasing Farepak and its directors for any shortfall), or

b) Give or lend all that money to Farepak on the condition that they fulfil their pledges and promise to play nicely in future?

I'd submit that (a) makes more sense but in most cases, governments around the world have chosen (b). Very few governments allowed banks to collapse and agreed to pay some compensation to savers (method (a), which worked a treat for Iceland) and other countries who are a bit more clued up (and not in cahoots with bankers) have asked their banks to sort themselves out via debt-for-equity swaps (Denmark, and rather bizarrely, Northern Rock in the UK after three years' wrangling), but these examples are few and far between.

Obviously, the government doesn't guarantee your money if it's with a Xmas club and you might not agree with the law guaranteeing your money up to £85,000 if it's in a bank, that's a separate issue.
4. So there we have it. There is precious little we can do because the government will thwart us at every turn, using our money to do so.

And the underlying reason why 'they' have us by the short and curlies is because they know and we know that the only way to keep house prices at double their true value is by continually pumping in money via the banking system, so while we curse and swear at bankers and their bonuses, this is about as much use as Catholics complaining about priests abusing children.

Until we abandon this thinking that high house prices make us richer, there will always be bankers and politicians ready to exploit this for personal gain, and as long as there are Catholics who believe in their church as an institution, there will be people who abuse that trust, end of.

Quick! While his back's turned!

Adam Collyer is on a 'blogging break/huff until the end of the month, so why not pop over there and fill the gaping void with a comment?

Saturday morning gear change

Inevitably enough, they used 'New York Groove' by Hello as background music in the film yesterday. Had the film been English they would have used 'Money' by Pink Floyd or 'Wall Street Shuffle' by 10cc, I suppose.

I spotted a semi-tone truck driver's gear change after 1 minute 7 seonds:
PS, Ace Frehley's slightly superior cover version faithfully includes the gear change at 1 minute 11.

Friday 18 February 2011

Inside Job

This is the first documentary I've watched in the cinema since that one with the penguins, which is slightly disconcerting as normally you watch documentaries on the telly at home. It's a fair enough summary of what led up to the 'financial crisis', but you have to keep your wits about you as the plot jumps back and forth, it's full of flash-forwards and flash-backwards and evocative cutaway shots of New York etc filmed from a helicopter.

The real nuggets in the film are the interviews with various relatively senior people from the Home-Owner-Ist financial services lobby, whom the interviewer manages to trip up in their own contradictions and half-truths.

Dumbest of them all is former Fed Governer Frederic S Munchkin who is frighteningly stupid. In one section, he answers a direct question with "Yes" but then realises what he has admitted and keeps backtracking and backtracking and ends the section by saying "So what I meant to say is 'no'". He pops up again later and, when asked why he left the Fed in 2008 at the height of the 'financial crisis', he explains that he wanted to go back into academia to do some revisions to a text book.

So I'd wait for it to appear on telly, if I were you. The real reason I went is to see David Malone, who did a Q&A after the film and is tip top man, he really knows what he is talking about (as in facts and figures; names and places and not just vague principles), so why not pop along to any of the venues mentioned in first link in sidebar.

More musings on that "inflation error"

We can track back the origins of this story to page 39 of the Bank of England's February Inflation Report:

Clothing and footwear prices are highly seasonal, falling during sales periods as retailers try to clear that season’s stock and then recovering as new stock is brought in. Due to such changes in stock, identical garments are often no longer available, making it difficult to capture post-sale increases in prices.

It is likely that the previous collection practices picked up the seasonal falls in prices during the winter and summer sales, but did not fully capture the recovery in prices after sales had finished; with CPI calculated from monthly changes in prices, this would have biased down both the price levels and annual inflation rates.

That just does not ring true, and having thought about this, it strikes me that the original inflation figures were in fact correct and the BoE is now frantically trying to shove the blame for the house price bubble onto the ONS.*

Let's first write down what we do know:
i. Clothing/footwear makes up about 6% of the CPI shopping basket;
ii. Clothing/footwear prices had been falling for years;
iii. Retailers practice 'price skimming', in other words, they launch their range at full price (FP) and then the price drops and drops as it goes out of fashion and then what's left is unceremoniously dumped in end-of-season sales (EOSS).
iv. Let's assume for the sake of this discussion that half of items are sold for FP and half in EOSS.

To make the BoE's preposterous claim stack up we have to make two completely unrealistic assumptions:
a) The EOSS discount to full price back in 1997 was only 10%
b) The EOSS discount would have to have increased by 10% of FP every year, in other words, by 2006, the EOSS price would be £nil and by 2009, shops would be paying people £1.80 to take away an item with an original FP of £6.

Here's a table to illustrate the point, click to enlarge:* There has been a long-running feud between the Whitehall/government people and the ONS, and I'd trust the ONS every time. Click the ONS label for some examples (I'm sure there are dozens more).

So you're happy to pay scroungers?

Asked Mr G over at HPC, to which I replied:

Mr G, when you say "scrounger" I take it you are using the Daily Mail definition?

Now, precisely why there are five million of such people is down to a combination of stupid welfare system, innate laziness, poor education system, disastrous tax and regulatory policies, political correctness and de-industrialisation etc etc.

But I'd cast the net wider and include other categories of "scroungers" who cost the country far, far more than the 5 million on the dole, i.e.
* politicians
* six million quangocrats
* bankers
* private landlords who receive Housing Benefit (especially if they are renting back a council house they bought for very cheap)
* Home-Owner-Ist Ă©lite generally
* corporatist private sector leeches
* most lawyers, auditors and accountants
* pensioners generally (who get twice as much from the taxpayer as working age welfare claimants and children)
* fakecharities
* the green insustry lobby
and so on.

Faced with the choice between

a) Giving somebody on the dole £70 a week/a pensioner £140 a week and

b) giving a 'private landlord' £1,000 a week or a Council Chief Executive £3,000 a week or an agricultural landowner like Prince Charles £100,000 a week or a banker £1m a week, I know which is the best value :-)

Where I'll be this evening.

18.30, The Phoenix Cinema, East Finchley

The USA has non-jobs too...

Via SPPI, this:
Source: National Park Service [note: I checked yesterday evening to see if SPPI had copied the advert correctly, which they had, however the job advert has since been removed from the site, to be fair, this may simply be because the application deadline has passed]

Job Title: Interdisciplinary (Climate Change Adaptation Coordinator – Cultural Resources)

Department: Department Of The Interior

Agency: National Park Service

Job Announcement Number: NPSWASO-HQ-11-434393

SALARY RANGE: $89,033.00 – $136,771.00/year
OPEN PERIOD: Friday, February 04, 2011 to Thursday, February 17, 2011
SERIES & GRADE: GS-0101-13/14
POSITION INFORMATION: Full Time Career/Career Conditional
DUTY LOCATIONS: 1 vacancy – Washington DC Metro Area, DC
WHO MAY BE CONSIDERED: This announcement is open to all U.S. Citizens.


Experience your America and build a fulfilling career by joining the National Park Service. Become a part of our mission to unite the past, our cultures and our special places, to establish important connections to the present and build a rich and lasting legacy for future generations.

The National Park Service is seeking an energetic professional individual to serve as the Cultural Resources Climate Change Adaptation Coordinator. The position is located in Washington, DC and provides cultural resource management assistance to park units, and provides leadership and guidance to stakeholders in the cultural resource management and historic preservation communities nationwide on issues relating to climate change. Candidates interested in this position should have an indepth knowledge of climate change science either as a consumer or generator of climate change data and models to support decisions in cultural resource management and adaptation.

Thursday 17 February 2011

Question Time: The cancelled forest sell off

I haven't watched QT for years - the duplicity and complicity of politicians I can live with, but the sheer stupidity of the general public asking the questions I can't - but today I made an exception because Nigel Farage was on.

I must say, it was only the skinny blonde lady with glasses from the audience who nailed this question: she reckoned that the Lib-Cons never seriously planned to sell off the few remaining government-owned forests and that it was a 'red herring'.

The phrase I would have used is 'smokescreen'. Seeing as there is no particular commercial rationale for doing so (maybe it would have generated a profit of a few million, maybe it would have been a net cost, who knows), I would assume that they floated the idea a few weeks ago in order to distract our attention from more pressing matters of e.g. the bank bonus season.

Let's put it in perspective:

Value of forests which might have been sold off £300 million (for which the government would have received £300 million, so net cost to economy £nil, and that is a one-off cost of £nil)

Bankers' bonuses declared in past few weeks: £6,000 million (from which HM Revenue & Customs rake off about 50%, so net cost to economy £3,000 million, and that is an annually recurring cost of £3,000 million).

Gnomeo & Juliet

I took the lad and two of his friends to see this film this afternoon.

It was quite good fun, some of the in-jokes were genuinely funny and the 3D/CGI effects are, as is usual with these things, awesome.

The best bit I suppose is the hyper-realistic depiction of tedious English suburbia, which really did look English, and not what Americans consider to be typically English, but there again you can just peep into your neighbours' gardens to see that.

Not much more to say.

"David Cameron sets out Welfare Reform Bill plans"

Further to Scott Wright's post of earlier, this BBC article is a fair summary, I suppose, but it repeats the same deliberate untruths:

In future, the government is guaranteeing that for every £1 extra people earn, they will be at least 35p better off as a result of being in work.

Nope. The correct figure is probably more like 19p 'better off'.

Even by the DWP's own admission:

... under the current system people who work longer than 16 hours would be taxed at around 96 per cent – under Universal Credit around 900,000 people who already work 16 hours a week would be taxed at around 76 per cent.

That in turn is an unfair comparison:

a) The 96% rate is because Tax Credits Withdrawal is currently 39% of gross wages (41% from 6 April 2011); basic rate tax + Employee's NIC is 31% of gross wages (32% from 6 April), leaving you with 30p for every £1 you earn. After that, Housing Benefit and Council Tax benefit are withdrawn at 65% + 20% of your income (after tax and tax credits withdrawal), leaving you with the princely sum of 4.5p for every £1 you earn.

b) The 76% rate is because the Universal Credit is withdrawn at 65% of the net amount, i.e. you earn £1 gross, lose 32% in PAYE, and of the 68p left, they claw back [65% x 68p] = 44.2p so you keep 23.8p for every £1 you earn.

c) But what even the DWP gloss over is that it is only Housing Benefit which will be rolled into the Universal Credit (and not Council Tax Benefit). If we rework the 96% rate from (a) for somebody who isn't claiming Council Tax Benefit, the effective tax rate is in fact 'only' 89.5% (i.e. for every £1 gross wages, knock off 39p WTC withdrawal, 31p PAYE and of the remaining 30p, claw back 65% or 10.5p of Council Tax Benefit, leaving you with 10.5p!

d) It is not clear what will happen to Council Tax Benefit under the new rules, but assuming it is clawed back at 20% of net income, that takes another 4.8p of the 23.8p you were left with from (b) and leaves you with 19p for every £1 you earn, which I submit is considerably less than 35p.

IDS & lies

Today's news features a whole host of articles about welfare reform: Torygraph, Daily Mail

It's not so refreshing to see that the total lie "The new universal credit, to be introduced from 2013, will ensure people keep at least 35p in every extra pound they earn" is being spouted again.

I know this has been explored previously in many places other than here but just as they keep repeating their lie in order to try and making it sink in, I wish to repeat the truth in the hopes that at least some people will use their own minds as free thinking human beings to not believe it.

The 65% withdrawal rate is stated in the white paper as applying to NET income, this means that above the disregard threshold a claimant will first be taxed on their earnings at 32% (basic rate 20%, employee's NI or in other words disguised income tax 12%) They will then suffer benefit withdrawal of 65% applied to their remaining 68p (65% of 68p = 44.2p).

So if we add all of these together, our marginal rate for households currently only eligible for tax credits increases from 73% in the 2011/12 and 2012/13 years to 76.2% from April 2013. Sounds more like we get to keep 23.8p to me IDS!

This seems like the wrong direction to be heading, punishing those who already exercise the behaviour you want (i.e. working full-time to support their family) to encourage people to work part-time and massage the unemployment figures. Sounds more like a Labour policy than a Tory one to me but then we do live in a faux democratic dictatorship where Lib, Lab & Con are merely different coloured branches of the same party.....

"King lifts lid on inflation error"

City AM's headline is presumably their entry in the "understatement of the year" competition, it's not some little minor technical error, it seems fairly fundamental. The article explains:

Inflation was higher than official figures suggested throughout the housing bubble and credit boom, the Bank of England admitted yesterday. Consumer price inflation was 0.3 per cent higher than previously thought every year between 1997 and 2009, due to errors on clothing prices.

Sales prices were wrongly assumed to be the norm, distorting the Office for National Statistics’ numbers. The blunder was bound to have misled the Bank, economists said, and meant that interest rates were kept too low for too long during the boom.

1. Well, given the BoE's remit of "keep the house price bubble going, or else", I'd say they got interest rates about right, but hey. If the BoE (and by extension the government) were actually serious about inflation (which they aren't and haven't been for ages) there's no need to go round measuring CPI, RPI and all that nonsense, it's quite sufficient to look at house prices/land values. If there is 'too much' money sloshing around, then it feeds through into higher house prices/land values; so if they are rising faster than x% then that is a sign of inflation.

2. Mainstream economics* says that a) you can combat inflation by increasing interest rates, but b) that has a negative impact on the economy. This is the excuse they are now using to ignore inflation that is running way over the official target of 2%, although the real reason they don't dare increasing interest rates is because their precious house price bubble would finally pop.

3. So what the article is saying is that they completely failed to notice the house price boom, and if only some statistician had weighted clothes prices slightly differently, then none of this would have happened? Is anybody really that gullible? I suppose they must be - Mr Butler fell for it hook, line and sinker:

“If the ONS had got its figures right, the Bank might have moved more quickly to raise rates and get us out of the cheap-money spiral that caused the housing and borrowing bubble, and the inevitable bust that followed,” said Eamonn Butler of the Adam Smith Institute think tank.

4. It appears that banking shill Allister Heath on page 2 of the same paper is only too keen to toe the party line:

This may seem like a small error but it was a major gaffe. Interest rates would undoubtedly have been higher every year during the bubble had the Bank known prices were going up as much as they were. Even half a per cent more on rates would have dampened credit growth and property prices; the bubble wouldn’t have been as bad.

* Proper economics says it's best to leave interest rates to the markets and to prevent bubbles in house prices/land values by taxing them (which does not damage the real economy, and the receipts can be used to pay off national debt or reduce other taxes, which boost the real economy even more in a virtuous circle), but this is a separate debate. DBC Reed-onomics goes even further than this.

Are elephants the new cows?

Asks Anti-Citizen-One after spotting this tale of woe:

A 47-year-old telecommunications engineer died on Tuesday night in a freak accident when his car rammed an elephant at Nkunga forest on the Meru-Nanyuki road. Mr Dalton Mwachenga, who was travelling from Uganda, hit the elephant that then fell on his car...

Highway officers, who were manning a roadblock near the forest, rushed to the scene but could not rescue the man as there was a herd of about 50 elephants hovering around the scene...

Meanwhile, another car overturned as its driver evaded an elephant crossing the road...

What is puzzling is that people are complaining about the lack of road signs warning drivers that they are entering a forest. Wouldn't the fact that there are tall trees on each side of the road be a bit of a clue?

Wednesday 16 February 2011

"Test from mobile. Please ignore."

Pavlov's Cat pushes the 'blogging envelope.

Scale Of The Universe

Slide the slidy thing back and forth. I suppose this is the sort of thing that megalomaniac dictators play with on their evenings off.

Schools converting to 'academy' status

Is there any point? What are the pro's and con's?

Join the debate over at Mummylonglegs, who has to make the decision.

NOW That's what I call cashing in!

Throne Up

Yet another debt for equity swap by a bank

From the FT:

Commerzbank has taken long-awaited action to shore up its capital base, buying back some of its debt and issuing €626m ($835m) of shares...

Banks led by Credit Suisse on Thursday completed a quick placement of 118m Commerzbank shares, equivalent to almost 10 per cent of the bank’s capital, at €5.30 per share...

Some of the debt instruments in the buy-back offer trade at steep discounts to par value, partly because European competition authorities have stopped Commerzbank from paying the interest due on the debt as a condition for approval of the state aid given to the German bank...

Commerzbank will further benefit through buying back its debt at a discount. Analysts at Barclays Capital estimated that Commerzbank would book a post-tax gain of about €200m from the deal.

So this is the non-enforced (and hence the best) variation on the theme. The bondholders, who are sitting on unrealised losses, just sell their bonds at market value; the bank which buys back the bonds can book the bondholders' loss as their own profit (that's how accounting rules work!), so that profit counts as 'equity'.

The bank raises the money by issuing new shares for a similar value, so a bondholder is perfectly entitled to swap some of his devalued bonds into shares by selling the former and buying the latter.

Hey presto, the bank's capital ratio has improved a bit, risk/cost to taxpayer and depositors reduced and nobody has incurred any further losses; and if the bank's position improves in future, those who lost money on the bonds will make it back on the shares.

What's not to like?

That's another way of putting it.

From The Telegraph:

Lord Warner, who is drafting plans to reform the elderly care system, said it would be unfair to expect the working population to foot the bill for looking after their parents’ ageing generation.

He warned that the “squeezed” middle-classes face potentially the greatest burden, amid concerns that it is already too late to help ease the “catastrophic” costs likely to hit the recently retired... he [also] warned that the independent commission drawing up reforms for the Coalition would have to consider how to exploit the “big chunk of potential” funding currently locked up in housing.

As I said over at HPC:

The whole point of having a "State" is to provide low-cost mass insurance to spread costs and risks and rewards.

When Lord W says he wants to "exploit the “big chunk of potential” funding currently locked up in housing" then how about "the State" offering universal free elderly care for all without means testing and raising the money to pay for it from LVT?

So if you are a member of "the working population" it is your choice how much you want to contribute towards that care by living in a smaller or a larger house. And if you are lucky enough never to need old age care, well that's your good fortune, and the value of remaining healthy until you peg it surely outweighs the cost to you of chipping in for those who don't.

Separated at birth (3)

Tuesday 15 February 2011

[Amagerbanken] Denmark shows us how to do debt-for-equity swaps

Spotted by GolemXIV at Bloomberg:

Denmark is dealing with Amagerbanken under regulations introduced in October designed to ensure taxpayers don’t have to meet the bill when lenders fail. The bank estimates its assets amount to about 59 percent of liabilities, meaning that creditors, including holders of senior unsecured bonds on which a government guarantee expired Sept. 30 and depositors with more than the insured maximum in their accounts, will face write-offs of about 41 percent.

“The bank hasn’t collapsed and gone into bankruptcy like the Icelandic banks, but has been selectively bailed out with a transfer of assets and a partial transfer of liabilities,” said Simon Adamson, an analyst at CreditSights Inc. in London. “Normally when this happens, senior debt and deposits are protected, such is the sensitivity around them, but this is bank resolution with debt and deposit haircuts, rather than a simple liquidation.”

OK, this is slightly harsher than a normal debt-for-equity swap*, as it's not clear whether the bondholders would share in any upside if it turns out that the bank's assets actually turn out to be worth more than the current estimate, but hey. Denmark, like Iceland, has shown idiots in the USA, UK, Ireland etc how to do things.

* In an idealised version, bondholders give up part of the nominal value of their bonds (a repayable claim on the bank's assets) in exchange for new shares (a non-repayable claim), which if done properly leads to nobody losing (or gaining) money at the time of the swap (the market value of the new shares handed out = market value of the bonds cancelled), but hey.