Tuesday 31 March 2015

Daily Mail on top form

Spotted by Pyotr Wasik (who I still assume is Flashman) in The Daily Mail:

[Complete and utter bastard] Andreas Lubitz was signed off by two different doctors for the day of the Germanwings disaster but failed to tell his employers, it has been reported...

It also emerged today that his parents only discovered that their son was a mass murderer just minutes before the bombshell press conference by prosecutors in Marseille. His mother, a piano teacher, and father, a successful businessman, were understood to be in the French city at the time of the announcement, but kept separate from the victims' relatives...

The couple's £400,00 two-storey detached home in Montabaur, a town 40 miles from Bonn where Lubitz is thought to have grown up, was also searched by detectives.

Still Alice In Wonderland

From imdb and imdb:

On a golden afternoon, Alice Howland, a renowned linguistics professor who is happily married with three grown children, follows a White Rabbit who disappears down a nearby rabbit hole.

Her life begins to change when she tumbles into the burrow - and starts to forget words and then more in the merry, topsy-turvy world of Wonderland!

Memorable songs and whimsical escapades highlight Alice's Early-onset Alzheimer's Disease, which culminates in a terminal degenerative encounter with the Queen of Hearts.

Alice struggles to not only to fight the inner decay, but to make the most of her remaining time with friends, family - and an army of playing cards!

"Computers, a host of TV channels and smart phones: The simple indoor pleasures missed out on by yesterday's children"

From The Daily Mail:

They are the traditional childhood pastimes which often see children spending hours safely in front of a screen instead of coming home drenched and muddy after jumping in puddles, injured from falling out of a tree or picking up nasty infections from mud pies.

The dubious pleasures of playing outside are disappearing - as children choose to stay indoors playing video games rather than go out to make sandcastles and daisy chains. Dozens of indoor pursuits that now define childhood are activities that yesterday's children never had the chance to try...

David Hardy, spokesman for the Electro Attractions Group which carried out the survey, said:

"Nowadays, children have much more to keep them amused - computers, a host of TV channels and smart phones - something older generations didn't have. As a result, youngsters don't have to get dirty in the mud and puddles, be bored stupid by fresh air or get beaten up by bigger boys in the park.

"Forcing your children to suffer these traditional activities occasionally can be a great way of reminding them just how great it is simply sitting in front of a computer or TV screen.

"But that's about it, really. You've made one daisy chain, you've made 'em all, frankly."

Tories and Labour - both deliciously wrong on tax, as usual.

From City AM:

Labour and the Conservatives will today lock horns over the levels of tax imposed on companies, as business takes centre stage in the fiercely contested General Election campaign.

Real policy differences or Indian Bicycle Marketing?

Labour will announce today that, if elected, the party’s first Budget will cut business rates, in a move they say will be worth an average of £400 for 1.5m small businesses.

Pandering to the landowners. Boo.

During a visit to a small business, Balls will say: “Under the Tories, higher business rates have cost firms an average of £1,500 a year and are an ever bigger part of their tax burden. So instead of another corporation tax cut for large comp­anies which helps fewer than one in 10 firms, we will cut and then freeze business rates for small firms instead.”

What the Tories have proposed, quite sensibly, is to have a flat rate of corporation tax of 20% for all limited companies, instead of 20% for small ones and 21% for large ones.

Yet the Tories argue that such a move would equate to a one per cent rise in corporation tax, as it would mean reversing a cut from 21 per cent to 20 per cent that will come into force tomorrow.

No, keeping the rate at 21% is not a rise, it is simply not a reduction.

Treasury minister David Gauke said: “You have it now in black and white – Ed Miliband and Ed Balls will whack up corporation tax in their first budget. This would be the first time corporation tax has risen in over 40 years.”

Keeping the rate the same is not exactly "whacking up" corporation tax, is it? Sticking 2.5% on VAT or 2% on National Insurance, that's closer to "whacking" and that was the Lib Cons who did that (the fact that Labour would probably have done it had they won in 2010 is neither here nor).

But he is lying.

My trusty tax tables tell me that until 2006 or so, Labour experimented with corporation tax rates of 0% and 10% for very small companies and 19% for small/medium sized companies (a stupid idea if there ever was one).

Nonetheless and despite that bloody great lie, the Tories win this one on points. Cutting and simplifying corporation tax is clearly better than reducing business rates. But no mention of the biggest taxes on business (rather than on 'business owners') which are VAT and NIC.

What we need with business rates is a revaluation, which is due to happen in 2017 and which will solve a lot of problems...

BNP Paribas Real Estate predicts that following the 2017 re-evaluation, the Uniform Business Rate – the multiplier used to calculate rate payers’ bills – will rise to a record 50p in the pound England, earning the government £26bn. It named retailers in Leeds and Bristol as likely winners from the next revaluation, with their bills likely to fall by 40 and 20 per cent respectively.

Mayfair and other prime West End offices are also set to benefit with no change in their rental values since the peak in 2008. However, retailers on Bond Street and Oxford Street face rises of 60 and 40 per cent. Offices in King’s Cross face a 79 per cent rise in rents.

Monday 30 March 2015

Community generated land values.

All from today's Evening Standard:

Exhibit One (no link)

State schools in London risk becoming victims of their own success by pushing house prices up so high that teachers cannot afford to live near them, a senior mayor has warned.

Exhibit Two

A popular vegetarian restaurant is set to close after 40 years of trade in Covent Garden because the owners cannot afford to pay spiralling rent prices.

Food For Thought, in Neal Street, runs as a co-operative and counts celebrities and West End stars as regular customers.

Exhibit Three

The West End’s historic Chinatown will “disappear in five years” as oriental restaurants are squeezed out by rising rents and soaring property prices, traders said today.

The cheap and cheerful grid of streets lined with red lanterns and restaurants between Leicester Square and Soho have been popular with theatre-goers, office workers, late-night revellers and tourists since the 1950s.

Landlords Shaftesbury PLC, which owns 71 premises in the area, saw profits grow by almost 50 per cent in the six months to the end of March 2014.

A spokesman for Shaftesbury said: “The company, whose ownership in Chinatown has been built up over 50 years, has demonstrated a long-term commitment to supporting the local community through its strategy of creating lively, prosperous and interesting destinations in the West End for visitors, those working in the area and residents."

Exhibit Four

A run-down row of Edwardian villas once home to a community of squatters has been restored after decades of neglect — with some flats now up for rent at more than £3,000 a month.

The six blocks in Rushcroft Road, Brixton, were seized back by Lambeth council during violent clashes in 2013. During the eviction, squatters, some of whom had lived there rent-free for more than 30 years, fought with bailiffs, with furniture set ablaze in the street.

The 47 properties have been gutted and renovated in a project funded by the sale of half the block to private developers for a reported £2.5 million.

Three cheers for Jeremy Hunt

From The Daily Mail:

A panel of scientific advisers had recommended in October 2013 that the vaccine should not be introduced as it was not deemed cost-effective. But ministers told the Joint Committee of Vaccination and Immunisation to carry out another assessment and this concluded last March that it should be offered.

The Government then spent almost a year negotiating with drugs manufacturers trying to agree a cheaper price. On Saturday, the Mail highlighted how the jab was being denied to babies because of the cost row. Nearly 800,000 babies each year would be eligible for the jab at an average annual cost of £16million.

It's an impossible problem*, and fair play to Jeremy Hunt for going on telly and fronting it out.

The other good news is that a lot of health services around the world take the price the NHS have negotiated as their benchmark price and end up paying the same low-ish amount.

* On the one hand, the marginal cost to the manufacturer is pennies per dose.

But the value to the 'customer' is huge. The approximate cost to the NHS can be estimated in £millions, but how do you estimate the cost of the death and disability of possibly hundreds of people a year, i.e. the value of avoiding it?

The NHS wants to pitch the price closer to the pennies per dose (plus a reasonable contribution towards R&D costs) and the manufacturer wants to hold out for a price which is nearer the value to the customer. The difference is 'rent'. This wasn't an example of the UK government being hard hearted or intransigent, it was the manufacturer who was holding us all to ransom.

And how do you trade off that cost/benefit with the cost/benefit of all the other things people would like the NHS to do? The NHS/Jeremy Hunt's basic argument is (or should be) "Look, we are terribly sorry for the tragedies which have happened over the past couple of years, but with the money we've saved, we'll be able to treat lots of other people for other things."

Sunday 29 March 2015

"Now a good time to buy euro?"

Asks Random here.

I have absolutely no idea, if in doubt, look at a longer term chart and ask yourself whether EUR really has bottomed out yet…

Friday 27 March 2015

"Julia Roberts given Ebola all-clear after experimental drug treatment at Royal Free"

Click picture for more.

This is what you want, this is what you get.

From yesterday's City AM:

On 30 March when parliament is dissolved, as the majority of MPs will gear up to embark on the toughest part of their election campaigns, some will bid farewell to the Commons for the last time as they step down from public life.

But among the 77 MPs leaving office, many will be left with a valuable memento of their time in office - a second home part-subsidised by taxpayers.

Now research by City A.M. and online estate agent Emoov estimates that between them, MPs stepping down at the end of this parliament could stand to make more than £9m of gains on properties previously funded by taxpayers.

It is quite surprising that two of the biggest cheerleaders for Home-Owner-Ism, City AM and the TaxPayers Alliance (or more accurately, the financial backers of those two), who are always pushing for more direct and indirect subsidies to landowners and ideally a tax exemption for all land based profits, are taking the line that maybe massive windfall gains on London homes are not so hard-earned after all.

There's no honour among thieves is there? Without these hard working MPs, nobly nodding through Help To Buy, bravely blocking Council Tax revaluations and heroically hiking VAT and NIC to finance a Council Tax freeze, the backers of City AM and the TPA would be well out of pocket.

Thursday 26 March 2015

Sterling: still not overvalued

Here's a chart of GBP vs a basket of other major currencies from 2009 onwards.

Clearly, it fell rather dramatically for three years from late 2007 to late 2010, then it scraped along the bottom for two years, but inevitably it has now climbed back a bit to be six per cent lower than its long run average*; there's no reason it wouldn't go back to that long run average over the next year or two.

That all depends on whether the other countries' economic policies are more or less stupid than ours, chances are they will all be equally stupid.

* Because of of subtle difference between harmonic and mathematical averages, the long run average for GBP is actually 0.96, not 1.0.

Changing the rules of football. Slightly.

From City AM:

England's leading football clubs have left their loss-making ways behind and entered a new era of profitability after mustering record-breaking pre-tax profits last season...

The profit was the result of a 29 per cent rise in revenues across the division to £3.3bn, driven by booming broadcast contracts and commercial growth, allied to the impact of cost-control measures such as the financial fair play (FFP) rules initiated by European body Uefa.

Clubs’ return to profitability heralds the end of the so-called prune juice effect, which repeatedly saw uplifts in television rights income largely swallowed up by instant wage inflation. Player salary costs rose just six per cent in 2013-14, while the Pre­mier League’s wages-to-turnover ratio – a key indicator of financial health among clubs – fell from a record high of 71 per cent in 2012-13 to 58 per cent*, its lowest level since last century.

It appears that the football clubs have finally worked out how to prevent any increase in revenues going straight into higher players' wages, so well done them!

* To cut a long story short, out of the £800 million extra revenues, they spent 'only' £100 million on higher salaries and an extra £200 million on other stuff, meaning that last year's overall pre-tax loss of £300 million turned into a very slim net profit of £200 million.

What is it with the 'Rich'?

On R4 Today yesterday there was an item on Virgin's launch of an Entrepreneur Prize.  They had Branson talking about it / indulging in more self-promotion. Then they asked him about UK and Europe. He replied with something on the lines of:-

"Well, I won't be popular for saying this, but I think it would be a very bad for business for the UK to leave the EU.  Because 50 years ago when I started in business and was trying to sell records to Europe [he probably meant France] the added a 38% import duty on the records made it impossible for me to export".

Leaving aside that I read somewhere 'allegedly' that RB was involved in a tax fraud, which involved pretending to export record albums, he has as you would expect got the economics exactly the wrong way round.

His business did not 'lose sales' by being unable to export to Europe low priced records. It was the citizens of Europe that lost out by being denied the opportunity by their governments from saving by buying at low prices.

Europe has about 350m people. The global population is about 8Bn.  That leaves about 7.65Bn that Branson could still sell to.

The main lesson from this is that Branson might want private enterprise but he sure does not want free enterprise.

Wednesday 25 March 2015

Reader's Letter Of The Day

Emailed in by David H, from yesterday's Evening Standard:

Has anyone really looked at house prices and run any decent comparisons?

In the Standard yesterday there was an advert for one/two bedroom flats in Eltham starting at £300,000. On traditional metrics of 3.5 times salary, a couple would have to earn a combined £85,000 a year to afford one.

In most circumstances you would have to say they were well off, yet they could only afford a one-bed in Eltham. Bizarre.

Jason Merritt.

George Osborne talks sense: shock.

From City AM:

BRITAIN’S lenders face having to pay the bank levy forever, as the chancellor yesterday revealed that the crisis-era tax was here to stay...

“I think the bank levy is going to be here to stay. It is perfectly reasonable as a society to ask the banking sector to make a contribution,” the chancellor told MPs on the treasury select committee.


“I was very clear in 2010 when I replaced the bonus tax with the bank levy, that the bank levy was a more effective way of getting the banking sector to make contributions.”

It is and it does.

Osborne hiked the levy for the ninth time in his Budget last week, increasing it to 0.21 per cent of UK banks’ global balance sheets. The initial plan was to set it at just 0.05 per cent of the balance sheet.

Osborne had targeted revenues of £2.5bn from the tax, hiking the rate as banks shrank in order to maintain that level of revenue. But under the latest plan, it will increase to take £3.7bn per year.

That's part of the point; to get banks to "shrink their balance sheets"; in other words to stop making the very low margin but high risk loans to land price speculators. So to keep revenues constant, the headline rate has to increase.

It's still only a paltry 0.21% though, which barely nibbles into banks' overall lending margin of 2% (i.e. mortgage interest average 3%, deposit interest average 1%, or whatever).

Analysts fear that such a large loss from the banking system will have larger ramifications for the wider economy.

"Large loss"? Get a grip. Banks hand out £10 billion a year in bonuses; the financial sector boasts that it pays over £50 billion a year in tax (mainly PAYE plus corporation tax and other bits and pieces). UK gross bank balance sheets are in the many trillions; if you net off inter-bank lending and other pure accounting entries, they are about £1,800 billion. Check: £1,800 billion x 0.21% = £3.8 billion.

“If that £3.7bn was capital that banks levered up into lending, that is easily £75bn of lending that could have been provided to the economy,” said analyst Joseph Dickerson from Jefferies. “I’m not sure it makes a lot of economic sense. It is like a sin tax, like on cigarettes, and governments usually like to have more taxes.”


Loans create deposits (especially in a land price fuelled bubble system). The constraint is what people are willing to borrow; once they've 'borrowed' that freshly printed money, it goes straight back into the banking system as a deposit.

The mechanism by which the bank asset tax depresses lending volumes is because the very, very low margin loans are no longer profitable; hence and why the sensible medium term policy would be to hike the bank asset tax to 1% or even 2% of assets (there are plenty of other bad taxes we could get rid of, like Stamp Duty or the 45% income tax rate, just to make it fair all round and fiscally neutral).
Dinero adds: "Bank capital is paid in capital. Its not derived from lending. See the document. Basel III capital"

1. Where did I say that "bank capital" was derived from lending? I didn't, that is an irrelevance and not central to this debate. I said that "loans create deposits". A well run bank doesn't actually need any share capital (Basel notwithstanding), and strictly speaking, building societies do not have any share capital at all.

2. If bank capital is issued in exchange for cash, then what does that cash represent? Ultimately it represents somebody else's debt. If different people have some spare cash, they can either give it to the bank as a deposit, or give it to the bank in exchange for new shares (or half-way house, give it to the bank for bonds). It's a legal distinction rather than an economic one.
Dinero again: "and so the statement "If that £3.7bn was capital that banks levered up into lending, that is easily £75bn of lending that could have been provided to the economy," is broadly correct."

No it's broadly complete and utter bollocks, this is special pleading put out by the banksters. The total amount they can lend is restricted only by the amount that people are prepared to borrow. Whatever they lend out comes straight back in again, as deposits, as bonds or as share capital. If they want people to put the money back in as share capital rather than deposits, they will just reduce interest on deposits and increase dividends on shares.

"Capital adequacy requirement is to be 10%
Mortgages have a risk weighting of 1/2
3.7 bn times 10 = 37
37 times 2 = £74 Bn
the £3.7 Billion goes from retained earnings, bank capital and so is no longer available for the capital adequacy criteria."

Read the post! That £3.7 bn is only a very modest increase in their current overall tax bills and only one-third of the bonuses they award themselves.

And finally... lending to land speculators (akak "mortgages") is not lending to "the economy", is it? It's just an increase in debts for some people and deposits for other people.
Dinero: "" If they want people to put the money back in as share capital rather than deposits, they will just reduce interest on deposits and increase dividends on shares."

That would only work if people were happy to convert their no risk deposit at the bank to an at risk capital at the bank. That would satisfy capital adequacy, but its not very likely to happen."

Again, nope.

Apply common sense or read my earlier post "Economic Myths: Gearing reduces the cost of capital".

The total 'risk' of borrower defaults etc. faced by 'the bank' is the same however it is funded. And that 'risk' is ultimately borne by its funders (be they depositors, bondholders or shareholders).

From a depositor's point of view, the more share capital there is, the safer he is.

But the same applies to shareholders. The more share capital there is, the safer each individual one is.

Imagine a bank that was ONLY funded by share capital. The shares would be very, very safe indeed. Even Northern Rock only managed to lose about 5% of the money it had lent out on reckless mortgages.

Or imagine a bank that was ONLY funded by deposits, i.e. a building society in the good old days. Putting your money in a building society is technically slightly riskier than in a bank, but the difference is negligible and nobody ever gave it a second thought.

(The £85,000 deposit guarantee clouds this picture, but then the government always does.)
Dinero: "People would not want to convert their deposits to share capital..."

Yes they would, I just explained that. If a mortgage bank were 100% funded by share capital, then its shares would trade at close to par and be easily buy-able and sellable; banks would redeem them when they had spare cash, pay very modest dividends that are only slightly more than normal deposit interest, and worst case in really bad years, you'd not get any dividends. They would be so close to being 'cash' as makes no difference.

"... and so that is not a route by which the retained earnings that are transferr5ed to the HM Treasury's custody by the levy could be replaced. So the amount of assets allowed to be held in line the capital adequacy regulation is reduced by the bank levy. "

A tax is a tax is a tax. Banks already claim that they pay £50 billion a year in tax, what's another £3.7bn?

That tax can be paid out of retained profits (i.e. share capital); or it can be paid by reducing deposit interest, or the banks could reduce bankers' bonuses by one-third. Or downsize their palatial head offices a bit etc etc etc.

The quoted bankster is talking shit, you can bend and twist it any way you like. If you follow that fucker's logic, banks should not pay any tax at all.

Tuesday 24 March 2015

Fixed term Parliaments - they didn't think it through properly.

Before everybody drifts off topic in the comments, as a general rule, I'm all in favour of fixed term governments, most other civilised countries seem to have them. That's not the point here.
If you ask me, the reason that the current government decided to have five-year fixed term parliaments is because the elections to the European Parliament are held every five years and have been since 1979. In 1979, Jim Callaghan had to call a General Election because their five years were up, but since then no UK Prime Minister has called a General Election in the same year as a European election*.

They have switched between calling an election after four years (if things were going well for them) or hanging on for five years (if things were looking bad for them), but carefully avoided having a General Election in the year that a European election was due to happen (starting, ironically, in 1983 with Thatcher, thus avoiding a clash in 1984).

UK political parties spend a lot of money and effort on their election campaigns, so having a European election and a General Election in the same year would completely exhaust them, so over time, an unspoken agreement has been reached whereby they use the European elections as a dry run for the General Election, in other words, they hold the General Election the year after the European election (which happened in 2004/2005; 2009/2010 and 2014/2015). Having been through this mill, it's a good way of doing things.

This all came to a head in 2010. There was a European election in 2009 (so the next one is due 2014) and the Lib-Cons won the General Election in 2010 (so the next General Election could have been in 2014 or 2015). As the two coalition parties and the Labour opposition are pro-EU and do not countenance leaving it in their wildest dreams, they declared an armistice and agreed in advance that the next General Election definitely would definitely not be held in 2014; it would be postponed until the year after the next European elections i.e. in 2015.

So the next European elections will be in 2019 and the next General Election will be in 2020, everybody knows what they are doing.
So far so good.

What they forgot was the four-year cycle of the elections for the Scottish and Welsh Assemblies**, which were held the first time in 1999 in Scotland and in Wales. So far there hasn't been a clash between those and the UK General Election.

But of course, sooner or later the pre-existing four-year cycle and the new five-year cycle have to coincide, which happens to be this year 2015. And the parties don't want that either. So the Scots and Welsh duly agreed to defer their elections until 2016, a year after the General Election.
Again, so far so good - but here's the fun part...

If the Scottish and Welsh Assemblies have elections in 2016 and then want to have them four years later in 2020, that will clash with the General Election due to be held in 2020, so they'll have to defer until 2021 and so on until the end of time.

They might as well have just decided to extend the lifetime of the Scottish and Welsh Assemblies elected in 2011 by a year and gone straight over to five-year elections.

The same applies to the Greater London Assembly, which has had a four year cycle so far (2000, 2004, 2008, 2012) none of which clashed with the General Election, but that is going to happen in 2020, so the 2020 GLA election will no doubt be postponed until 2021.

* This is a complete misnomer, but I will use it for convenience.

** The Scottish Assembly has started calling itself the Scottish Parliament, I don't know how that happened.

"Methadone programme 'is a black hole', says drug misuse professor"

From the BBC:

The methadone programme in Scotland is "out of control", an expert has warned.

Prof Neil McKeganey, from the Centre for Drug Misuse Research, said "it is literally a mathematically defined region of spacetime exhibiting such a strong gravitational pull that no particle or electromagnetic radiation can escape from it, into which people are disappearing".

Prof McKeganey has earned praise from English literature professors and scientists at the CERN large hadron collider in Switzerland for his excellent use of English and deep understanding of astrophysics.

Readers' Letter Of The Day

Nominated by DBC Reed from The Guardian, the good bit is near the end:

Austerity policies have failed everyone but the super-rich, bankers and landlords who have benefited from the government’s tax cuts, bonuses and measures to boost house prices, but not home building. We call for an end to austerity policies.

We need to invest in a future for the majority of the population. That’s why we’ll be supporting the People’s Assembly Against Austerity national demonstration and festival against austerity on Saturday 20 June.

Len McCluskey Unite
Mark Serwotka PCS
Christine Blower NUT
Mick Whelan Aslef
[and 47 of the other usual suspects]

Monday 23 March 2015

Rent seekers vs rent seekers (2)

From The Evening Standard:

The British film industry is being squeezed by Hollywood blockbusters and “high-end” TV series taking advantage of tax breaks, a movie boss warned today.

Christine Langan, head of BBC Films, said that while the tax breaks for films were a good thing, the extension of support for the most expensive TV dramas such as Wolf Hall will push up UK costs as producers “fight for space and crew”.

Ms Langan, who was behind international hits including Philomena, An Education and Saving Mr Banks, said that it was important to safeguard and nurture the low-budget British film industry from growing competition.

Rent seekers vs rent seekers

From The Telegraph:

Farmers face a threat to hundreds of millions of pounds in extra income from their land, as mobile operators mount a campaign to slash the rent they pay for mast sites.

A coalition of all four of Britain’s mobile operators – EE, O2, Three and Vodafone – is urging the Government to intervene to give them the similar rights to energy and water companies to build out their networks.

According to a report commissioned by the operators from Deloitte and seen by The Telegraph it could mean the average annual rent for a rural mobile mast plummeting from £7,500 to less than £240. Many farms host more than one mast.

Urban landlords could also take a big hit if the mobile industry gets its way. They charge an average of £9,200. It would mean total savings for the mobile operators of up to £271m, according to Deloitte.

How on earth is that "income from land"?

The value of a mobile phone mast is purely a function of how many people live within its radius. In that sense, that value belongs neither to the agricultural landowners nor the mobile phone companies, does it?

Fun Online Polls: The CPI shopping basket & Your favourite season

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

Which of the following were just added to the CPI 'shopping basket' (multiple answers allowed)?

Craft ales - 25 votes
Spotify - 19 votes
Oversized headphones - 17 votes

Irony - 15 votes
Checked shirts, buttoned at the top - 8 votes
Brown lace-up shoes - 7 votes
Vinyl - 7 votes
Chunky knitwear - 6 votes
Skinny jeans - 6 votes
Tasteful tattoos - 6 votes
Red rimmed spectacles - 5 votes

By some miracle of the wisdom of crowds, the first three items were in fact the correct answers, I made the rest of them up just to go with the hipster theme.

Thank you everybody who took part.
Over the past few weeks, there has been the occasional hour or two where it was warm enough to sit outside, for the first time in months.

So I've decided that although I like Xmas best of all, summer is definitely my favourite season. I'd be quite happy if it were summer all year round, with winter restricted to a couple of weeks either side of Xmas, and with obligatory snow from Xmas Eve through to Boxing Day.

What does everybody else think?

Vote here or use the widget in the sidebar.

Sunday 22 March 2015

There's Lessons in this - somewhere


First, he gets done for making a lot of money out of the risk premium made available by the State by it criminalising one set of recreational drugs.

Then he sets up a brewery to market a not-criminalised recreational drug.

Then he gets done - so it seems - for not paying enough, or any VAT. Probably the worst tax in the world.

Saturday 21 March 2015


Spending Targets

From the Telegraph

More than two thirds of Britain’s aid budget is being given to organisations such as the EU and the World Bank to help meet official targets, despite billions of it going unspent for years, an investigation has concluded.
MPs found that £6.3 billion of Britain’s aid budget is being handed to major agencies to help hit the Government’s target of spending 0.7 per cent of the nation’s income on overseas aid.

Everyone should see Falling Down at least once (contains swearing)


From Buzzfeed:

2U offers small class sizes and technology that allows interactive courses to be conducted live online. Its degrees cost exactly as much as they would if you attended on campus. Yale said it would charge $84,000 for its online medical science degree, and says it will be identical to the degree earned by students on its campus.

At the town hall meeting in the wake of Yale’s announcement, that claim—which is one of 2U’s biggest selling points—was a target of students’ criticism, according to two people present. “At the very least, it should be a separate degree,” said Chandra Goff, a recent graduate. “But the sentiment was also that it shouldn’t go forward at all.”

“This is a scar on our credential,” said Daniel Cervonka, an alumnus of Yale’s physician associate program who attended the meeting. “To offer a Yale degree online is not a good idea… It’s devaluing the degree, and it’s devaluing the profession.” Cervonka is the director of the PA program at the University of Bridgeport.

Graduates want less people with their qualification. Lecturers don't want a couple of lecturers doing the courses for all students.

Friday 20 March 2015

Daily Mail on top form

From The Daily Mail:

* Jamila and Jalila Henry, 21, are identical twin sisters from south London
* Convert Jamila has been caught travelling to Syria on her twin's passport

… At her flat in Balham, South London, yesterday, Jalila would say only that she had ‘loads to sort out’.

At her £500,000 home in nearby Streatham, the twins’ mother, Patricia Henry, 50, said she was ‘getting together with her relatives’ to discuss how to respond to the arrest.

Short List

People who called themselves "Dr." without being doctors, but who could later officially use that title.

(I have 2 so far)

Thursday 19 March 2015

UKIP fun, UKIP fun - this one will run and run.

I set up a Fun Online Poll last year, results as follows:

How many of UKIP's 24 MEPs will leave the party by 2019?

None - 18%
1 to 3 - 30%
4 to 6 - 14%
6 to 9 - 12%
10 to 12 - 9%
13 or more - 17%

A year into the new European Parliament, so far they have lost two (h/t Rohen Kapur by email):

Ukip has suspended another MEP, Janice Atkinson, one of its highest-profile female parliamentary candidates, over allegations of a “serious financial nature”.

The decision to withdraw the whip from Atkinson comes less than two months after Ukip suspended Amjad Bashir, also an MEP, over financial matters just before he defected to the Conservative party. He strongly denied any wrongdoing.

So, yah boo sucks to those who voted "None" and a provisional pat on the back to those who chose "1 to 3", but I'm sticking with my original prediction of "6 to 9", which is looking rather more likely now - if one leaves and/or gets caught with fingers in the till and/or falls out with Mr N. Farage every year, then we are bang on target.

James Higham is a bit more fundamentalist about this.

Budget fun

The most stomach churning part of yesterday's Budget speech was the Indian Bicycle Marketing at the beginning, suggesting that Labour was the party of high spending and deficits.

The official version reports it thusly:

We’ll also redeem the last remaining undated British Government bonds in circulation. We’ll have paid off the debts incurred in the South Sea Bubble, the First World War, the debt issued by Henry Pelham, George Goschen and William Gladstone.

Osborne actually added a reckless ad lib at this stage, from The Telegraph's live reporting:

"We will pay off debts occurred in the South Sea Bubble, the Second World War, those incurred by Pelham, Gladstone. Those raised by Gordon Brown will take a little longer to pay off."

Which, as Matthew Holehouse points out, is bold, given this government has racked up more [National Debt] than Gordon.

This paints Labour into a nice corner; they can't pillory the Tories for overspending because that's supposed to be their policy.

Those who have absolutely no policies on such lofty matters are free of the constraints of IBM and can get a bit closer to the truth:

"Ukip leader Nigel Farage branded Mr Osborne's statement the "long-grass economic plan", saying: "This Government has evidently failed in its promise to the British people to eradicate the deficit and whilst it took Labour 13 years to double the debt this Government has done it in five."

There are different ways of looking at this, handy charts and tables at Economics Help.
The only bit of good news in the Budget was that Osborne has cranked up the Bank Asset Tax a bit, even though he's doing it wrong:

“This is a three-fold increase in the bank levy in just four years and once again is anti-competitive for our own UK banks. It will hit UK headquartered banks hardest as it’s a tax on their entire global balance sheets, whereas foreign banks in the UK are only taxed on their UK liabilities,” said EY’s Anna Anthony.

“The constant tinkering with the tax regime for banks in the UK is unhelpful, and in the long-term unsustainable – the industry will definitely be looking for a commitment to a more certain tax environment in the future.”

The Bank Asset Tax is a splendid tax and does not make banks 'uncompetitive' as banks are the very essence of a cartel; but ideally it would only be applied to domestic bank assets or liabilities. Then every country can choose its own rate independently.

Wednesday 18 March 2015

My top twelve blogs

I've had to transfer one 'blog from "Top Twelve" to "Dormant and occasional".

Whoever is the first to nominate a 'blog in the comments, be it their own or somebody else's, gets the spare place in the "Top Twelve".

We want plates!

Via Pubcurmudgeon, something we can all agree with.

Ricardo's Law of Rent, sort of.

The Homeys don't really deny any of this, they just see land as an 'investment opportunity' rather than 'privately collected tax' or 'private appropriation of publicly created wealth'.

From today's City AM:


Over the last decade, we have seen the rise and fall of many housing-related indicators – from house prices, which fell 20 per cent and have subsequently bounced back by the same percentage, to private house-building, which is still 40 per cent below its 2007 levels.

The one measure that has hardly budged has been the proportion of average earnings accounted for by private rent. This measure has tracked in a consistent, narrow range of 31 per cent to 37 per cent, and has averaged 33 per cent since the fourth quarter of 2004. The stability of this measure is particularly attractive to investors.

That one-third figure is about right (it drifts up gradually as the economy grows, which is why the proportion is higher in high-wage areas than in low wage areas).

But the total rental value of land and buildings increases in line with the economy, and bears little relation to the cash cost of just providing the building. It must be far higher or else location/land itself would have little value; this is also evidenced by the fact that the rent for physically similar houses are wildly different in different parts of the country, even though the running costs are much the same.

It's not like a hire car, where the rental income declines over time and which has to be scrapped after ten years; and indeed where the daily charge for similar cars is much the same across the country.


a) rent is just privately collected tax. Higher incomes = more income tax; higher incomes = higher rents, and

b) that one-third gives us a good guide to the potential amount of revenue from Land Value Tax. Expressing it as one-third of gross income is far less meaningful than expressing it as half of net income after tax; get rid of income tax etc. and rental values would rise to nearly half of GDP. Seeing as a sensible government only needs to spend about one-third of GDP, that leaves plenty left over for personal tax-free amounts or a modest Citizen's Income (same thing, really).

That was then, this is now.

BBC, December 2013:

The Scotch Whisky Association (SWA) has urged the UK government to abolish the automatic annual increase in duty on wines and spirits.

The industry body is fronting a campaign to encourage consumers to raise the issue with their MPs. It said the alcohol duty escalator was damaging the domestic market and punishing consumers when household budgets are tight.

The Treasury said 90% of Scotch whisky was exported and unaffected by UK duty.

Quite correct.

Although UK alcohol duty (and especially spirits duty) is far too high (with VAT on top, of course), it only affects domestic demand as it is not levied on exports; output is fairly fixed in the short term, so all things being equal, higher domestic duty is 'good' for exports. The same logic applies as it does to domestic duty on imports, which is 'bad' for imports.

That economics Wunderkind Osborne has now finally decided to firmly grasp the wrong end of the stick and came up with shit like this in his Budget speech today:

Mr Deputy Speaker, we want to help families with simpler taxes – and with lower taxes too...

And to back one of the UK’s biggest exports, the duty on Scotch whisky and other spirits will be cut by 2% as well.

Quite clearly, all things being equal, this will reduce exports of whisky.

He is starting to get it.

Philip Booth of the IEA has been fairly Home-Owner-Ist in the past, so I am heartened that even he can see the flaw in the idea of exempting main residences from Inheritance Tax.

From today's City AM:

Some Conservatives are currently pushing plans to increase the amount of an estate which will be exempt from Inheritance Tax by the value of a family’s primary residence up to £350,000. This will save many families up to £140,000.

Tax rates should be low and flat. Tax exemptions lead to discrimination and distort economic behaviour.

If this tax change goes through, two families with identical total assets could find themselves paying vastly different amounts of Inheritance Tax if one of the families invested in shares and the other invested in their home. Such discrimination against business investment is wholly unjustified. It adds to the already heavy tax discrimination in favour of owner-occupation.

The proposal will encourage investment in housing rather than in other forms of investment. Given the fixed supply of housing due to planning constraints, the result will be higher house prices. It will also encourage older people to remain in larger properties rather than downsizing, moving into more appropriate sheltered accommodation, or moving back in with their family.

The incentives will not be trivial. A 90-year-old woman, for example, living in a four bedroomed house in Leicester might pay an extra £100,000 in Inheritance Tax by choosing to move into sheltered accommodation, or an extra £140,000 by choosing to be cared for in her son’s or daughter’s house.

So far so good.

He then goes off on a tangent with some wild suggestions about reforming/simplifying IHT which are
a) administratively unworkable, and
b) miss the point. IHT raises barely more than the TV licence fee and they could get that money in much more easily in other ways (like a council tax rebanding, or just sticking 15% on Council Tax).

But hey, it's a start.

Tuesday 17 March 2015

Fun Online Polls: The nation's shopping basket

Inspired by The Daily Mail.

Vote here or use the widget in the sidebar.

1970s style policing

From the BBC:

A former detective has said three investigations into Cyril Smith sex abuse allegations were stopped.

Retired Det Sgt Jack Tasker, who served with Lancashire Police, carried out the third investigation, following two by the former Rochdale Borough force.


If you'd suggested it as a name for the lead character in a Sweeney-style 1970s TV series, they would have laughed it off for being too obvious.

Life copies satire

Daily Mash, 10 February 2015:

RAPPER Kayne West has quit the music industry to devote all his energy to twattish behaviour.

He said: “I am at a point in my life where I ask myself, what really fulfils me? Is it the arduous process of recording music and touring, or is it simply pissing off others?

“I would say the latter.”

From The Evening Standard, 17 March 2015:

A petition has been launched in an attempt to prevent Kanye West from headlining Glastonbury Festival...

A change.org petition – titled Cancel Kanye West's headline slot and get a rock band – reads: “Kanye West is an insult to music fans all over the world. We spend hundreds of pounds to attend glasto, and by doing so, expect a certain level of entertainment.

“Kanye has been very outspoken on his views on music....he should listen to his own advice and pass his headline slot on to someone deserving! Let's prevent this musical injustice now!”

Fun Online Polls: Grammar Schools

The results to last week's poll are as follows:

Do you support the idea of selective state grammar schools?

Yes 87%
No 13%

Thank you to everybody who took part (a good turnout with 111 votes) and I think that the results speak for themselves.
Nothing springs to mind for this week's Fun Online Poll, I'm afraid.

Monday 16 March 2015

Location, location and, er, condition

In some cities oop north, houses are being sold for as little as £1, on condition that the buyers repair them and then lives in them for five years. In Stoke on Trent the local authority is even giving interest free loans to the buyers and it now turns out that the renovated houses are worth £60,000.

So where has all this value come from?

The building's location hasn't changed. Some of it has obviously come from the repairs made to the building, but it seems unlikely that the entire value came from that source, after all, the council only lent them £30,000 to begin with. Perhaps the council sold at undervalue, but if you have a house which needs a large amount of money spending on it and no-one wants to rent anyway, what is it worth? Up in Durham, landlords have just abandoned houses as not worth repairing.

There's a clue a bit further down the article: "We're looking forward to it becoming a family area again where we can bring up children and people know their neighbours" says one of the new homeowners.

That suggests the rise in value has been partly due to "gentrification", i.e. the aggregate effect of. many properties being repaired in a given area is much greater per property than the cost of repair. Not only that, however, but the aggregate effect in reducing location value of many properties being in need of repair can be so great as to wipe out the location value entirely.

This Utter Crap...


BenJamin is doing his best against the odds in the comments. (I have run out of 'free' articles).  Help him out.

Sunday 15 March 2015

Economic Myths: I can remember when mortgage interest rates were 15 per cent...

This is another one which the Baby Boomers like to pull out of the bag, sub-text: todays' first time buyers have never had it so good; high house prices are not a problem etc.

Superficially, the sums are like this:

Nowadays: thirty year mortgage of five time wages, interest rate 3.5%, mortgage repayments incl. principal repayments as % of wages = 25%.

Good old days: twenty-five year mortgage of three times wages, long run average interest rates average 8%, mortgage repayments as % of wages = 25%.

If interest rates nearly double to 15%, superficially you would expect mortgage repayments to nearly double.


What these people conveniently forget to mention is that inflation was pushing up their wages/eroding their mortgage at a rate of knots.

If you calculate annual mortgage payments as a percentage of inflation-adjusted wages, the picture for somebody who took at a twenty-five year mortgage of three times salary in 1970 is as shown.

In other words, there were a couple of years of pain at the onset, but after ten years, real mortgage payments had halved and after fifteen years they were a laughable 5% of wages:

RIP Greyfriars Bus Station

It's the most hideous building in Northampton, which is something of an achievement in itself. But, it's also the place I took my first independent bus ride to at 13, the place I came home from after earning my first pay packet at 15, the place I changed buses on the way to losing my virginity at 17 and the place where I bumped into the woman who is now my wife at 19.

To others it represents terrible architecture, but to me it was part of my adolescent history. That doesn't mean it shouldn't be blown up, but I'm a little nostalgic about it going.

Friday 13 March 2015

"Scottish party leader admits never taking cannabis"

From the BBC:

Three of Scotland's four main political party leaders have said being fairly normal, they had taken cannabis when they were younger.

Nicola Sturgeon and Scottish Conservative leader Ruth Davidson both admitted that they had made the beginners' mistake of combining it with alcohol and it had made them feel sick. Lib Dem leader Willie Rennie said he had taken it "in his youthful days", adding that he still felt pretty youthful every now and then.

However Scottish Labour leader Jim Murphy told the Glasgow University debate between the party leaders that as a terminally dull and joyless person who had always had one eye on a political career, he had always politely declined the offer of toke.

Mr Murphy told the audience at the university's Queen Margaret Union that lecturing friends and family about the dangers of cannabis as a gateway drug was a "working class thing to do" in the Glasgow estate where he grew up.

"Shoeworld worker walked home wearing £73 of stolen shoes"

From The Evening Standard:

A sales assistant at Shoeworld walked home from the Oxford Street store wearing 26 pairs of stolen shoes, a court heard.

Eva Jaciskova, 37, put on the shoes at work and walked off in them over six months. The Slovakian national then flogged the footwear on eBay, Southwark Crown Court heard.

Between January and June last year the mother-of-two stole the 26 pairs of shoes with a combined retail value of £73 before staff spotted the large amount of stock on the eBay account and investigated.

The beginning of the end of democracy.

From the BBC:

Under the old system, one person in each household completed the registration for every resident eligible to vote. Now everyone has to register individually by providing their national insurance number and date of birth.

About 7.5 million people had already gone missing from the electoral register before the new system was introduced, but campaigners fear a further million have been disenfranchised.

The article helpfully contains a link to the government's register to vote page:

The deadline to register to vote in the general election is 20 April 2015.

NB, when I'm in charge and introduce a Citizen's Income, one of the minimal requirements will be that you are registered to vote at your current address, which would lead to 99% enfranchisement within a very short space of time.

"Jeremy Clarkson approached BBC bosses about 'catering foul up'"

From the BBC:

Top Gear host Jeremy Clarkson initiated the BBC investigation which prompted his suspension, after he informed BBC bosses of the alleged "catering foul up".

BBC News understands that the star phoned BBC head of television, Danny Cohen, to report the lack of hot food. Producer Oisin Tymon, with whom the altercation took place, is not believed to have filed his own written report.

Interviews are expected to be held with the star and other parties next week, and the show has been taken off-air. Clarkson has expressed dissatisfaction with the catering, which his co-presenter James May labelled "a bit of a fuck-up".

Beyond satire

From The Telegraph:

A primary school headmistress has been accused of "humiliating" pupils by making them lie face down on the floor while she pretends to ring God on her mobile phone to say they have been naughty.


Furious parents of children at St Joseph's Roman Catholic primary in Devizes, Wiltshire, have written to the governors and complained to education watchdog Ofsted.

**cymbal splash/rim shot**

Nigel Farage on Discrimination Laws

From the BBC

Mr Farage told the BBC his remarks, recorded last autumn, had been "wilfully misinterpreted", saying he was talking about nationality not race.

Speaking to BBC Radio 4's Today Programme he said he was making the point that employers should be able to discriminate in favour of British workers.

Is there actually any demand out there for this? I challenge anyone to find a case of a company that hired a Pole but wished they could have hired an English person. How would you even get to that situation?

We already have an advantage - if I sit down 2 programmers, one from Poland and one from the UK with equal skills and experience that both seem to test OK, I'd hire the one from the UK because communication would be better with the person in the UK. You're not going to have language difficulties.

What's Farage's imaginary situation here? That an employer sits a Pole and a Brit down, and the Pole is a whiz programmer, and the Brit is a bit average, but the employer would want to hire the Brit over the Pole because of Queen and Country?

Thursday 12 March 2015

I've changed my mind about the Euro


From the BBC

The first truffle to have been cultivated on UK soil has been harvested from a field in Leicestershire, according to a plant biologist.

Dr Paul Thomas planted the fungus on 20 farms and estates around Britain six years ago.

He found the 39g specimen under a young holly-oak tree.

The entrepreneur, who appeared on the TV series Dragon's Den, said it was the "birth of the UK truffle industry".

After a decade of waiting, Dr Thomas believes that his other sites will also start producing truffles later this year.

I remember this guy on Dragon's Den. He didn't get an investment, but I thought it sounded interesting at the time. If he can make truffles an agricultural product rather than a rare thing that has to be foraged for, I can't see the £400/kg price staying where it is.

Apple and Malls

From the Wall St Journal:

Apple draws so many shoppers that its stores single-handedly lift sales by 10% at the malls in which they operate, according to Green Street Advisors, a real-estate research firm. That gives Apple the clout to negotiate extremely low rents for itself relative to its sales, while creating upward pressure on prices paid by mall neighbors who might not benefit from the traffic.

In the past, malls typically operated according to a straightforward bargain. Department stores that anchored the ends of the malls either owned their own stores or paid almost nothing aside from fees to maintain common spaces in exchange for drawing much of the traffic, while specialty retailers in the smaller spaces between the anchors typically paid the bulk of a mall’s rent.

Apple has upended that model by using its bargaining power to pay no more than 2% of its sales a square foot in rent. That compares with a typical in-line tenant, which pays as much as 15%, according to industry executives.

Nothing new exactly, but just part of the Eiffel Tower/café near the Eiffel Tower thing of how rents work…

Wednesday 11 March 2015

Another fine mess you've got us into

In Moneyweek, James Ferguson points the finger at welfare for workers, the brainchild of our late, unlamented Prime Minister, as being largely responsible for getting the UK into the mess that it's in.

Britain has strong GDP growth and low unemployment. But we also have zero growth in productivity, or real (after-inflation) wages, or growth per person. And how can the government spend the equivalent of 43% of GDP (high by
historical standards), yet food banks still exist? And why, when we have one of the lowest relative poverty readings in
the OECD group of wealthy nations, do we suffer from extreme perceived inequality?

..income inequality is flat to falling – yet perceived inequality is high and rising. Why? The key reason is that benefit spending per person in the UK has soared by 60% in real terms over the last 15 years. That’s a huge and perhaps
unsustainable shift (given our chronic deficit). And why is food bank use rising, even as unemployment falls? Because these new benefits are largely going to workers, rather than job seekers.

The majority of the £215bn (12.5% of GDP and 28% of all government spending) welfare spending bill goes to the retired (£87bn). But the next largest chunk goes not to the unemployed (who receive just £8bn), but to the employed (£76bn). Supplementary payments to boost earned income include tax credits, income support, housing benefit and other allowances.

It must have seemed like a good idea at the time to top up the earnings of the politicians’ favourite group, “hard-working families”. But the structure of these in-work benefits creates economically destructive incentives.

To qualify for tax credits, a couple must work at least 24 hours a week between them. So the cynics among you won’t be surprised to learn that not only does a third of the working population work part-time (nine million people in total) but that the average hours worked per person is just over 12 hours a week – ie, 24 hours per couple.

Part-time work pays £11.24 an hour on average. That’s an annual post-tax income of £14,250 for a couple. At this level, tax credits alone would boost household disposable income for those with three children and childcare costs to £35,203 – before any other welfare entitlements, including housing benefit. For a full-time, salaried worker to earn the same disposable income, they’d have to be on £48,500 – almost double the average.

Why put in a six-day week in a semi-skilled job when you could do a couple of hours a day on an easier job and potentially earn almost twice as much?

So next time you hear someone blaming the unemployed Romanian gypsy immigrants with twelve kids living in a mansion on housing benefit for all the country's ills, remember who is really responsible.

He doesn't do numbers or logic.

From The Times:

A mansion tax would lead to developers in London building fewer affordable homes, according to the deputy mayor of London.

Sir Edward Lister, who is also Boris Johnson’s chief of staff, said that if demand waned for expensive homes as a result of a mansion tax and developers reduced the number of luxury properties they built, there would also be fewer affordable ones because builders have to agree to construct a certain number of these in the same development to win planning permission.

For a start, the "affordable housing" requirement does not really reduce overall average rents, it's market segmentation that's all, but let's gloss over that.

Planning departments usually stipulate that a certain proportion of the total number of units in a development are sold for a smaller-than-usual profit margin to a Housing Association. The proportion is different in different areas, and can be any old number the planners pluck out of the air (unless they get too greedy and the developer just shelves the project - it is a very crude tool).

Agreed that the Mansion Tax would reduce the number of large, expensive units of housing in a new development, but by definition, it would increase the number of smaller, cheaper units.

So if the number of units goes up and the proportion allocated to "affordable housing" goes up, then the number of units of "affordable housing" would go up, not down.

Or the planning department could drop its required proportion and keep the number of units of "affordable housing" constant.


Or alternatively, they could just increase maths and science teachers' salaries...

From the BBC:

David Cameron is to announce a £15,000 university bursary for teenagers with good A-level maths and science grades, if they commit to enter teaching.

This "golden hello" for teenagers is an attempt to recruit more maths and physics teachers for England's schools. The prime minister says he wants this country to be the "best place in the world to learn maths and science"...

The £15,000 over three years for potential teachers would help with living costs and would be repayable if students did not go on to teach for three years after graduating.

Tuesday 10 March 2015

Everyone's a loser.

In Moneyweek Matthew Lynn makes the point that, if interest rates don't go up soon, they might never go up at all.

It's been six years since the Bank of England took interest rates down to near zero as an "emergency measure", and during that time, people have got used to the low rates. They have become the new normal. When rates go up, an awful lot of people will feel the pain, but, more importantly, almost no-one will feel the gain. This is because savers, too, have got used to the low rates and have spent years putting their money into something that pays a better rate of return than an interest-bearing bank account. So with so many losers and so few winners, why should a government ever want to put interest rates up again?

It's also starting to look like the "new normal" is pretty like the "old normal", with the high interest rates of the end of the twentieth century being just a blip, but, more ominously, it looks like the high home-ownership rates and low house prices of that same period may be a blip too and the "unaffordable" house prices of today are here to stay. Not so much back to the future as forward to the past.

"It's bureaucracy gone mad"

I know a thing or two about bureaucracy, jobwise. There are parts of the government that function smoothly and are well thought through, some parts are Catch 22 madness.

One basic rule is that you send communications to the right person, be careful about hitting "reply all" and so on.

Seriousness or not of the underlying issues, when I read this I couldn't stop laughing for about ten minutes:

The head of the Met Police has said sorry to the families of three girls missing in Syria after they failed to receive a letter intended for them.

The families complained the letter - about a friend of the girls who went to Syria in 2014 - was given to the pupils instead of being sent directly to them.

Killer Arguments Against LVT, Not (356)

Submitted by Random:

I have been trying to convince someone of the benefits of LVT but he says he was in Taiwan and the LVT there caused "imbalances" and required "additional local taxes." Don't know much about it but thought you might. He seems to think it is mainly on agriculture and keeps going on about the origins of LVT and telling me it is relevant.
Here is what he says:

"The LVT worked great when it was an agrarian society and provided one of the fastest growth rates of any society ever. However that is what the LVT was designed for, agrarian societies."

Irrelevant. If you live in an agrarian society (especially a feudal one), then LVT is the best kind of tax. That neither proves nor disproves that it's the best kind of tax for a modern economy.

"LVT can be made to work in cities... only if a country was only comprised of cities with no other form of land use. If it has urban, suburban, industrial, non- production rural and production rural it crashes and burns."

Bollocks. By definition, within one country, land values depend on what kind of land it is, where it is, what it (can) be used for etc, and the tax rate is set according to that. So the rate on city centres per unit area would be tens or even hundreds of thousands times as much as on farmland.

"Ah you don't even know the origins of the LVT. I presumed that you had read up on the topic - learned the origins and knew at least some of the theory behind them. Instead you are just parroting popularist tropes."

Smartarsery, ad hominem and entirely irrelevant. If two people independently arrive at the same idea, that the fact that neither has read up on the other's work does not invalidate the idea.

"A group of philosophers known as the Physiocrats first postulated the LVT in the 18th century in France. This was a proposed response of feudalism within an agrarian society."

True, but we've covered that.

"An updated version of it came about with Henry George and it became part of Georgism yet still focused on agrarianism."

Complete and utter bollocks. In the whole of Progress and Poverty he is talking primarily about urban land values. And Adam Smith before him made it clear that it was appropriate to (high value) urban land and hummed and hahed about whether it ought to apply to (lower value) farm land.

"It was a core tenet of the Kuomintang. They made huge strides in pulling Taiwan from being an agricultural backwater to being an industrial powerhouse."

Yup, Sun Yat Sen was a declared unabashed follower of Henry George and it worked as predicted (i.e. far better than predicted).

"However once industrialised things like LVTs start to cause imbalances and become a hindrance."

Facts, examples? Compared to taxes on output, employment, profits etc?

Either way, everybody at all times has to pay 'land value tax', the question is, should it be paid to landlords and bankers or to the government? (Owner-occupiers are exactly that, simultaneously tenants and landlords).

And why is our Homey waffling on about Taiwan? SYS's original full-on LVT has been watered down and watered down and is only a small part of overall government revenues (ballpark, the same as council tax plus business rates in the UK).

"LVTs are great for agrarian societies and catching up. A liability for industrial and post-industrial societies. I suggest you read up on their history, uses and criticism before posting."

We've covered this.

Any ideas?

Yes, tell him to fuck off.

PS, I've a good idea who this Homey is, he likes leaving threatening messages on my voicemail at work.

“Armchair generals must share blame – Hammond”

From the BBC:

"Armchair generals" who support British foreign military interventions are partly responsible for violence in the Middle East, Philip Hammond has said...

Speaking at the Royal United Services Institute (Rusi) in London, Mr Hammond said:

"One sided coverage by the tabloids which unfailingly refer to British soldiers as 'Our Boys' has resulted in politicians chasing an easy vote by sending them off to take part in one badly judged adventure after another.

"We are absolutely clear; the duty to attack foreign countries is with the soldiers. But a huge burden of responsibility also lies with the politicians who send them there and the armchair generals who act as apologists for them."

Monday 9 March 2015

Fun Online Polls: Madonna's fall & Grammar schools.

The results to last week's Fun Onlin Poll were as follows:

Madonna: did she fall or was it a pre-planned stunt?

It was an unhappy accident - 9%
It was a pre-planned stunt - 12%
Who's Madonna? What fall? - 19%
Don't care - 57%
Other, please specify - 3%

Best 'other' suggestion was by JQ: "It was a happy accident".
Moving swiftly on from gran'ma to grammar...

From the BBC:

According to opinion polls, support for grammar schools remains constant.

A recent YouGov survey, published in The Times, indicated that 54% of people said they would support a new grammar in response to "demonstrated local demand". If elected, UKIP has promised a grammar school in every town.


I don't think I've done a Fun Online Poll on this yet, what do the readers of this blog think?

Vote here or use the widget in the side bar.

Selfie Sticks

From the Telegraph

The Louvre is concerned about the increasingly popular gadgets being waved around within inches of the Mona Lisa and other famous paintings that tourists love to use as a backdrop for souvenir shots.
They are not yet banned at the museum, but a spokeswoman said: "Users must follow the rules and not point any objects at paintings, sculptures."

What's the point in going to an art gallery if you can't brag to your friends about it on Twitter? You might as well just go and see a movie.

"New phase in A9 Perth to Inverness duelling project"

From the BBC:

The next stage in a £3bn plan for a duel between Perth and Inverness has begun with a public brawl on the stretch at Dalwhinnie.

Cabinet Secretary for Infrastructure, Investment and Civil War Keith Brown has unveiled plans for a new junction giving access to duellists from the Highland village.

The public have been asked for their views on 15 options for the final choice of weapons. A number of high definition videos of the ensuing carnage have been created of some of the proposals.

Mr Brown has described the duelling project as "mammoth", slapped a protestor in the face with a glove and demanded satifaction.

Saturday 7 March 2015

Housewives' choice

I looked at Mrs W's Facebook page today, as I do occasionally, and got down as far as this...

Friday 6 March 2015

Oh, so now they notice?

From the BBC:

The Serious Fraud Office (SFO) is investigating the way the Bank of England lent money to banks during the financial crisis, the Bank has said.

The Bank commissioned its own inquiry last year, then referred the matter to the SFO. Liquidity auctions enabled banks to access extra cash during the credit crunch that followed the collapse of Northern Rock...

As the financial crisis bit in 2007, the Bank launched a new type of liquidity auction - called long-term repo open market operations - whereby banks were allowed to put up a wider range of assets as collateral against the three-month loans. These assets included government bonds and mortgage-backed debt securities...

The exact focus of the SFO investigation is unknown, but BBC business editor Kamal Ahmed believes it may want to find out whether the banks exaggerated the value of such collateral to makes themselves look stronger, with or without the knowledge of Bank of England officials.

Surely we all knew this anyway?

The whole thing since 2007 has been a freebie for the banks and a blatant bank bail out at taxpayers' risk and expense. If the banks' assets had been worth what they told the Bank of England they were worth, then they wouldn't have been insolvent/illiquid and hence the bail out would not have been necessary in the first place.

The question answers itself: the Bank of England must have known that banks were overstating the value of their assets, end of discussion.

"The Gift" by Velvet Underground...

... turns out to be based on a true story, which had happened a couple of years before the song was recorded.

The only real embellishment was that in the song, Marsha's friend Sheila tries to break open the box by stabbing it with a sheet metal cutter and accidentally kills Walter. In the true story, Reg Spiers managed to arrive safe and sound.

Seems like a strange thing to be boasting about.

From The Telegraph:

David Cameron said that a future Conservative government will "keep mortgage rates low" so that homeowners can "go to bed with real peace of mind". The Prime Minister said that maintaining low borrowing costs would be the first priority of the Conservative's housing policy.

He attributed Britain's historically low interest rates of 0.5 per cent, set independently by the Bank of England, to the Government's deficit reduction program...

"When confidence falls, mortgage rates can spiral, homes become unaffordable, and families risk losing the roof over their heads. That was the risk Britain faced in the last recession. But this Government came to office set in place a long-term economic plan and showed the world we were managing our economy and as a result, mortgage rates have stayed very low..."

He said that a family with a £120,000, five-year fixed rate mortgage are spending £155 a month less than they would have been in 2010.

"This has made a real difference to families across our country. Instead of couples having agonised conversations about the mortgage payments late into the night, people are going to bed with real peace of mind because our long-term economic plan is working."

Notwithstanding that...

a) What's good for borrowers is bad for savers.

b) The current low interest rate environment is a global, long term trend. If anything, the 1970s and 1980s are looking more and more like a blip and what we have today is pretty close to 'normal'.

c) Low interest rates could be a result of weak economic activity as much as sensible economic management.

d) The Lib-Cons have reduced the annual deficit slightly, but have managed to nearly double the overall accumulated national debt since 2010; and it is the overall national debt which influences interest rates.

e) The absolute level of interest rates is nigh irrelevant, all that matters is changes. Once you have taken out a mortgage, clearly you benefit if rates go down; if you have savings you lose income; and if you want to buy a home in the near future you gain nothing because house prices rise inversely with interest rate falls. If you are saving up for a deposit, you are running to stand still at best.

f) What about the 'peace of mind' that job security, economic growth, a decent welfare system etc could provide? So what if people are 'saving' £155 a month in interest relative to 2010, if real wages had increased by their long term average of about 2% or 3%, then the average household would have gained a lot more than £155 a month.


From the BBC

Drivers in England will get 10 minutes' grace before being fined if they stay too long in council-owned car parking spaces, the government has announced.(1)

It is one of several changes, expected to take effect later this month, which include new restrictions on the use of CCTV cars issuing automatic fines.

Communities Secretary Eric Pickles said he wanted to end the "war on drivers". But councils said many already allowed 10 minutes' leeway and raised concerns about the safety of other changes.

The changes include:

• guidance for councils reminding them they are banned from "using parking to generate profit"(2)
• a right for residents and businesses to demand - by a petition - that a council "reviews parking in their area"(3)
• new powers for parking adjudicators so they can "hold councils to account"(4)
• protection to stop drivers being fined after parking at out-of-order meters(5)
• a ban on the use of CCTV "spy cars" except in no-parking areas such as bus lanes and near schools(6)
• Mr Pickles said: "We are ending the war on drivers who simply want to go about their daily business.(7)

1. Why? You've paid for parking for an hour, why should anyone expect to get another 10 minutes? You'll just end up with people stretching their time to 1:10 and then thinking they can have a few more minutes "I was only just over the time". The current view of a lot of councils, of an unofficial grace period seems more sensible.

2. Car parking charges are about allowing lots of people to park, and preferably, about penalising people over the normal time to encourage churn. But that's not related to how much it costs to build and run a car park. Take the money, give the residents a cut in their council tax. Simples.

3. So, NIMBYs can try and get car parks closed down to increase their house prices, presumably.

4. Currently known as contesting your fine in court.

5. I've never heard of this happening, but maybe it does elsewhere. Again, if you threatened to contest it in court, I doubt you'd lose.

6. Why? Someone's broken the law, you want to enforce it as efficiently as possible, don't you?

7. Including drivers who break the law.

I'll try it on with free parking, but if I get caught, it's a fair cop.

Thursday 5 March 2015

Tip top tokenist Tory tinkering.

From the BBC:

The Conservatives are considering limiting child benefit to three children, BBC Newsnight has learned… It would save an estimated £300m a year - but Tory MP Dominic Raab said it was not purely about cost but could "send a message about personal responsibility"…

Child benefit can be claimed by anyone responsible for a child under 16, or under 20 if the young person is in education or training - though since 2013 there have been restrictions for families where one parent earns more than £50,000 a year. It currently pays £20.50 a week for a first or only child, then £13.55 for other children.

Deliberately ignoring the elephant in the room as per usual.

Child Benefit is (or was) a splendid benefit, it was small amounts of money (nowhere near the average cost of bringing up a cd) but everybody gets it (until recently when it was withdrawn for higher earners). The total nominal payout is about £10 billion a year and fraud, error and admin costs are so small as to be barely measurable.

The cash value is nowhere near the average cost of bringing up a child (the bulk of which is loss of mother's wages) so eases the pain a bit without actually distorting behaviour.

The biggie is Child Tax Credits, up to £53 a week per child plus bits and pieces, which is a total payout of about £25 billion a year, the bulk of which goes to a small number of large families with low or no (declared) income.

For second and subsequent children, the extra cash you get from having another child is £66, which is probably more than the marginal cost of bringing up a second or subsequent child. If a mother is at home and not in paid employment, then the loss off her wages is a sunk cost. So this does distort behaviour quite a lot.

Fraud, error and overpayments are endemic; admin costs are enormous and they put a sadistic amount of effort into clawing back overpayments from randomly selected people. And it is savagely means-tested, of course.

Now, if you chuck Child Benefit and Child Tax Credits in the pot and divide it by the number of eligible children, it comes out to about £55 per child per week (see pages 8 and 9 of the Citizen's Income Trust booklet), without the need for means testing and so on, which seems fair enough to me.

If you want to cap this at three or four children per family/mother to "send a message about personal responsibility" then that also seems fair enough; any 'savings' from doing so are minimal in the grander scheme of things (£1 billion a year, perhaps?) but possibly worth having.

The other good thing about having a flat rate amount of £50-odd per child per week is that it sorts out the so-called gender pay gap, which is actually a mothers-vs-everybody else pay gap. If you means-test it, then you leave the pay gap as it is.

Personal Service Companies and Who Actually Pays Tax Confusion


Now, clearly it cannot be 'right' to pay public servants through personal service companies whilst HMRC cracks down on the practice in private businesses under the IR35 rules.  (Which IMHO just highlight the stupidities of the massively over-complex UK tax code).

But to say that this will raise more money for the government is patently untrue.  All these people are employed by the taxpayer, so any tax they 'pay' is just a discount to Real Taxpayers.  It is just money going round in circles.  True, that if these people have less tax taken off their pay, then this 'extra' money in their pockets - or some of it - 'escapes' from the government.  But since it will no doubt be used to buy goods and services - which are themselves taxed - a lot will still 'go back' to the government.

FWIW I know for a fact the Financial Ombudsman Service employs people through Personal Service Companies.  I have fairly concrete suspicions that the Financial Catastrophe Authority does as well.  So the FSCS will also probably be at it.  These are not outside consultants (like another friend of mine is for the ad hoc work he does for the Bank of England) but people sitting in their offices doing 9 to 5 work, well activity, for them.

Even Guido is on the Bandwagon


And the comments are off.  I wonder why?

The most popular search term on bing.com

Predictably enough

Wednesday 4 March 2015

UKIP's Nigel Farage wants return to policy 'normality'

From the BBC

UKIP would cut the number of half-baked policy announcements but would not set an annual target, Nigel Farage said.

The party wants bar room policies to return to "normal" levels, said Mr Farage, with between 20,000 and 50,000 dog-whistle ideas given publicity.

A UKIP spokesman said last week that bullshit populist ideas should be capped at 50,000 a year.

Mr Farage insisted the party had not done a U-turn, but said the public were sick of talk about caps and targets, until they're not.

Short List

"Advisors to English kings in the Middle Ages who were called 'Thomas' and ended up falling out with the king and being assasinated/executed."

Thomas Becket
Thomas More
Thomas Cromwell

John b adds: Thomas Cranmer

An earlier treasonous - albeit probably fictitious - Tom got off lightly.

Gimme Shelter

From The Daily Mail and/or Metrolyrics:

Yeah, a local business is threatening
My very life today
If the planners don't turn them down
Ooh yeah, I'm gonna fade away

The planned new café, children, is just two miles away
Is just two miles away
The planned café, children, is just two miles away
Is just two miles away, miles away, miles away, yeah

Tuesday 3 March 2015

"Our goal is a Britain where everyone who works hard can have a home of their own"

Sez Dave Cameron.

But what if we turn that statement round:

"Our goal is a Britain where people who aren't working hard have to trade down into somewhere more affordable, and certainly won't be sitting back collecting rent from people who are working hard"?

How many people would sign up to that?

North Sea oil: tax and subsidies

A few ill-thought out ideas from opposite ends of the political spectrum.

From the BBC:

[Gordon Brown] suggested a number of measures that he claimed could help the industry, including;

* A North Sea reserve to maintain and upgrade essential infrastructure and to provide "last-resort" debt finance for companies who want to keep fields open.
* UK government co-investment through public-private partnerships.
* Government loans.
* Advance purchase agreements.

Yup, nationalise it and subsidise it; he doesn't appear to have mentioned tax cuts.

And from City AM:

Deep tax cuts are the way to go. Nothing less than a double digit cut or the elimination of the supplementary charge will achieve the necessary level of impact. The Basin needs help now, or much of it could disappear if the oil price stays at these levels for a number of years...

Rather reassuringly, the article also tells us that extraction costs are £18.50 ($28.50) per barrel, only half the current oil price, so there's still plenty to play for. Most of his special pleading is hokum, but here's the interesting bit:

And if policymakers want to be really radical, there is always the option of introducing production sharing contracts for North Sea exploration.

The UK is out of step with many other oil producing countries, where these arrangements are a standard alternative to our tax and royalty system. In essence, these contracts between governments and extraction companies guarantee a minimum and maximum return on capital, giving companies more financial certainty and governments more tax revenues.

In outline, the original 1970s system for North Sea oil taxation was quite Georgist. Capital expenditure was allowed as incurred on a cash basis (none of this capital allowance nonsense), which minimised downside risk - but the corporation tax rate was very high. Norway and The Netherlands have stuck with this, quite successfully.

So oil companies ended up with a fair return on capital and the government kept most of the 'rent' or the 'free gift of nature' i.e. the excess of market price over extraction costs.

Interestingly, both Brown and the vested interest guy are stumbling in the right i.e. Georgist, direction, which is to abandon all current taxes on North Sea oil producers and for the government to enter into fixed-price agreements with them to purchase oil for cost-plus, say £30 a barrel.

This gives the oil companies incentives (the price would be set by however much they bid at a reverse auction) and certainty; and the government gets the freebie. It also gets the upside and the downside of oil price fluctuations, but as oil revenues are only a very small part of UK tax revenues, that scarcely matters.

Remember also that even if the world oil price fell below £30/barrel, the UK government would still not be making a commercial loss, because the 'pump price' of a barrel of oil (159 litres), minus refining and transport costs is £1/litre. It would just be making a smaller profit than it otherwise would have been.

Whether the government would get more or less revenue under such a system is neither here nor there, it would be getting the right amount of revenue and that is what matters.