Saturday, 13 February 2016

Renting isn't all bad

Some friends of mine have just declared bankruptcy. She started their online only business eight years ago. As it grew he quit his job and joined her. Working from home they had a successful business. Successful enough to pay two salaries and all the costs of their home, cars, bills etc.
Until recently.Where an expansion plan overstretched them. The resulting losses and disappointments and personal illness caused the pair to decide to just pack it in.

And this is where the rental society gain.

They have no house to repossess. They only have, with the business, their stock assets and some small personal funds. A business running homeowner of their size would likely have personal guarantees to the bank, secured on their property.

I saw the couple yesterday and they said they are moving in two weeks time. I was stunned. Two weeks? Just move? In two weeks? But, of course they can. 
They have nothing to sell. They are in no chain. All they need is to find a new home, give notice, and move.

And they have no heavy equipment to move. No fridge. No freezer. No TV.  which also means that unlike the homeowner,they have never bought any of these items. Never had to replace them. 
No home insurance either.
They have never had to have a discussion about weather to put on a loft extension or a conservatory, to fit in their expanding family. And all the horrendous cost and dislocation that that causes.  They just move down the road. They have never had that worrying feeling as one's spouse begins to stare at walls and then leave magazines around the house. Glossy pages featuring tiny pots of paints that cost more than tankers of oil. 
Or worse. That conversation that begins with "the kitchen drawer is stuck again." Goes onto "I saw Jennifer yesterday..Her new kitchen has a boiling tap and a built in igloo" and and ends up with a remortgage.
This particular couple had one child when I first met them. They now have five. And have moved house six times during the time I have moved none.

Interest rates are of supreme indifference to them. Back in the pre-crash days the interest rate announcement had the biggest effect on disposable income of homeowners. Its only very recently that it hasn't moved for any length of time.

They have not had repair,replacement or restoration bills for exterior and interior works. No new gate or fence panels. No new shed. Never owned a lawnmower. all the myriad of small costs involved with owning anything, from a replacement shower head to a whole new bathroom, pass them by.

They have never had to engage solicitors, at considerable expense, to organise the transfer of them from place A to place B in accordance with the law. Nor the local authorities for the same. Never had a young person telling them that their fee for advertising and marketing their existing home for them would be between 1% and 4% of its value, Some £8,000 average for the UK.
And they have never had to pay the chancellor 5% of the asking price of their most valuable asset, that is also their pension, just because they wanted to relocate.

So,when we read about kids being unable to get on the property ladder, that may have some upsides for them too.

Friday, 12 February 2016

Talking your way into a recession...BS alert

"Are we talking ourselves into a recession? John Botham thinks it's possible. He tells Today that although markets are volatile and lower oil and commodity prices are a cause for concern, other parts of the UK economy are doing very well. The danger, he says, is that consumers might put off a purchase because of the volatility in stock markets or that banks, becoming fearful as their share price takes a beating, stop lending. He doesn’t believe we are repeating 2008 again." BBC

Always a warning sign for me this, only true idiots can think it is possible that recessions are entirely induced by the collective state of mind of the markets and human population the world over.

On the other hand, people making these kind of statements were rife in early 2008. I recall clearly day after day hearing vested interests - from bankers to recruitment consultants, saying all was fine and we should be happily spending and changing jobs etc.

Of course, none of this is true; but at the same time this is not 2008. As much as the Banks are having a nice little run on them in share price terms they are not as exposed as they were in 2008 to crazy derivatives or sub-prime mortgages. Also the low commodity prices have upsides as well as downsides, in 2008 commodity prices were at all time highs and managed to start both the Great Recession and then the Arab Spring in due course.

Yet, business cycle wise, we are due a slow down in the next year or two and the world is full of intractable geopolitical issues. So a mild slow down could happen although it feels unlikely in the UK services based economy.

Wednesday, 10 February 2016

Generating Electricity by Fantasy-Power

Towards the end of last year, as part of the Green Crap Purge George Osborne Amber Rudd withdrew the £1 billion pot allocated for encouraging the development of Carbon Capture & Storage, one of the great moonbeams-from-cucumbers schemes of our time.

Now it so happens that all scenarios for achieving the UK's official daydream of Full Decarbonisation by 2050 depended upon a chain of reasoning as follows:  "most heating needs to be electric", followed by "most transportation needs to be electric", followed by "there must be lots of genuinely CO2-neutral** biomass power generation";  then - because as eny fule kno we will needs a heap of gas-fired power plants, and maybe even some coal plants to generate those quite staggering quantities of elelctricity "there needs to be lots of CCS": and all finally, triumphantly anchored by "the residual CO2 from non-electric transportation - you know, aircraft and such - needs to be offset by biomass-PLUS-CCS",  which is of course CO2-negative! ('net negative emissions' in the jargon).

Thus, our 'decarbonised' energy future was being built on some inescapable logic plus the manifestation, well before 2050, of the unicorn of CCS.  Economically viable CCS, to boot.

So, the government having cruelly withheld the billion, they can be blamed for the disintegration of the entire chain!  And they will be, from now until 2050, I should imagine.

When do we get to register that CCS is a non-existent deus ex machina for *solving* an insoluble problem?  That it is an ontologially-challenged concept?  That it is a pure fantasy? 


**as opposed to burning mature trees a la Drax, which is anything but CO2-neutral as the greenies are slowly coming to realise.  Sorry, Drax