Sunday, 31 May 2015

Tax freedom day

Apparently today is Tax Freedom Day or, the day on which we start to work for ourselves rather than the state.  Unless you work in the state sector, I suppose.  I have always thought that the concept of Tax Freedom Day is a bit odd.  Who pays all their tax off at 100% of income for the first five twelfths of the year?  Is the premise that almost any level of taxation is too high?  One of the early versions of the US constitution didn't allow the federal government to raise taxes.  We don't hear too much about that these days...

What we can all discuss until the cows come home is the appropriate level and structure of taxation, to maximise economic opportunities and give the government money to spend on important things and nice things.

Are we moving away from taxes on income and towards taxes on consumption?  Maybe.  One of the possible results of the coalition's pension reforms may be that as we as individuals approach or go beyond retirement age, we may be able to use our pension pots as a very tax efficient current account.  Money going in to a pension pot, such as a SIPP, has (up to a point) already-deducted income tax refunded into it.  Money taken out of a pension pot has tax deducted from it at a rate depending on one's age and other factors.  That means that if you are a net saver (as we all should be when we are working!) you can build up an investment fund quite efficiently.  If you are my age, that means pretty much a one-way passage from income to capital, because taking the money back out is expensive.  If you are much older, you can put the money in, get the tax refund, and they take money out again at your marginal rate of income tax.  The pension system basically encourages you to defer spending which is, after all, the whole point.

If we extended the pension freedoms to people of all ages, we would effectively have a consumption tax: you would only ever pay "income tax" on money that you took out to spend; if you are good at saving, you could slash the amount of tax you pay.

In the States, they have a system called a 401(k), which, as I understand it, offers a similar structure to the UK system, but with more freedom and flexibility.  Banks will lend to someone on the basis of money saved into his or her pension pot.  So, for example, you can borrow against your retirement income.  Americans have a much broader choice of how to invest their pension pot.  One thing you are not allowed to do with your 401(k) is to invest in stuff which you benefit from, such as a second home.  So you are allowed to invest in what we call buy-to-let, but you aren't allowed to buy a holiday home in Cornwall.  I don't know what happens if you buy a buy-to-let and then live in it at a later stage, I imagine that may get quite complicated...

The point is that, with not too much tweaking of the pension savings system (such as removing the contribution limits and age limits), we could effectively move to a situation in which what is taxed is consumption, rather than income.  That ought to do wonders for our long-term economic health.  

It could also be a tax simplification: VAT (which is sometimes described as "the worst tax") could be abolished, freeing up millions of person hours in business administration (hello productivity); the "income tax" and "national insurance" regimes could be flattened out and simplified (goodbye thousands of tax accountants); capital gains, inheritance, and corporation taxes would be obsolete.  The cack-handed auto-enrolment pension scheme would be unnecessary.  Loads of the little tricks and gimmicks and micro-management of contemporary government could melt away (ahh).

None of this should be understood to be financial advice.  The Capitalists are not Advisors.

Friday, 29 May 2015

Referendum: Who Will Tell The Amazing Story?

What a tale to tell.  The intrigue, the diplomacy, the shuttling back and forth across the Channel and the channels; the rumours, the plots, the plot ...

Which of our famous political writers will take up their pens at the end of it all and give us the book?  All of them, probably.  But whose will be published, whose will sell?  Even if we know the outcome all along?

The characters.  Cameron, of Oxford.  Osborne, of Oxford.  Hammond, Johnson, May, Gove ...  Salmond and Sturgeon and Adams and Robinson.  Assorted 'businessmen' (or biznizmen as they say in Russia, it means something subtly different).  Celebrities, as they get enlisted for their endorsements before the vote.  Clerics too, in due course, we may be sure - they always try to be current, relevant.  

And the huge cast of shifty foreigners. 
French foreign minister Laurent Fabius warned that Paris would say no if the UK demanded a special status in the EU ...
(Did he, by God?   He might be reminded of how France adopted its 'special status' in NATO all those years, in but at the same time out.  How was this trick achieved?  Easy: NATO needed France - on its own terms - because Russia was a genuine threat.  Now, there's a thought ...)

The intrigue, the foreigners, the rumours, the plots, the plot (even if we know the outcome all along) ...  It has to be Hilary Mantel.

ND

Thursday, 28 May 2015

How long wil lthe boom last?

Chart forFTSE 100 (^FTSE)


Predicting 9 of the last 3 recessions, as co-writer Blue Eyes often rightly criticises me for, it s mugs game. Even the informed writers here knew the 2008 crash was coming, but how deep and when eluded everyone - markets are just not predictable.

But when we look back at the FTSE all share, a very rough guide to the UK economy over the decades since 1984, we can discern some key pointers:

1. Thatcher and Major oversaw a huge strengthening of the economy from is weakest point which was probably around 1982/3 in terms of the post baby boomer period.

2. The 1990 recession slowed growth in share prices from 300% to 25% until around 1995. Although there is a clear upturn from 1993.

3. From 1995 the dotcom bubble really distorted the picture until the crash of late 2000/2001, which also cross over with 911. A min-recession took place in the real economy in the Tech and Travel and Hospitality sectors, but the rest of the country survived relatively unscathed - stock prices took a big dip as the effects of the dotcom bubble wore off. The indices returning to its pre-1997 levels.

4. Then we have the disastrous leverage boom of 2003-2007. How so much damage could be done so quickly is frightening. Still, stock prices bounceback within 18 months and have been steady ever since.

5. However, since 1999 there has been zero real growth in the FTSE, even allowing for the changes in constituents, the index has shown little growth.

6. Reflecting the UK's wider productivity issues remarkably well, the indices has been suffering from slow growth since 2011 - 4 years now of slow chugging up.

So what next? Well from 1984 it took until 1987 for a crash and then the overall recovery too to around 1993. This boom then last until 2001. So a 4 year expansion, then a 7 year recovery period, followed by a 7 year boom.

Then we have the dotcom crash, a 3 year downturn then another 4 year boom. Then a huge crash followed by a weaker 7 year recovery period.

On balance, this means we are likely due a 3-4 year boom phase before the next crash. Given property cycles are often cited as 18 years - then this would also match with the next big bust not due to the early 2020's in theory.

What seems unlikely now from a historical context is a huge recession in the next few years. It maybe that with technology changes and volume of interactions that phases are getting shorter - but still, its hard to be a bear even now.

Of course, event dear boy, events - an EU Grexit or Brexit or the final realisation of the massive Chinese bubble in printed money  and over-investment can jinx historical moves. But then again they always could.

Wednesday, 27 May 2015

Queen's Speech - Referendum moments

The real action today in the Queen's Speech is the move to put into law the referendum on EU membership. This it eh political action which will dominate the next 18 months and in many ways is the most dangerous Tory bill (for them!) to come to Parliament since the Maastricht treaty in 1997 - maybe even as dangerous as the Poll Tax bill of 1989.

The only competition it has really is the new Scotland act that also plays out the next stage of the Scottish 'neverendum'. The bill devolves huge powers to the Scottish Parlilament but also will be met by the SNP party as a 'betrayl of the Vow' given back in September. Whether it is or not is irrelavant to the politics of the situation. Parliament is about to find out how much fun it is going to be having nationalists who want their own Country sitting on the benches of the Government of the  Colonial masters.

As for the EU referendum, I think the Tories have a good chance of getting the outcome they want as long as they learn from the SNP playbook and play very nasty all round.

1. Agree to Referendum at end of 2016
2. Try to negotiate for 6 months from now
3. Announce in January that France, Germany et al have not given enough concessions and that Cameron is minded to back an 'Out' vote
4. Wait for the EU to fold as it sees subsidies and indeed its existential existence threatened (especially if Greece has exited Eurozone too, a distinct posibility)
5. Finally receive some small but meaningful concessions by summer 2016
6. Decide to campaign afte long and hard thought for a vote to stay in
7. Win the referendum, shoot the UKIP fox, be seen as great leader for the UK until Scotland leaves...

Sounds easy, requires real balls to execute - I doubt they can do it that well!

Tuesday, 26 May 2015

Areva: Getting Serious for EDF and the Nuke Business

Radioactive troubles
It's no small matter in the world of nukes that EDF needs to bail out Areva by one means or another.  The terrible twins of the French energy policy, or more specifically l'équipe de France du nucléaire are bound together in fate.  It seems implausible that Areva can bear the liabilities, legal and financial, arising from its disastrous attempts to get the first few EPRs up and running: but where is EDF's immense nuclear fleet without Areva?  Where is France without the nukes?  Who will pay?


Radioactive turd
I've been raising this question here since CU first invited me on board.  France plays many strategic games, often quite well, but there is none more pressing for them than this.  For a decade now they have been bending the UK government to their will, and of course I reckon the EU 'Energy Union' is their next campaign-front.  If Cameron is serious about obtaining some material euro-concessions - and IMHO he is - bribing the French (with ours and other peoples' money) will be one possibility.


To illustrate just how serious things are, EDF is also proposing to cut holidays for its white-collar staff !  As welcome as ... a radioactive turd.

(From which, incidentally, I understand you get atomic piles ...)

ND

Monday, 25 May 2015

Nash: Beautiful Mind, Baleful Consequences

It is really pleasing that Nash, the tortured genius, produced such staggering work in pure areas like geometry and PDEs, where he made astonishing advances that cannot be gainsaid.

Because his other, probably even more famous work - the Nash Equilibrium - was an 'advance' of a very dubious kind.

No problem with the maths (not that I am equipped to judge): as with so much in the pseudo-science of 'economics' it's the applications.  In the Real World - the one that matters - the simplifying assumptions behind so many theories just do not hold to the necessary degree for the edifices that are constructed on those foundations to be considered safe.  

No engineer would be permited to build a bridge on similarly flaky physical principles.  But pontificating economists and econometricians, wildly layering unjustified wobbly assumptions one upon another as though they were proper foundation-stones, infect the thought-processes of politicians and regulators.  Yes, and sometimes even businessmen, who can frequently be conned into paying tens of thouands for 'forecasts' that are quite literally not worth the paper they are printed on (as a glance at the disclaimers in 6-point at the bottom of the document make clear).

The Nash Equilibrium is mis-applied all over the place: within the models used to generate price forecasts - well, more fools the folk who buy them - but more seriously by regulators who reckon they can thereby 'understand' the markets they intervene in and supervise.   The flamboyant Taleb* rants against misuse of the Gaussian, but I'd say misuse of Nash is worse - not least, because it's generally less obvious; embedded deep, unacknowledged, its limitations less well know.  And idiot businessmen make speculative decisions that impact their shareholders; but idiot regulators make decisions that affect us all.

Nash's Nobel prize is therefore a rather depressing commentary on the ways of the world.  So much the better that he won the great maths prizes as well.

ND
________________
* Don't read Black Swan, he'd gone OTT by then - read Fooled By Randomness

Saturday, 23 May 2015

If you don't like the rules of the game, change them.




The EU is going to be the big story in the first half of this parliament.
Grexit & Brexit will be on the front pages of the papers until its all resolved. One way or the other.
So we shall be thinking about that for a long while yet.

One main stumbling block for the Better Off in Campaign .. and it is a pretty large pothole on the pathway to renegotiation .. is that the In campaign are proven liars.

We will put it — the EU Constitution — to the British people in a referendum and campaign whole-heartedly for a 'Yes' vote." — Labour Party manifesto, May 2005
 
"We will have a referendum on the constitution in any event — and that is a Government promise." — Tony Blair, The Sun, May 13, 2005
 
"Well, if it were necessary to hold a referendum, of course [we wouldn't hesitate]. I suspect that the best deal for Britain will be won, where we will get what we want, at this summit." — Gordon Brown, GMTV, June 19, 2007
 
"We would not agree to a deal that crossed the red lines, therefore, we did not believe a referendum would be necessary." — Later that day, Downing Street website
 
"The manifesto is what we put to the public. We've got to honour that manifesto." — Gordon Brown, BBC 1 Politics Show, June 24, 2007

 Today, I will give this cast-iron guarantee: If I become PM a Conservative government will hold a referendum on any EU treaty that emerges from these negotiations.  No treaty should be ratified without consulting the British people in a referendum.
David Cameron September 2007 

 “What is the point in David Cameron upending one pledge on Europe , but promising he’ll offer us yet more European promises in his general election manifesto? Why will they be any more credible than the ‘cast-iron guarantee’ he has just broken?

The out campaign can make an awful lot of this issue.

They can point to the fact that even if the Prime Minister was sincere in his desire for changes to our relationship with the EU .. even if he was committed to Eu reform as his number one priority for the government..there is nothing to prevent the EU agreeing something , and then changing it back later on. 
Or changing the name and the colour of the cover of a treaty and pretending its a whole different, unrelated treaty. 
And then the UK's PM would only have to sneak through the French windows to append his signature to the toxic docs once the press have gone home. As happened before with Lisbon.

Despite all the promises of Red Lines and Cast Iron guarantees , these have been proved to be about as binding as that famous, hard fought,  European  Agreement that was agreed by another Conservative Prime Minister at Munich.

If I was leading the OUT campaigners, then this would be my 'Miliband in Sturgeon's pocket' attack line.

Friday, 22 May 2015

Wales: Where underperfomance pays

 


Here is a graphical indication of where Welsh educational performance is going:



Here is what the Welsh NHS is doing:

Embedded image permalink


Here is their pay rise voted to the members of the Welsh Assembly. There is nothing so rewarding as abject failure - why try when doing badly pays so well; just like they teach in Welsh schools...

Thursday, 21 May 2015

Gaol the Bankers [Again]

A good few years ago I sat my SFA, and then FSA exams.  For those who've not had the pleasure they are multiple-choice questions, and by way of prep my ever-helpful kids used to delight in testing me on long car journeys.  Not much of the regulatory stuff remains in the memory, it is pretty dry, but one thing I do recall:  under the regimes of those days there was a slew of misdemeanours for which the maximum penalty was  

2 years' imprisonment and an unlimited fine

And two years is for the 'technical' offences: you can get more than that for theft etc.

So here we are in 2015, eight years after the banking crisis started and financial wrongdoing / failure of governance ceased to be a joke.  Somehow, the bastards escaped gaol then, just conceivably because the place was in meltdown and all hands were needed on deck.  But any excuse for leniency is long since over.  And white-collar people really don't want to serve time.

So as FX rigging follows LIBOR rigging, where are the mass criminal prosecutions ?  The FCA has replaced the FSA and, I wondered, maybe the penalties have inexplicably been reduced since my day?  A quick search under 'imprisonment' in the FCA handbook reveals that this is not the case, it's still

2 years' imprisonment and an unlimited fine

For the nth time: I'm a capitalist, these people have their hands on my money, it's important, I want them banged up!

ND

Wednesday, 20 May 2015

GDP Trumps GHG, part 94

It's part of the 'greening' of politics that everyone is supposed to put CO2-reduction at the top of the priority list, and that's the direction in which lip-service is generally paid.  In this context, coal-burning is the universal enemy.

But when push comes to shove, and shove comes to parochial concerns - generally jobs - even coal (unabated coal!) gets the benefit of the doubt.  The SNP - that's the SNP whose policy is "100% of Scotland's electricity from renewables by 2020" - are of course up in arms about Scottish Power's decision to close Longannet, one of the most heavily CO2-emitting plants in Europe.

And today we have Yvette Cooper, prime candidate for the Labour leadership (and of course MP for Normanton, Pontefract, Castleford and Knottingley), declaring: "dreadful news that SSE plan to close Ferrybridge C next year".  Yes, that's another of those big, dirty coal-fired plants.

Perhaps she'll get asked at the hustings how she squares this anguished cry with her official support for the crazy energy policy that started with Ed Milibore's 2008 Energy Act.  But probably not because there's no need, really: we all know the answer.

ND

"What do you want me to do, write a thank you note?"

I was thinking this morning of a post when low and behold, Guido has sort of beaten me to it:

http://order-order.com/2015/05/20/theres-lunch-money-left/#_@/MMpkgwyjrOq9hg

I was thinking of all the career ending naivety that Liam Byrne exposed when he left a note for Danny Alexander in 2010, saying 'there is no money left.' To his successor in the Treasury.

I was wondering what note Danny Alexander would have left. There is a fine history here. In the 1970's Jim Callaghan took over from Reggie Maudling - Callaghan found a note saying -

"Good luck old cock. Sorry to leave it in such a mess."

The of course there was the quote above, from Gordon Brown after taking over in 1997 and being told the economy was in the best state it had ever been in after the 18 years of Tory rule- displaying all the good traits of humbleness and good humour we came to expect from him.

This time where are we...on the one hand some of the damage of 2008/9 has been well repaired  - the deficit is shrinking (although not under control), the tax base is rising a little, inflation is low.

But of course we have huge workfare and welfare, the overall national debt is spiralling and the world economy is experiencing various shocks with one to come from Greece highly likely.

Also - note to Cameron - we have a big deficit at the height of the boom - so the accusation against Brown could well come back to haunt the Conservatives one day!

But I wonder what Danny Alexander has written to Mr Hands - something very anodyne I expect given what happened to the last note!

Tuesday, 19 May 2015

Open Thread: Deflation, Am I Bovvered?

And so it has come to pass: nearly eight years after the financial crisis started, and despite years of QE, the UK is suffering deflation.

Or are we really suffering at all?  With the election safely behind them, will Osborne + Carney let rip?  Is this the strategy for 2020?  Or will the oil price take care of any slack in the economy?

Go for it, C@W people!

ND

Monday, 18 May 2015

The stability budget


One of the LibDems' (remember them?) election demands was, whoever they got into bed with to form a government, that they wanted a Stability Budget shortly afterwards.  Whatever that meant. So it was with some degree of surprise that Chuka Ummuna said that he wanted to concentrate, in his rôle as Shadow Business Secretary, on the Budget. The Budget? I thought, that is nearly a year away!  Oh. No. Apparently George is to have a second bite at the cherry this year, now that he has got thrown of fhis LibDem shackles.

So here at C@W I thought it would be amusing to speculate over what he might change now that he has got a) a majority and b) possibly up to five years until the next election.

My guess is that he will (rightly) get some of the tougher stuff out of the way as early in the parliament as possible to take advantage of the lack of opposition from Labour and LibDems, and the honeymoon on the Tory benches.  According to John Cruddas, Osborne's omnipasty budget woz wot wunnit for the Tories, because it gave Ed Miliband a huge poll lead at the time (not to mention pasty-lovers jeering at the Olympics) and, thus, comfort that he could cruise to victory without any actual policies.  So we know that Ossie is a master strategist, and one to watch in the run-up to the post-referendum leadership contest.

But down to details.

George needs to square some serious circles.  He needs to get cracking with the deficit reductions, he needs to raise productivity and to bridge the London/not-London divide (see table above), and also keep GDP on the up-and-up.  

- sell off Channel 4
- sell off RBS and Lloyds
- sell off Network Rail
- sell off brownfield state-owned land for development
- introduce the new, lower, welfare cap
- devolve council tax bandings and the setting of business rates to the (new) metro authorities (i.e. London and MetroManc and whoever else wants to sign up in due course)
- introduce a new infrastructure bond, to raise investment for transport and broadband schemes but outside the scope of the regular state capital spending budget
- replace the various green-energy schemes with a carbon tax (and let the market decide what to invest in)
- beef up the competition authorities
- cut corporation tax by a point or two, and massively increase the tax-free allowance
- announce a Royal Commission to review the income tax and National Insurance systems, to submit proposals well in advance of the 2017 budget
- re-introduce the Brownite capital-gains tax regime
- amend the Bank of England's remit to take into consideration nominal GDP growth rates, formally, when predicting the likely path of medium-term inflation
- sell the BBC to Rupert Murdoch

Saturday, 16 May 2015

Election 2015: Sore Losers, Sore Winners

What does it take, in terms of practical effort on the ground, to win a Parliamentry election?  From the tone of complaints by some of the Disappointed one is inclined to think they imagine you've simply to have your heart in the right place, pick your candidate, and wait for the tooth-fairy to deliver victory to your chosen camp.

Actually it takes a lot of careful plotting and planning, followed by many many grinding hours of footwork.

History corner: in the heady days of the SDP some good friends of mine whose idealism had inhibited them from joining any of the tarnished old political parties decided Woy Jenkins et al were Different.  They joined up, found the whole thing jolly congenial - and volunteered to deliver 2,000 leaflets.  This was Islington, so no long front-drives involved: but after a couple of evenings they discovered that 2,000 was quite a lot.  Two months later, 1,500 of the expensively produced pamphlets remained in their cardboard boxes.

Back to 2015, and as discussed in CU's recent post, of course many people live in 'safe' seats that are most unlikely to change hands.  But an insurgent party (such as UKIP) or a party wishing to regain power must set about actually winning in places where they don't have incumbency.  And in marginal seats, absolutely everyone must knuckle down to covering the hard yards.

Personally, I have made a habit of living in marginals (see comments on that thread), with 2015 no exception.  I won't bore you with the demographic details but suffice to say, Croydon Central was and is a very marginal seat, with the sitting Tory targetted strongly by Labour and a chunky UKIP vote in the 2014 council elections that could easily have dished him.  So how was it defended?  

By 400+ people pounding the pavements for 6 months, that's how.  Operating under committed and intelligent leadership with a very good, carefully thought-out, bespoke and detailed plan.

You can read about it here.  The headline is misleading because it suggests that incumbency is everything.  It's important for sure, but there's a lot more besides, as the body of the text makes clear.

And that's what it takes to achieve a majority of just 165 votes in a difficult seat.   Labour worked just as hard in Croydon Central, with much optimism in their hearts, and it must be a bitter result for them.

But how many front doors did disgruntled UKIP supporters knock on?  Around our way, the only thing we noticed was some sour-faced leafleting outside a shopping parade on two occasions, and the  one postal delivery that is available free to all candidates.  As my tired feet slowly regain their normal state, you'll understand when I greet "s'not fair" with a chuckle.

ND

Friday, 15 May 2015

Political and Business double speak

Nigel Farage has not resigned at all we have discoverde this week, indeed he has "un-resigned."

This menas politics is now copying the pseudo-claptrap talk of management. As it is Friday, here is a list of some other typical double-speak we all see and hear everyday -

 ”We will do it” means “You will do it”

”You have done a great job” means “More work to be given to you”

”We are working on it” means “We have done nothing yet, but may start soon”

”Tomorrow first thing in the morning” means “Its not getting done
“At least not tomorrow!”

”After a discussion we will decide - I am very open to views” means “I have already decided, I will tell you what to do”

”There was a slight miscommunication” means “I lied”

”Lets call a meeting and discuss” means “we do not want to deal with this, lets delay for months”

”Make a list of the work that you do and let’s see how I can help you” means “Your very close to be fired now"

"We need to find out the real reason” means “Its your fault, I just need to find a way to blame you”

"We are a team,” means, “I will not take the blame alone”

"That’s actually a good question” means “I have no idea what you are talking about”

Thursday, 14 May 2015

Bar Wars - Episode IV: A New Hope


What is going on in UKIP?

The single MP seems to want to split in half. The party leadership fracturing into People's Front of Judea factions. 
Their has been justified criticism of Nigel Farage since his 'I'm leaving..no I'm staying' non resignation. A stupid thing to have done. Something that populist  antennae should have warned him about. It looks just like a stunt one of the main parties might try. Not the party running on the 'we are not like the others' ticket.
Farage looked tired. Worn and disappointed and probably fed up with having his pub dinner interrupted by looney lefties.
He should have gone.
We know he thought he would win, so wouldn't have to resign. But he lost. So should have quit.

It's obvious he should have resigned as leader. Seven attempts and seven failures. That's time enough to try and become an MP. He failed.

Despite attracting voters by the millions he isn't the man to add the extra 2 million they need to turn votes into seats. UKIP must reach out a little further if they want to become a party the size of the former Liberal Democrats of the right. Farage has a limited appeal. Its a big appeal but not big enough.

I'm not suggesting for one moment that their most charismatic leader should disappear into the sunset. Farage has done something incredible. he took a weirdo party of eggheads and fantasists and turned it into a national protest party. 
He has never backed down from a fight. Never been afraid to make his case.Doesn't really care who he annoys along the way. Farage is an incredible asset to UKIP.
But a toxic asset. Like nuclear power his energy lights the party up. But his clean up costs can be considerable.

But if the personality cult that is Nigel wants to go any further, he must widen the parties appeal and bring along some of his better media performers. UKIP needs to become a proper party. 127 second places in the 2015 election means a possible 50 MPs next time out.

This is the perfect time.
The election is over. And if the number of MPs was disappointing, the number of votes and where they came from was not.
Labour are defeated and unlikely to be doing much of anything for 6-12 months at least.
The Lib Dems are gone..possibly for good. The SNP are going to rattle their nationalist cage and annoy English voters. The Conservatives have a  budget to set that will bring them unpopularity on a Thatcher 1981 scale.

 All UKIP had to do was keep quiet and use their new found wealth to remind their supporters of their victory. Sort out their data. Lay the groundwork for their target constituencies.
The media will babble away for six months about new Labour leader. new Lib Dem leader. probably new Green leader. UKIP can relax.
 
Farage could have gone. Carswell or AN Other becomes leader after a vote and the party carries on after a brief media fuss.
Farage would only be resting. He's still an MEP.Still be in the media .
And ready to come back as deputy or leader of UKIP's 2017 EU Referendum campaign.

All the publicity UKIP could ever want is coming in 2016-17.
Having a leader and an MP and a Farage gives UKIP a wider voice. Or a different voice.
Farage would be refreshed, focused and with a simple message. Out of the EU. Which is pretty much his message anyway.

Nigel is on Question  Time tonight. Not a good idea if he is the story. 
He should cry off.

 Unless he has something to say that will the close the story down. 

Or blow it up.

Wednesday, 13 May 2015

A Checklist for Amber Rudd at DECC: We're Watching

My hopes for someone with sound instincts to take over at DECC are on hold until Amber Rudd proves herself, on way or the other.  She's obviously a bit green-friendly, which lowers the tone; but then again she is said to be a practical person with business experience and in favour of shale.  So in the spirit of Séptimo de Mayo we'd better suspend judgement.  I'm not, frankly, very optimistic, but... 

What I shall be watching for:
  • scrapping and/or substantially renegotiating the Hinkley Point 'agreement' with EDF, which is now such a nonsense that no reponsible government of whatever stripe should proceed
  • a very hard-headed approach to the wretched EC 'European Energy Union', including the utter crushing of its dirigiste tendencies before they ever get started
  • ditto the even more wretched UN Paris Conference: no 'Europe must show leadership by cutting its own throat' etc etc 
  • telling the Climate Change Committee to wind in its neck (and ditch the utterly useless Gummer / Debden at the first opportunity)
  • immediately getting to grips with the detailed nonsenses in UK policy, some of which could be stroke-of-a-pen stuff.  There are too many to list them all, but most egregious: the way biomass gets a free ride as 'deemed to be CO2-neutral', when burning mature trees is categorically not;  the way distributed generation (most specifically including intermittent wind) gets a free ride on all the trouble it causes in the Grid
  • putting the boot in the Scots - meaning, force them to confront the infeasibility of their stated 'energy policy'
That's right off the top of my head, and C@W readers will pitch in with more (as will I, after a bit more deliberation).  Some will say: scrap the Energy Union, withdraw from Paris, etc etc.  It's fun to say stuff like that, but it's also, frankly, pointless.  We get enough of that, and it's not practical politics.

There is one handy aspect of the current situation, which is that under successive Energy and Climate Change Acts the SoS has a range of amazingly strong unilateral (or semi-unilateral) powers.  So use them, Amber!   Above all, significantly reduce the UK's 'legally binding' CO2 target.  "The Secretary of State may by order amend the percentage [i.e. target] specified in section 1(1) …if it appears to the Secretary of State that there have been significant developments in— (i) scientific knowledge about climate change, or (ii) European or international law or policy" (Climate Change Act 2008 Part 1, Sect 2)  That's not what I'd call legally binding at all.

ND

Tuesday, 12 May 2015

Tell Sid

Money, money, money

The Sunday Times reported this - err - Sunday that George Osborne plans to sell off the state-owned banks as soon as possible, in an effort to draw a line in the sand of an unprecedentedly bad era of British economic history.  As all good capitalists know, Lloyds has been doing pretty well, and the G has been slowly selling its stake - at a profit to the taxpayer.  RBS, however, has not been doing so well: if the government sold it off at current prices, it would have to accept a huge paper loss on its "investment" in the bank.

The Tories have floated (geddit?) the idea of selling Lloyds shares at a discount, so that ornery investors can pocket a windfall if they hold on to their shares for a few years.  This idea, presumably, was to counteract the finger-wagging which accompanied the sell-off of the Mail a couple of years ago.  This time, however, Saint Vince is not in government to undermine its own process.

Some viewers will be old enough to remember the sell off of the Central Electricity Generating Board (a name that not even Ed Marxiband could have dreamed up). During that sell-off, investors were given a fixed proportion of both National Power and PowerGen shares, for any given overall investment.  A similar approach may work with Lloyds/RBS.  

In a rich man's world

Governments have been putting off a decision on airport expansion for decades, and it's getting pretty ridiculous.  The Davies review is getting into a right pickle, presumably because it is likely to recommend the politically-difficult expansion of Britain's existing hub airport.

I have a better idea.  The Davies report should give the green light to a new runway at each of Heathrow, Gatwick and Stansted.  Let the market decide whether one or more actually get built, and let the airports compete for the extra passengers needed to justify the investment.  But with one important caveat: the potential "losers" from airport expansion, the residents of homes affected by an increase in noise and air pollution ought to be compensated in some way.

Monday, 11 May 2015

Taxes do have effects - Bank Levy a case in point

Now that we are free of a the potential of Socialist interference in markets, we can look once again at what the new Government is doing and whether that will really help much.

One interesting article in the Financial Times (much a better read when there is no election coverage in its dripping pink pages. Seems the Keyensians has been routed too there), which describes how many of the Investment Banks are taking a dim view of the Governments continuing bank levy.

In a world of low interest rates and free QE money for the Banks, it can be hard to make a buck. So the Bank levy, which has been increased each year just to raise as much as the year before, can have a big effect.

Lots of the trades banks are now doing make very little real money. The Repo desks are a haven for this.  Billions of dollars of transactions for fractions of a percent profit. (All Socially useless once might say, but that one is currently drinking himself into a stupor in North London).

Yet these trades are hi by the Bank levy and also the Bank are less than impressed about real regulation which has caused them to be fined repeatedly for market abuse. The latter no one can doubt, the Banks hate getting caught rigging markets but of course this is exactly what needs to happen to make a market work.

The fact the Banks want to go to Hon Kong or elsewhere where they can openly abuse their clients is their look out. Moves in the that direction are welcome as the reasons for it are unjust.

The Bank Levy though is different, it relies on Banks no shrinking their balance sheets to raise revenue when of course its imposition incentiveses banks shrink their balance sheets. Moving UK operations to other places in Europe or the US where there are no Bank Levy's is a bad thing.

The City in the UK, despite the past few years, is in a delicate state. The large investment banks are mainly gone, destroyed by the financial crisis. RBS is shut, Barclays heading the same way. UBS and Credit Suisse are a shadow of what they were. In their place is Sovereign Wealth Funds, moving in with their money. But they are not the same and not really HQ'd here and one day we will discover they can use Sovereign immunity to help erase their poor commercial decisions.

The West needs a robust capital industry more so now than ever, with QE money sloshing around and huge fiscal challenges to be overcome in the next two decades. Some thought around tax incentives would be welcome in the June emergency budget.

Sunday, 10 May 2015

One Election Result We Can All Cheer

I refer not to the Dropping of Balls, the Culling of Cable nor even the Defenestration of Davey.

It is the Graunching of the Greens in Brighton!   Yes, democracy has functioned in the Brighton & Hove City Council elections and the utterly useless Green administration has been swept away, even as the Greens themselves entirely failed to sweep the town itself

A shame their grotesque green failings couldn't have reflected on Ms Lucas herself.  At the end of the day, the grown-ups have got to lock up the dangerous toys; a point that should register with whoever now takes over at DECC.

Well, a man can dream.

 ND

Saturday, 9 May 2015

Moscow Compo: The Result Is In !

Who repesents Britain in Moscow?   And the answer is ...

-  Sir Nicholas Soames, MP + grandson of Churchill

source: Beeb
No winner this time, I'm afraid (though "either an aristo, and/or a minor politico whose status + availability won't be buggered by the election outcome" comes close - but then I would say that...), so the weekend break in a Gazprom company holiday resort in Crimea goes begging.

I do like the Beeb's photo, by the way.  A nice lighting effect.

Yes, the sun is shining ! 

ND

Friday, 8 May 2015

Changes. Boundary Changes!

Around these parts we have strongly criticised Tory strategists for failing to nail the much-needed Parliamentary boundary changes in the coalition agreement - which was the Only Thing That Mattered (given that whoever got into power in 2010, in whatever combination, was going to sign up to a bit of austerity etc).

So now, fellas: eye on the ball and fix the bloody boundaries !  Do it now!  A quiet word to the DUP - lads, think of something realistic we can do for you, and join us in this little Bill we have up our sleeves, anything you want really - and Get It Done !  Now !

Yes, there are other consitutional matters that need serious attention in the coming Parliament, and I trust that wise heads have thought them through carefully.  There is some intelligent magnanimity to be shown to the Scots, and a glorious opportunity for some intelligent, win-win devo-localism across the land.  But that can wait.

Fix The Boundaries Now !  There may never be a better opportunity.

Back to celebrating:  Croydon Central ...  165 votes, haha.  Ed Davey, heheheh.

ND

_______
Update(1):  pleased to see Andrew Neil raise boundary changes as his first question to Grant Shapps just now (13:40)

Update(2):  they don't even need the DUP now 

Thursday, 7 May 2015

Have you ever really voted in a UK General Election?

When I went to vote this morning, as ever, my vote will mean nothing. In a completely safe Tory seat my vote makes no difference whatsoever. My other half thought hard before voting about who to choose and yet really, why bother?

Moreover, I am 39 and have had the following election history

1992 - too young by a year to vote
1997 - Just moved to USA from Leeds Central (would have been safe Labour seat anyway)
2001 - Voted, lived in Surrey Heath, the safest Tory seat
2005 - Voted, lived in Westminster, safe Tory seat
2010 - Voted, lived in Sevenoaks, safe Tory Seat
2015 - Voted, living in Sevenoaks, safe Tory seat

When there was a referendum for Alternative Vote I was dead against that form of voting and changing First Past The Post for what is a hodge podge system of AV.

Now though, with FPTP well and truly broken by the regionalisation of politics in the Country, we surely need to do something more. Even in this election only around 15 seats will change hands, one quarter of the amount available.

No wonder everyone is so bored when 75% of people have meaningless votes in any event.

Surely some of my readers have had a better time of it, or is my experience all too common?

Election 2015





Its time to put yourselves forward. The great day of reckoning is at hand.

And so that means the vote share predictor.

in the comments

1. Liberal Democrat seats
2. SNP seats
3. UKIP seats
4. Conservative seats
5. Who will be prime minister in 20 days time?

Iain Dale, the grandaddy of blogging, whose return to t'internet is still going on and his blog is as good as it ever was in the years before he quit blogging for broadcasting, has done a seat by seat election profile. 
It is really quite remarkable. The sort of things the party specialists do. Only they have much more data to rely on.

Mr Dale has done not just a uniform swing but had a look at incumbency benefits..scandals..political record. Local record. Voter makeup and such and predicted a winner for every seat. Its well worth a look here

He even revised all his seats with information from the latest Ashcroft polls and adjusted a few seats for late surges or local issues. I'm very surprised more hasn't been made of this by some of the broadcasters. it would certainly fill a few silences to look over it during election night.

The LBC man  predicts

*Conservative 276
Labour 267
Liberal Democrat 23
UKIP 5 SNP 54
Plaid Cymru 4
Respect 1
Green 1
DUP 9
Sinn Fein 5
SDLP 3
Independent 2

Giving no one a majority and no possibility of a coalition between anyone UNLESS Miliband is overthrown and a pro SNP candidate steps in. 
{50% of unite members are in Scotland are SNP voters. Len might decide he doesn't want half his members forming their own union and demand a left wing government take office.}

Not as outlandish as it may seem. Batty Hatty, who would become temporary leader if Miliband resigned or found that old dagger he used to carry about, plunged into his own back, , would sup with the devil for the title of First Labour Prime Ministress.

At the bottom is the final poll of polls for Wednesday.

So ..predict away .
Winner gets to go to Belgium and ask what do we do now?

Conservative

273 (-34)





Labour

268 (+10)





Liberal Democrat

28 (-29)





UKIP

2 (+2)





SNP

56 (+50)





Green

1 (0)





Other

22 (+1)





RESULT HUNG PARLIAMENT, CON LEAD BY 5










Wednesday, 6 May 2015

The Anglo Saxons

"If we were to accept, if Greece were to accept, if others were to accept that Greece could leave the area of solidarity and prosperity that is the eurozone, we would put ourselves at risk because some, notably in the Anglo Saxon world, would try everything to deconstruct the euro area piece by piece, little by little."

Britain's Best Friend in Europe™ has been at it again.  I think that we must presume that a President of a continent does not give keynote speeches off the cuff, so I think that we must presume that if he had meant to say "the markets" then he would have done so.

Apparently, Anglo Saxon hoards are waiting to pick members of the "area of solidarity and prosperity" (tell that the the unemployed of Seville and Turin) off one-by-one.  While it is certainly a possibility that if a member of the Eurozone was to leave the currency union, the next question would be "who is next?", because the supposedly irrevocable union would have been shown not to be so.  But is asking obvious questions a primarily Anglo Saxon pursuit?

I would be interested to know what economic system the Luxembourger would prefer.  Not unlike Britain's Ed Miliband, Jean-Claude has never had a job outside politics.  He passed his bar exams but went straight into the government.  Perhaps we ought not be surprised that he has never been exposed to market forces.  At least Ed Miliband is presenting himself to the electorate in a reasonably fair race.

If Mr Juncker had any sense of the world in which he lives, he might be a bit more respectful of market forces, whether run by nasty Anglo Saxons or anyone else.  Markets, after all, are what propelled the Venetians, the Dutch, and the English from the flat medieval Earth into commercial and industrial prosperity.  Without markets, we would cease innovating and specialising, and our economies would be condemned to Soviet-style perma-stagnation.  

Looking around the world at the moment, the economies doing best seem to be those following an "Anglo Saxon" path, and those following the Franco-Greek model which are flagging.

Perhaps what Mr Juncker really means is that reality will deconstruct the Euro area, because it is, after all, reality which is biting in Greece, Italy, Germany, France, and Finland.  Perhaps Mr Juncker thinks that with enough political will, reality can be denied indefinitely. Perhaps. But first, Mr Juncker will have to convince German voters to give up their mercantilist economic policies, and to pony up for the permanent transfusions which the Greeks and others will need to stay within a currency union with the productive northern countries.  He will have to convince the different nations to think as one federation.  

Maybe those things are possible, but probably not by Monday.  So in the meantime, Jean-Claude, blame it on those awful Anglo Saxons, but don't be too surprised if they vote to stop contributing to your pension in 2017.

Tuesday, 5 May 2015

Why is Ed Milliband panicking his way to the end of the election?


"We wants it, we needs it. Must have the precious. They stole it from us. Sneaky little hobbitses Tories. Wicked, tricksy, false!"

I return from a short break (I have really enjoyed this missing out on tons of election coverage as the parties try to have an election without any commitments at all!) to find Ed Milliband has turned into Gollum from the Lord of the Rings.

Gollum, in the books, is captivated by the Ring, the source of power. All is subsumed to its acquisition and though there is an inner battle, everything is sacrificed in the end for power.

In the past week, the true Milliband-Gollum has come to the fore. We all know he started this terrible path to power by ruining his own family by beating his more talented brother with the help of the union barons.

Fast forward to this week and he is truly desperate. Most of the Labour lines are about 'hidden' Tory plans to smash the NHS. Pure lies in all likelihood with no way of proving any of them. If anything the Tories are as cornered as everyone else by the mammoth NHS spending requirements.

But the lies pour forth with increasing desperation. Not content with just campaigning on a lie as the central theme of his campaign Milliband has gone futher.

To the depths of meeting with narcissist and anarchist Russell Brand - in search of unregistered younger voters to try to convince with the made-up message of the Labour Campaign.

Together with this of course, is is 'set in stone' pledges made last week.



This stunt has to be the worst I have yet seen - factless statements written into stone. Carefully chosen to avoid any Nick Clegg type disasters where commitment might late come back to bite you.

The only thing all of the above tells me is that Ed Milliband is really, really desperate for power. Of course, having ruined his family he personally has the most to lose from failure. But Gollum he is, willing to sacrifice everything to his insatiable appetite for power.

If he does win, this all leads me to think he will quickly degenerate to Gordon Brown levels of idiocy and bad leadership, so consumed with his own 'journey' which he mistakenly thinks this that of the country too.

Monday, 4 May 2015

Snooker & the Problem of Other Minds

Following on from the notion that hour upon hour of televised snooker commentary offers near-laboratory conditions for empirical observations, I pass effortlessly to that classic philosophical topic, the Problem of Other Minds.

The brilliant, inspirational and much-lamented young philosopher Gareth Evans (well, he died young) used to keep a collection of cuttings that he saw as offering empirical insights into the way that philosophical problems are addressed in ordinary discourse.  For example, he had a whole section on references to the Loch Ness Monster, as input to how the ordinary person addresses issues relating to existence, poor Nessie being an ontologically-challenged beastie.

In this spirit of empirical enquiry (as good capitalists should) I offer snooker commentaries, which are chock-full of remarks such as:
  • that hasn't worked out as he intended
  • what he's looking at here is the deep screw to the baulk 
  • now he'll be stunning up to the pink
  • he's decided to throw caution to the winds
  • he's already considered the plant, but rejected it 
  • he's thinking two shots ahead here, to the difficult yellow
  • he can't decide between the green and the brown
  • he's feeling very confident just now
  • he won't come back to the table this time
And so it goes on (and on, and on).  What we are hearing is a steady stream of confident judgements about what is "going through the mind" of the player, admittedly punctuated by the occasional:
  • well, I didn't see that one coming!
In other words, the commentators are totally unabashed by any deemed 'problem' of assessing the thoughts of another, and are getting right on with it, non-stop - and with signal success, as may readily be judged by the frequency with which their assessments are spot-on, notwithstanding the odd fail we've acknowledged (which is exactly the true meaning of 'the exception that proves the rule').

How do they do this?  The 'ordinary' answers one would give will include:
  • they are all past-masters themselves, and have thought through all the same snooker situations many a time and oft, i.e. they know what they'd be thinking (indeed, they know what they are thinking, as they gaze at the very same table), and there are only so many permutations of what's possible (or conventional)
  • they have a lot of clues available to them: what the player is staring at, how he moves around the table, the way he looks at the scoreboard, how he angles his cue, which of the balls on the table the player has examined closely and from which vantage-point, etc etc
  • based on the rules of the game, some strong deductions are possible as to what any competent player would be thinking about (- e.g. if snookers are required, it is a strong possibility the player that is behind will be either looking to lay a snooker, seeking tight safety, or only taking the black with a red: and I knew all that without looking)
The matter of competent commentators usually being right, by the rigorous standard of what the player actually then does, relative to their assessment, is material and perhaps fundamental to the 'ordinary' way of analysing the situation.  This ought to be an extremely important input to 'non-ordinary' / academic deliberations on the Other Minds thing.  It is of course immensely helpful that in these cases there will almost always be a salient action immediately following the player's thought-process and the commentators' articulated assessment thereof.

Which is why I think of the whole set-up as tantamount to 'laboratory' conditions: and with endless examples of slightly differing examples to observe!  Wonderful stuff: what would Descartes or Locke have made of it all?  (Only write on one side of the paper at a time ...)

ND

Sunday, 3 May 2015

Moscow Compo: Must Close Soon!

OK folks, 9 May is shortly upon us so the chance to win a C@W special prize must be seized quickly!

Recall: Little Volodya has summoned the Leaders of the World to Moscow for his big show in celebration of the rather important 70th anniversary of Victory over Hitler.  But of course he's in the naughty corner just now, so who will represent the UK at this jamboree?  And never mind who will - who should?

Since we announced this compo there have been two developments, one helpful to his cause and one less so.  L'il Kim, it seems, is no longer attending.  Yes, Jong-un the Wrong'un won't be there to embarrass anyone: some say he fears a coup if he leaves home, others that he doesn't wish to be an exhibit in a freak show (too late for that, matey).

But what of others?  The Gruaniad says:
The leaders of China, India and Brazil are expected at the parade on 9 May, but there will be few western leaders, most of whom are boycotting the event. The German chancellor, Angela Merkel, will miss the parade but instead travel to Moscow a day later to lay a wreath at a war memorial. The UK Foreign Office says it is still deciding whether British officials or politicians will travel from London to attend the ceremony, which comes just two days after the general election.
The thing that makes it really awkward is that the Russians have signalled they will be fêting their recent exploits in Crimea and eastern Ukraine.  Who on earth can the UK send?  C@W readers and writers have so far nominated:
HMQ (conditional); Prince Charles (conditional); Prince Philip; William Hague; Tony Blair; Gorgeous George; Ed Balls; Russell Brand; Camilla; Princess Anne; Ant & Dec; Farage; Mandelson; Hammond; Owen Jones; Polly Toynbee; Len McCluskey; Caroline Ashton; Peter Hain.
The FO will have chosen by now and it more-or-less has to be either an aristo, and/or a minor politico whose status + availability won't be buggered by the election outcome.  Keep voting, folks!

ND
Update: Duke of Gloucester; Miliband E; Will + Kate + New Princess; Andrew; Princess Michael of Kent (nice one); the Chelsea Team (sic);  KP(ieterson); KP(rice);  Michael Foot (corpse of);  Hon. David Henry Montgomery ... Fiona Bruce; Bob Crowe (ghost of) ...

Weekend Essay: The Laboratory That Is Televised Snooker

With the traditional bank holiday snooker-fest in full swing (swing?) I have often been struck by the observational possibilities offered by such consistent and unremitting television coverage of such a tightly-defined arena.

Here's one line of thought arising therefrom.

A large number of the audience equip themselves with headphones to listen to the broadcasters' commentary, which of course the TV viewer also hears.  From time to time, the audience responds audibly to something that is said - usually a light ripple of laughter, sometimes louder guffaws.

The viewer thus has the opportunity to calibrate the impact of the commentators' witticisms on several hundred people at once.  Better still for 'scientific' observation, since each participating member of the audience is wearing headphones, when they laugh it is almost certainly because individually they find it funny, and not because they notice everyone else is laughing too (a variant of Homer Simpson syndrome*).  It is very rare that just a couple of people laugh out loud alone.

Here's the thing.  Although the commentators continually pepper their entire spiel with attempts at gentle humour, very few indeed of their bons mots actually give rise to audible laughter.  I get the distinct impression they are trying for it all the time.  It seems fair to conclude that they don't have a particularly good handle on what's going to be laugh-worthy and what isn't - and, to be fair, I don't  find that I can predict reliably the snooker audience response either, apart from the occasional crack which is a really obvious candidate for a laugh.

Which puts us firmly in this territory
Studies reveal only minor correlations between how you think you’re viewed and how people view you; if those around you aren’t falling victim to the “false consensus effect” (assuming you’re just like them), then they’re falling victim to the “false uniqueness effect” (assuming you couldn’t possibly be as clever, or busy, or unhappy as them). Or maybe it’s you who’s falling victim to the “transparency illusion”, assuming your words and facial expressions are a dead giveaway for your feelings, when usually they’re not ... Barack Obama, after his disastrous first presidential debate of 2012, was convinced he’d done brilliantly. If arguably the world’s best living orator can’t read his audience, what hopes for you or me?
Or how about this, from Wolf Hall:
More ... calmed himself, 'I did not say what Riche alleges.  Or if I did say it, I did not mean it with malice, therefore I am clear under the statute.'  [Cromwell] watched an expression of derision cross Parnell's face ... More turns, smiling, as if to say, a good point there ... and looked at the jury as if expecting applause; they looked back, faces like stones.
There are all manner of important directions in which these observations can take off, and conclusions essayed.  Be it stand-up comedy, musical composition, fine art or humble snooker commentary, it is a true artist who can reliably elicit his desired response.

ND

________________________
*Simpson's First Law: "Never be the only one in the room laughing"

Friday, 1 May 2015

No deal with SNP. Is Miliband in denial ?




Party                           Seats
Conservatives               279
Labour                         270
SNP                              48
Liberal Democrats         27
DUP                               8
Plaid Cymru                    4
SDLP                             3
UKIP                             2
Greens                           1
Other                             8

323 seats are required for a minimum majority

Last night Ed Miliband ruled out ANY deal with the SNP.
Any deal at all . 
NO DEAL.
NOTHING.

If he is serious, and he may even be serious and not just trying to frighten Scots into voting Labour, then that screws up those numbers for Labour.

Labour plus a supply deal with the Liberals gives 297.
+ the far left parties gives 9 + the DUP {but they would have to be bought off..have to be} + 8
Gives some 316. 

Tory with SNP could scupper any  Labour brotherhood of nations government at any time they liked.

It does seem Miliband is just going to dare the SNP to vote him down. 
This has been suggested before by commentators on here. But it seemed a very very bold strategy. 
We know Miliband has a Balls , but not actual balls. I always felt this middle finger to the SNiPs was just a political ruse.

But on reflection, its quite a smart strategy. 

IF Labour can do just a little better than the polls suggest, which is as likely as not, they can be very close to a working majority with Liberal support.

Once Labour are that close , and Miliband says no deal, its now the SNP who have a hard decision. And whichever they choose only makes Labour stronger. They back him, or abstain, but know that they have gained nothing from him. Or they vote him down and trigger a new election.Something the SNP, with the more important Scottish elections looming, and their expected high tide of MPs would not wish.

If Miliband's government falls after 5 minutes, he can always say "I said I wouldn't be bought. I said I would not bribe.  I didn't."
Which is  decent ground for the next election. 

And if the Tories win the next election, the SNP are in serious trouble. A vote for Nicola is a vote for Tory rule from Westminster. The chances of the SNP retaining all their gains in a second election would be much reduced.

Maybe this Miliband fellow really has thought through what he was saying, after all.
Hell Yeah!