Friday, 31 July 2015

Jeremy Corbyn now predicted to win the leadership.

 http://www.independent.co.uk/incoming/article10383885.ece/alternates/w460/9-Field-PA.jpg

Veteran Labour MP, and long time voice of sanity in the labour party, Frank Field, ponders his decision to nominate Jeremy Corbyn for the leadership.


Thursday, 30 July 2015

Simple Solutions to complex problems: Pt 1. African Immigration. Sink or swim?

To ease us through the silly season the Internationally acclaimed Quango Lectures.
Here is a slice from the first lecture.



Immigration.  The statistics. 

28.5 million people employed in the UK in 2013.
85% UK born. 15% foreign born
of the 15% foreign born - 6% from EU - 9% from outside EU

{ok so far?}

Of those in work 12.9 million are in the category 'low skilled.' Which is some 45% of total UK employment. Low skilled covers entry level trades. Entry level administration. Customer service, leisure, travel, sales. Warehouse, entry level manufacturing. And drivers and the care sectors.

12.9 million low skilled workers
10.9 million uk born
2.1 million foreign born

{now we are getting to the numbers we need.- Not easy. Lots of conflicting reports. These are from the official migration report for the Home Office.}

UK net migration is some 300,000 a year since 2011. 250,000 average 1997-2010
{Pre New labour, and EU border relaxation it was around 50,000 a year.. With a minus figure during recession..call it 30,000 a year overall.}

1.2 million low skilled workers are from outside the EU.
1 million are from within the EU

Of the non eu two thirds came to uk more than 10 years ago.
Of the EU migrants 90% have come in the last 10 years.

So the EU migration is a recent event and these migrants are now performing jobs and consuming services and living in accommodation in the UK.

The National Farmers Union, among others, have said that farms could not survive without economic migrants and is a major reason, along with the huge subsidies, that agriculture uses to promote the benefits of EU membership. Farms claim they cannot attract low skilled UK workers even though wages are above minimum wage level.

Conclusion and solution to non-EU immigration.

1. Stop economic migration from the EU. This may require leaving the EU. But as the benefits to our coming decision to withdraw is mostly to other EU nations, they may well decide an accommodation to suit the UK.
2. In place of current EU workers use non-EU immigrants to do the low-skilled, no qualifications needed, basic understanding of English only, jobs in farms and factories. Perfect entry level occupations for low or unskilled workers.
3. The leaving EU migrants will leave accommodation, NHS and school places for the incoming, jobs to go to sub-Saharan workers to occupy. 
4. Net migration should remain stable as EU migrants return to the EU, new non-EU migrants fill their places.

The UK can feel good about rescuing and providing new lives from refugees fleeing war, famine, hardship throughout the non-EU globe. The UK will be able to say exactly how many migrants it could take. At present that would be 1 million working migrants and about 500,000 family members.
{These numbers do not include the Romanian and Bulgarian recent migrants, so add another 100,000 at least.}
The UK would be no better, or worse off, on pure numbers, by following this course of action and would have significantly solved the problem of asylum seekers for the next 5-10 years. 
At the expense of our EU neighbours coming to work in the UK..

Wednesday, 29 July 2015

Calais open thread


"Calais is suffocating. The tourists have stopped coming here because all they see on the telly is stories about migrants and they are afraid to come," said Gilles Duvauchelle, the owner of Le Bounty café in the town centre.
Several customers at the bar nodded in agreement, with one woman saying that Britons used to come in large numbers to stock up on wine and French food in the hypermarkets on the edge of town. But now they have dwindled to a trickle, she said.
"The government is incompetent," said Mr Duvauchelle. "When migrant camps build up in Paris they move them on. But when they're here in Calais they don't give a damn," he said.
He said he was a truck driver for 20 years and is shocked at what lorry drivers have to put up with now if they arrive in Calais.
"They get attacked, they get migrants climbing in and the police can do little to stop it because they are overwhelmed by the numbers."
There does not seem to be an obvious solution to this.  The comment highlighted above seems to suggest that Calais (for onward travel to England) is not the only part of France being swamped.  Recent news reports have also focused on Greek islands and the south of Italy.

This isn't only about border controls.  People aren't arriving in neat queues with their documents in hand, they are simply turning up in Europe by the boat-load.  We can protect our border slightly better here in Britain, what with having la manche to keep us at arms' length, and by being simply a bit further away from SE Europe and N Africa.  But even then we don't know how many are slipping through, and we certainly don't know who they are.

The French unions aren't helping by going on strike the whole time, blocking up the roads with burning tyres and wrecking the ferries they used to work on.  Maybe the strikers are reacting to France's sad decline, but they aren't to blame for the thousands of people turning up on Europe's southern shores.

But what on Earth is the answer?  Is Simon Danczuk right to say that the problem will persist while Britain is an attractive place to live?  Does that mean we have to trash the joint? 

Are we surprised that the tourists have stopped coming?  Why would you queue up in Folkestone for hours if you had the choice, not knowing whether you were going to get back sensibly?  I am certainly not planning another booze cruise for the time being, despite the soft Euro.

I Thought Better of 'The Economist' Than This

Yesterday CU posted on a report covered in the Grauniad based on ludicrous calculations.

Here's another, featured in the same place, this time flying the colours of the Economist Intelligence Unit (and oddly sponsored by Aviva, presumably to provide top-cover for some bizarre new policy direction they are taking).  It pupports to establish that the Cost of Doing Nothing - about climate change, naturally - is as follows:
"value at risk to manageable assets from climate change calculated in this report is US$4.2trn, in present value terms.  The tail risks are more extreme; 6°C of warming could lead to a present value loss worth US$13.8trn, using private-sector discount rates.  From the public-sector perspective, 6°C of warming represents present value losses worth US$43trn—30% of the entire stock of the world’s manageable assets"
Oo-err, missus.  It runs to 63 pages but I can't recommend you spend the time.  However, as part of the usual C@W service to readers, here are a few comments.

1.  Gross mis-use of 'VaR'

The report states (correctly): "A core responsibility of asset managers and institutional investors is to manage risk, and the most commonly employed measure to assess it is value at risk (VaR)."  Just so, but the calculation of VaR as understood (and in the finacial world it is indeed well-understood, check google to see the wealth of serious work done on this metric) absolutely cannot sustain a horizon-period of 85 years. Most practitioners wouldn't trust it much beyond 8.5 days (- find me a company report citing VaR beyond 5 days).  Nicholas Taleb often writes as though he wouldn't trust it at all.

But they are clearly inviting us to accept it in the technical sense that the 'VaR' moniker is regularly employed for (as well, perhaps, in an ordinary-language sense for those who have no inklining it is in fat a technical term).   It is hard for a non-practitioner to grasp what violence has been done to the underlying concepts to push out VaR that far.  It's a bit like saying to a patient:  we need you to hold your breath for ten seconds while we do this test.  Good: now hold it for ten hours.

What they've done mathematically might have some ultra-qualified, very abstruse 'meaning'.  But they are trying to leverage the broad, intuitive acceptance of VaR as a financial metric: and VaR it ain't.

2.  Ludicrous scenarios / counterfactuals

A related issue is the craziness of projecting either scenario - a world without climate change (base case) and a do-nothing world of climate change (in varying degrees of temperature-rise) - on a continuous basis, with nice smooth curves.  One of the reasons VaR is properly limited to what might be lost over a few days is that much beyond that, (a) empirical data shows that the maths breaks down / ceases to be valid; and (b) a massive factor behind this is that people react to developing situations and re-optimise their positions.  Feedback kicks in.  So nothing in the human world carries on in smooth curves (check the price of oil since 1972 for an illustration).  Sometimes - retrospectively - 'secular trends' are identified, and how long do they last?  Only the benign ones last 85 years.

Why is it to be imagined that anything would drag on getting worse and worse for 85 years?  I don't mean "- because obviously we will all agree to install more windfarms at the next Paris Conference", I mean because (if you really believe this stuff) something will fundamentally bust a great deal sooner than 85 years.  (And I understand, of course, that a believer might advocate 'acting', for that very reason - but please don't tell us the financial incentive to do so is measured by an 85-year model.)

The way the world really works is, if something really bad is actually happening then a war breaks out (or similar extreme reaction) - in other words, a discontinuity results, much sooner than 85 years into the affair.  Do wars destroy wealth?  Well they do, and more - strongly to be avoided where possible.  But have a look at how WW2 turned out for the USA.  Or the aviation industry.  Or nuclear science.  Things change, and change a lot.

3.  Why call this stuff 'Climate VaR'?

Why not 'over-population VaR'?  It's every bit as good a conceptual diagnosis of what they think is going on.

I really thought better of the Economist than this.

ND

Tuesday, 28 July 2015

I wonder who the ten richest people in the world really are?

I often read The Guardian newspaper, it is still one of the best broadsheets and it is easy to filter out the boring marxist commentary on everything. This article though shows why I read it. The ludicrous Tax Justice Network, have calculated that $21 trillion has been stolen by wealthy elites and put into offshore tax havens.

Now my old friend Mr Worstall will no doubt be along to demonstrate just how inaccurate these calculations are. If they go by what the Tax Justice Network normally does then they have multiplied a few things by ten to get to a really big number.

Anyway, I am not that bothered by the article anyway. Rulers steal their Countries wealth and flee has been a meme right from the start of human history, it is unremarkable that it still happens.

In a more prosaic way though, and to help the authors make their point, they would be better to speak to Forbes about their findings. You see Forbes insist that Bill Gates is the richest man in the world along with Melinda Gates. It makes for a lovely story as these two are genuinely both genius' and philanthropic. Also both came from nothing. The whole Forbes list is bent to this fantasy - self-made billionaires.

In reality, we all actually know that Vladimir Putin is the richest man in the world. He owns several major oil companies, has an army and is beyond the reach of any law. Following him must be several of the Li family dynasty in China along with King Salman of Saudi Arabia - who takes 1000 of his friends on holiday (bet Bill gates has never done that!).

Then there are the Qatari's, few of them but extremely rich and only getting richer by the second. The Nigerians who have stolen the oil money, the list goes on.

I'd love to see a 'real' Forbes list - it would be an advert for overt kleptocracy in the extreme. I doubt Gates would make the top ten.

Monday, 27 July 2015

The China take, part 2015



So, all that printed money in China is not having much of an effect after all. Always hard in the middle of the summer to know what such a huge sell off in China stocks really means of course - everything could be fine when everyone comes back from the beach.

- It could mean that the entry of lots of retail investors into the Chinese market has resulted in the traditional moves by real players - i.e. to rob them blind and then double up just to be sure. The market had got very frothy and now perhaps was a good time for major traders to drink in some fabulous profits.

- The collapse in commodity prices suggests something else, that China really is slowing down a bit in its historic growth trend. This maybe bad for not-yet-rich Chinese but maybe better news for anyone who does not make a living selling commodities or luxury goods to China.

- The Government of China tried very hard to buck the market and seems to have failed, a dragon they perhaps cannot control. This in itself augurs well for the future in China, as since the Tianamen square massacre have been in the thrall of the Communist party and army.

Looks bumpy from afar though and as well all know, stock market crashes come and go, but their real world impacts are often very large - I sort of recall we noticed 2008 in the UK for instance.

Sunday, 26 July 2015

The Trew News (or: are memories really this short?)

A heady mix of the knowing Hard Left (the unions, millionaire Primrose Hill Marxists, et al.) and the Ignorant Young (the Brandites, if you like) is whipping up a storm over Jezza Corbyn. The Left has never been in finer fettle.  Janet Daley nails Corbynism in the Telegraph:
The two flats into which the house had been converted were not destined for poor tenants on the housing waiting list, but for high-level council staff whose bourgeois tastes were impeccable. Indeed, one of the first items of furniture to enter the ground-floor flat was a baby grand piano.

Do go and read the whole thing.

Saturday, 25 July 2015

Digi-experiment: after Caulfield

Having found Powerpoint ® a handy medium for caricature I was challenged by someone to try for depth in an interior perspective.  So here's a crack at the Patrick Caulfield approach.  Apologies to him, he did his with a paintbrush ...  didn't he?


ND 

Friday, 24 July 2015

Amber Rudd Update: Cutting the (Green) Crap

Quelque-chose pour le weekendthe Grauniad kindly summarises for us the progress of the Rudd-Osborne crap-cleansing operation so far.   9 victims are identified:
  • onshore wind
  • solar
  • biomass
  • Green Deal
  • Green Investment Bank
  • VED on car emissions 
  • zero carbon homes
  • 'green tax target'
  • SSSI's for fracking
They are wondering about the Lagoon, but they reckon offshore wind & new nukes are safe.  (It's silly of them, BTW, to list the Green Investment Bank - which is merely being part-sold.)

It would appear Osborne is fairly well committed to putting the economy above empty green gestures.  As always:  GDP trumps GHG.  Have a nice weekend!

ND

A 21st Century Business Catastrophe

Mrs D and I are wont to spend a few bob on organised holiday travel and yesterday, with an eye to the soft EUR, rang up about a tour that caught our fancy.  "Have you ever travelled with us before?" asked the operative.  Too bloody right we have, check how much £££ you've taken off us over the past several years.

"Oh, we've moved to a new computer system and it's lost our customer records."

WTF?  Lists of personal details like that are the lifeblood of such firms, and change hands for serious money.   At the very least, they'll be scrabbling to retrieve their data from some deep archive, or boot up the old system again, with days of really inefficient working and lost opportunities in the meantime.  At worst, they're buggered.

I have been inclined to hold up (e.g.) airline booking systems as an example of how superior private enterprise software projects are compared to the NHS etc; though we all know the private sector is capable of monstrous cock-ups too.  But for a travel firm to be deprived of its customer records?!   Sheesh.  This is 2015:  they have put themselves in the hands of morons.

ND

Thursday, 23 July 2015

Quite tempting to pay £3 to elect Corbyn...


The height of the silly season approaches. Perhaps this year we thought it would all be about Germans getting lynched on Greek holidays or vice versa.

Instead we are treated to Grade A* charade of a leadership election by the Labour party. The candidates appear to be the wife of someone who would have been OK, a token northerner who can wear a suit, a muesli eating character straight out of Viz and an earnest handwringer whispering against the gale.

It's brilliant fun, I was a bit sad when UKIP had their 'Farage Farrago' but by comparison they handled it like a grown up bunch of adults.

But would it be right to waste £3 on the Labour election? Whilst I was not that interested a week ago the writings of the likes of Lord Finklestein and Matthew Parris are normally a good sign of what to do - i.e. the opposite. They are very keen on trying not to stir up the far left.

However, the far left are well stirred up, there is this thing called the Scottish Nationalist Party and they show no signs of giving up and going home for a hot toddy.

So they are wrong, as always.

But can Jeremy Corbyn win, are the early 1980's back in fashion to that extent - its quite likely, more so than the 1990's being back in fashion as it is too soon for that.

What would a Corbyn win mean, well for me it would mean a lot of very easy blog posts for a few years. For UKIP it would mean a lot of very easy votes to sweep up and for the Country, not much as the Tories are the Government anyway for the foreseeable.

Should I waste £3. Given I am not a member of any party currently, joining Labour is not even morally dishonest - people have lots of varied reasons to join political parties after all......

Wednesday, 22 July 2015

Amber Rudd Looks Like a Good'Un

Back in May, directly after the election, I stuck up a check-list for the newly-appointed Amber Rudd.  Subsequently she announced she was taking the summer off to decide what energy policy should be, which sounded fair enough.  The policy edifice of her three predecessors Miliband, Huhne and Davey will take more than a couple of weeks to dismantle - even if we have long suspected the Boy Osborne has been quietly stockpiling some dry powder for a much-needed cannonade.

Well, we haven't even let her go to the beach and she's rolled out a stonking package of long-overdue reviews of the burgeoning 'low-carbon' subsidy bill.  Her rhetoric has been (broadly) encouraging (plus-or-minus Hinkley and the Swansea Lagoon) and her mate Osborne has whacked the subsidy-wallahs with two early hits - removal of the renewables exemption from Climate Change Levy, and of the requirement for all new-build houses to be 'carbon-neutral'.

We like this a lot!

Gratifying howls of anguish are issuing from the relevant quarters, coupled with a bit of rushing-around to see if they can get onside with the new regime.  "If the government really are determined to cut emissions in the most cost effective way ... we hope to work with them on the recommendations."  I'll bet you do, sunshine.  It's amazing how a dose of reality and the smack of firm governmental resolve can have that effect.  Just business, after all - they know the score really.

Incidentally, can I just say - oh, ye of little faith !  Because when I posted my desiderata in May, here's what some of you said in the comments (no names, no pack-drill)
  • "Nobody in government will deviate from the status quo"
  • "I fear that [the above comment] will be proved right"
  • "Nothing will change.  Ministers live in the bubble"
Have a great holiday, Ms Rudd - you've the Paris conference to gird up for; and there are still several other items on our little list ...

ND

Tuesday, 21 July 2015

We will never run out of land to sell....

The Government is to try, a little bit harder, to cut the deficit. As always, the old chestnuts are brought out, dusted off and ritually burnt to impress us.

Mainly that oldest of old wheezes, the great land sale. The Ministry of Defence owns 1% of UK land dontchaknow, plenty to be sold. All the other departments too - also we need 150,000 new houses.

I am sure I have heard this before somewhere, oh, yes, from every Government ever elected in living memory. There is always a big land sell off that will raise billions in any budget.

The thing is, rather weirdly for Politicians, it turns out to be true, there is always more land to sell off. The Government owns a lot (the Queen too, another story for another time....) and can grant planning permission for anything on its own land.

Hooray - all our problems are solved.

Except of course, if you are one these holy Land Value Tax believers, then you have to have limits to land - otherwise your plans to tax everyone solely on the value of their land has big problems  - either incessant inflation as land comes to market or, more likely, huge deflation as the value of land decreases as more is released to the general market.

Either way, the evil Tories are no doubt int he gamer for killing LVT as a concept once and for all....

Monday, 20 July 2015

Gold hits a five year low; a positive message?





Price of Gold




Perhaps the Greek crisis won't come back after all and Mr Schauble will play nice from now on?

Perhaps China creating money to give to private companies to buy their own shares is perfectly fine?

Perhaps that ISIS lot will just toodle-pip off and those nice Iranians won't sponsor global terror anymore?

Perhaps Mr Putin is fed up with his picnic in Ukraine and is about to leave for home?

All of these things must be true to an extent if we are to believe market signals. The price of Gold has fallen to near $1000 an ounce, a five year low. Looked at historically, since the Brown Bottom, gold is still 4x higher than 2002, but of late the price has really cratered. China and the Oil Producing countries have been stocking up on supplies sold by European countries and new supply from Africa and Russia - they are less likely in the future to buy more gold so the price is declining. Also India has put on strong restrictions against gold hoarding which has been a challenge in its economy for hundreds of years (i.e. wealth is stored and not productively invested).

But longer term a low gold price suggests the preachers of economic doom are at a low ebb, with the world economy recovering still and has a bit of growth left in it yet.

I won't be buying into a contrarian bet soon - perhaps if the price reaches below $900 will be the time to consider it....certainly I did well in 2008 buying at $600 an ounce but that that time buying anything would have seen strong returns over the next few years.

Price of Gold


 

Sunday, 19 July 2015

...and only twenty years late

This BBC article makes for interesting reading.  Apparently the competition authorities are looking into how competition operates between rail firms in the UK, and are suggesting that different operators may be allowed to provide services on the same routes.  Free-market types will be saying "and about bloody time, too".

In fact, competition between rail operators was suggested alllllll the way back at the start of the privatisation process.  Stage One was to get the great state behemoth into the private sector.  Stage Two was to get the rail industry to a situation where the government could allow the market to sort itself out without too much interference.  Franchising or tendering can work well in certain situations: it would be a nonsense for every home to arrange for its own bins to be emptied, but producer interests went wild when local councils arranged it all in-house.  We can all think of examples of franchising in the rail industry not having given us the best results.  Some still pine for renationalisation.  Mainly the problems arise because neither the government nor the rail operators have enough information; franchise negotiations become nano-plans.  Bureaucrats make stupid mistakes on spreadsheets.  Ridiculously, operators have to get permission to improve services beyond what was originally agreed.

We never got to Stage Two in the UK, because New Labour was stuffed to the gills with ministers who a) didn't understand markets and b) wanted rail privatisation to fail.  Under everyone's favourite Gordon Brown, the nationalised infrastructure owner brought its maintenance operations in-house, thus completing the circle back to the bad old days of 1970s bin collection.  Kein Wunder that industrial relations on the railways have soured since.

Three cheers for the competition authorities, and let's hope that free markets can make some more progress under this new government.

It seems unlikely that competition will work for every route.  Customers do not always have the information they need to make an informed choice, and we must take care not to make the ticketing systems in the UK even more complicated than they already are.  I suggest that we can take inspiration from unlikely colleagues: Ken Livingstone and George Osborne.  Ken started the process in London of bringing London railways under the control of City Hall.  TfL now controls all manner of rail franchises which were previously uncoordinated, and has knitted together some substantial improvements.  Not to mention simplified fares and ticketing.  (One only has to step foot outside the Greater London boundary to step back in time to the era of paper tickets! What do you mean I can't tap out here?!?!)

So, I propose that intra-region services are overseen by the new superduper-Mayors or other relevant local authorities, and they can experiment with the arrangements which may work best for them, while leaving inter-city services to the tender mercy of the free market.  Network Rail could be sub-divided into corresponding geographic areas.

--

It is a classic British tale.  Britain pioneered railway privatisation (or did we copy it from the Kiwis? I forget), and in those heady reforming days of the 1990s persuaded its European partners to open up their own markets as well.  A wonderful example of what a former Prime Minister described as "constructive engagement".  Also, see the energy industry.  Of course, it took a while to get off the ground, as various countries backslid and protected their national interests.  But now, it looks as though the French (the French!) and the Italians (the Italians!) have more side-by-side rail competition than we do.  I think we invented football, as well.  The French left complain that the EU is too British by half (perhaps not their exact words).  Maybe sceptics can find some solace in bringing umpteen other countries around to our way of thinking, occasionally.

Saturday, 18 July 2015

Britain - soldiering on?

Mark Carney says that (UK central bank) interest rates may start to rise in about six months' time.  Let's pretend that people haven't been saying this for the past several years or so, and focus on whether it is really likely this time around.  The Bank of England is supposed to set monetary policy to look forward, so the fact that the CPI is bumping along at about zero ought to be irrelevant: it is what CPI is likely to look like over the course of the next couple of years which interests (hur hur) the Bank.

The UK economy certainly feels like it is in recovery mode.  Unemployment has been crashing, and wages are apparently starting to rise again.  In my own tiny industry there is something of a skills shortage.  I wonder what it is like elsewhere, and in enterprises which require less "skilled" staff.  But does a nascent recovery mean that the domestic drivers of inflation are about to flare up?  So many prices now depend on external factors, where does that leave monetary policy?  Should the Bank be varying UK policy if the oil price bounces around?  What effect would a Chinese collapse have, or a significant correction in the value of the Euro?  It seems to me that global factors may be disinflationary to the UK economy.

Of course, monetary policy is not only interest rates.  By telling us that interest rates may have to start to go up, Carney may actually prevent them from doing so, or at least mitigate their rise.  How?  Because the reaction to the prospect of tighter money may tighten money!  Look how the pound rallies each time the prospect of higher rates is floated.  At the margins, some people may decide to save rather than borrow, if they think that rates may go up fairly shortly.  

Carney also said that he thinks that the pound needs to soften in the medium term, to rebalance the economy, and that will be achieved by running a tight fiscal policy.  That seems right because a tight fiscal policy allows a looser monetary policy, for the same inflation target.  I was hoping that George's emergency budget would be tough enough to hold Bank policy down, and maybe it still will.

--

I wonder whether the housing problem in this country isn't partly fuelled by stamp duty and other transactional costs.  I want to upgrade, and can afford the mortgage on a more expensive home, but I know that estate agents' fees, solicitors' fees, and stamp duty will blow a hole in my budget.  It also means that my next place will have to be somewhere I can be for many years, to justify the moving costs, which means I may end up over-consuming "just in case".  However, costs such as increased council tax in a potential next home do not even factor in my affordability calculations - it is an absurdly "regressive" tax, so as we go up the housing scale it becomes relatively cheaper to pay.  Ridiculous, really.

If I was a renter, I would have moved by now to somewhere a bit more gucci.  As it is, I am holed up in a flat that would be ideal for someone just starting out, and for the next place will probably be competing with people who actually need much more space.

"Postcapitalism"? Paul Mason Has Been Thinking Too Much Again

Still, a provocation worth a weekend read.

Unfair I know, but hard not to make fun of him & his obsessing with Greece, though.
On the ground in places such as Greece, resistance to austerity and the creation of “networks you can’t default on” – as one activist put it to me – go hand in hand. Above all, postcapitalism as a concept is about new forms of human behaviour that conventional economics would hardly recognise as relevant.
Networks you can't default on, eh?  Sounds like the mafia to me.

The lefties really, really do love this Greek thing: they think it might be ... The Revolution!  Let's see what they've made of it in 12 months' time.  There must be a scenario - let's call it '1789' - in which none of us will be thinking about anything else.

ND

Friday, 17 July 2015

Even The Treasury is Fallible

So there we are, diligently reading the Boy Genius' George's latest masterwork Fixing The Foundations, a.k.a. the Treasury's "Productivity Plan".   Turning to the energy section - "The government aims to improve productivity in energy generation, production, supply and usage.  This will be achieved through ..."  -  we find the inevitable nuclear daydream, as follows:
... delivering a significant expansion in new nuclear power in the UK. The Hinkley Point C power station alone could generate 7% of the UK’s electricity needs 1
Well it could, but that's a rather pointed conditional.  And what's that little '1', the footnote at the end?  The eye falls to the bottom of the page where we read, in 6-point: 
1 Job stats from EDF
But job stats are there none!  Now we know the government and EDF are bosom buddies - how else to explain, well, anything UK-nuclear really - but what happened when someone at the Treasury was set on to ring up the froggies and ask them how many jobs Hinkley Point will create?  Did they just forget?  Surely not, at the Treasury!

Or did EDF say: not a single bloody job until you roll over on all our remaining demands and sign the bloody contract !  (Oh, and even then, the lion's share will be going to French firms.)

All entirely academic, 'cos it ain't gonna happen.

ND

Thursday, 16 July 2015

Sundays, bloody Sundays.





Sunday Trading is up for review.

This was a battle lost long, long ago. I was one of the first who was 'forced' to work Sundays. The quote marks because the law said no one could be coerced into working on a Sunday. 
The reality was if you didn't you didn't get the job. Those new fangled out of town shopping centres springing up in the early 1990s decided to open their doors on a Sunday and so did anyone wanting to work for one of their tenants. 
Just about possible to be a staff member without working Sundays. Plenty of Weekend and Saturday workers in those days. But for any sort of management role..Sunday working was required.

The unions were utterly ineffective and the government, mindful of the defeat it had had in 1986, opted for the daftest law it could conceive. Large stores that wanted to open were restricted. Small stores that didn't want to open were permitted. Even more foolishly the Church managed to make their priority day, Easter Sunday, a day of closure, by law, for all. But they forgot to include the nation's actual priority day, Christmas Day.
As Christmas is the peak trading time for retailers, there has been an erosion of the two days free from work. Many shops now open on Boxing day. Its compulsory to work as its simply a Bank Holiday that will be required to be worked if deemed necessary. As is New Year's day. As is Christmas day. And the Church attempting to 'keep Sunday special' was always doomed to failure.
A worker couldn't nip out for a roast dinner. Couldn't attend Church before going to work. Couldn't pop round the in-laws to take the children up the park. Sunday, for shop workers, became just another day. Albeit with a lie in.

Stores that began opening back in 1994 faced a very uphill struggle. A Saturday's trade would be equal to three normal days. A bank holiday caused panic amongst shoppers fearful of 'running out.'
Shops that opened on Sundays were ghost zones. Maybe only 10% of normal business. 
It took a good five years before stores broke even and perhaps ten before they showed a profit.
But eventually Sunday became the second busiest day, even on shorter trading hours.
{I remember doing a study of 50 of my regions stores in 2000. The 15 that were closed on a Sunday were just as profitable as the worst performing 15 that were open. Due to much lower running costs.
And they were far, far easier to manage.}

Nowadays, the odd Sunday Trading laws make even less sense than they did when introduced. The internet is a 24 hour place. The challenge for the big e-tailers is how to get their sold goods into the hands of their customers. Longer opening is one way. The High Street has not recovered from the financial crash and the rent rampages of the the 1990s and millennium years. It struggles with its excessively high costs against the online seller with minimal outlays. 
So a relaxing of a restrictive timeframe would be welcomed.

I would just urge the Church to remember to insist Christmas day must have all shops closed by law.
Or in ten years time they will be discussing having free wifi and a parcel collection point to try and attract people to their own big day.

Greece Poll Disaster....

polls

Wednesday, 15 July 2015

Interesting Times for the Labour Party

Intruding on private grief is a disgraceful thing, I know ...

But.

What times for Labour, eh?  SNP, UKIP and even the Wicked Tories taking all their best lines as well as their votes;  nobody paying them the slightest attention;  Harriet Harman splitting them with her New Realist strictures;  Jeremy Corbyn steaming up on the left;  little Owen Jones floating the idea of supporting 'Out' at the euro-referendum.  

And the achingly glamorous, oh-so-tempting possibility of becoming the British (English?) wing of a pan-european anti-austerity movement !  With real street-fighting !

Can they resist it ?  One thing's for sure: all the leadership candidates except that nice Liz Kendall will be trying to keep the LabSyriPodemos option open.  What else have they got for 2020?

ND 

PS: errr ... so, would that be 'In' or 'Out ' - ?  Decisions, decisions

Tuesday, 14 July 2015

When a deal is not a deal

Hmmmm....there are 2 international deals out there today and both seem to be a very bad idea on the part of the 'superpowers'

Firstly, to Greece, where the Parliament is expected to sign on to the EU bailout terms. These terms, as many commenting and contributing to this blog know full well (see Phil's comments on yesterday's post for a very clear example), are simply unachievable for a Country with Greece's problems.

We will be back at the Grexit table in due course.

Secondly, we have the nuclear deal with Iran. At no point have Iran said they will not develop nuclear weapons - as they have always said this. Nuclear Inspectors will not be allowed unfettered access which suggests that Iran still has much to hide.

Moreover, Iran is in nearly full control of Iraq, with many divisions now on the ground in the Country and the forces opposing ISIS all controlled by Iranian commanders.

That Obama wants to 'reset' the US position in the Middle East is simply crazy. Of course, plenty of Iranian oil will flow and this will further undermine Russia, Venezuela and ISIS, but the price for this is backing the Shia's against the Sunni's and further inflaming the Islamic civil war.

All for nothing as the Iranians won't really co-operate until it is too late.

How can it be that the Western leaders are so desperate and weak that they keep making mistake after mistake?

Monday, 13 July 2015

Athens, Brussels and the Awful Lesson of Melos

History Corner

Sheesh, the euro-types have given Greece a going-over.  If those perennial fudgers and compromisers are willing to go as far as that, Tsipras clearly overplayed his hand catastrophically (and of course got right up their noses at a personal level).  Can it possibly stick?  - there's such a thing as a deal that is too good for its own good.

Anyhow, to the history books.   5th-century Athens bore some resemblance to 21st-C Brussels, the hub of a semi-imperial set-up, administering a more-or-less compliant collection of diverse and once-proudly-independent city-states and regional entities.  Some they had taken by conquest, others had originally been fellow members of the Delian League before it morphed into the Athenian pseudo-empire.  In any event they were pretty much obliged to accommodate the wishes of Athens which, for its part, was bluntly guided by its own self-interest, sometimes far-sighted and moderately enlightened, sometimes less so.

Melos was an island which sought to persuade Athens not to enforce punitive levels of tribute.  A debate ensued: the famous Melian Dialogue, as written up by Thucydides, which starts off with some fairly even-tempered exchanges, the Melians attempting to achieve their goals by rational argument, the Athenians courteously responding - giving details - that they didn't see it that way.

It didn't end well.

The Melians should have known.  Although by that time Athens was a democracy (of sorts), and public morality was evolving towards something we'd recognise in the Judeo-Christian tradition, the massive residual influence of the Homeric tradition was still out there.  Homeric morality is simple: only one thing counts, and that is Results.  How you achieve them may be more or less decorous, but a successful Result trumps all nicer considerations and finer feelings.  Initially the results in question were to the benefit of a noble family, later to a city-state, and later still by extension to a wider civic entity.  As the Athenian empire became more complex, it became ever more difficult to determine what exactly was in its best interests (the birth of politics and the rise of the esteemed counsellor alongside the great warrior): but that's not the point.

Tsipras and his chums are Marxists, or so we are told.  Greek Marxists, of all people, ought to have a clear historical perspective on this stuff.  Apparently not: and now his people will be getting the Melian treatment in no uncertain terms.  What price a classical education, eh?

ND

Friday, 10 July 2015

Weekend Essay: Conflicting Loyalties

Many years ago, the commander of the far-flung military formation of which my unit was part decided he wanted a parade with all his soldiers arrayed before him.  He was of the view that our loyalties properly lay with him, at his formation-level - and of course he suspected it was not really the case - so he wanted us all gathered together in one place, under his proud paterfamilial gaze, to inculcate in us the loyalty he considered we owed.

A simple matter of issuing an order, you may think, but actually (because of our geographical dispersion) it was really quite complicated.  You'd be amazed (unless you've been a solider) how many people - of all ranks - carefully engineered reasons why they could not attend the parade as summonsed.  The commander got a parade, of course: but not the 100% turnout he wanted.

He was up against something very difficult to fight: the phenomenon of where people's loyalties really lie.  Hard to tie this down - but you know it when you see it: when the flag is run up, it's pretty obvious who is saluting.  (By the way, I was absolutely of the camp that saw the fundamental repository of loyalty at the unit level*, and I'm clearly in the majority: the thriving old comrades' associations in my part of the Army are all organised along unit lines.)

With all the nationalist-type questions being posed these days: Scotland vs UK;  UK vs EU;  religion vs country;  regional devo etc etc, I have done a survey of myself and declare the following inventory of my loyalties.
  • house vs school:   school wins, though I had an excellent house-master.  (But I was a day-boy)
  • college vs university:  an odd one, this.  When I was studying it was university - college seemed too small and introverted - but as an alumnus now, it is college
  • unit vs formation:  see above, I am unrepentent
  • England vs UK:  again, an odd one.  When I was serving with the Colours, I felt like a Brit.  Now I'm not so sure - I think it's the Scotties that have driven me to this uncertainty (I've always despised Salmond)
  • parish vs diocese:  parish.   Hmm, but when there's a really good bishop ...
  • ward vs borough:  no strong feelings but probably borough.  Ward boundaries change from time to time which undermines localism; and my borough (unlike some) has a clear identity
  • department vs company:  company.  In my wage-slave career (with four different employers) I switched departments every couple of years
  • national vs supra-national:  no contest !  - and let not Jean-Claude Junker ever, ever go on a tour of his Europe anywhere near me
(I'm not sure what I make of all that!  Over to the amateur psychologists.)

What say you, readers - where do your loyalties lie?

ND

_________________
* I turned up at the parade anyway, to watch his discomfiture.  Boy, was he cross.

Hubris defined: Tsipras the Quisling

Hubris Defined:

"excessive pride towards or defiance of the gods, leading to nemesis"

So Greece's new proposals to its creditors look the same as the ones it rejected last week and had a referendum to say 'Oxi' to.

Somewhere this week Mr Tsipara has been sat in a dark room and had the facts of life explained to him on EU and the true gods of finance. He has become a Quisling and the fate of Nick Clegg now awaits at the ballot box - something he will no doubt avoid after his recent fondness for it.

The EU Monster, as Budgie commented yesterday, has a Terminator like ability to reform and re-focus just enough to kick the can a bit further down the road.

Tsiparas however is doomed to follow the path so well defined by his ancestors.

One day, the EU will run out of road, but not yet at least......

Thursday, 9 July 2015

China; not more threatening than Greece


Interesting to see the Chinese Government so swift to act to stop a large stock market rout. Not sure that  Capitalists would approve of banks being asked ot lend money to companies to buy their own shares - seems a bit gamey perhaps?

Still, it has done the trick of stopping the share collapse. The Chinese are struggling to allow stock market trading into their retail trading base. Much like we do with AIM etc, the propensity for the newbies to get robbed is high and as a Communist state this has some downsides.

They seem to have licked it for now and the impact on the UK is minimal, far less than a Grexit or indeed huge EU bailout of Greece could be,

In time China will go pop big time. The Government have decided to print money at an alarming rate to keep up the growth profile. The money is printed in the back of the $5 trillion of US Dollar T-bills that the US is never going to redeem. They are merely playing the game according to the rules they have learned.

Of course, this leads to massive over-investment and poor investment choices, as well as rampant asset inflation. All in all, a disaster, but the underlying strength of economic growth will provide a big shock absorber. The rise of the US did not stop in 1929, neither will China's crisis in 2015.

Wednesday, 8 July 2015

Summer Budget: Open Thread



Will update later with any details but so far it seems to be the usual,  'not has hard as we are portrayed are we?' attempt along with some fiddling around the edges and finding ways to avoid real cuts where possible...middling...what do you think?

Tuesday, 7 July 2015

Russia: the Bear-Baiting Continues ...

... unabated, as one might say.  I have just returned from an outing across France and Germany to report that while all eyes are on Greece, something else very interesting is afoot.  Until a year ago the biggest civil actions the world has ever seen were (a) that being pursued against the German government by the three German nuclear power operators (E.on, RWE + Vattenfall), for damages in respect of Merkel's precipitate post-Fukushima closure of their plants.  That one weighs in at around EUR 12 billion, and is perhaps a story for another day.   (b) The BP oil spill ($18 billion, as we now know).

However, these were relegated to the second division by the extraordinary award against the Russian government of $50 billion last July, in favour of Yukos shareholders claiming that Russia destroyed their oil company illegally.

I don't recall this making monster headlines at the time (CU covered it here), but that might change.  Because all across Europe, law firms are diligently working up practical plans to seize Russian state assets - and last month the tip of this iceberg was sighted.  In all the Greek excitement, I certainly didn't spot it.

Apparently this is all very real and maybe even imminent.  There may be trouble ahead ...  oh, and that EC investigation on Gazprom rumbles on.    The countries of the Orthodox faiths must think us western europeans have got it in for them.

A good job the Chinese have problems of their own.  More nervous days in Mariupol though, I'd suggest.

ND

Osbrone to repeat 2012 Omnishambles budget

There is a budget tomorrow, lost in the unfolding Greek disaster that it will be. But from the bits I have gleaned in the media I am confidently predicting a  2012 style omnishambles budget:

There are to be £12 billion of welfare cuts, £11.5b if you exclude the radical and stupid idea of outsourcing over-75's licence fees to the BBC (it is a silly gamer, the licence fee is our money, like any other tax not the BBC's, the Government are just engaging in fiscal sleight of hand to cut the BBC budget a smidgen).

Also f note is the move t increase the inheritance tax threshold just as some welfare cuts are to be made. In the early years of the Coalition the Tories took a lot of flak, rightly, for cutting the 50p top rate of tax to 45p. At a time when the cuts are hitting the poorest, this is no time to do it.

The time to make radical tax cuts is in the 2 years before an election, not in its aftermath. You don't reward voters who have not served their purpose by voting, you look to store up the political capital to make them happy next time ahead of the next election.

Not that I vote Tory, but their sunny days in the polls are to be numbered if the Budget turns out as currently predicted.

Monday, 6 July 2015

The "O'crapalypse"

It's really hard to see how Greece can stay in the Eurozone and even the EU from here on in:

1. There is only around €500 million of cash in Greek banks  and even with allowances of €60 euros per person that is only 1 days supply left.

2. The ECB is not a political unit and Draghi hates being seen as partisan so it will not do anything ahead of agreement by the EU leaders.

3. The EU leaders are not meeting until tomorrow - so good luck in Greece trying to live for at least 48 hours with no money.

4. The IMF loans are sub-ordinate to the EU ones and the Greeks have defaulted anyway.

Basically, by the middle of this week Greece will have no money left, let alone trying to pay €3.5 billion in a couple of weeks time to the EU.

So, even if the Euro leaders try hard - which initial reactions suggest they are not minded too anyway, the chances are that Greece will have to issue its own scrip sometime this week in order to keep any semblance of the economy going. Medicines and food are running low with the Banks shut - the Country maybe struggling but ordinary Greeks can afford to buy goods - it is the EU via the ECB that is creating an artificial shortage.

As I have maintained for years, the sooner they do this, bite the bullet of a hefty devaluation and get on with it the better - The Country will be a much better place in 3 years, versus the 7 years of disaster that have accompanied trying to pay the debts.

As for the Eurozone, ECB and all that - there is nothing positive to be said at all. The actions to create the crisis in Greece are sickening, the lack of vision and judgement to design an easy path to exit or a parallel 'soft euro' for Italy, Spain and Portugal too is pathetic. The UK can also see clearly where attempts to negotiate or change the will of Germany get you - nowhere and worse.

The sooner we can leave the better, when is that Referendum?

Sunday, 5 July 2015

Oxi oxi oxi!



Will the creditors capitulate?

Will there be a France-Germany rift; a north-south rift?

What will be the consequences for Spain, Portugal, and Italy?

It's all to play for in this rather interesting, not to mention high-stakes, poker.

Friday, 3 July 2015

The Grown-Ups Will Be Taking Charge Again

Is it the ritual of voting for who's to be chucked off 'Strictly' that gives people strange ideas about democracy?  Do people 'voting against austerity' think they are doing something meaningful?   Or do they recognise it's just a way of registering their bit of a protest with those - 'the adults in the room', © Christine Lagarde 2015 - who will take decisions regardless.  Or done out of devilment, like when we voted Jocelyn Hapless-Nerd to be form captain.  Not a golden age for democracy.

There's quite a lot of this going on, and it's prominent enough to be taken seriously - or at least, analysed as a serious phenomenon.  Scotland has had its spasm, and will probably be invited to jerk itself off again at a tactical moment of the SNP's choosing sometime soon.  The Greek thing will play itself into another frenetic bout of megaphone diplomacy next week.  Before 2017 is out we shall all be having a go at the old In-Out.  Hey, and the game may soon be extended to 16-year olds, that'll do wonders for the maturity-level of the whole thing.

So: if I vote 'no to austerity', more-or-less in a vacuum, do I consider I am invoking a fundamental right unilaterally to force *someone* to implement a Marshall Plan in my favour?  A bit of a perversion of of the least-worst-system-yet-devised, that.

I am reminded of the 1980s, when Lambeth and Liverpool councillors were wont to vote for utterly demented things, some of which were just empty (unilateral nuclear disarmament in Kennington) but others of which couldn't be allowed to pass: 'spending' money they didn't have was a favourite.  Reality struck, in the form of a new law requiring that a named council employee (the 'nominated adult-in-the-room') was personally responsible for imposing a balanced budget on the naughty councillors.

Jocelyn H-N's electoral success didn't turn out quite as funnily as we'd hoped either.  Not dissimilar really: when it comes right down to it, the adults always get out the cane.  Eventually.

ND

The hidden reason why BA would like Heathrow expansion even more than you think


Further to the post yesterday about the UK airport choice, one of the biggest supporters of Heathrow is British Airways (well, its parent company the boringly named International Airlines Group).

BA's HQ is at the Waterside building, pictured above. It is a epic paean to corporate excess. A huge sprawling building, never really filled with staff and built at a cost of £200 million in 1998. It has a long hall, shops, etc. A very nice place to work and absolutely no re-sale value whatsoever. BA has tried to put it in its Pension scheme over the years amongst other things. But a building with no real re-sale value (what other business would want a 100,000 suare foot between the M25 and the Runway at Heathrow?) it has become an albatross trapping BA in an office to big to leave and costly to maintain.

But lo, a new runway would mean the demolishing of this building and of course, a compulsory purchase order for Waterside. No doubt, being a CP, the price would be something astronomical, after all if it cost £200 million in 1998 with the rise in commercial property values surely now it would be £500m or more. Of course, BA has not far from here and also scheduled fro demolition its staff hub for the aircrews and engineers - all of this would have to go too. All at CP prices.

Thus as part of a new runway programme BA will be subsidised directly by the taxpayer to move and re-build a big chunk of its estate. Either saving them a fortune or resulting in a free upgrade of the estate that would be a huge benefit.

This over and above the massive benefit of a hub being built at their home airport anyway. No wonder Willie Walsh is so keen on Heathrow expansion.

Thursday, 2 July 2015

UK Aiports

I have read now some of the £20 million airport review. Overall, it is quite a weak document. Clearly the agendas of Lobbyists are covered - from both sides so you could say it was balanced. But it is a sort of Mutually Assured Destruction type of balance from the Cold War Era.

Gatwick hate Heathrow;
Heathrow hate Gatwick;
Boris wants an Island;
Business want Heathrow;
NIMBY's want it somewhere else.

Unsurprisingly there is little political capital in doing this and I can see Cameron pushing this decision further off into the future. What I see thought is some interesting stats; business travel is falling, Heathrow still does a huge amount of freight to Terminal 4.

So where is this need for Business travellers coming from, not from the statistics. IN my own corporate world business travel is increasingly being hammered by Skype and Video calls - long promised but was always going to happen due to the sheer cost of travel.

Freight could surely go to the Midlands or Stanstead. Leisure travel, the growing sector, could go to any airport around the UK.

Mr Drew of this parish suggested a free for all with the Private Sector building the runways and airlines choosing what they want and charging passengers - the old, letting the market decide trick.

But for our arcane planning system that might work, but to pass any planning and the endless judicial reviews, the heft of the Government is likely required as the cost/risk analysis won't work for a private venture. Plus those private companies do love a little subsidy tickle when they can get one so why no badger the Government s much as possible - a subsidy always falls out after all!

As it is, I still think the odds are not on Heathrow unless Labour decide to back the scheme to burnish their business friendly credentials - so much for the Tory majority making Government easier.

Wednesday, 1 July 2015

Commercial EUnion : We won't make a Drachma out of a crisis




Greece's Prime Minister Alexis Tsipras has offered new concessions to the country's creditors.
 But Germany says a new agreement on a bailout would not be possible until after the referendum this weekend.

Some sources are suggesting that a deal was very close just before the Greeks withdrew for the referendum. But that the creditors wouldn't budge.

Greece has defaulted on its IMF loans.
The ECB hasn't said it will definitely  bail out, erm.. lend the Greek banks enough to get through another month.

Anyone else get the feeling that Angela and the EU has had enough of the Greek tradgedy? That they think they can manage the default fallout quite well now. Better than they could have done even two years ago ?

And that the EU has decided to take the hit at this point in time, rather than down the road ? The Rubicon has been crossed?  And whatever the Greeks decide to do now, it won't be enough ?