Saturday, 30 April 2016

Econometrics, the Bane of our Existence: Weekend Reading

Fun though it is to have a punt at predicting the price of oil two years hence, it is constantly amazing to me that apparently hard-headed people fall for economic forecasting all the time, without once giving thought to the fact that (a) empirically, it has a staggeringly awful track record - you'd never take medicine from a physician with a history of failure like that; and (b) intellectually, it is bankrupt.

I could write my own lengthy & vehement essay on the wretched pseudo-science (and very likely will): but you'll probably prefer this, by a proper professor.

ND

Thursday, 28 April 2016

Economists for Brexit

A strange week indeed in the world of this interminable Brexit referendum.


Firstly it appears that the polling 2 months out shows the race closer than anyone would believe. I am minded to be led by my own views that perhaps a really big chunk of the UK populace want to Leave the EU and it really makes little difference how many World Leaders or Dodgy Dossiers are rolled out by the Prime Minister and the Remain side; minds are made up.


In which case, it will be all about turnout on the day which makes predicting the outcome a fools errand. England may have been knocked out of the Euro's on the Monday - or perhaps they will be steaming through - how will the nationalistic fervour play out?




Anyway, today sees some very esteemed economists come out for Brexit and shoot a fair few of the Remain foxes. I have long respected Roger Bootle who I have known for years on and off.


Roger often gets things right, he was one of the ones noting in the early 2000's how spectacularly over-priced house prices had become and thus predicted much of the Great Recession. Few did, even if everyone claims to have done now 8 years later.


Only key issue that Leave seem to be grasping is that there is a trap in the whole EEA debate; a smokecreen of complex economic interpretation. The reason to Leave to EU is to control our borders and Government. Joining the EEA is a mis-step as it will allow the Euro-Elites to continue to impose free movement of people.


Today the economists show that the vast majority of trade is covered by the WTO and Ted Cruz wrote yesterday anyway that Obama is talking through his behind on the US approach.


It is about time the Leave campaign had a good whole week. 5 more and they can actually win, tall order though that is.

Wednesday, 27 April 2016

Meanwhile, Back In The Markets ... Big Events

Has anyone reported this in Europe?  On Monday, the new US LNG terminal at Sabine Pass was formally opened, sending out a cargo of gas bound for Portugal.  Yes, folks, that's an export terminal.  Shale gas is a-comin' our way.

The past week has seen a serious uptick across the energy commodities' forward curves - Brent up 7% across the whole structure, UK natural gas up 20% at the near-end, even coal up 5% at the back end.  Brent is still in modest, uninformative contango (as is gas) so a parallel upwards shift doesn't betoken an end to basic oversupply.  But hey, the producers will be happy enough to be able to lock in at higher prices.  20% in one week is not to be sneezed at - any fully-hedged UK utilities will be smiling broadly: any that were exposed will have been scrambling, maybe even to buy some of that US gas on a long-term contract.

And of course Sterling (spot) has had what some see has a post-Obama speech boost, though it's not at all as pronounced as the commodities - more within the range of general noise.

The opening ceremony at Sabine Pass could be seen as more significant than the COP21 "signing ceremony" in New York on Friday.  Signing? 
"The US, China and India - the three biggest climate polluters - have all committed to join the agreement, possibly as early as this year."
Possibly as early as that, eh?  Oh well.

ND

Tuesday, 26 April 2016

Going Out In Style

Father Ted famously uses the occasion of his Golden Cleric award to make an acceptance speech that settles a few old scores.  "And now, we move on to liars ..."   Yesterday I attended the retirement celebrations of an outstanding and highly-esteemed lawyer who practised in my neck of the woods for 30 years.  Though extremely effective, yer man is the eiptome of 'mild mannered' and we looked forward to his address in the justified anticipation of some wise and witty words.  We got all that - and more.

A bit of background.  In the bad old days before competition in the energy industries (and by Heaven, they were bad) one of the great nationalised industries used a particular law firm for all its major commercial dealings.  The senior partner in said firm therefore effectively wielded the power of his client's monopoly - and many there were who felt he did so to baleful effect.  Across the industry, all of us on 'the other side of the table' had cause to mutter under our breaths.  But hey, monopoly is monopoly, you just have to grin and get on with it.

Anyhow, our golden guy was once a junior lawyer in this very firm.  As people do, he was paying tribute to various folks he'd learned from over the years, and when his account reached that period of his career we were wondering what characteristically diplomatic turn of phrase he might deploy to describe the great ogre under whose lash we had all suffered.  He certainly picked his words carefully - "treacherous old bastard!", to be exact.

It was a great party.

Any other good retirement speech stories out there?

ND

Monday, 25 April 2016

Not shaping up as the best year





Businesses go bust all the time. It is the way of Capitalism and overall is a force for the good. Rubbish is cleared away and shiny, new and hopefully more efficient beasts are freed to emerge.


More likely, old and knackered companies are taken out where the new ones have already won the field.


BHS going into administration is the latest such event. Online retailing and a changing high street (seriously, youngsters die for iphones and wifi, they have few material needs beyond this that I can see apart from cheap fashion) mix have done for a format that was all things to all men circa 1995.


It is said a buyer will be sought, but they have already tried that and Dominic Chappell did not really have any answers to the business model, just attempted financial engineering.


So the shops will be sold piecemeal and BHS will be gone with Woolworths. Of course, there is the Tata steel issue too, where doey-eyed management is trying to get the Government onside with a sizeable bale out. No such thing is required, there is plenty of steel in the world and plenty for the future. It is not like the iron ore is from the UK so it is hard to make this a 'national security' issue.


But taken together these two sad stories do not do much to show the country is robust health. The high street continues its long term re-arrangement but does the online world generate the jobs and economy of the pre-online high street. If not, what are we to do to cover the gap? In steel we cannot compete with China's over-investment - same as in ship-building previously. Again, what can be done.


Currently unemployment is low in the UK, but for how long if the economy remains uncompetitive and based on a zero interest rate policy. The UK should make it through this bumpy period post the referendum, but it is a sign perhaps that resilience has its limits.

Saturday, 23 April 2016

Weekend: Remembering Ronnie Corbett

You won't find me name-dropping luvvies, mainly because I don't know any - with two* exceptions, one of them now sadly departed.  I refer to my former neighbour Ronnie Corbett of that ilk.
Pic: Beeb

I knew him (a bit) for over 40 years.  It was always amusing to see a Rolls Royce driving around with just a pair of hands visible on the wheel and a glimpse of the crown of his head.  Seriously, he was a top bloke and had a real sense of civic duty and noblesse oblige.  If you asked him for something realistic (a bit of undemanding figure-head patronage, school prize day or opening a community hall, you know the sort of thing) he would usually try to help - year in, year out.  Not every star of stage and screen is quite such a nice chap.  (I once had a run-in with Cyril Fletcher which was of quite another character.)   Ronnie Corbett, David MacKay, Frank Kelly - all the good guys are dropping like flies.  (If the Reaper is coming after the songwriters now - Wood, Prince - then McCartney and Dylan had better get a shift on with their oldies gig.)

A funny story: the road we lived in was something of a rat-run for unwanted truck traffic, and the Council proposed to install a width-restrictor about a hundred yards from Chateau Corbett.  He objected, strongly.  So the bastards placed it between the 'in' and the 'out' of his sweeping in-and-out drive - with the result that trucks would take a detour through his property to avoid the barrier!  He had to fence off one of his entrances to stop them.  Sounds like a Ronnie Barker joke.

Yes, everyone got on well with Ronnie - not least, the local vicar: great golfing buddies, and he even 'changed his mind' on baptising babies born out of wedlock when Ronnie asked him to baptise one of his grandchildren ...  Will be missed, as they say.

ND

- - - - - - - - - - -
*The other is Angelina Jolie (sic), to whom I am related by marriage.  Strange but true.  Mrs D likes to claim that connection as one to Brad Pitt as well.

Friday, 22 April 2016

A Bloody Great Bale of Straw in the Wind

... for Drax, that is.  Here's a telling slip by Amber Rudd.  Writing to defend the indefensible Hinkley Point in the Graun, she says:
"new nuclear is the only proven low-carbon technology that can provide continuous power, irrespective of whether the wind is blowing or the sun is shining"
 - i.e. what we in the trade call baseload.

Oooh.  What about biomass then, lady?  What about Carbon Capture & Storage, that *indispensable* adjunct to the gas plants necessary to balance the intermittent and random output of wind?   Both, like nukes, capable of continuous power and much better still, both what we call dispatchable ...

They know, really.  Biomass mostly isn't low carbon; and CCS is a fantasy.  They know, really.

ND

Thursday, 21 April 2016

Leave takes shape, too late but at last at least

It is rather disappointing that the Leave campaign in the Referendum has only now got somewhere towards explaining what it is aiming for. This is a rather crucial omission, which is very likely to cost it the campaign overall. Indeed, with polls fairly consistent at a 60/40 split, the Leave team need some game-changing events to save them from left field.

The Leave team have at least realised we can't join the EEA. After all, why leave the EU just to join its shadow little brother. They key here is immigration, in the EEA, we still have no border control. To me, population control is central to the Leave platform.

As I have said before, whether or not the UK has the balls of the Australians, controlling population and mitigating climate change are the big tests of the next century. These are the strategic issues that determine whether society can survive or not.

The EEA does not allow this. Furthermore, with globalisation, as highlighted here by BE yesterday, trade deals can be done or not and matter less than before.

The key is stopping subsidies to kleptocratic governments across the continent, stopping support for the anti-democratic and anti-business Luxembourg set and gaining potential control over our borders.

With this as the core driver, Leave have a better message - its a tough one that appeals little to the lefties and city liberal elite; but it could resonate enough in shires and county towns to see Leave squeak home

Wednesday, 20 April 2016

There is another way

Hats off to the BBC for their more in-depth analysis of the issues around the EU referendum. Yes, we are going to be talking about this a lot over the next few weeks. Monday night's Newsnight discussion was interesting, with Evan Davis smacking down silliness on both sides.

One thing which we keep hearing from Remain boils down to "no, we won't be able to", in the context of negotiating trade deals outside the EU. We can discuss hypotheticals like whether a free trade agreement between the EU and Australia, for example, is being held back by Romania, and whether the UK could sort something out more quickly unencumbered, until we are blue in the eyes; the simple fact is that we do not know until we try. Would we have to press the Article 50 button until we have sorted some of this stuff out? Again, that rather depends on who is in government.

Tim Worstall has an interesting article on Forbes about whether trade deals matter at all. He points out that in the long term, economic strength and dynamism come from productivity and specialisation.

The basic point here is that we enjoy high living standards if we produce high-value goods and services. Tim says that the best way to encourage people and firms to produce the valuable stuff is to expose them to stiff competition. That means breaking up monopolies, not subsidising and mollycoddling  inefficient industries, stopping restrictive practices, and by opening ourselves to importing stuff if it makes more sense to do so.

And the beauty of this is that we can do this ourselves and without reference to the Romanians, Australians, or French farm lobby.

After Brexit, there is nothing to stop the UK from opening itself up to full international competition. If we choose to reduce import duties to nothing, then we boost competition and thus encourage our firms to do better. Once we are producing better stuff, people overseas will want to buy it - and if it is of good enough quality then tariffs won't matter. We gave up the widget trade a long time ago.

If we want to unleash the UK's potential we must (also) undertake lots of reforms whichever way the referendum goes. We must open ourselves up to more investment, from wherever it comes. We must restructure our public services and welfare systems, opening them up to red-blooded competition and making them ruthlessly efficient. We must privatise the railways and roads, making users pay for the actual services and in turn making the firms accountable to their customers. We must concentrate public spending on the essentials and root out the nice-to-haves with zeal. We must simplify the tax system and slash its burden. We must make people more responsible for saving for their old age. 

This will all need a leadership which does not care all that much for short-term popularity or an image of niceness. It will require a seriousness and sense of purpose which we haven't seen since at least the Omnishambles budget. But it will have to be done carefully, so as to not irritate the people who need to implement it - see the latest Academy policy for details.

Most of all, what is needed is public support for the direction of travel. Does the UK (in or out of the EU) want to muddle through and sit comfortably as a middle-ranking European economy or does it want to be a world leader, to set examples, to be copied, to be envied?

Monday, 18 April 2016

Obituary Corner

I had been going to write about the funeral today of Ronnie Corbett - of all people - who was a neighbour of mine.  But I think it's for the weekend, because I have just learned of the awful and untimely death at 48 of Prof David MacKay, whom I've had cause to laud on C@W more than once.

Read about his remarkable career here - a rather bare-bones summary, it has to be said.  Here's an extract: 
MacKay's contributions in machine learning and information theory include the development of Bayesian methods for neural networks, the rediscovery ... of low-density parity-check codes, and the invention of Dasher, a software application for communication especially popular with those who cannot use a traditional keyboard... In 2008 he completed a book on energy consumption and energy production without fossil fuels called Sustainable Energy – Without the Hot Air. MacKay used £10,000 of his own money to publish the book, and the initial print run of 5,000 sold within days. Bill Gates ... called it "one of the best books on energy that has been written." (Source: Wiki)
And it was from there that he went on to be the Chief Scientist at DECC 2009-14.  Now you might reasonably imagine that doesn't speak too well for him: but quite the reverse - he was a lone voice of rationality in a morass of green-blob activist civil servants and half-brained politicians, and did his level best to show them the light, even breaking through sometimes with truths they just couldn't suppress.  Even though they proceeded to ignore them.  His work on showing that burning wood pellets for electricity generation can result in greater net CO2 emissions than coal-burning (the calculations are very complex) was revolutionary, and informs the debate that still has a long way to go before we finally stop the farce of pretending that industrial-scale biomass-burning is 'renewable'.

A great public man, as well as a very nice chap.

ND

Sunday, 17 April 2016

A lightbulb moment


An incandescent light bulb  
So, as with Mr Quango, there I am buying some bits before returning the the UK with my family after a short break. 


One thing I saw for sale and jumped at was 100W lightbulbs. In the 3rd world there is no EU regulation to stop the selling of Halogen bulbs and I guess there are still factories that churn them out.

You see, CFL bulbs, which via EU law have now replaced Halogen's are just no good.

They won't work for any outside lighting as they do not work in the cold, the small print tells you they take up to 1 hour to heat up and also you try finding a sparky who reckons they work with dimmer switches.

Worst of all, unless handled with impeccable care, never switched on or off and also taken back to the supplier for recycling; they are no better than Halogens. This last point really sticks, there is a whole army of green bloggers in alliance with bulb makers who have bullied Governments into making changes for 'enviromental reasons', but these are often bogus.

 CFL's have better energy usage because, er, they produce less light. They have a longer lifetime by a factor of 10 for constant use and are 3 times as efficient only under those circumstances. Funnily, in my house they go about as often, if not more frequently that before. Especially if you touched them, which is a no-no apparently.

But it is a great example of why we need to leave the EU and its corporatist enthralled allied to dim-thinking greenie-communism.

Saturday, 16 April 2016

Watching the Referendum Fix Go In

A straw in the wind.

Sir Alan Duncan MP, of colourful career, has had an unexpected epiphany.  From being a lifelong euroskeptic he's decided we're stronger safer better in.  His constituents are surprised because they recall him taking a rather different line, really quite recently.

But these things happen, don't they?

In other news; Sir Alan is very concerned at the thought that MPs might be judged by how wealthy they are, be required to publish their tax returns etc, because if high-achieving people had to worry about that kind of attention they wouldn't go into parliament at all.

As things stand, I would have though his tax return is a matter between him and the HMRC.

ND

Friday, 15 April 2016

Homosexual Food




I managed to appal my kids whilst in Arrecife, Lanzarote airport. I made a homophobic reference aloud to the entire food court. But to be fair to me, Bristol airport provoked me into it.

It was 10am. And I'd been up since 5am. And was hungry and had 30 minutes before boarding begins. This was in Bristol airport. The Quango clan was in the cafe area and looking for something to eat. 
And what was available was what is now always available in the UK. Packaged sandwiches consisting of foods that I would never choose to put together. Bottled water. An unknown brand of orange juice. Massive coffee cups, Sweet cookies and an assortment of unlikely flavoured muffins.

And that was about it. No cooked food except in a restaurant area, that had queues to get in. 
So, with a looming deadline its toastie and panini hell. 

Mozzarella and tomato sourdough. 
Goats cheese and sweet chili chutney
Emmental and mushrooms
Moroccan meatball wrap
Raspberry and white chocolate muffin

What is going on? Is this Tony Blair's fault? is it the EU? It all started happening around 1997. The phasing out of the cheese and ham toastie for an avocado and herb salad wrap. Where did all this ..this ..smug food come from? Where is the BLT? Or a ham sandwich? Gone. Dead. Deader than a megadrive.
All replaced by the likes of a falafel and red tapenade sandwich containing cucumber yogurt and coriander. 

This is the new food. And its everywhere.

Not just Bristol Airport. This is the new cafe snack, lunchtime food.  Pret- a- Nero-Bucks have consigned the 'old fashioned' grub to the likes of those terribly chav people at Greggs, and replaced it with the best food a liberal Guardian reading hipster can afford. Toasted Almonds and Baby Kale with cherry tomatoes sandwiches! Yummy.. !

Any public venue. Train station. Airport. Arena. Conference centre. Exhibition hall or shopping mall. The new food is on offer. 

So i'm standing in front of the chiller picking up Parsnip and wild crayfish..and putting it back..and grab a chicken raita salad wrap and try and read the label to see what chicken raita actually is ..
{ (Raita is a spiced yoghurt dressing made with finely diced cucumber and herbs. It is white with flecks of green and originates from Northern India).
.. and putting it back. And looking at the empty section that says 'egg and cress' and 'mature cheddar and pickle.' And thinking why are there acres of coconut chicken curry soups and yet no cream of chicken and no cheddar baguettes? .. Because you sold all the cheese ones..damn you.
 I have a seven year old boy here. He won't eat a rare roast beef and horseradish baguette.  I won't eat it with horseradish on. There must be something else ? 

What about crisps.. ? Mature cheddar and red onion ? Balsamic vinegar, sea salt and organic cider?
And then the girls come over and i think well they must have found something. but no.They didn't want any of it either. And so we bought some tea and coffee and juices and some croissants.

And I sulked and thought, well Quango, the world has changed. The mightily meek have inherited the food court. The days of a bacon sandwich are gone. Even if you did find one it would be a Miliband one. Jammed full of mango and brie and olives and..i dunno..macaroni.. in a gluten free, ciabatta roll.
Just accept it. Just .. move on.. Things can only better and all that..we live in a diverse society. Even in Bristol airport..Greggs aren't opening here anytime soon. Next time stop at the garage for a heated pie or something...move on..get with the progressives..


*****

And then I'm returning from Lanzarote. I'm in a Spanish food court in a Spanish airport. This could be full of nothing but paella and veal. 

Instead there was outlet after of outlet of' 'normal' food.
Upper Crust, the poor man's subway were doing good business. I adore their cheese and ham baguette. That's all you get by the way. Cheese and ham. If you want stuffed mushrooms and lime and mint dressing you'll have to bring your own.
There was a hot food place doing burgers. Big, thick burgers, that they are cooking right in front of you. Adding whatever peppers or lettuce you wish. And skewers cooking. Vegetables. Lamb. Beef.
Just cooking them up next to the team making pizzas to order.  It was unbelievable!. Real cooked food. Real..old style sliced egg in a sandwich. Ham and mustard. A toasted cheese sandwich. Smoked salmon. With or without cream cheese.

And that was when i snapped. In the middle of the airport. Aloud. Loudly aloud. I said..

"This is what I wanted! This is the stuff! Not that ..that ...that ...Gay food!"

And so caused my teenage girl to lecture me that food has no gender. And even if it did, it would be perfectly normal for a tomato to be in a same sex relationship. And gay people eat the same food as straight people. And so on.

And I had to explain I didn't mean to say gay. I used the wrong word. 

I meant PONCY!

 Poncy food UK я us.

And I'm sick of it!
 That's what I meant. 

Pretentious, pompous sandwiches made me homophobic.  And I sincerely apologise to anyone who is offended. 

Except the people at ***** at Bristol. Who can take their Ecuadorian **** wrapped in ***on a ****bed of **** and sunflower seeds and shove it *** their **** until its passed its sell by date.

*all food descriptions are from actual UK cafe chain menus. Though you probably know that and possibly even appreciate it.

Thursday, 14 April 2016

More Vulnerable than is Comfortable

When a teenager - and I know this is going to surprise you - I was an aircraft spotter, military division.  There were four of us, and at half term we would set out in a battered Ford Prefect on long, looping one-day expeditions from our South London fastness: meticulously planned, OS maps all the way, to take in as many military airfields as could be reached in one day, timed so that sun-up found us and our telescopes at the first stop, and sundown at the last.  (Our record was 12.  Our extremities were Kemble in the West, Upper Heyford to the North, and Honington to the East.  In between stops we would recite from memory whole Monty Python sketches and ISIRTA skits ... party on!)

Anyhow: the IRA campaign of the '70s was in full swing, but security at these places was typically laughable.  It was by no means unusual to be able to wade unchallenged through a hedge and approach fully operational military aircraft across the grass (I have the photos ...).  But we and our confreres were the only ones that did.  It occurred to us that the IRA must either be stupid, not really trying, or in some strange way strategically averse to causing millions of pounds worth of damage and tying up thousands of British military personnel at minimal risk to themselves ... 

Back in 2016, I have been travelling a bit recently and had cause to rehearse the same observation, this time in respect of civilian transportation systems.  It would be crass to give details, but I couldn't help noticing (as I am sure we all have) that security is *less than ideal* in a great many awkward places.

We could go through the same conjectures again; and I am led to the conclusion that we may be on a knife-edge as regards easygoing, easyjetting international transport for everyday purposes.  Of course everyone will keep dancing until the music abruptly stops.  There was a dip in air travel after 9/11 but since then air passenger miles have doubled (sic), thanks to better aircraft, more competition, more demand at low prices, more movements of people from developing countries, and Not Very Much Trouble.  I suggest that it stands to get a whole lot more difficult, time-consuming - and of course expensive.  Schengen or no Schengen.

Hope I'm wrong.

ND

Wednesday, 13 April 2016

Medicine and the swallowing thereof



If you did not catch Nick Robinson's Europe: Them or Us? last night, I highly recommend catching up online. The programme set out Britain's turbulent history leading up to joining the Community in January 1973. 

Could we have built a better Community if we had joined when invited to in the 1950s? Joining at the start would certainly have avoided the embarrassment of having our membership vetoed by Monsieur De Gaulle in 1963. The British establishment view in the 1950s seemed to be that the continentals would fail, so why waste time on silly projects? By the time we did join, the six had been building institutions and processes for twenty years. Might the organisation we have been part of for 40 years have been significantly more "British" if we had embraced the European Dream fully and wholeheartedly? Would the ECB be headquartered in Canary Wharf?

+++ Spoiler alert +++

At the end of the show, interviews with Ted Heath and a member of his cabinet recalled the Parliamentary antics needed to get the legislation through and, in the immediate aftermath of entry, the suggestion by the French of setting up a single currency. Heath's reaction: a shrug.

If the end result of a tightly-knit European union is regarded as a long-term inevitability, should Britain just swallow its medicine and get on with taking part? Should Britain learn to live with the lack of perfection of the project, the lack of direct democratic accountability, and get on with shaping the institutions as best it can? Or do we continue to assume that eventually the whole thing will unravel, or even prompt that unravelling by leaving?

Tuesday, 12 April 2016

An EU Referendum Classic

Back in action properly in a day or so.  Meantime it's hard not to LOL at yesterday's classic RichardNorthism on the subject of some recent interview of Nigel Lawson.  Headed The Limits to Tolerance (!), it includes this:
the arrogant, malign fool that is Lawson had not even finished in his attempt to destroy the campaign. Asked about border controls in Ireland, the idiot told Marr that border checks would have to be resumed. If there could possibly be a more sensitive subject, I would like to know what it is. In one fell swoop, Lawson has just wiped out the Northern Ireland "leave" vote. And what is especially galling on this is that I personally have spent several weeks researching this issue and crafting a sensible "line to take"
... here we have this man, in a matter of seconds, destroy hundreds of hours of work, setting back carefully crafted arguments and possibly wiping out the entire Northern Ireland vote... exactly an example of what I've been complaining about. From a personal perspective, I simply cannot be expected to work hour after hour, week after week – as I have done for years – only to have my efforts destroyed in seconds by idiots such as Lawson, and stay mute. That is the point which so many of my critics seem to miss.
A passage like this could be from one of Craig Brown's brilliant parodies.  Or, sadly, from a clinical textbook.  Laugh?  Actually I nearly wept for the poor man.

ND

Sunday, 10 April 2016

In Which Your Hero is Gassed by the CRS

So there are Mr & Mrs Drew going about their lawful holiday in Paris, returning by train from a pleasant day in St-Germain-en-Laye.  Bimbling through the labyrinth that is the Nation RER/Metro station (think Oxford Circus or Bank multiplied by five) we noticed a few folks with scarfs over their faces ... well, it was quite chilly, and anyhow the denizens of the RER include some dubious types from the banlieu as anyone will tell you ... we mounted an escalator to propel us into the daylight at our chosen exit.
Bam - straight into a cloud of CS with its characteristic smell, and effect on the eyes and throat.  I haven't had the pleasure for a couple of decades at least, when I last had my annual NBC test as a soldier.  (As I said, it was a cold day so at least the CS wasn't going to make its way to, ahem, sweaty parts, where it also has an effect ...).  Plus the usual helicopter, and the popping of some kind of percussion device being used by one side or another.

Yes, friends, this is one of a series of riots against M.Hollande's plans for a bit of labour law reform.  In the red corner, a mob known as Nuit Debout, who on this occasion were 'standing up' during the daytime.  Nuit Debout are probably what Momentum would like to be when they grow a pair - so we may see some copycat action in due course.  I wouldn't ordinarily cite Russia Today as any kind of reliable authority on anything, but here's their account.

Anyhow, call me a coward I really don't care, but my instincts are with the uniforms in cases like this, so we turned in this direction.
 Yes, in the blue corner were the CRS.  Best not tangled with, as the good Anna Raccoon recently observed.  They took pity on the middle-aged couple stumbling and spluttering off the top of the escalator (why no announcement down the Metro?? - I really don't think this would happen in London, they'd close the station) - and let us through.  They'd come for a bit of skull-cracking and it was the youthful lefties they were after - them and their last-ditch defence of the 35-hour week.
So for us it was back to the hotel and plenty of talcum powder.  I know the drill.  We took a circuitous route out to our evening engagement ...  I wonder whether Hollande will get his labour reforms? 

ND

Friday, 8 April 2016

Weekend discussion: statistics

Matthew Lynn in the Telegraph takes an interesting look at the Eurostat intra-EU trade numbers:
Eurostat, hardly an anti-EU source, has just published its latest analysis of the degree and depth of trade within the EU. 
It ranks all the 28 countries based on the share of their exports that go to other countries in the Union. So where was the UK? Right at the very bottom of the table, with only 44pc of the stuff we sell abroad going to the EU. 
The only other country below 50pc was tiny Malta, basically a financial and tourism centre, on 45pc. All the other 26 nations are selling more than half their exports within the EU, some overwhelmingly so. The average across the EU is 62pc. We are running at half to two thirds the levels of other European economies. 
It is a similar, if not quite so dramatic story, on imports. We are third from bottom of that league table, with the rest of the EU accounting for 54pc of our imports – a reflection mainly of the huge deficit we run with the rest of Europe. The only countries below us were Greece and the Netherlands, on 53pc and 46pc respectively.
His conclusion: that the EU is not key to the UK's economic position in the long term. 
Why is that? The answer is pretty simple. The EU economy has stagnated – GDP is still some 6pc below what it was back in 2008 – while the rest of the world has been growing far more quickly. In that context, the findings are not very surprising. It is far easier to sell stuff to people with plenty of money than to people with not much of the stuff.
There are three important points that come out of that, however. The first is that it explains why the UK will be the first country to vote on leaving the EU. It simply doesn’t matter that much to us.
Do read the whole thing. Over a glass of French red.

Thursday, 7 April 2016

Is Frexit sur les cartes?



In the UK we hold the single market up as the primary motivation for EU membership. Perhaps this is not the case for our neighbours across La Manche. Tempers fray at the border between France la Belle and the kingdom to her south over the issue of that timeless eau de vie.

French winemakers are fed up that French consumers are going for Spanish and Italian wines - sacré bleu! Local producers are losing market share... and are demanding protection from "unfair competition". It looks as though national regulations require producers in France to jump through hoops which other European countries do not require. In a single market, that means competitors can presumably provide more bang for the Euro.

Further dommage for the Fifth Republic is that Italy has overtaken France as the world's largest wine-producing country. Could that be linked to Britain's discovery of prosecco?

...but this is what it means to be in a union with your competitors. From this side of the Channel, these gripes seem laughable. Hijacking your rivals' trucks and destroying their goods to stop them from getting to market? In 2016? Presumably this is all a show to get the taxpayer to pony up some compensation. Throw in an accusation of illicit importation of cheaper non-European wines re-badged, and now we have fraud in the mix as well. What is the French for sore?

It is not a dissimilar situation to the steel one: are French households (large in number) supposed to pay more for their wine by Buying French to support local industry (relatively few in number)? But in other ways it is totally different: the undercutters are European and so they are not "dumping" in way that Chinese state steel-makers are, apparently. The same basic agricultural and environmental minimum standards surely apply to Spanish growers as to French.

So in this case the French producers must either accept less than a monopoly in their home market, the French government must cut red tape and/or taxes to allow producers to compete with more dynamic members of the single market, or France must leave the single market and erect barriers.

European voters must face up to the fact that they must compete in the global market - whether they like it or not. We want the shiny phones and the huge tellies, but we also want short hours, long holidays and the security blanket of the welfare state. We can only do that if we sell enough stuff that other markets want to buy. 

But most importantly.... what a terrible waste of wine! Capitalists are appalled.

Wednesday, 6 April 2016

Events, eh? They Just Keep Coming

As you've probably gathered, 3 of the 4 of us Capitalists are in foreign parts just now leaving BE to keep y'all thoroughly engaged.  And isn't it always the way: when you're out of town, the Events come piling in.

Cameron has long predicted the next big scandal would be over lobbying: he obviously didn't reckon on a special Panamanian episode of Family Fortunes.  It can't directly be spun for or against the EU, but indirectly it's a corker for the general mid-term anti-government, anti-establishment, anti-everything sentiment that will give Brexit its best shot (and probably Sadiq Khan as well).

Ah well, shoulders to the wheel to try and put paid to the latter.  But that's for next week - when I'm back from hols.

ND

Tuesday, 5 April 2016

They Know, Really

Under a bold headline (that was doubtless written before even beginning to draft the article) -
Green policies are not responsible for the Tata steel crisis
- the Grauniad proceeds to cite all manner of confused and confusing stuff.  Credibility is not much enhanced by their quoting of that well-known authority and general arse John 'Bummer' Gummer: “There’s no evidence at all that there’s been offshoring of industry from Britain because of our green policies. For most industries, the energy element is extremely small and the amount of extra cost from the green levies is so small as not to be in any way crucial.

But they do also publish this handy and illuminating graph from DECC:

Michael White in the same organ on the same day doesn't want to blame Brussels, but can evidently interpret the graph perfectly well for himself.
Last but not least, painful for progressives to admit, Ed Miliband’s 2008 Climate Change Act, which committed Britain to being a “world leader in reducing CO2 emissions” didn’t help. It now looks like the kind of vanity project which has hurt UK industry without doing much good. And don’t forget that in his “hug a huskie” phase Cameron whipped Tory MPs to vote for the bill too. It was a pricing gift to rival steelmakers, an example of the kind of moral imperialism as arrogant and self-regarding in its own way as the old-fashioned variety or more recently unilateral nuclear disarmament. What a painful learning curve we are on.
ND

Monday, 4 April 2016

Save our Steel

The steel industry seems to appeal to the front pages in a way that others do not. Perhaps those red-hot flows stir something in us, maybe the dangerous working conditions invoke a sense of heroic endeavour, maybe we are proud of our industrial past. Maybe we just liked The Full Monty.

Anyway, we know that the steel industry is in decline, and not just because of overcapacity in China leading to a flood of imports. Manufacturing industry now makes up only 10% of the UK economy.

George Osborne promised us a "march of the makers". That has not appeared. The UK current account (of which the balance of trade is one part) is in the largest deficit ever. What remains of heavy industry appears to be buckling under the weight of energy costs, and the rest of the economy seems to be slowing down.

So what should be done? Should the government prop up steel? Should it raise the drawbridges on foreign trade? The panicked reaction of the government does not bode well for free-marketeers. A good reason to be concerned about the stance on trade post-Brexit. The recyclability of tea bags will be the least of our worries.

Instead of yearning for the days of British Steel, the Austin Allegro, and waiting six months for the Post Office to install a party line, the UK needs to push on and improve its competitiveness. Only that way can the economy generate the products and services which keep us all afloat.

So what practical steps can the government take?

Energy: there is no face-saving way out: the government should announce that the new nuclear programme cannot work in its current form. If firms want to build new power stations then they will be free to do so, but without pre-determined wholesale prices. As ND points out, these "contracts for difference" distort the market and mean that investment in all types of generation is drying up. There should be a complete sweeping away of the thicket of taxes (for that is what they are) and subsidies. If you want to build a power station, invest your own money and take your own risk. At the same time, the government could announce that it will fast-track applications for new developments using proven technology. That probably means gas and onshore wind, but let the market decide. The greens and NIMBYs will just have to lump it. Press ahead with fracking permits.

Sterling: it is obvious that the Pound is too strong. However, "devaluation" does not often work, and currency wars are not what the world needs. What does work is a rigorous and credible monetary framework. The government should re-affirm its commitment to 2% CPI inflation. It could tweak the Bank of England's mandate to target 2% average inflation, or it could be really radical and move to a nominal GDP target. Any of those points would imply looser money in the short term, which would surely soften Sterling.

Housebuilding: slash the red tape which holds back housebuilding and commercial developments. Create Docklands-style development corporations for large urban sites. Build new towns. Throw more money at councils and housing associations to build more subsidised housing.

Infrastructure: accelerate public-transport investment. Build more roads. Sort out the broadband industry. Say yes to Heathrow. Say yes to Gatwick. Improve rail links to Stansted.

Much of this stuff requires the authorities to take on vested interests. So it is time for Britain's leaders to lead. Forget focus groups and Yougov polls. Set out a vision and persuade people that it makes sense. We know what needs to happen. Just get on with it.


Saturday, 2 April 2016

Should Britain join the Euro?

It seems weird now, but there was a point during those heady early days of the Blair government when it seemed possible that Britain would join the Euro at its launch. Nobody had done much of the technical preparation, but it seemed plausible that the government would announce its intentions and everything would swing into place. We now think that would have been an awful decision, but would it have been quite as catastrophic as the consensus would now have it?

If the UK had been part of the Eurozone from the outset, the Eurozone would have looked very different. The UK is the second or third largest economy in the EU, so what happens in the UK would have been of interest to the policy-makers in Frankfurt. The first few years would have been quite tough, probably, because money would have been too tight. Back in those days, UK interest rates were significantly higher than those in Germany et al.. Our boom would have been much more bubbly, or the government would have had to try and hold it back with fiscal restraint, or perhaps a bit of both. But Euro interest rates would have started to catch up if Britain's inflation rate had started to take off, albeit not as responsively as under an independent monetary regime.

Ireland's boom and bust might not have been quite as bad if the UK had been included. Spain's boom might not have got so quite out of hand. Overall, the EU economy might have done quite a bit better if Eurozone rates had been higher, earlier. When the crash hit things would have been dire, of course, but perhaps the UK would have been arguing for looser money sooner, so we may not have had quite the same tight-money-led depression that has engulfed Spain and others. 

Despite the facade of virtue of Brown's famous five tests, at heart of his veto on Euro-membership was the Chancellor's political ambition. He knew that the treaties would hold him in check when it came to election-winning spending sprees. While he preached "prudence for a purpose", Gordon Brown was (as we know now) planning a massive expansion of the British state. Brussels would have soon been criticising and even censuring Britain for its profligacy. Who knows quite what the outcome might have been, but even if spending had been a couple of percentage points lower in the run-up to the crash we may have been in much better shape to deal with it.

Why am I doing a post about joining the Euro when there is basically no prospect of it? Because the lessons of outsourcing economic policy to the EU still implications now. We keep hearing that the UK government cannot bail out Port Talbot because of EU rules, both on external trade and internal state aid. 

Good.

The state aid rules are basically a British imposition on the rest of Europe. They absolutely make sense. The alternative would be a constant competition between members of the single market to undercut each other with subsidies and preferential treatment. The current setup is a victory for Britain, so how ironic that many (even on the supposed "right" of politics) are calling for state intervention in the steel industry. Thank goodness that it is all virtue signalling, for nothing much can be done while we are bound by the EU rules.

This is the best single reason I can think of for staying in the Union. To get our childish politicians from making absolutely horrendous decisions, just to meet the needs of today's news cycle.

The second best reason is to have the weight of the biggest consumer market behind you at the trade tariff negotiations. Nobody would say that the EU is brilliant at negotiating trade deals, but when China slaps on protectionist tariffs what better leverage than to be able to respond on behalf of 500 million prosperous consumers? 

Then there is TTIP, which looks like it ought to create a huge planet-spanning single market with the US and EU at its core. I have briefly looked at the trans-pacific deal which includes the US, Aus, NZ, Japan, Malaysia and others. Despite what the lefties tell you, it is mostly perfectly reasonable. If minnows like Kiwiland can do it, think how much stronger the EU's hand is in those talks. TTIP and TPP combined basically creates a massive single market with sensible membership. We basically get the "Anglosphere" economy which Hannan et al. have been calling for, but get to carry on popping over to France when the cellar gets a bit empty. This is the bigger picture.

So what we should do after we have voted strongly to stay In (which is what is going to happen), is to ignore the inevitable whinging from the cyberkippers, and crack on with embracing reality. We should start with closing down the national institutions which double-up with continent-wide ones. In one of the areas I work in, we have an EU agency and 28 national agencies (OK, not quite, because the Benelux countries have a joint office). The EU agency sets its fees deliberately high so as to maintain demand at national level. So not only are taxpayers supporting a massive duplication of effort, businesses who use the central agency are paying well over the cost price for doing so. By getting rid of the national agencies we would all save twice. In other areas there are massive barriers to intra-EU trade where national regulators - whether deliberately or not - protect incumbents.

We should join the Euro, and convert the Bank of England into much needed flats. We could have a clear-out of Westminster and free up office space and infrastructure capacity for productive businesses. We could slash red tape and "gold-plating" by simply legislating for Directives to have direct effect. Government efforts in Brussels negotiations could be redirected from trying to opt out of individual measures to making the whole system itself work better - and goodness knows the system needs to be improved. Instead of nationalising policy areas, we could push for the sorts of market-based reforms which were so successfully implemented in the 80s and 90s. Imagine, for example, if we could get the other 27 countries to copy our employment rules. Think how much more dynamic the continent would be and thus how much better the UK economy would perform. We could push for a sensible EU-wide welfare and pensions regime to make it much easier to move our jobs and homes and investments about. Starting from scratch would be a boon for every member state, and the whole thing could be put on a much more sustainable footing. 

The future in a properly-constructed EU, trading freely with our prosperous allies around the world, could be bright and free.

So let's stop playing the underdog, and (re-)embrace our place in the world as leaders.