Friday, 31 October 2014

Osborne retires South Sea and WW1 debt

This just goes to show how terrible Government can be, politicians have been stuffing us with debt for centuries. It makes me laugh (hysterically) to think that my great-great grandchildren will be writing something similar about the Great Recession debt - but its likely to be true, although with shorter maturities the morass of Government debt will not be so identifiable.

Which, makes me consider on a Friday perhaps it would be better for the Country is all debt raised was hypothecated, so much for defence, the NHS, for investments, for State Pensions. In the short run it would mean nothing, but after about 10yrs the data would start to look more meaningful. All those complaints about say, the Baby boomers sucking up all the money having over-spent in their day, would be much more directly attributable.

No way Governments will ever agree to this then!

Still it's Friday...

The country is running out of money and everyone is fighting. It reminds me a lot of my childhood.” – Conan O’Brien

“Interest on debts grow without rain.” -Yiddish Proverb

“Forgetfulness. A gift of God bestowed upon debtors in compensation for their destitution of conscience.” -Ambrose Bierce

“Blessed are the young, for they shall inherit the national debt.” -Herbert Hoover

“In the long run we shall have to pay our debts at a time that may be very inconvenient for our survival.” -Norbert Wiener

Thursday, 30 October 2014

High House prices will realise the socialist utopia in the UK

Following on from some perspetive comments on the last post, it is worth further exploring just how quickly the UK is running down its historical wealth.

This has happened to many, many countries in the past - Argentina of the ealy 1900's is always a prime example, but of course Spain was a world power and the Chinese empire's waxing and waning over the millenia offers many examples.

The UK itself nearly fell-off the cliff in 1976. An IMF bail-out at the height of the 'sick-man of Europe' phase. It took a decade of supply-side reforms to drag the country back from the precipice, but was thay forever, or a bump on the road down.

I ask, becuase increasingly no just in the UK but all all over Europe and North America, the feeling is that our children will have worse prospects than ourselves, that life is getting tougher and not better. Some of this is illusory, as we accept massive developments in health care, technology and communications whilst attaching no valuee to these. But in terms of income and GDP, the writing is on the wall.

Perhaps a good example of how a country can decline can be seen in the wealth transfers between generations.

In the UK, property prices have meant that the family home is the man source of savings for the vast majority of the population. These prices have shot up, making older people much richer than young ones. Now we are seeing them want to pass-on this wealth their children, who cannot afford to buy a starter home. So far, so what, the wealth is being shared around. But then, the cost of the bank rentier removes the built-up wealth

But in London I note  key affect. English people are selling to foreigners and moving out. No one in my large team at work in the City buys anywhere near central London now, if at all. No on under 30 evens owns a flat. The foreigners are buying up the City. They are bringing in wealth to replace the UK wealth. This then works its way out to the surrounding South East.

However, the parents have to chip in for their children, so the money they have made from the foreigners is expended on bloated house prices elsewhere. The build up of wealth was illusory - but the decimation of it real. The younger generation do not have the incomes, when they in turn come to help their children, they will not have the previous generations pensions or housing gain to support them. The Country will be poorer.

Now, perhaps house prices will crash and the foreigners will sell up, allowing younger generations to buy into a lower market and start the process again. The thing is, this has never happened in the UK and is not the experience of Countries like Japan - where prices stagnate at the top end in an advance economy.

To this story we have to add in the Government deficit and debt crisis, which will entail a spending crunch and poorer services for decades from now onwards for 30 years. The Government is still increasing the total public debt whilst at the same time the private stock of money is being diminished or further poored into housing.

In the end, with the intergenerational stock fo wealth run down, the main hgh priced assets in the hands of foreigners and high taxes there will be a leavening of the living standards or British people - all at the lwo end. Often it is the right wing who agitate for high prices in house and engineer house price booms like Osborne and Cameron have done - but the reaping of what has been sown will prove very painful in the end.

Wednesday, 29 October 2014

Immigration, Immigration

Anyone reading the news or media in the UK today would think that there was a by-election coming up soon that UKIP might win.

Oh, they'd be right.

All the papers, even PMQ's the entire media today is an immigration froth-fest. Yet the one winner is Mr Farage, who I have not even seen interviewed. The more the discussion is about Europe and Immigration, the more people will vote for the only party able to discuss it honestly.

What amazes me most about the media and politicians in that even now the whole debate is utterly partisan, with meaningless statistics thrown around. Only the Migration Watch article in the Telegraph manages to avoid hysteria.

And again, to me, makes most sense. There is no way a couple coming the UK for minimum wage jobs in the fields (which the locals don't do, so we are told) pay any meaningful taxes. Maybe at best between them £1000 a year. Nowhere close to enough to pay for the Schoolznhospitals so dear the people and politicians.

Yes, in the City there are plenty of educated immigrants earning a fortune and paying tax, but where are the studies which show which is which? Where is the plan to encourage and allow the immigrants we need rather than the immigrants we get.

Also, from the otherside, where is the understanding that the massive global population growth being driven in Pakistan, Nigeria and the Middle East is also causing a huge push factor - whether we like it or not. One day soon a moral choice will have to be made, sad to see today with the end of Mare Nostrum that already this is starting to happen.