Friday, 28 August 2015

The Ballard of Ed & Yvette

How the decision was made for Yvette Cooper to stand as a Labour leadership candidate.

And how Ed Balls reacted. 

 
With the usual apologies.
This time to Victoria Wood. And her hit from the 'soon to be fashionable again' 1980s

Friday Fun - Naming Day


What name best suits for the new Labour Leader?

I really like the Jezbollah efforts that I have read, better than the bland Corbynista. Can we do better though?


After all we are about to gets years of hilarious copy on a plate with nuclear disarmament, Nato-Withdrawal and Open borders for the Open University.

The top runners for me are:

Jezbollah
Jezallah
Jerry the Red

any advance on these?

Thursday, 27 August 2015

We've never had it so good


One of the recurring themes discussed on this blog by our illustrious readers (welcome one, welcome all, but don't be offended if stupid comments are taken to task!) is whether life in the UK has improved in recent decades or not.  Anecdotal evidence suggests that most people would balk at the suggestion that life was better in the 1970s, and yet that is precisely what some people suggest.  I want to explore that, and what better time to do that than on the day that it has been announced that net migration to the UK is at its highest ever level?

By complete coincidence, I have been reading Niall Ferguson's Always Right, which is a wonderfully unequivocally favourable account of Mrs T's time in office, analysed with the benefit of twenty plus years' hindsight. Ferguson even manages to get Saint Margaret off the hook for the Poll Tax and the ERM. Hmm. Mild tint of rose aside, Always Right contains some interesting stats to help us answer whether our great nation is better now than it was forty years ago.

In 1975, the inflation rate reached 27%. Today it is 1% on the old measure, and basically zero on the consumer prices index.  We can argue about whether a particular index captures the actual cost of living for a real person or family, but there is no arguing that inflation has collapsed relative to its level in the 1970s; it hit eight point something as late as 1990. Returns on stocks and bonds were negative in the 1970s.  The mines were costing £1bn a year in subsidy. No wonder people were leaving in droves for sunnier, less-traumatic climes.

Unemployment reached 4% when the Tories launched their famous election poster. It is hard to compare old stats with current stats because the way unemployment is measured has changed a lot in the intervening 40 years; unemployment is probably a little bit worse now than it was then, but not by much. Employment is at its highest ever, pretty much right now.  Nobody would deny there were tough times in the 80s and 90s, but we really are enjoying a jobs boom here.  Let's not talk even about the strikes.

A topic frequently returned-to at C@W is the price of housing.  Nobody can deny that house prices have soared compared with income.  There are many causes: rent de-control, tax reforms, the general build-up of capital in the economy; and yet owner-occupation was only 54% in 1981.  Our heroic 1970s "average earner" was emphatically not racing up the property ladder. It has never been easy to buy a house, but outside the south-east doing so is now more affordable than it has been since John Major left office.

Foreign travel has blossomed - we spend four times as much abroad as we did in 1979, we have shiny gadgets coming out of our ears, a hugely wider choice of things to do in our spare time, and live generally much healthier lives. The UK's cultural industries are booming. Even the coffee is better.

State schools are some of the best in the country.  We have the best demographics in Europe. We have Europe's economic and cultural capital.  

Nobody talks about managed decline or the "brain drain" any more. So, hopefully you are now persuaded that we've never had it so good. No wonder so many people want to make this island their home, to make a go of it, to enjoy a life that would be impossible in many, many other parts of the world. Yes, we need more housing and infrastructure, of course. Nobody would argue that we don't have any problems. But give me 2015 over pretty much any earlier year.

Next target for the newspaper's oil wrath : retailers



In the recent times the Major petrol retailers get a lot of stick, somewhat justified but not entirely, for not reducing their prices when the price of crude oil falls. As I have gone into before, the refining of the product and margins in that industry are of course more important factors. Not that journalists care.

I have been impressed of late with Journo's uncovering the scams at airports and hospitals where customers are over-charged because of the captive market created in the local environment. These are good things and show the power of a free press, albeit in a small way.

To continue this theme, we can consider what crude oil gets made into - the answer is easier if we try to think of things not derived from crude oil. For example, in a supermarket:

- All the medicines are oil based more or less,
- All packaging that is not pure paper - so, er, all of it.
- Most flavourings and dyes
- All baby products, with each nappy being one  cup of crude oil originally for example
- Then there is the heating and lighting
- Much apparel, including all trainers, are mainly oil based
- Plus the costs of transporting everything to the market.
- Even all the food is grown with oil based fertilisers.

So basically, supermarkets have had a 50% reduction in the input costs to their products in the past year months. It may take some time to feed through as many of the products are a long-time in production and transport. We should really expect to see big reductions in retail prices across the majority of goods. In fact, this alone could well be enough to push the country into deflation for the rest of this year.

However, I have a sneaking suspicion the desperate big Four supermarkets - all suffering from stiff competition, will use the falls to help them rebuild margins and profitability where possible.

Wednesday, 26 August 2015

FTSE struggling to hold 6000...

FTSE 100 (^FTSE)

"A summer blip"

That was the confident tone I head on speaking to friends and associates working in the Banks on Monday this week. The adults were away and there was low volume, allowing hedgies and their algorithms to have their fun by hitting stop losses.

No need to worry, China has a history of the Government interfering in the economy to keep everything on track.

Yet I now note the US markets were not very re-assured by the Chinese panic interest rate reduction announced yesterday. Indeed, the market fell. The FTSE in the UK today is down another 1% and struggling to hold above 6000 points. Indeed, the long terms chart looks like it is ready to make a decisive break up or down - I don't get the feeling that an 'UP' is on the cards right now.

When the Central bank cannot provide re-assurance to the markets through emergency policy then something fundamental is really wrong in the economy. China is an interesting conundrum as it is unlikely to do anything as radical as fall into outright recession. The markets there too have been juiced with retail investors who are being robbed by the professionals as is ever the case and this may make the situation appear worse than it is.

However, I am mildly worried. September is upon us and after that October. It is 7 long years since 2008. These months have a terrible history of igniting the woe in the markets and the economy.

What will happen when the adults come back next week?