Prompted by Alan Davies' maths programme on the telly just now, in which they didn't explain four-dimensional thinking very well IMHO (i.e. a fourth dimension in space, not time), I shall try and explain it better (this is something that has bugged me for ages).
Let's imagine you run a shoe shop, and you keep a record of all the shoes you sell in a year. For each sale, you record four items of information (four 'dimensions'):
1. What size are the shoes.
2. At what time of the day you sold them.
3. What type of shoes they are (e.g. are the shoes for a baby, a child, a teenager, a woman or a man).
4. The date on which you sold them.
Anybody can imagine a long list of total daily sales figures for all sales of all types of shoe, from 1 January to 31 December. Let's call that one-dimensional for now. (You could argue it's two-dimensional already, as just giving a total number of pairs sold for the whole year would be one-dimensional, but this is my thought experiment, so don't interrupt).
We can also easily imagine a table, with the dates 1 January to 31 December down the side and 'type of shoe' across the top, with a number in each square. Let's call that two-dimensional.
It's not too difficult to imagine how we'd add a third dimension, for example how many pairs you sold on each date of each type in every two-hour period that the shop is open. Instead of a flat table with rows and columns, you'd have a cuboid, with dates 1 January to 31 December along the length; 'type of shoe' across the width; and 'time of day sold' down the side. This divides the cuboid into little cells, each with a number in it: I've done a rough example and filled in a few cells which show that you sold:
- 5 pairs of women's shoes on 4 January between 9 am and 11 am;
- 2 pairs of babies' shoes on 4 January between 1 pm and 3 pm; and
- 4 pairs of babies' shoes on 6 January between 9 am and 11 am.
The number '4', for example, is aligned with 6 January lengthways, with 9 - 11 am vertically and with 'baby' across; the number '4' is aligned in three dimensions.
Once you have pictured the cuboid, it is also easy to imagine that instead of the labels down the side being 'time of day' they would be 'shoe size', and then presenting the same raw data but with different numbers in all the cells, which is still three-dimensional.
But what happens if you try to show all four 'dimensions' (i.e. date; type of shoe; time of day; and shoe size) at the same time? We can imagine writing down these variables each time a pair of shoes is sold, so we know the data is* not complicated, but what does it look like (short of copping out and sub-dividing each day into hours lengthways)?
Well, all you have to do is sub-divide the three-dimensional cuboid space into four dimensions, so that each number can be clearly aligned with date (in one dimension, call it 'lengthways'); with 'type of shoe' (in another dimension, call it 'across'); with time of day (another dimension, call it 'down') and with shoe size (another dimension, call it ...)
* I refuse to treat 'data' as a plural noun, even though it would be the grammatically correct thing to do.
Tuesday, 31 March 2009
Prompted by Alan Davies' maths programme on the telly just now, in which they didn't explain four-dimensional thinking very well IMHO (i.e. a fourth dimension in space, not time), I shall try and explain it better (this is something that has bugged me for ages).
Horrors! From yesterday's Times: "The Government has been forced to pay out around £1.6 billion for a portfolio including toxic loans and questionable mortgages as part of the rescue of Dunfermline Building Society by Nationwide Building Society today. The Treasury is made the cash payment to Nationwide, which this morning agreed to take on the healthy parts of the Dunfermline, including its 300,000 strong army of depositors, in a rescue deal hastily put together over the weekend."
Ah ... I see! From today's FT: "Nationwide, Britain’s biggest building society, has acquired £2.4bn of savings accounts from the Scottish group. It has also picked up the mutual’s staff, brand, 34 branches and head office as well as a £1bn portfolio of residential mortgages. The £1.6bn payment from the government to Nationwide is because the building society is only acquiring part of the group’s asset book but all of its liabilities. It includes £68.5m of integration and running costs from the deal."
What most people overlook is that 'savings' are a liability from the bank's point of view - those accounts are money that it has to pay out again sooner or later. So Nationwide does not appear to have pulled a fast one; it acquired £1,000 million mortgage assets (worth perhaps £900 million) and £1,600 cash (= £2,500 million) and assumed liabilities* of £2,400 million (customer deposits) and £70 million of integration and running costs, net value of transfer = negligible.
The amount that the government paid to Nationwide appears to be 'about right' and is thus irrelevant.
The bit that is important is how much the government will recover from Dunfermline BS's asset book; whether that will be less than the £1,600 billion it is out of pocket so far; and who else could have taken the losses on the chin.
I've checked Dunfermline's most recent accounts (for 2007**) and they appear to have non-customer liabilities*** of £465 million. Assuming the government had the nous to keep those liabilities within Dunfermline BS (it's not clear from the FT whether they did this, thus reducing the amount it had to pay Nationwide by £465 million) it could repay itself first and those liabilities last (a kind of forced debt-for-equity swap), then even if a quarter of the asset book is irrecoverable, the cost to the taxpayer would be minimal. Once the government has its money back, it hands over the keys to the other creditors and tells them to salvage what they can.
That's that fixed. Next.
* To confuse the issue, customer deposits at a BS are referred to as 'Shares' in the balance sheet, are they heck, in practice they are more or less the same as customer deposits at a normal bank.
** Either the Dunfermline BS was totally PC or it was targetting the wrong sort of customer; the pretty photo's of typical customers that adorn the first few pages are of a single mother; an Asian couple; and a pensioner couple.
*** "Amounts owed to credit institutions", "Debt Securities in Issue" and "Subordinated Liabilities", per balance sheet, page 19 to the accounts.
Don't blame me, Ross started it.
Sent to me by email (name withheld at sender's request):
I have a small business, I contacted Business Link before Christmas about these loans for businesses Mandleson talks about. Initially my advisor said there was lots of talk by politicians but no one knew what was going on. This was some two months after the announcements.
A few weeks ago I got in touch again on the same subject. Yes, unsecured loans were available under the govt. scheme but the interest rate was a staggering 16%! My advisor suggested my existing bank was a better bet, I contacted them and they had no problems with a loan at base + 4%, however I would have to stand surety.
This suggests to me that a dodgy dishonest businessman could take one of these govt sponsored loans, pay off existing secured debt, pay himself out as much cash as possible and let the company go bust, leaving these debts behind. The mind boggles at the stupidity shown.
I put this to my advisor, he admitted it was a rogues' charter, put together by clueless people who have never run a business in their lives. Some Business Link people realise it's just another quick fix that's destined to blow up in the future.
Megan on top form:
"Sadly, I could find no tacky Marie Antoinette at the guillotine memorabillia in the gift shop to bring home to my niece and nephew. Bummer."
Monday, 30 March 2009
Hurray! February 9: Low-budget drama "Slumdog Millionaire" sweeps British film award
Boo! March 30: "Slumdog Millionaire" child star Rubina 'earned more from shooting three-day soft drinks ad than from the whole film
These last two bars represent one hour's trading (click to enlarge):
Sold: one June Long Gilt at 122.72 (to close a long position).
To sum up my first month back in the game after a twelve-year break: three lucky trades, one stupid one, one unlucky one, and I'm up about a grand. I must concentrate on being a) luckier and b) less stupid next month.
From The Metro:
Nationalised lender Bradford & Bingley said today that it was writing off more than £500 million in mortgage loans turned sour... The firm said 4.6% of its £41 billion mortgage book was three months or more in arrears, or repossessed.
I posted this over at HPC with the comment that a one per cent write down on its mortgage lending didn't seem nearly high enough. Little Professor responded by linking to this article on Bloomberg from mid-2008:
Bradford & Bingley Plc, the U.K. lender struggling to raise cash in a rights offer, must honor a 2006 deal to buy about £2.1 billion ($4.1 billion) of mortgages by the end of next year from GMAC LLC.
Customer payments are more than three months late on 5 percent of loans already purchased from Detroit-based GMAC, whose mortgage unit disclosed in a filing today it got $2.88 billion in emergency funding. That arrears rate is more than double the average for mortgages held by the Bradford & Bingley...
"This is what has spooked everybody," said Alan Beaney, who manages $2.1 billion of stocks as head of investments at Principal Investment Management in Sevenoaks, England. "They are committed to keep buying these things."
Bradford & Bingley first agreed in 2002 to buy loans from GMAC, now controlled by Cerberus Capital Management LP, the New York-based private equity firm. Steven Crawshaw, who stepped down June 1 as Bradford & Bingley's chief executive officer, formalized the deal in December 2006 and committed to buy as much as 4 billion pounds of loans a year through 2009.
It's not actually clear whether US taxpayers are now (indirectly) bailing out a UK bank or UK taxpayers are now (indirectly) bailing out a US bank, but surely this is complete and utter insanity.
From The Metro:
A London MP reported to have claimed more than £300,000 in second home allowances on his house in the capital insists he has done nothing wrong as it is "part of my salary".
Labour left-winger Harry Cohen said MPs were told "Go out boys and spend it" when the present system was introduced under ex-PM Margaret Thatcher in the 1980s. The MP listed a single-bedroom schoolhouse in Colchester, Essex, and a caravan on nearby Mersea Island as his main home, according to The Mail on Sunday.
This meant that over the past five years he was able to claim the maximum allowance of £104,701 on his constituency home 70 miles away in Leyton and Wanstead, east London. The paper calculated he had received a total of £310,714 in allowances since 1990.
And you wonder why the government is so obsessed with re-inflating the house price bubble? "MPs with second and third homes" just doesn't have the same ring as "Hard-pressed home-owners", does it?
Sunday, 29 March 2009
As we know, one hallmark of an authoritarian government is 'spontaneous' displays of public affection for the regime, e.g. the burkah'd woman cheering on the successful 'revolution' in Iran in 1979; the kids waving flags when Tony Blair entered Downing Street in 1997; or school children being asked to depict Obama in various heroic poses to celebrate his inauguration in 2009.
The present UK government has gone one better and organises protests against itself in order to lend apparent justification for it then doing what it planned to do anyway. Prompted by a throwaway comment on Douglas Carswell's 'blog, I've had a closer look at those G20 Protests in London yesterday:
From The Grauniad:
They hoped for ten thousand but in the end more than three times that number turned out on London's streets today for the biggest mass demonstration since the beginning of the economic crisis. The Put People First march was organised by a "rainbow alliance" of 150 trade unions, church groups and charities including ActionAid, Save the Children and Friends of the Earth. The theme was "jobs, justice and climate" and the message was aimed at the world leaders who will be gathering for the G20 summit here next week.
1. Trade Unions. Need I say more than union modernisation fund?
2. Church groups, especially the Church of England, are more or less part of the State anyway (tax-exemptions, subsidies, right to appoint senior members to the House of Lords etc)
3. ActionAid received £11.2 million from 'Governments, EU' (see pie chart on page 18 to the 2008 accounts). Admittedly this is only 16% of its income, but read on to page 19, "ActionAid’s accounts only show part of the total contribution from the UK’s Department for International Development (DFID) to the ActionAid family – the full picture is contained in ActionAid International’s financial statements" or to page 36, where they admit that they hid another £1 million from the Big Lottery Fund and Comic Relief under the heading 'Companies, trusts and NGOs' rather than 'Governments, EU' in the pie chart on page 18.
4. Save the Children "receive grants from UK and foreign governments, multilateral bodies such as the European Union, and international agencies such as the United Nations" worth £65.4 million (see page 2 to the 2008 accounts), which is 40% of its income.
5. Friends of the Earth are the archetypal fakecharity-cum-fakepressuregroup, whose raison d'être is to lobby the EU while being largely funded largely by the EU, see EUReferendum for more.
NB, ActionAid and Save The Children also get a lot of money from the Disasters Emergency Committee ('DEC'). According to its 2008 accounts, this particular body does in fact raise most of its money from proper voluntary donations, but then it dishes them out to fakecharities again.
Warsteiner, in the comments to my Jacqui Smith caricature of three weeks ago:
" I can see why she's got a second home - at least her husband can have a wank in peace".
From today's Sunday Express:
Jacqui Smith has claimed Commons expenses, paid by the taxpayer, for the cost of watching adult films at her family home... A source close to Ms Smith, 46, said last night that she had not been at the family home in Redditch, Worcestershire, on April 1 and April 6 last year when the adult films were viewed. The source said she was “furious” with her husband, adding: “She was not watching these films..."
Saturday, 28 March 2009
My magic fag packet says that if the government offered people the choice of an education voucher worth £4,000 a year instead of a 'free' State school place, it would be fiscally neutral if twenty per cent of pupils took them up (i.e. the seven per cent who already go private plus another thirteen per cent currently in State schools).
If more than twenty per cent took vouchers, there would be an overall saving to the taxpayer (assuming that the massive overheads in State education that bring up the average cost of a State school place to about £8,000 could be scaled down pro rata), so that would enable taxes to be cut (at its simplest by increasing the personal allowance so that everybody benefits equally, enabling more parents to afford take up the vouchers, thus producing more tax savings etc. until some sort of optimum trade-off is reached, i.e. the maximum number of children going private at the lowest cost to the taxpayer).
I know from talking to other parents at the private schools where my children go, that most are pretty much in favour of vouchers (except for the super-snobs); that those parents who aren't happy with their child's State school (most of them) are certainly interested; and that surveys show that more than half of parents would send their children private if they could afford it, but there's no point proposing policies in a vacuum, so this week's Fun Online Poll asks whether you would take the vouchers (or, assuming your children are now grown up, whether you would have taken them).
NB, as a guide, average school fees are about £7,800 a year at primary schools and £9,000 a year at secondary schools (see here). But there are huge variations between the poshest and the most basic; as well as regional variations, so the better-value ones outside London/the South East might be only £5,000 to £6,000 a year. Minus off a £4,000 voucher and millions of parents would be able to afford to send their children to an independent school.
Unsurprisingly, seventy five per cent of us can't see the slightest difference between Labour's and the Tories' tax and spend policies.
Seventeen per cent thought there was a difference but couldn't think of one off-hand. Eight per cent (seven people) thought there was a difference and gave examples in the comments, which were all either tongue-in-cheek or rather vague.
Anyway, here's a reader's letter from Wednesday's Metro by somebody who thinks that there is a difference, it's textbook Indian Bicycle Marketing*:
How astonishing that the Tories are determined to abolish inheritance tax for estates worth between £300,000 and £1 million. This is a tax paid by just six per cent of estates. Contrast this with Labour's help for struggling mortgage payers and the unemployed, and you can see how the parties' priorities differ. While the Tories' committment to protect the wealthiest was never in doubt, it's never been so clearly displayed.
Dave Bodimeade, Essex.
UPDATE: WOAR has pointed out in the comments that Dave B is a press officer for the Labour Party.
Just a few facts that I'd like to ram down Dave B's throat, were I ever to meet him:
1. Inheritance tax is a pure jealousy surcharge which raises £3 billion a year, about half a per cent of all tax receipts**. It's either there to trick people into thinking that the government somehow cares about vague concepts like 'equality' or because the government is genuinely spiteful.
2. Labour responded to the Tories' inheritance tax proposals by promising (by a roundabout way) to double the nil rate band to £650,000-odd, not quite as high as £1 million, but that's just details.
3. "Labour's help for struggling mortgage payers" consists of taking money off savers and giving it to borrowers, so it's unfair to mention the "help" without mentioning the people who are being robbed.
4. As to the unemployed, the policies of the two major parties aren't really that different and have only changed at the margins over the last forty years or so (getting progressively stupider) so that's a non-point. But it's interesting to compare the "help" for mortgage borrowers (about £30 billion a year) with the "help" for the unemployed - the total income support, employment support/jobseeker's allowance, incapacity benefit etc paid out is just shy of £20 billion a year with another £13 billion-odd in Housing Benefit and Council Tax benefit**, i.e. ten million households with a mortgage (the bulk of whom must have at least one wage-earner) are getting just as much "help" as five million households with no earned income whatsoever.
* i.e. if you would like to see inheritance tax cut, you'd be more likely to vote Tory on the strength of that letter. Whether the Tories would really do it depends on what their focus groups tell them that swing voters in marginal seats are thinking.
** IHT and Council Tax Benefit would both be scrapped by an MW government of course, and as a quid pro quo, there'd be Council Tax bands going from 'A' (paying £100 a year) all the way up to 'Z' (paying £10,000 a year) as part of the transition to proper Land Value Tax or a Progressive Property Tax, like in Northern Ireland, where Domestic Rates are set at a flat 0.6% of capital property values, but of course the poor buggers are still saddled with Stamp Duty Land Tax and Inheritance Tax.
Friday, 27 March 2009
A big thank you to whomever it was who Googled Josef Fritzl 2 from Iceland, heck knows why you did it, but you have made my evening.
First, skim-read this extract from The Vancouver Sun...
Several aid workers criticized the multi-tier contracting system used by the U.S. Agency for International Development (USAID), Washington's central aid co-ordinator.
"You have contract after subcontract after subcontract, which just kills everything," said a senior employee of a USAID contractor. The report says many contractors are widely regarded as "absorbing a huge volume of funds in consultant costs," while delivering a finished product or service that's often of questionable quality or relevance.
Some projects are also "supply-driven" — meaning they're imposed from the top down, when there isn't always demand or need at the grassroots level. In one example, about $6 million of U.S. aid was spent on developing an Afghan women's business federation, but it failed, largely because "there were no credible ground-level women's business associations," the report said.
In some sectors, U.S. aid-delivering agencies seem to lack strategy and co-ordination, the report said. In an example given by one aid worker, 15 U.S. agencies worked in the energy sector, each with its own vision. Another aid worker told how two separate contractors, both funded by USAID, by chance discovered they were doing virtually the same project, in the same place.
The Oxfam criticism follows a recent report by the American Academy of Diplomacy, which said staff cuts at USAID over the past two decades had severely undercut its ability to manage aid contracts.
Which is all sad enough, but now tell me, how is that any different to the way the UK government wastes our taxpayer billions? It would be nice if we could persuade Oxfam to issue a similarly damning report on government spending in the UK.
This questionable propostion was put forward by German Foreign Minister Frank-Walter Steinmeier in an EU-sponsored debate entitled Visions For Europe.
H/t Denis Cooper.
From The Metro:
DNA linked to seven murders and thought to belong to a female serial killer actually comes from a factory worker who makes forensic swabs.
Traces of the same DNA were found at 39 crime scenes in a 15-year hunt for the 'Phantom of Heilbronn'... Police claimed the 'noose was tightening' on the killer last year following the murder of a policewoman. But a review of the case was ordered after police failed to find the 'suspect' or any witnesses to the murders.
From a Metro article headed Cost of red tape up £10bn in year, a figure which I am perfectly happy to accept as being in the right ballpark and probably an underestimate:
But TUC general secretary Brendan Barber said: "This tired stunt is well past its sell-by date... Their biggest complaint is working time rules. That might sound bureaucratic but in plain English this is the right for everyone at work to have four weeks paid holiday a year. What business calls red tape, the rest of us call a well-earned rest.
... I suppose we should be grateful that the BCC haven't added in the cumulative costs of the abolition of slavery and stopping children cleaning chimneys."
Thursday, 26 March 2009
Here's the FT's entry for the Meaningless Statistic Of The Week Competition, from an article headed "Government shores up housebuilding":
The public purse is now funding almost half of new home building, demonstrating the extent to which the government is shoring up the construction industry amid a historic slump in private sector development... This compares with just a fifth of new homes that were funded by the public sector in the last few months of 2007 as the housing boom entered its final phase
The chart in the print version shows that social housing starts are constant at around 2,500 per month, but private sector housing starts have fallen from 15,000 to 3,000 per month, i.e. private sector housing starts are down by eighty per cent. Now that's a far more interesting, not to mention a far more meaningful, statistic.
Tim Worstall likes having a pop at a character calling himself Jonathon Porritt Bt CBE. I had always assumed that JP was just some numpty who churned out MMGW articles for the Grauniad, I now realise to my horror (via an article in The Times which Christina Speight emailed round) that JP is in fact "head of the Sustainable Development Commission", which is The Government’s independent watchdog on sustainable development.
And how 'independent' are they? The current headline on their website is "SDC welcomes government plans for home energy efficiency", so 'not very' is the answer to that one.
From the BBC:
The watchdog conducting an inquiry into local authorities' decisions to invest in Icelandic banks has admitted it has also got £10m tied up in the country...
I can't claim for one second to have actually seen this coming* any more than they did, but I never even considered sticking my savings in an Icelandic (or any other foreign bank) just to earn a measly extra per cent or two in interest, the risks of being caught out like this just don't make it worthwhile.
* Umbongo (see comments) did see it coming and acted accordingly!
Wednesday, 25 March 2009
From The Metro: US inmates answer 118 enquiries
From the BBC:
The Conservatives could guarantee loans to private and voluntary groups to help them fund welfare-to-work programs. Theresa May said such support could encourage groups to get involved and would be more than recouped by a long-term decline in the benefits bill. The shadow work and pensions secretary said the recession meant "radical" welfare reform was even more essential.
Labour is proposing its own shake-up of the system to require most people to look for work in return for benefits.
"Loans"??? Every fly-by-night operator will set up, bank the loans and be long gone before anybody notices they have achieved nothing. Or is this just an excuse to create hundreds of fakecharities?
It is not up to "private and voluntary groups" to get people into work, it is up to employers and potential employees. And there is such a thing as private employment agencies - from super-posh headhunters down to humble employment agencies for shelf-stackers and street-sweepers. These agencies are paid for what they do by the employer (and thus don't cost the taxpayer a penny), so they have every incentive to find work for people.
As things stand, the tax, welfare and regulatory systems drive a huge wedge between employers and employees:
Employers are more likely to take people on (or not make them redundant in the first place!) if e.g. there were less stupid regulations and Employer's National Insurance were reduced/simplified and ideally scrapped outright. And once we're out of the EU, we can scrap VAT as well, another tax on productive activity, different topic.
There are those with proper skills who have been made redundant recently who are actively seeking work - they will be helped if employers are helped (see above). But ultimately, people are far more likely to take on work if it makes them significantly better off. So Frank Field's idea of paying people higher benefits if they have worked but been made redundant is rubbish, far better to use that money to cut people's taxes a bit so that they can save up for a rainy day while they're in work.
And for the hard-core unemployed, there's no point taking on a job because welfare is quite cushy (once you've sorted out your IB and your free council flat etc) and if you take on a low paid, part time or temporary job, you lose as much in benefits as you can earn. This would be fixed at a stroke with a Citizen's Income-style welfare - slightly lower basic benefits but no income-based means testing (above and beyond normal income tax) and no constant registration and de-registration for different kinds of in-work and out-of-work benefits.
And while I'm on the topic, let's get rid of the National Minimum Wage as well, it is better to keep two-thirds of £2 an hour (under a Citizen's Income scheme) than it is to keep five per cent of £5.73 an hour (under the present rules, once you take benefits withdrawal into account).
As to Labour's "requirement to look for work" this is just so much rubbish and gimmicks, they and the Tories before them have been spouting this for thirty years and it has made no difference.
Yup, as I suspected, more or less confirmed in yesterday's Times:
It is thought that deals struck for Goody by Mr Clifford, which included television programmes, magazine interviews, and a publishing contract with HarperCollins, have contributed about £750,000 to a trust set up to provide for the children.
The rest of Goody’s estate, expected to be valued in excess of £1 million, is also thought to be in line to pass to her children. It is understood that she has not bequeathed anything of significant value to her husband or mother.
Mr Brazier [the father of Goody’s sons] has custody of the children and will provide for their upkeep, with the trust used to pay for schooling. The amount of money available could rise hugely if Goody’s book, a diary of her last days, sells well.
Danny Hayward, one of three trustees, who met Goody through his work as a photographer, said that he had been instructed to provide her children with "the best education money can buy".
You can bet your bottom dollar that her widower is at least nominally a beneficiary of those trusts though, or else the IHT-inter spouse exemption does not apply.
Tuesday, 24 March 2009
As I've said before, "I am not a conspiracy theorist as such, but it is indisputably true that our gummint enjoys creating a Climate Of Fear in order to be able to ram through restrictions on our freedoms, increasing taxes and/or enlarging the power of the state."
Here's today's instalment from The Metro, apparently "Britain faces nuclear bomb threat from terrorists." Maybe it does, maybe it doesn't, but if they genuinely believed it, why don't they round up those "20 Islamic militants living in Britain after receiving terror training in Pakistan" and charge them or deport them or something?
From the privately-owned MSM:
Sky News: Shock rise in UK inflation
CityWire: Consumer inflation shows surprise increase
Telegraph: The return of inflation
Independent: What fall? Inflation shows a surprise increase
Financial Times: Inflation surprises and jumps to 3.2%
... meanwhile, on Planet Beeb: Key inflation measure falls to zero*
Compiled by Little Professor at HPC.
* This was then changed to "Housing costs dampen UK inflation" (but the article still kicked off with "A key measure of UK inflation has fallen to zero for the first time in 49 years, official figures show") and subsequently to "Surprise hike in consumer prices" as Obsidian points out.
From The Metro:
Instead of paying for second homes, parliament should build dorms for MPs. The MP would pay for his or her constituency home and could stay in communal accommodation when in Westminster. They could benefit from car pooling, dedicated access to parliamentary networks (so as to avoid leaving disks on trains) and, at the end of a term, the dorm would pass to the next incumbent of the position rather than the MP pocketing the sale cost.
Phil, London SE1.
... and from The FT:
Sir, Presumably those who received the 125 per cent loans that Northern Rock handed out after the government bail-out are tickled pink. These rare creatures now have low interest loans worth more than their property values and are backed by a triple A rated mortgage bank funded from taxpayers’ cash.
One lender’s toxic debt is clearly another borrower’s fragrant liability.
Paul J Weighell, Purley, Surrey.
Monday, 23 March 2009
I know the topic has been done to death, but here's a nice one-paragraph summary from the FT:
This financial year, the government is on course to borrow £95bn with one month of data to be published. City forecasts and those from the IMF suggest borrowing of £140bn-£170bn in [each of] the two following years. Together the total increase in national debt over the three years between 2008-09 and 2010-11 is set to be far higher than the £356.4bn inherited by Labour in the spring of 1997.
Yup, you read that right. The next three years of Labour/Tory profligacy* will cost more than all the other debts that governments had managed to build up (minus repayments**) over eight or nine centuries prior to 1997.
Just sayin', is all.
* Loosely defining 'profligacy' as spending in excess of tax receipts. You could argue that even a lot of spending out of actual tax receipts is wasted as well, I suppose.
** I'd be surprised if any UK government has ever actually repaid very much in nominal terms, they rely on inflation and GDP growth to stop it getting too high.
Sunday, 22 March 2009
Thanks to the hundred people who took part in last week's poll. The results were that 87% preferred an economic system that makes it easier to become wealthy, as against 13% who preferred one that makes it easier to remain wealthy.
As ever, I would like to point out that this is a subtle distinction. All things being equal, high taxes make it more difficult to become wealthy and more difficult to remain wealthy (unless you belong to the elevated class who lives off tax receipts, in which I include not just the quangocracy but those who live off ground rents and property gains as a form of privatised taxation), as do regulations. But, as much as industry decries EU or government imposed regulations, there are two classes of affected business:
Take for example maternity rights* - for a large supermarket chain, with hundreds of stores and tens of thousands of employees, it is quite easy to cater for the fact that at any time x% of your younger female staff will be on maternity leave - when they're ready to come back to work, full- or part-time, it's quite easy to slot them back in again. It's not quite the same for a small business employing a dozen people or fewer - for such businesses, one employee going on maternity leave (with all the associated costs and hassle) can make the difference between profits and losses or between survival and failure.
So, while such regulations don't appear to immediately benefit large businesses, they certainly raise barriers to entry, and by harming small employers far more than large employers, I'd class them as part of an economic system that makes it more difficult to become a large employer and relatively easier to remain a large employer.
This week's Fun Online Poll: "Can anybody see the slightest difference between Labour's and the Tories' tax and spend policies?" Vote here or use the widget in the side bar.
* The lazy reader will instantly accuse me of being a MCP. Far from it, I happen to be married and I know exactly what it's like when women in their twenties are applying for jobs, with or without young children.
From the BBC:
Cutting inheritance tax would not be a high priority for an incoming Tory government, Ken Clarke has said. The shadow business secretary told the BBC its main economic goals would be to cut public debt and restore growth. The Tories' pledge to take millions of families out of inheritance tax in September 2007 was seen as a key moment in reviving their political fortunes. Labour said the more Conservative economic policies came under scrutiny "the more they fall apart".
Recent indications that the Tories will not reverse Labour's planned tax rises for the rich have already caused internal ructions. Increasing income tax for top-earners to 45% from 2011 would be "difficult to avoid", shadow chancellor George Osborne has said - a stance backed up by Mr Clarke and foreign secretary William Hague...
In recent weeks, senior Conservatives have stressed the party will face extremely tough choices if they win the next election given the state of the public finances. The Conservatives insist cutting the overall burden of tax for families remains a long-term objective and have pledged to freeze council tax bills for two years among other proposals. But they have declined to rule out tax rises after the next election.
1. Given that The State wastes £100 billion a year, why can't tax cuts be a short term objective?
2. Given that there is so much scope for tax cuts, why not focus on cutting the really damaging taxes on turnover, employment and production before promising to freeze a minor tax on property ownership?
Jade's recent marriage to Jack Tweedy is IHT planning straight out of the text book - had she died single with an estate of £1m, two-thirds of what her two sons inherited would have been liable to IHT at 40%.
Without knowing any of the details, I would guess that she left the amount of the nil rate band to her two sons, and the remainder in a trust with her widower as main beneficiary, which is thus exempt from IHT because of the inter-spouse exemption (which also applies to registered civil partners, and rightly so), with the trustees having the power to dribble out money to her two sons as and when, these being chargeable transfers from Mr Tweedy, but provided he lives for seven years after such transfers, there'll be no IHT.
Just sayin', is all.
Theory more or less confirmed, see update here.
Exhibit One, from yesterday's Times, Andrew Ellson on the topic of 100 per cent mortgages:
For a start, a statutory maximum loan-to-value ratio risks starving the property market of first-time buyers, undermining any chance of a recovery in house prices and trapping an increasing number of borrowers in negative equity. Only young people with wealthy parents willing to help them with a chunky deposit would be able to buy their own home.
Wrong - the number of potential first time buyer depends on the number of people with a job who are renting. Provided the cost of buying is roughly the same as the cost of renting, many would prefer to buy. It is only in a credit bubble that people are suckered into paying far more to buy than to rent (once you factor in future interest rate hikes and property price falls).
Wrong - a "recovery in house prices" is not somehow something to be welcomed, ideally, house prices would be low and stable, and would not be an easy route riches ...
Wrong - ... or to poverty. It is not falling prices that are "trapping people in negative equity", it is the fact that people were suckered in to buying or MEWing when prices were unsustainably high in the first place. Keep prices low, hey presto, no more negative equity. What he appears to be recommending is somehow keeping the whole insane Ponzi scheme going.
Wrong - it would not be "only young people with wealthy parents" who can afford to buy. However high or low house prices are, young people with wealthy parents will always be at an advantage (or what's the point of bothering to become wealthy, if you can't help out your children should you so wish?) Reckless lending does not do FTBs any favours at all, as they are competing with each other - take away the financial weapons of mass destruction and prices will fall, so by and large FTBs will be paying lower prices, thus being saddled with smaller, affordable mortgages.
Exhibit Two, from yesterday's FT, Bob Sherwood on the impact of new railway links on house prices:
House values near the Channel tunnel rail link stations are predicted to rise by a total of £1.6bn after fast domestic services start to operate later this year. Homes around Ebbsfleet in Kent are set for the largest rise of up to £30,200, or more than 14 per cent of their average current value, according to a study of the economic impact of the rail line, called High Speed 1... Bridget Rosewell, of Volterra, said the report showed that HS1 – which is forecast to generate additional rail and car park revenues of £3.4bn over 60 years, offsetting net operating costs and about 31 per cent of the capital investment – was a good public investment.
At least he's noticed that new railways give a massive boost to house prices, but...
Wrong - it's not the houses themselves that increases in value, it's the land on which they are built.
Wrong - property values do not wait patiently until the station is opened and trains are running before jumping upwards. The permanent increase in land values is a function of how likely the development is to go ahead and how long it will be until completion. A vague statement of intent that something may or may not be built in ten or twenty years time has little impact, but over half the jump happens on the day that the plans become official. The increase in land values over the last year before trains start running is minimal as 'it is already in the price'.
Wrong - I shall have to take the calculations showing that the benefits far outweigh the costs of the new railway links at face value, but it is not really a "public investment", is it? From the point of view of those landowners and homeowners who make windfall gains, it is somebody else's investment for private gain. So, if any taxpayers' money is to go into this, why shouldn't the tax be collected from the landowners and homeowners who benefit, or indeed be diverted straight to the railway company, i.e. the railway company agrees to go ahead provided that those property owners are prepared to contribute?
This second example via Dave Wetzel, by email.
Saturday, 21 March 2009
I'll close this week's Fun Online Poll tomorrow, but here's one final example of a marginal decision that helps distinguish one option from the other.
Putting aside the misconception that "Council tax pays for local services" (it doesn't - it pays for about ten per cent of the cost of local services and similar proportion of the value of local amenities) and the uncontentious fact that local councils waste vast amounts of money on quangocrats etc, let's imagine each local council were allowed to decide whether to replace Council Tax with a Local Income Tax of around 4% (ultimately the same logic applies to replacing Business Rates with a Local Corporation Tax of 4%), here's my handy cut-out-and-keep-guide.
The guide is based on the economic 'laws' that housing is a normal good (hence gross housing costs are a fixed % of net incomes); that the supply of housing is price-inelastic (hence that taxes on properties are borne by the property owner/vendor); and that post-tax returns on capital tends to equalise (because capital leaves low yield areas and moves to higher yield ones).
Or to put it another way, if you decided to move to a different local council area, which one are you more likely to choose, one that keeps Council Tax or one that replaces it with Local Income Tax (assuming it were administratively workable, which it isn't, different topic)?
Friday, 20 March 2009
Everybody's favourite globetrotter-cum-climate change activist Sienna Miller was mentioned on the front cover of today's London Lite, so I flicked to page nine to see where she'd flown this week. She stayed in London, apparently, to celebrate someth... Holy Cow! Look at the size of that nose!*
* I hope that Kelly Hoppen doesn't turn out to be Jewish, in which case this post might be taken the wrong way.
Is taking place from 5pm, Tuesday 24th March 2009, Committee Room 15. Hosted by Vince Cable MP, Chaired by Nick Ross. Be there or be square.
More details here.
I explained this strategy at length here; in short, the three main UK parties have policies that are more or less identical. They differentiate themselves by either A) claiming that the underlying philosophy is somehow different or B) in a negative way, i.e. they accuse each other of wanting to do things which would appeal to the other parties voters and don't defend themselves against such accusations by the other parties (thus giving their own potential voters the hope that they would do it, even though clearly they wouldn't).
As to A), a wealthy client asked me about Labour's threatened five per cent income tax surcharge on higher earners a week or two ago, and whether this would be introduced if the Tories won the next election. I explained that they almost certainly would. I can now award myself a brownie point for this blinding insight...
Dave The Chameleon has now admitted that he would introduce the surcharge, but wait - instead of it being a Nulab 'bash the rich' exercise, he'd do it in order to "rescue the economy" and/or because "priority must go to debt reduction".
As it happens, it is highly questionable whether the measure would actually increase tax revenues, once you factor in how few high earners would have to move abroad to wipe out the gains. And I'm not a fan of tax breaks for pension contributions (either on an individual level or for society as a whole), but even I would be tempted if I were getting over fifty per cent effective tax relief (once you include income tax and both layers of National Insurance).
As to B), the BBC gives Nulab ample scope to indulge in this tactic here. Dave has a good crack at all the vastly overpaid and superfluous quangocrats (yeah, the Tories invented the quangocracy, pots, kettles), and ...
Chief Secretary to the Treasury Yvette Cooper said: "How can David Cameron talk about fairness when he is still committed to a tax cut for millionaires' estates, won't back our £1.2bn help for the unemployed to get back into work, and wants to cut Sure Start? David Cameron's plans for cuts in apprenticeships, housing and transport in the middle of a recession are economic madness that would cost us all more in the long run."
NB, "help" = money = subsidies = a higher tax bill on somebody else. I've no idea whether the Tories want to "cut apprenticeships" for example, but this gives potential Nulab voters the illusion that under a Nulab government there'd be more apprenticeships that under a Tory one (for which there is no evidence whatsoever), and as to the other "cuts" she accuses the Tories of wanting to make (there's no evidence that they would do this either), all this does is give potential Tory voters the forlorn hope that the Tories would in fact cut taxes - they quite clearly wouldn't, but doesn't the accusation at least give the gullible voter at least the overall impression that they would?
Bought: one June Long Gilt at 123.95
Thursday, 19 March 2009
From The Metro:
Stunned mother Tina Banks was left gobsmacked when the toy parrot she'd just bought her 11-month-old girl told her: "I'm going to rip your head off and s**t down your neck." The 99p toy let off a volley of abuse as they walked home, calling out "arseholes" and squawking "f**k off".
"I thought that was a pretty good deal, but then I heard what was coming out of its beak," said Ms Banks.
Hussein Lalani, commercial director of 99p Stores, said it should not have been in the toy section. "It is labelled the product is not suitable for children."
From the BBC Daily Politics:
1. The current economic crisis has made me more likely to support Britain joining the Euro: Agree- 31%, Disagree- 64%
2. Britain benefits overall from membership of the European Union in terms of jobs and trade: Agree- 44%, Disagree- 51%
3. Britain should leave the EU but maintain close trading links: Agree- 55%, Disagree- 41%
4. The British people should decide in a vote before Britain transfers any further power to the European Union: Agree- 84%, Disagree- 13%
I'm surprised that the BBC didn't skew their questions a bit more to get the 'right' answers and even more surprised that they published the results without adding the usual wailing about what an undereducated and xenophobic lot we Brits are.
Via Dick P.
As I glanced idly at the charts this afternoon, I noticed that the June US T-Bond future had jumped by a full point in a few minutes when the session opened (that's at 7.20 am Central Time, I think), and on the assumption that UK and US bond prices move in line, I thought it best to bail out of my short position of one UK Long Gilt future. The price then fell back again. When I had another look this evening I noticed that the T-Bond future had jumped by a full seven points (although it's dropped back a bit since), which is quite staggering, this is a once-every-few-years event, see chart:
It turns out that the economic illiterates who run the US had decided to go for the same tactic as the morons in the UK, i.e. for one branch of government (the central bank) to print money to buy bonds issued by another branch (the Treasury). What is interesting is that when the UK government decided to print/spend between £75 and £150 billion, UK gilt prices jumped five points, and the US has committed to print/spend $1.2 trillion, if you scale that down for exchange rate and different sizes of economy that's about the same as the upper end of what the UK will print/spend, and the impact on US bond prices was pretty much the same.
CityUnslicker looks at the corresponding effect on the price of gold. USD fell slightly as well, this is all textbook stuff.
Wednesday, 18 March 2009
To help people decide how to vote in this week's Fun Online Poll, here's another example - the State education system and why the MW policy is as it is.
I have to trot out a few basic assumptions/observations first, but you can skip to the end of this section to get to the point. These are:
a) Education is A Good Thing - not only to enable each individual achieve more, but also from the point of view of society as a whole - you're better off as an also-ran in a well-educated society than in a poorly-educated one,
b) Competing providers will always be better than a State-run monopoly, however they are funded,
c) The full cost of an average State school place (including the quangocracy and teachers' pensions) is about £8,000 per pupil, not much less than private school fees at the better value private schools in most parts of the country,
d) Taxes on turnover, employment and incomes* are A Bad Thing because of the "deadweight costs" - not only is each individual taxpayer worse off, but the economy as a whole suffers.
e) What we have is a situation where the State spends about £80 billion of taxpayers' money on educating about ten million schoolchildren not very well (John B will no doubt differ on this point).
f) The poor standards and the higher tax burden make it doubly difficult for the ninety three per cent of people who come out of a State school to get on in life and become wealthy.
g) About seven per cent of parents can scrape the money together to have their children educated privately. On the whole these children get a better education, but the parents are paying twice over - once for the State school places they do not use (via taxes) and again directly to the school. That's bitter, but at least it enables the wealthy to stay (relatively) wealthy, and rather bizarrely, relative wealth is as important to people as absolute wealth.
So much to the assumptions.
If we rule out the option proposed most eloquently by e.g. Brian Micklethwait, to scrap all State involvement in education - both the funding side and the provision side - and rule out staying with the status quo, the way forward has to be education vouchers.
As a moderate in all things, I wouldn't even initially propose scrapping all State schools and giving everybody a voucher - I'd let parents choose to waive their children's free State school places and take vouchers worth £4,000 a year (half the cost of a State school place) to be used against the cost of private school fees. Even if only a fifth of pupils took them up, there'd be no overall cost to the taxpayer (workings here), but if half of pupils took them up, that'd save £12 billion. Not a huge amount, but enough to raise the personal allowance by £1,500 each or so for a start.
And for every £1 of income tax cut, there would be a few more parents who can afford to put their children into a private school, thus further savings to the taxpayer, thus more tax cuts and so on in a virtual circle until some sort of optimum is reached, where the "deadweight costs" of the taxes are rather less than the overall benefit to society from having a better-educated population than would otherwise be the case.
What would the results of all this be?
1. Lower taxes, so it's slightly easier to become wealthy (benefitting each individual as well as the whole economy).
2. Higher educational standards (ditto)
3. There would no longer be a privileged and/or dedicated elite who send their children to private schools, who then earn more, send their children to private schools etc; the lines would be far more blurred, so there would be more 'social mobility' in both directions (but hopefully more upwards than downwards).
* Of course, if we replaced Council Tax etc with Land Value Tax, there would be a real incentive for councils to either improve their own schools; allow more competing providers to take them over; or even to top-up the vouchers with local money. As we well know, house prices and rents are much higher in the catchment area of good schools, ergo LVT receipts would be higher, so up to a certain natural level, improvement in schools would be self-financing. But that's a slightly different topic.
From The Belfast Telegraph:
The head of the European Commission today called for action and not words when EU leaders gather in Brussels tomorrow to discuss the financial crisis.
... at Sneinton Boulevard Post Office.
Guess the religion of the one guy who's moaning about this.
Bought: one June Long Gilt Future at 123.43
See the BBC article.
The official figure for 'unemployment' is of course completely made up as it excludes Incapacity Benefit claimants, students, married mums who aren't really looking for a job (but might take one if offered) or three million 'salaried unemployed' in the public sector. But let's see how Nulab spin their way out of this one.
Here's the stupidest rent-a-quote from the article:
David Kern, chief economist at the British Chambers of Commerce, said the government should now "seriously consider" temporary wage subsidies.
Nope. How about just reducing or scrapping Employer's NIC?
Tuesday, 17 March 2009
The Telegraph appears to be the only paper to have covered the rumour that the FSA will only allow banks to grant mortgages of up to three times salary. I personally doubt whether a) this is true, b) this is administratively enforceable and c) even if it were, whether our benighted government - who have desperately spent the last two years trying to reflate the property price and credit bubbles - would allow it, but never mind:
Spread over two or three articles:
Exhibit One: Melanie Bien, at mortgage broker Savills, said: "If you insist on putting a limit of three times salary, you will end up with as a subdued market as you have now. Prices will have to come down even further for first time buyers to afford a property."
Exhibit Two: why does the Government feel the urge to intervene in the mortgage market so crudely? It will make life tougher for first-time buyers.
Doth not compute.
If the measure were to bring prices down (which it almost certainly would), that would make like easier for first time buyers. But simultaneously, by a miracle of DoubleThink, it would also make like tougher for first time buyers. Don't the two more or less net off in the short term, with the overall long term effect being a reduction in the debt burden on the first time buyers?
Or does the avowedly right-wing Telegraph in fact favour the nominally left-wing government's original plan to do absolutely anything within its powers to reflate the property price and credit bubbles? Or what?
Now I think about it, this is another good example of a marginal situations where you can choose between policies that make it easier to become wealthy and policies that make it easier to remain wealthy.
As there is a fairly fixed supply of housing and a fixed amount of space where it's worth building them, changes in house prices do not affect the overall wealth of the economy one bit - policies that keep prices up merely enable the already wealthy to remain wealthy, whereas restricting the amount of money that is funnelled into property, must, all things being equal, increase the amount of money that can go into more productive things, thus enabling people who aren't already wealthy to become wealthy.
There's a fine BBC article on how things have changed in NZ since prostitution was legalised six years ago.
It's fairly short and well worth a read, so I won't highlight bits of it. Suffice to say, this is a golden opportunity for pragmatarians and libertarians to say "We told you so."
Sold: One June Long Gilt future at 123.79.
Monday, 16 March 2009
In case this week's Fun Online Poll seems a little cryptic, it's not.
For avoidance of doubt, I would never recommend policies that make it both more difficult to become wealthy AND to stay wealthy, that's not the choice here . So taxes like capital gains tax, Inheritance Tax or Stamp Duty Land Tax, that make it more difficult for some people to stay wealthy without making it easier for others to become wealthy in the first place are beyond the pale. Similarly, our savagely means-tested welfare system makes it far less likely that the five million adults claiming benefits will ever work their way out of poverty and hence become wealthy ('wealthy' in this context meaning 'wealthier than they otherwise would be' on an individual level), while at the same time those welfare payments are paid for out of the taxes on other people's labour and investments (thus making it more difficult for those others to become or to stay wealthy), which is what I'd call a 'lose-lose' situation.
What I am thinking about very specifically are the marginal situations where a choice has to be struck. To repeat my simple example from the comments to the poll, we are stuck (for the time being) with high taxes on employment income (a Bad Thing) and a savings culture that has been eroded (also a Bad Thing), but as I said "... politicians love to waffle on about tax breaks for saving. My view is that rather than reducing taxes on savings income, they should reduce taxes on employment income so that people have higher net incomes out of which to save something in the first place.
An even more extreme example of this are tax breaks for pensions saving. It is only those people who earn more than enough to live on who can afford to put money aside, so superficially, the tax breaks benefit them (making it easier for the already wealthy to stay wealthy) and are funded out of a higher tax burden on those who live from hand to mouth (making it more difficult for them to become wealthy).
That would be bad enough, but the irony is of course, the bulk of pensions tax breaks (which ought to accrue to those higher earners) is swallowed up by the pensions 'industry', and what is left in each indivudual's pensions pot has been lost thrice over through malinvestment in the stock exchange over the past few years*.
So switching from the specific to the general, what pensions tax breaks do is transfer income from lower earners (making it more difficult for them to become wealthy) to people who sold overvalued shares to gullible or negligent pension fund trustees (making it easier for them to remain wealthy) and to the pensions industry itself, which does not really create wealth or enable society as a whole to become wealthier.
I've got plenty of other examples, I'll explain a few more as I go along.
* Yes, yes, I know that people like to rail about The Goblin King's £5 billion a year tax raid on private pensions - but let's not forget that the UK's various final salary schemes now have a £219 billion deficit, having been in a broadly break even situation two years ago. Or that the TV licence fee costs UK households about £3 billion a year - if your pension is that important to you, then you could halve the loss by going without a telly, for example.
From The Metro:
Mr Cameron challenged the Government to match his pledge, which he said would provide a lead in showing how taxpayer-funded institutions can "deliver more for less"... he said that, in the current tough economic climate, all public institutions had to show that they can "live within their means"... his plan for belt-tightening in public institutions would form part of a "route back to recovery" which he will set out in a series of speeches over the coming weeks.
Oh, before you get too excited, Call Me Dave was talking about 'freezing' the BBC licence fee, not cutting it mind, just not increasing it. Assuming that it would therwise have increased by 3% for inflation, that 'saves' about £4 per household*, or £80 million over a year, just slightly more than one per cent of one per cent of overall government spending.
Truly, this is Indian bicycle marketing at its finest.
* To the extent that you accept the lack of a tax hike as a saving.
From Virgin Media:
The value of the materials such as glass and paper that have been sent for recycling is £1.1 billion since 2003, the Recycle Now campaign claim. While the demand for recyclable materials has been affected by the economic crisis, Recycle Now said UK markets seemed to be stabilising and more than 95% of recycling collected was being recycled...
According to Recycle Now, 33.8 million tonnes of rubbish has been sent for recycling since 2003 - an amount that would have cost £1.8 billion to send to landfill, and would fill the Royal Albert Hall more than 1,000 times...
According to the Waste and Resources Action Programme (Wrap), which runs the Recycle Now campaign, the recycling industry supports 100,000 jobs, produces an annual turnover of £17 billion.
1. Let's take the figure of £1.1 billion (from the start of the article) at face value; how does that square with annual turnover of £17 billion (mentioned at the end)? Their figures equate to a turnover of £170,000 per employee, can one person really deal with that much rubbish?
2. 'Recycle Now' are not a 'campaign', they are, as the article states, a sub-quango of the quango Waste Recycling Action Plan.
3. Don't forget that the real commercial cost of sending stuff to landfill would be a fraction of that. The Landfill Tax on 33.8 million tonnes of rubbish at the current rate of £32 per tonne would be £1.1 billion. So the true 'saving' was only £0.7 billion, or £2.33 per UK resident per year. From that we have to deduct the extra costs of separate collections for all the different things that can be recycled (including the extra unpaid minutes that you spend every day cleaning and sorting it), so I wouldn't be surprised if this led to an overall net expense.
4. I like the way that warmenists' basic unit of area is 'the size of Wales' and the basic unit of volume is 'enough to fill the Albert Hall'.
Sunday, 15 March 2009
Growing spider plants is quite easy, even for somebody as horticulturally challenged as I am - you just snip off the new shoots, stick them in mud, water them a bit and hey presto, dozens of new spider plants. Doing the reverse is a bit trickier, but I think I've cracked it. First you leave them in a dimly lit garage for six months without watering them, then you leave them outside during an unusually cold winter (six inches of snow helps), and you should end up with something that looks like this:
Glad to have cleared that up.
For my next lesson, I will explain why coins and notes are nothing more or less than non-interest paying, small denomination IOU's issued by the government, redeemable at the bearer's demand, despite what the conspiracy theorists have to say on the matter.
From the BBC:
The government's top medical adviser has drawn up plans for a minimum price for alcohol which would double the cost of some drinks in England. Under the proposal from Sir Liam Donaldson, it has been reported that no drinks could be sold for less than 50 pence per unit of alcohol they contain. It would mean most bottles of wine could not be sold for less than £4.50.
Cabinet minister Douglas Alexander said the government would consider what Sir Liam had to say in his report. The proposal is aimed at tackling alcohol misuse and is set out in Sir Liam's annual report on the nation's health. The BBC's health correspondent Adam Brimelow said Sir Liam's recommendation would not automatically become government policy. But he said Sir Liam was influential and had advocated a ban on smoking in public places long before it became law.
Our correspondent added that recent research from the Department of Health had shown that a minimum of 50 pence per unit of alcohol would reduce consumption by almost 7%.
1. The government does not listen to its own specialist advisors unless it suits them. When the ACMD put out research showing that cannabis was not particularly harmful, the government completely ignored it. If Sir Liam was a cheerleader for the smoking ban, then this does not bode well.
2. T'was but two short weeks ago that the socialist running dogs reported that "... research [carried out by bansturbators] showed a minimum 40p per unit caused consumption to fall 2.6 per cent." That's how these convenient myths are inflated - first it's a 40p minimum leading to a 2.6% fall; now it's a 50p minimum leading to a 7% fall. In a few weeks' time, no doubt some more "research" will show that a 60p minimum will lead to a 15% fall and so on.
3. It's nice to see everybody's favourite fakecharity get another opportunity to preen themselves. If you want an idea as to the direction the government is going, they are as good a guide as any.
4. The BBC article rounds off with some meaningless statistics on alcohol-related NHS admissions, stated as 207,800, or roughly two per cent of all admissions, including accidents while drunk. Last summer, they briefly revised this figure up to 800,000, but that Big Fat Lie seems to have gone out of fashion again.
5. The article also mentions the "cost to the NHS", stated as £2.7 billion, or a staggering £13,000 per admission, that can't be right, surely? And how about comparing that £2.7 billion with total receipts from VAT and duty on alcohol sales of around £12 billion?
I tell you, it's thirsty work, this 'blogging, and the weather is glorious so I'm off out to do some in-depth, first hand research on the effects of alcohol.
H/t CCTV Star
Saturday, 14 March 2009
Something else that has irritated me for most of my life is the way that women who want to sound posh pronounce the word "book" almost the same as they'd pronounce the word "buck". I've never noticed men doing this.
Why do they do this? Why single out this particular word? They (usually) manage to pronounce "look" correctly, instead of saying "luck", after all.
The road on which I live is marked with single white lines in front of people's driveways (which I guess means you shouldn't park there), and the rest is divided into parking bays (you have to pay to park in these Monday to Friday but not at the weekend). The gap between the driveway next door and mine is not wide enough for a parking bay, so one rather long white line stretches between them.
So far so good. A lot of inconsiderate drivers find it hilariously funny to park their cars on the white line exactly between our two driveways, so that the rear bumper is in my way and the front bumper in my neighbour's way, which makes it a right struggle getting in and out, as it is a narrow road and there are often cars parked on the other side as well.
So far so bad. Some twat had parked his Merc there today. I happened to espy a traffic warden sauntering past (despite the fact that parking is free at the weekend), so I asked him why he didn't slap said Merc with a ticket.
He explained that he couldn't, because he is only in charge of ticketing cars that are parked in a bay without a permit, and not cars that are parked incorrectly outside a bay, whether they are displaying a permit or not. To double check, I pointed out another car that was parked directly in front of somebody's drive, and asked him whether he could ticket that one. He replied he couldn't, that was a matter for the police.
What sort of idiot dreams up rules like this? If they have to harass anybody at all, shouldn't they be harassing people who park inconsiderately, and not those who park in the marked bays where they're not causing any inconvenience?
A recent editorial in The Grauniad said "... let us have a permanent EU president. Mr Klaus could not be making a more persuasive case for one."
Funnily enough, the readers of this largely centre-right 'blog agreed. The response to the question "Should we have a permanent EU President?" was as follows:
Yes - provided Vaclav Klaus gets the job - 82%
No - let's stick with rotation - 12%
Yes - provided Vaclav Klaus doesn't get the job - 5%
Thanks to everybody who voted, agreed it would be nicer to knock the EU on the head, but better a small step in the right direction than none at all.
OK. This week's loaded question is "What kind of economic system would you prefer?", assuming it were a straight choice between "One that makes it easier to become wealthy." and "One that makes it easier to stay wealthy."
Vote here or use the widget in the sidebar.
We say this film yesterday for our belated Valentine's Day Out, and it really is rather good. A few things really stand out:
a) Although it is a film for grown ups, there is no nudity, swearing, violence or pyrotehnics, hence the PG certificate, which makes you realise that none of things are actually essential. The first full on snog that Isla Fisher gives Hugh Dancy is actually completely incongrous, where the whole film is crying out for a shy peck on the lips.
b) Isla is a comedy genius, she walks into plate glass doors, drops letter in the street, dances like a nutter, destroys her own evening wear and sprays dinner guests with food etc with absolute goofy panache, while remaining thoroughly charming throughout.
c) John Lithgow hardly looks a day older than he did in 'Footloose', but the others - Kristin Scott Thomas (who is now French), Joan Cusack, John Goodman and Julie Hagerty - all look frighteningly old and tired in close up.
d) The maths doesn't stack up. Isla has run up $16,000-odd in credit and store card debts on clothes, shoes, perfume and handbags, and she manages to repay them all by having an auction of all her old tat. With one or two items (e.g. the green scarf), the bidders are clearly prepared to overpay as she is by now a minor celebrity, but as a rule of thumb, second hand clothes wouldn't sell for more than a fifth of what they cost new, so by reverse logic, her credit card and store card debts must have been in the order of $80,000. Hmm.
e) The only other thing that spoils it is the fact that Hugh Dancy is you typical fairy tale prince - our heroine thinks that he is merely the overworked and underpaid editor of an obscure finance magazine, but it turns out that he is actually the scion of some great financial and property owning dynasty.
Friday, 13 March 2009
The premier said Beijing expected to see results from President Barack Obama's economic recovery plan but expressed concern that massive U.S. deficit spending and near-zero interest rates would erode the value of China's huge U.S. bond holdings.
The Chinese people are going to go mental when it finally dawns on them what their insane mercantilist government has done with all their hard-earned money. Do the Communists have some sort of contingency plan?
From The Metro:
Trading Standards chiefs are calling for a ban on the sale of electronic cigarettes to children because of fears they could ingest potentially lethal doses of nicotine.
The battery-powered "e-cigarettes" look like real cigarettes but users inhale a mist of nicotine instead of smoke. However, some of the e-cigarettes contain up to 18mg of liquid nicotine in refill cartridges which could prove fatal to children if swallowed, The Sun reported...
Anti-smoking group Ash [ahem, "fakecharity Ash", actually] said while it welcomed "safe and satisfying" alternatives to smoking, it had seen no proof that e-cigarettes are safe.
A spokesman told BBC Radio 5Live: "We're not entirely sure these products are safe and that is the problem. We haven't had the tests through yet that show they are safe and that is why the regulators are worried."
Thursday, 12 March 2009
I set up a group dedicated to "Pouring petrol over a pile of old tyres and setting fire to them" to celebrate Earth Hour but the warmenists over at Commit21 deleted it. HannibalLecter's group "I pledge to eat more vegetarians" met a similar fate.
Curmudgeon pointed out that "The trick, of course, is to put one up that is subtle enough for them to miss it for days."
Good point, but it turns out that Joanie from Alternative TV, Montreal, has beaten us to it: if you'd like to sign up to her pledge to "... recycle every toilet paper rolls [sic] in the office, even if they happen to end up in the trash can...", then sign up here, or use the widget in the sidebar.
UPDATE Their system for logging in is a bit flaky - it is quicker to register from scratch each time, using any old wacky pseudonym, than it is to log in again. Extra points go to the person claiming to belong to the most outlandish pressure group - something like "Gay parents for polar bears" would be nice.
I know that the whole QE thing has been done to death, but it's important to try and understand it, which many clearly don't. Here is a bit of economic numptiness from today's FT:
The Bank [of England] was pleased with the result of the so-called reverse auction, in which investors sell their bonds rather than buy them from the authorities. It augurs well for the rest of the programme, in which the Bank aims to buy up to £75bn in gilts over the next three months. It was inundated with £10.5bn of offers to sell gilts – five times more than its £2bn target, quashing initial worries from some City analysts that investors might fail to show up.
The Bank also paid close to the market price for the six bonds, which had maturities ranging from five to nine years, it had offered to buy. There had been worries that it might be forced to pay above market rates as investors demanded a big premium to sell their bonds.
Woah, stop right there! Let's have a look at how the benchmark ten year Long Gilt future shot up in price since QE was announced in earnest last Thursday morning (click to enlarge):
To cut a long story short, the price went up by about five per cent, and has stayed at the higher level. So what the BoE paid on Wednesday may have been 'market value' on Wednesday, but it was five per cent above the market value of a week ago. In other words, for every £1 of new electronic money that the BoE prints, 5p is overpayment, i.e. leads to inflation or combats deflation.
Further, let's not forget the interest rate see-saw:
1. The government can keep long term effective interest rates down by buying up gilts (long term liabilities) with cash (current liabilities). Remember that high gilt prices = low long term interest rates and vice versa. But more cash sloshing around leads to inflation, which leads to higher short term interest rates.
2. Or the government can depress short term interest rates, but this leads to inflation worries, which leads to higher long term interest rates.
3. Or the government can increase short term interest rates to combat inflation, which leads to lower long term interest rates.
And so on, but they are currently playing both ends against the middle, and they do not care any more about anything whatsoever apart from very short term political advantage. It's all well and good knowing a thing or two about economics and finance, but will they stop at £75 billion or £150 billion? The secret of successful speculation is guessing what the government is going to do - those who bought gilts before last Thursday guessed correctly and have reaped the rewards - but how on earth do you predict the actions of a bunch of maniacs?