Wednesday, 25 November 2015

Fun Online Polls: Pies and Syria

I have been a bit out of action the last few days, so slightly belatedly: the results to last week's Fun Online Poll:

Does a pie need pastry on the top and bottom to qualify as a pie?

Yes, both 76%
No, a pastry lid is sufficient 24%

Good, we are three-quarters of the way to common sense. The correct answer is bottom and sides are most important. The upper crust, as per usual, is pretty superfluous.

Full write up over at Pub Curmudgeon's.
Yes, we know that The Guardian have been saying that global warming caused the civil war in Syria for ages, but what's a bit worrying is that somebody who would like to be an unelected head of state is parroting this bullshit (while whizzing round in a private helicopter and living in several fully-staffed castles).

From the first article which is still rational, yes, if does appear likely that the drought in Syria was one of the indirect causes of civil unrest, as starving farmers moved to towns where people are more likely to start revolutions, that's happened quite often in history. But you can just extend this simple connection several steps in both directions.

So this is probably true:

Drought -> civil unrest

But you can't just keep extrapolating and end up with this:

Driving a car -> CO2 emissions -> global warming -> either floods or droughts, depending on what suits your argument -> civil unrest -> violent Islamists (which we've had for four decades) -> terrorism.

So is he right? Or is it more likely The Killer Cornflake Conspiracy?

Vote here or use the widget in the sidebar.

Sunday, 22 November 2015

Cinema Chains Refuse to Show Jedi Advert

From the Guardian

The UK’s three leading cinema chains have refused to show an advert by the Jedi Council that features the words of Yoda, citing fears that it could offend people.

The 60-second advert was due to be shown before The Ten Commandments, released on 18 December and which has smashed records for advance ticket sales at UK cinemas.

It was cleared by the Cinema Advertising Authority and the British Board of Film Classification, but the Odeon, Cineworld and Vue chains – which control 80% of screens around the country – have refused to show the advert because they believe it “carries the risk of upsetting, or offending, audiences”.

The council warned that the move could have a “chilling effect on free speech” and said it was at a loss to understand the logic behind the decision.

Obi Wan Kenobi, director of communications for the Jedi Council, said: “The prospect of a multigenerational cultural event offered by the release of The Ten Commandments on 18 December – a week before Galactic Liberation Day – was too good an opportunity to miss and we are bewildered by the decision of the cinemas.

“The Star Wars movies are watched by billions of people across the globe every day and in this country has been part of everyday life for decades. The force permeates every aspect of our culture from YouTube videos to toy shops and Comic-Cons. For millions of people in the United Kingdom, Star Wars is a constant part of their lives whether watched on TV, or playing Battlefront".

Friday, 20 November 2015

Oh no! Our shoes and socks will get wet!

From a surprisingly even-handed article in The Guardian:

... recent studies have suggested part of the West Antarctic ice sheet is indeed unstable, triggered by warm water flowing onto the continental shelf for at least a few decades. We don’t yet know if humans have made this more likely, and until now we also haven’t had confidence in predictions of how much sea level rise could result from this region and others that could become unstable from climate change.

The Intergovernmental Panel on Climate Change decided in 2013 there was insufficient evidence to make an assessment any more precise than “it would not exceed several tenths of a metre” this century. We predict Antarctic ice sheet instability will most likely contribute 10cm sea level rise by the end of the century but is extremely unlikely to contribute more than 30 cm. So ‘several’, for us, is ‘about three’.

The author goes on to say "Does this mean climate sceptics should be dancing in the aisles, because our study rules out these very high contributions? Not at all."

If we are dancing, some will be dancing barefoot, obviously, because that extra 10cm of water will have made their shoes and socks wet.

No, this is not "creative accounting".

Simple question: if you remortgage at a lower interest rate, does your annual cost go down?

A: of course if does. So by definition, your annual surplus goes up (or your annual net loss goes down).

It is the same with QE. The government refinanced £350 bn of interest-bearing debt by replacing it with £350 bn* of QE money which costs it 0.5% interest.

If the government's interest costs go down**, then that reduces the deficit.

* Let us assume, for simplicity, that the £350 bn old debt was not bought redeemed at a premium i.e. £350 bn nominal of high interest debt was bought back for £375 bn or something.

** There is a good argument and plenty of evidence to show that governments don't need to pay interest at all, separate topic. But 0.5% is pretty close to zero.

It is a mystery to me why 'financial journalists' find this so difficult to understand and pretend it is more complicated than it is.

From yesterday's Evening Standard:

The Chancellor is also going to get a handy leg-up from Robert Chote’s watchdog on the public finances over the next few years — cutting his borrowing bill with the wave of a magic wand.

How so? It all comes about through the change in the OBR’s assumption about the Bank of England’s Asset Purchase Facility (APF), the vehicle in which Threadneedle Street holds the £375 billion of government bonds it bought under its money-printing programme.

"Osborne will paint this as fiscal rectitude, when he’s being rewarded for economic failure." [says] Russell Lynch.

Explaining the mechanics of this without needing to put a wet towel over your head is difficult, but here’s the gist of it.

All those bonds bought by the Bank under quantitative easing (QE) rack up “coupon” or interest payments from the Government — say of between 2% and 2.5% — most of which is now transferred back to the Treasury, after the Chancellor changed the rules a couple of years back***. But the Bank bought the bonds with the newly created QE money on which it pays interest set at Bank rate, which is just 0.5%.

Broadly, the difference between the two rates is now returned to the Treasury. The details of these arcane transactions have been relegated to supplemental fiscal tables in recent publications and this transfer —which looks like very (ahem) “creative” accounting — gets much less attention. But it has a big impact. For example, this financial year, the APF is forecast to generate £14.1 billion in coupon payments less £2 billion in interest paid out on the QE cash — £12.1 billion.

The "creative accounting" is pretending that the original bonds still exist and making two sub-departments of HM Treasury pay interest to each other, but such is life.

*** Not clear how the rules would ever have been any different. Governments pay interest on their bonds. The holder of the bonds receive the interest. If the UK government holds German bonds, the German government pays the UK government interest. If the UK government holds UK government bonds, it pays itself interest i.e. nothing happens.

Yes, but how will they ever know?

From Reuters:

Polar bear populations are likely to fall by more than 30 percent by around mid-century as global warming thaws Arctic sea ice, experts said on Thursday in the most detailed review of the predators to date.

The report, by the IUCN (International Union for Conservation of Nature), estimated there are between 22,000 and 31,000 polar bears in the Arctic and said they will be increasingly vulnerable as their habitat shrinks.

Thursday, 19 November 2015

Social housing tenants in the UK and Hong Kong

Parker Tron linked to this article in The Guardian, none of this is news but worth repeating:

Almost half of social homes are occupied by only one person, and only a quarter have two residents:
43% are one-person households
32% have more than two residents.
This is partly down to the high number of retired people living in social housing, especially in supported accommodation.

... in terms of economic activity, the difference in employment status between owner-occupiers with mortgages and social renters is stark.
92% of owner-occupiers with mortgages are in employment
41% of social renters are employed

But the reasons for the disparity aren’t immediately obvious:
Half of economically inactive social renters are retired
The remaining renters are full-time carers, or long-term sick or disabled

How old are they?
People in social housing are considerably older than the people in the private rented sector:
28% of social tenants are over 65, compared with 8% of private renters
Only 25% of social renters are under 45, in contrast to 70% of private tenants
Five times as many people over the age of 75 rent in the social, rather than private, sector

This is partly down to the high number of retired people living in social housing, especially in supported accommodation.

So to generalise, social tenants are disproportionately pensioners and one-parent families.

Coincidentally, Kj emailed me a link to an article about public housing in Hong Kong (link extremely dodgy, open at your peril):

Impoverished inhabitants have reappeared in the city. The public renter-housing sector today is a concentration of poor elderly retired households and low-income single parent households.

Between 1976 and 2011, the proportion of public housing renter households from the lowest income quartile increased from an estimated 24.5% in 1976 to 48.4% in 2011, and the proportion below the median household income rose from 53.3% to 80.0% (see Figure 1).

At the same time, among households with heads aged 20-65 the percentage living in public renter housing declined from 36.3% in 1976 to 27.4% in 2011, while among heads aged above 65 the percentage rose from 30.6% in 1976 to 48.6% in 2011.

Same old, same old.

The article was written by somebody working on behalf of banks, insurance companies and possibly the old-age care sector, who are salivating at the proposal of selling off public housing.

How about this for a Home-Owner-Ist tour de force, all done presumably without any intention at irony:

Given that demographic, it seems obvious that old age support should focus on selling our public housing estates to sitting tenants at an affordable price. In particular, this would allow the elderly to immediately and cheaply acquire an asset to provide old age support. It would go a long way to addressing the problems of elderly poverty in Hong Kong.

At present, elderly homeowners can mortgage their homes in exchange for an annuity to provide a constant stream of monthly income support for the rest of their lives. Upon passing away the property is inherited by their designated heirs, who can either take ownership and assume repayments on the outstanding mortgage loan, or receive the net value of the property after the loan is repaid in full.

Using land to finance old age retirement and to benefit the next generation has been a tradition in many civilizations long before the modern world made governments the preferred provider of those in need.

Privatizing the public renter housing estates would create a very large client pool of elderly homeowners willing to take advantage of mortgage backed annuity schemes. This would create better opportunities for diversifying risks associated with the uncertainty of life expectancy. A bigger market could also lead to better terms for all participants.

Wednesday, 18 November 2015

Even the Homeys at CityAM must have realised how ridiculous it sounded...

From the paper version of City AM:

Between August and September, prices rose 0.8 per cent on a seasonally-adjusted basis, with first-time buyers found themselves paying an average of 4.3 per cent higher than in September last year.

It's an encouraging sign for the market, after figures over the summer suggested the chancellor's cooling measures - which included a hike to stamp duty and rules limiting how much mortgage customers can borrow - were beginning to take their toll.

They added a few extra words to the online version:

It's an encouraging sign for the market (or discouraging for buyers), after figures over the summer suggested the chancellor's cooling measures - which included a hike to stamp duty and rules limiting how much mortgage customers can borrow - were beginning to take their toll.

And how any sensible person can be opposed to limiting the amount of money banks can create when houses are bought and sold is a mystery to me.

Tuesday, 17 November 2015

Another Home-Owner-Ist milestone is within grasping distance...

From City AM:

In ten years time only 26 per cent of so-called “generation rent”, those aged between 20 and 39, will own their own homes according to a study by accountants PwC.

In 2013, 38 per cent of those in that age group had bought a house. The amount of 20-39 year olds renting privately by 2025 is expected to have ballooned to 59 per cent, up from 45 per cent in 2013.

Richard Snook, an economist at PwC said:

“The continual advance of house prices, which have for outstripped growth in earnings, is fundamentally changing the way that people live. Changing the outlook for generation rent will require us to build more houses than need just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”

Not much of an economist, is he?

Firstly, there's not much hard evidence to show that building more homes gets prices down (unless you build them in entirely the wrong place, in which case they are not homes, they are just piles of bricks), only blind faith.

Secondly, who does he think will be snapping up those new builds?

Answer: exactly the same 'equity rich' Baby Boomers who are snapping up a disproportionate number of any other homes which are up for sale. At present, the ratio is one BTL purchase to two first time buyers, but that ratio is worsening (or improving, from the Homeys' point of view).

And whatever happens, all those new builds are a net transfer of wealth to large landowners.

Liberty and Property Rights

I quote from this:

"The risings began when Mohamed Bouazizi, a market trader, was driven to the horrific extreme of self-immolation because he had been denied ownership of his own goods and the right to engage in commerce. His was a protest against the violation of property rights, and he was not alone. In an authoritative study of the Arab Spring, the Peruvian economist, Hernando de Soto, chronicled hundreds of cases of entrepreneurs in Arab countries being driven to suicide by police corruption and harassment.

Why is this different from the effects of all the regulatory quangos in the UK? 

This example from the delectable FSA/FCA which has resulted in a huge loss of jobs and businesses as set out here.

I have maintained all along that the RDR was a fundamental assault on property rights (by the destruction in the value in the businesses of honest citizens built up over many years and the arbitrary interference in the sanctity of private contract leading both to the whole sale loss of jobs and the undermining of all existing client agreements.

In your face, Keith Vaz

Seen in Leicester Square this morning. The people dressed as Santa were doing gospel-type versions of Xmas songs: