Wednesday, 30 November 2011
From the Evening Standard:
London bankers today expressed dismay at Chancellor George Osborne's hike in the bank levy in yesterday's autumn statement for the third time this year. It has once again raised fears that UK banks could move their headquarters overseas and foreign banks scale back their operations in this country.
Osborne raised the rate from 0.078% to 0.088% after admitting the tax would fail to raise the £2.5billion he had targeted for this year. The levy was originally introduced to replace Labour's bankers' bonus tax and was [increased] both in February and March.
Stuart Fraser, head of policy at the Corporation of London, expressed his fury by saying: "A stable tax regime is essential to ensure our international competitiveness is not damaged."
The bank levy will be charged as a percentage of banks' assets on December 31. As banks have shrunk their loan books in response to both the eurozone crisis and tougher regulation the Treasury has realised that its planned take has shrunk. Figures revealed in the autumn statement show the expected income from the levy for this year is now only £2.1 billion but that it will rise to £2.9 billion in 2016.
1. The banks were barely affected by VAT hike earlier this year, which has clobbered most productive businesses by around £10 billion a year.
2. The banks have been bailed out time and again to the tune of hundreds of billion of pounds.
3. The banks will benefit from the planned reductions in the mainstream rate of corporation tax from 28% in FY 2010 to 26% this year (with further reductions in the pipeline).
4. The banks will benefit in particular from new rules which exempt overseas branch profits from UK corporation tax. In isolation, this is a very good rule, because dividends from overseas subsidiaries are by and large exempt, but extending this to overseas branches benefits banks in particular because they tend to structure their international operations as branches rather than subsidiaries, heck knows why.
5. It seems unlikely that the stupid Tobin Tax will go ahead.
6. It's not as if banks are struggling, as their senior staff can still afford to pay themselves annual bonuses of £10 billion-off a year. Sure, 50% income tax and 13.8% NIC gets deducted, but the banks must have had the money in the first place.
And they're whining about the bank asset tax rate being hiked by 0.01% of their assets?
Banks can earn a 2% margin on their assets in their sleep, it's like rental income, so 0.088% of that 2% is like a 4.4% tax on their unearned monopoly rental income. That'll be promptly hiked to 2% of the higher of [their UK assets] and their [UK deposits], or 100% of their UK-source rental income, when I'm in charge as a quid pro quo for scrapping corporation tax, PAYE and so on. Clearly, it is daft to tax banks with UK headquarters on their overseas assets, Osborne doesn't seem to grasp that bit.
Thanks to everybody who took part in last week's Fun Online Poll and left comments (none of them idiotic, I'm happy to say), results as follows:
What's the best way of responding to idiot commenters who post personal insults?
Ignore them, but allow their comments to stand - 34%
Delete their comments - 26%
Respond to their insults politely - 24%
Insult them back - 9%
Other, please specify - 6%
So there's no hard and fast rule. It seems to me that a simple warning or two and then subsequently deleting all comments from the idiot(s) concerned seems reasonable. Engaging in tit-for-tat insults is fun but pointless, and from bitter experience, trying to engage these idiots in serious debate is pointless as well, although they sometimes provide raw material for future posts :-)
Public sector pensions, ho hum, big topic. All things considered, I'm with the government on this one. Public sector pensions aren't the biggest problem facing us - the UK government spends five times as much on corporate welfare - but it's still a problem that will have to be addressed sooner rather than later.
What particularly annoys me is that the government has gone out of its way to explain that only public sector employees currently paid £15,000 or more will have to make the additional 3% contributions (3% is nowhere near enough, but it's a start) but the trade unions keep saying exactly the opposite, that these changes will hit 'low paid hard working public servants especially women' etc etc, I suppose that's their version of the Poor Widow Bogey.
Perhaps this summary is accurate, i.e. that the £15,000 is annualised, so if you work half-hours and are paid more than £7,500, you'll have to pay 3% more for the privilege of your gold-plated, final salary, index linked pension, I don't know. If true, all that does is reduce the number of public sector employees not required to make the additional contributions, fair enough, if you ask me.
So that's this week's Fun Online Poll, do you think today's strike was justified? It's a straight 'yes' or 'no' this week.
Vote here or use the widget in the sidebar.
Tuesday, 29 November 2011
Spotted by Steve A in the Swindon Advertiser:
A COUPLE were left dumbfounded when a fugitive bull and a cow moo-ved into their Blunsdon garden and refused to budge.
Kevin Eggleton and Sally Hilton were just getting home from a night out and going to bed at about 1.30am on Saturday when the garden security light came on. The pair are used to smaller wildlife, such as foxes, making an appearance at their home in Old Lady Lane, Blunsdon, but they were somwhat surprised when they looked into the garden to see the bovine pair.
Kevin, 58, tried to call the police but after no response spent most of the night baby-sitting the cattle before the farmer was tracked down and they were returned to the field they had come from at the end of Ermin Street, Blunsdon.
Kevin said: “We’d been out and were just about to go to bed when the security light came on outside. We are used to getting foxes and badgers in the back garden but when we looked out of the window it was the biggest fox we had ever seen. I ended up spending most of the night bull watching until about four in the morning when I went to bed. When I got up in the morning they were still there and had settled down and were stretched out on the grass.”
The police arrived at the house at 8.30am on Sunday and helped Kevin to trace the farmer (1). It turned out that the two animals had made a break for it from a nearby field at the bottom of Ermin Street before making their way into the family’s garden. They had not caused any damage during their overnight stay (2).
Kevin said: “We didn’t have a clue where they had come from and didn’t know where to start looking. With help from the police we eventually tracked down the farmer who is based in Fairford. When the farmer got here with the help of his dog, who was excellent, we were able to get them back down into their field. It was a very eventful day.”
1) That bit puzzles me, the police helped Mr Eggleton to find the farmer? I can see why this might not be top of the police's list of concerns, but I don't see why it's Mr Eggleton's problem either. I thought that all cows had to have ear tags and so could be identified fairly quickly, if you have access to the database. If not, he could have just sold them to the local slaughterhouse or something.
2) Well done to bull and cow for not causing any damage, maybe "like a bull in a china shop" actually means "to behave very carefully and not cause any damage"?
1. He'll mention his 'credit easing' scheme, which was "Named in a Tory party manifesto before the last election the National Loan Guarantee Scheme is similar to the previous Labour government's credit guarantee scheme set up by Alistair Darling in the wake of the credit crunch".
2. He might mention more quantitative easing as well, which was something which started under Labour. At the time, Osborne had this to say:
"The very fact that the Treasury is speculating about printing money shows that Gordon Brown has led Britain to the brink of bankruptcy. Printing money is the last resort of desperate governments when all other policies have failed. It can't be ruled out as a last resort in the fight against deflation, but in the end printing money risks losing control of inflation and all the economic problems that high inflation brings."
3. He announced a scheme to 'help first time buyers onto the property ladder' last week which was more or less word for word a re-hash of something Labour announced two years ago.
4. And then there's the £1 billion Youth Contract:
The decision to use wage subsidies to boost employment is something of a U-turn for the coalition, which quickly scrapped £1.3bn of similar payments, instigated by the Labour party, when it came to power.
5. The council tax freeze, paid for by hiking taxes on everything else seems to common ground between all the main parties as well (it's basic Home-Owner-Ism).
6. The only wizard wheeze which the Tories actually dreamed up for themselves seems to have failed most gloriously:
There could be a revision to a £5,000 per firm national insurance break for any business started outside London or the south-east. The Treasury predicted that 400,000 businesses would benefit, but it is understood only a handful gained.
Monday, 28 November 2011
Spotted by Joseph Takagi, Pavlov's Cat and Julia M at the BBC:
A cow has been shot dead by police after it escaped from a cattle market and took to the streets in Darlington.
It escaped at 09:00 GMT on Monday during the Darlington Auction Market in the Teesside town. The cow rammed into vans and parked cars on the Victoria Embankment area, and police said it ran towards people.
Officers said it was distressed and had to be shot dead by an armed officer after they and members of the public struggled to control it. Police said no-one was hurt during the incident.
There's a fine article in The Metro about the entries in this year's Turnip Prize, which is a low budget version of the Turner Prize.
They have one of those for tennis as well, there's a low budget version of Wimbledon known as the 80p comptetition.
Sunday, 27 November 2011
The previous thread has got a bit messy, so I'll start again.
Sobers, who is a master at Home-Owner-Ist DoubleSpeak has come up with more superficially clever but factually incorrect and totally contradictory arguments against LVT, none of which stack up in fact or in logic, and even if they did wouldn't actually be arguments against, but are on the one-dimensional level which appeal to tabloid newspaper readers, they are roughly as follows:
1. LVT will clobber a lot of businesses, i.e. those that use a lot of land (primarily farming, large scale manufacturing), which is A Bad Thing, he singled out Honda in Swindon as an example.
This is simply not true, it's what you might call "an outright lie".
a) A known amount of income tax, corporation tax, PAYE is collected from farming. There is a known amount of farmland, some of which has a low rental value (forests, about £10 an acre) up to tip-top land suitable for growing vegetables (up to £300 according to a farmer I know). We happen to have very good records of this because CAP payments are (or were) paid out at different rates according to the value of the land (so the owner of a forest got much less in subsidies than the owner of tip-top farmland).
So we can deduct the total value of the subsidies from the total tax they pay averaged over the past few years (it's possible that this is a negative figure) and divide this by the total rental value of UK farmland to arrive at a percentage and hey presto, that's your starting figure. As long as LVT on farmland in year one is equal to or less than this, it can't possibly have a negative impact on farming. As it happens, that net tax minus subsidy figure is very low (might even be negative) and the total value of UK farmland is a tiny percentage of the rental value of privately owned urban land, so as far as I am concerned, we could just exempt farmland for the time being and just make farmers pay normal LVT on their housing.
b) I also reminded Sobers that the LVT on Honda's Swindon site would work out at an average of £225 per car (assuming full production of 200,000 cars a year), which is a tiny fraction of what they are paying now in VAT per car. And half of their site appears to be a car park i.e. storage space for finished cars not yet sold, I'm sure they could cut back on this if they were so minded.
c) We can go through business after business after business, and all we establish is that some will pay a bit less tax than now, some will pay a lot less than now, and some will pay barely anything compared to now. The fact that shifting to LVT will benefit some businesses more than others is a minor concern, it all levels out in the end.
d) Just to remind you (i.e. Shiney) of the basic calculation, there are about 2.1 million acres of privately owned residential land and 0.3 million acres of privately owned commercial land (a mere four per cent of the UK by surface area). If we want to replace all taxes apart from duties on fuel, booze, fags and gambling) we'd need to raise £300 billion a year. Now, to head off the Poor Widow In A Mansion nonsense, let's assume that pensioners' sole and main residences are exempt, so reduces the amount of taxable residential land down to 1.7 million (pensioners are one-fifth of the population, 2.1 million acres minus one fifth = 1.7 million).
£300 billion divided by [1.7 million + 0.3 million = 2.0 million acres] divided by 4,840 sq yds/acre = an average of £31 per sq yd per year. That's the average don't forget, and distributions being what they are, two-thirds of land would pay less than this and the median would be about £25 per sq yard, which happens to be Swindon.
e) Reality check: LVT on residential land would raise about £250 billion, about ten times as much as Council Tax currently does £25 billion. So the LVT on an average/median home would be about £10,000 - £12,000 per year. The cost of the core functions of the state is a laughable £60 billion a year so the average net tax per person must be around £1,000 a year. We know that the total Child Benefit/Citizen's income for a median household would be £8,000 - £10,000 per year, which neatly back to a net tax bill (LVT minus CI) of around £1,000 per person.
f) Reality check: Business Rates currently raises £25 billion a year from those 0.3 million acres and the LVT raised from commercial land would be £45 billion-odd, so the impact on business is easy to quantify - it would be like scrapping all other taxes and doubling Business Rates. Seeing as all other taxes on business activity are most of the £300 billion a year mentioned above, I think we'd struggle to find a business which ends up paying more in tax, wouldn't we?
So Sobers realised he was on a hiding to nothing with that one and did a volte face; he took my facts and then invented some more arguments against:
2. LVT will favour businesses owned by foreigners, so if we stop taxing their profits, they will remit all their profits overseas again.
No they won't. Why would people take money out of tax-free country like the UK?
3. LVT will favour businesses over households. Most businesses are owned by rich people. Therefore rich people will get even richer. This will be unpopular.
This is not actually true, most of most businesses are owned by small shareholders, usually indirectly via pension funds. Secondly, most of the people near the top of the Times Rich List are oligarchs, bankers, land owners, property developers, owners of patents and other monopolists - they live off government-protected unearned income. LVT (and related taxes) are taxes on monopolies, so the chances are, most people on that Rich List would end up slightly less obscenely wealthy. And I've never been particularly interested in inequalities between people's non-state protected earned incomes - brain surgeons and barristers will always earn more than brick layers or bus drivers - that's just one of those facts of life which we can't do very much about so there's no point worrying about it. The best we can do is allow people to keep all their earned income by scrapping income tax etc and give everybody a share of the unearned income which everybody generates and have done with it.
4. LVT will favour businesses which use hardly any land, such as banks. Sub-text: people hate banks and want to see them taxed more highly.
That's not true either and irrelevant anyway - because most of banks' income is interest on mortgages secured on land, i.e. they are collecting rents. Once the rents are collected by the government and redistributed, banks will only be able to earn money by lending for investment in productive stuff. They won't be able to blow asset price bubbles, so their income will fall. The fact that they will be paying little in corporation tax is irrelevant.
Having explained the impact on banks, we hereby neatly turn a full circle and go back to the more traditional Homey argument which is more or less the opposite of argument 4:
5. If we had LVT, then land prices would fall (yes, this is true) and so all the banks would go bankrupt. Sub-text: we like banks and want them to have more of our money.
If you can bothered to look at the distribution of loans to value and so on and crunch the numbers, we'd know that banks wouldn't go bankrupt, even if house prices halved and everybody in negative equity lost their job, defaulted and declared themselves bankrupt. That's a simple mathematical fact.
That's why you can't win an argument with a Home-Owner-ist or Faux Libertarian, they have no respect for facts or logic and are quite willing to hold two diametrically opposed views at the same time and flip back and forth between them more or less at will, and if all else fails, they will concede on the facts half way through and then rehash the same old lies again later in the debate.
For them, there are no grey areas which the free markets will sort out, there is black (LVT will mean higher tax bills for some people - choose a few tear jerker categories, Widows In Mansions, the disabled, vulnerable children blah-di-blah, so is bad) and white (LVT will mean lower tax bills for some other people, if we choose a few hate figures who will end up better off, we can persuade the gullible population to stick with the present system).
Saturday, 26 November 2011
Physiocrat invited me to join the fray over at The Guardian yesterday (the actual article is by landowner and Socialist Richard Murphy who is obsessed with collect more and more taxes from people's earned income, so can be cheerfully ignored) after he donated the LVT bomb yet again.
Here's some of the rubbish we find in the rubble:
Bricktopguy The problem is Tax havens. While even one exists, it is impossible to stop tax evasion.
Physiocrat: Not true. Tax due from the Business Rate is not evaded through the use of tax havens. The solution is to collect more money from property taxes, preferably on land value. The tax havens would never get a look in.
Existenzangst: If our friend [Sir Philip] Green [owner of lots of high street clothes shops] owned no land in the UK and earned £6 million in the UK, he would pay no tax. Both sorts of taxes are needed.
Green is infamous for having paid a large dividend out of post-tax profits to his wife, who is not UK domiciled for tax purposes and hence had to pay no higher rate income tax, which allegedly saved him/her £285 million in tax. That's tax law as it stands, and good luck to them, say I.
But his businesses need to occupy land on UK high streets in order to earn money in the UK, whether as tenants or as owners. From today's Soaraway Sun: And then there is business rates. These are expected to rise by another five per cent in April next year. Sir Philip said: "On Oxford Street I pay £6million a year in rates — yes, £6million! — and now they want to charge people to park on weekends!"
The chances are that the total VAT, PAYE and corporation tax that his companies/employees pay are ten or twenty times as much as the Business Rates he pays. Business Rates (similar to LVT) is the one tax that he has to pay and cannot avoid; in the absence of those other taxes, his companies could be charged, and would be willing to pay, ten or twenty times as much in Business Rates (or LVT) as they do now and it wouldn't matter whether or not he owned land in the UK or whether or not he or his wife live in the UK.
UncleHarrie: I don't know what this LVT is, but if it effects ordinary little landlords like me then forget it, there is enough of us to make a big difference to the amount of seats any government can win. if it affects us we won't vote for it.
Jolly good. He doesn't know what it is but argues against it anyway. Fair enough, shifting from income tax to LVT would, by and large, benefit tenants at the expense of landlords. But his electoral maths is shit. By definition there are three or four times as many tenants as there are 'ordinary little landlords'. I suppose this is why the hardcore Home-Owner-Ists would like to see a return to the old days when only landowners had the vote.
Brouillard: Oh, and I half agree with Physiocrat on taxes... I don't agree with LVT though. It over taxes useful activities and makes knowledge economies far more lucrative than they should be. It penalises industry over services.
Land ownership is not an activity, useful nor otherwise. There are a lot of politicians who say (rightly or wrongly) that we should encourage 'knowledge economies' so how come that's A Bad Thing all of a sudden? As per usual, he fails to see that there will always be a balance between different types of industry. For sure, we need cutting edge computer programmers but they are merely a means to an end - better stock control, better telecoms, more accurate medical diagnoses, online banking, whatever. But there is a natural upper limit on the number of programmers we need, all the stock control in the world is no good if there's nobody on a farm or in a factory making stuff, for example.
Neither does LVT penalise 'industry' (I assume he means manufacturing), it's the tax system and all this carbon pricing that does that. Modern factories need a lot of space, but these can be, and usually are sited at the edges of towns and cities where land is plentiful and hence cheap. 'Services' on the other hand are usually provided from much smaller units in the middle of towns and cities, but where land values are much higher. It all evens out in the end; Honda would not wish to use retail units in the middle of Swindon to make cars, and hairdresser in the middle of Swindon would not shut up his shop and rent a cheap industrial unit on the edge of town instead.
Nick Greeny: So where does the [LVT] come from? Many people who currently pay tax would not, and you cannot assume that the value of land in Regent Street would remain as it is. If the tax paid was more than now, then the owner would go bust or move to a field in Norfolk. Where are your tax revenues then?
Oh dear oh dear. If you think that Apple or Hamlyns or Austin Reed are all going to shut up shop in a prime shopping area and open up in a field in Norfolk with only a few tractors and sheep passing by every day, you are very much mistaken.
Further, as a matter of fact, most of Regent St actually belongs to Crown Estates and most shops on there are rented. So whether a tenant pays rent to Crown Estates (part of the government, nothing to do with the Queen), pays Business Rates to Westminster Council (part of the government), and pays a shed load of VAT, PAYE, corporation tax to HM Revenue & Customs (part of the government) or just pays a single tax LVT (i.e. ground rent) to the government makes ABSOLUTELY NO DIFFERENCE.
If, as Physicocrat and I keep suggesting, we got rid of VAT, income tax, corp tax, NIC etc, then the rental value of shops on Regent Street would increase by an amount similar to the tax cut, so overall revenues would not change much.
I suppose it is possible that every single shop in London and every person living in London would move to the same fields in Norfolk, build a new Tube network etc, in which case, the rental value of that field would rise to whatever the rental value of central London is now and the rental value of London would fall. But this is a) unlikely to happen and b) irrelevant and c) illustrates that land rents will always arise, they merely shift from area to area.
Nick Greeny couldn't think of a come back to that, so he hit back with something completely left field, incorrect and irrelevant:
So after 10 years our 'free' green and haphazardly pleasant land would look like Azerbaijan with strip mining, fracking plants and land fill up and down the country. Hurrah for LVT!
We were trying to discuss reforming the tax system, and did not in any way suggest abandoning all planning laws or environmental protection laws. As we well know, the amount of land needed for landfill is amazingly small, but if LVT applied to landfill sites, they would be used more efficiently and more waste would be recycled or used as fuel.
... and then this:
And on a bad year when the farmer or other business makes no money? Instant bankruptcy. Well done... Also, what if you're a hedge or investment fund operating from a 800sqft office. You're making millions and paying the same tax as the pound shop across the road.
Severe lack of imagination, let alone any knowledge of the real world.
Can you envisage a country in which farmers and farm workers are exempt from income tax and NIC? Yes. Would there be farmland? Yes. Would some farmers wish to buy land, possibly with a mortgage? Yes. So such a farmer has committed himself to regular monthly payments for the foreseeable future. If he knows that the bank will foreclose for a single missed payment, the farmer would put a bit of money aside in the good years to the extent it can't be invested in improving his capital and machinery, and so in the bad years he has something to fall back on. Are there idiot farmers who would over-mortgage themselves and have the farm foreclosed? Yes. Can you legislate against stupidity? No. What happens to the foreclosed land? The bank sells it or rents it to another farmer, so what is the impact on agricultural output? None. If most farmers can cope with a future regular stream of interest payments, why would they not be able to cope with a regular stream of future LVT payments instead, knowing that if there is a long term depression in food prices, that their LVT payments will be reduced or even waived? No reason.
As to the hedge fund and the pound shop, we know that most hedge funds in the UK rent swanky offices in the most expensive part of London and pound shops run from yer average high street. If the hedge funds wanted to reduce their rental expense, they could easily do so, but they don't, presumably for status reasons. Neither can we assume that pound shops would rent incredibly expensive office space in central London.
So there's no reason to assume that a pound shop and a hedge fund would ever be competing for the same retail space, and even if they did, so what? There are rich people who like giving their spare cash to hedge funds and there are poor people who like spending their money in pound shops and so we will always have some mix of the two, there will always be demand for stuff that costs a pound and there will always be people who would rather run a pound shop than run a hedge fund.
These Home-Owner-Ists just don't know anything about real life, let alone economics.
Friday, 25 November 2011
Jasmine Gardner, in today's Evening Standard:
You'll walk in through a door on the high street, but you'll find almost nothing on the shelves. House of Fraser launched its second productless outlet this week, where aside from a few key items and some changing rooms to try on orders when they arrive for collection there will just be computers for browsing the website, using virtual personal shopping services and ordering online. It sounds a bit like your house but further away...
In the spirit of getting down with the kids, keeping my finger on the pulse etc, I watched some Top 40 programme on the telly this evening, which featured Bouncy at number 19, doing one semi-tone up truck driver's gearchange after another (1 min 45 sec; 2 min 5 sec; 2 min 25 sec; 2 min 45 sec) for no apparent reason:
VFTS reminds me to mention this story:
By her own admission, the university undergraduate had been ‘mucking about’ in her flatmate Lisa Smith’s bedroom when she fell off the bed.
In a freak turn of events the 18-year-old then knocked over a nearby clothes horse which landed on her, with the narrow rails trapping her by the head and shoulders. In desperation she called a friend to explain her predicament. Despite her best efforts and desperate attempts by her flatmate, Miss Morgan just could not free herself. Dressed in her pyjamas and dressing gown, she was forced to call on staff at her hall of residence at the University of Derby.
They tried wriggling the clothes horse this way and that but it was all to no avail and eventually the fire brigade was called....
All I can say is she had a lucky escape! Two months ago some poor bloke was actually killed by a clothes horse.
From Newark Advertiser:
The cow escaped yesterday as it was being unloaded ahead of today's weekly fatstock cattle auction at Newark Livestock Market. A local farmer said: "Something must have spooked it."
A Network Rail spokesman said a member of the public reported the cow at Newark Castle Station level crossing at 4.20pm. Trains on the line were ordered to run at low speeds, causing delays, but no services were cancelled. After standing by the level crossing for some time and then wandering down the line, the cow began walking in the direction of Kelham.
The Nottinghamshire Police helicopter was used to monitor the cow's progress. It was in collision with a Mini more than a mile away at the entrance to Kelham Hall on the busy A617 at 6pm and died. As the Advertiser went to press the extent of the driver's injuries were unclear. The cow's carcase was recovered by Crowden's of Newark.
For maximum carnage, try and get hit by a train, you stupid cow!
I love the extra detail of which local slaughterhouse recovered the carcase, I wonder whether they'll be selling rather oddly shaped cuts for the next few days.
THE GOVERNMENT will hand £1bn to private firms in a bid to tackle rising youth unemployment, Nick Clegg, the deputy Prime Minister, will announce today. Under the “Youth Contract”, firms will be eligible for a subsidy of £2,275 for each employee aged 18 to 24 years old they take on. There will be 160,000 such subsidies – equivalent to half the minimum wage for six months – available over the next three years...
The decision to use wage subsidies to boost employment is something of a U-turn for the coalition, which quickly scrapped £1.3bn of similar payments, instigated by the Labour party, when it came to power.
In a bid to ensure the cash helps those who need it most, the vast majority of subsidies will only be available to employers who take on a young person who has been on jobseeker’s allowance for at least nine months. The government is keen to avoid the mistakes of Labour’s Future Jobs Fund, which was widely criticised for helping employers cut the cost of taking on university graduates they would have hired regardless.
Labour's plan didn't work, this one won't work.
I'm sure employers will, for example, be able to find plenty of graduates who have been on JSA for at least nine months whom "they would have hired regardless". I suppose the significance of 'nine months' is that governments seem to worry more about long-term unemployed than short-term unemployed, so this is a good way of reducing the number of long-term unemployed, albeit at the expense of increasing the number of short-term unemployed.
Labour politician Liam Byrne had the temerity to claim on Radio 4 this morning that youth unemployment had increased by one million rather than to one million under the Tories, as the figure is one million this would imply that there had been no youth unemployment when Labour were in government.
Far from it.
As the chart from here shows, things had been getting steadily worse since 2001 or thereabouts (under Labour), there was a huge leap in 2008 (under Labour) and the number has 'only' increased by about 100,000 under the Tories.That increase will not come as a surprise to anybody who can remember the rules of thumb that a 1% hike in VAT leads to an increase in unemployment of 100,000 (so all things being equal, the 2.5% increase eleven months ago = 250,000 jobs lost, which the extra 2% NI makes worse); and that unemployment increases fastest for new entrants to the jobs market, i.e. for 16-17 year olds, chart from here:There's another interesting chart over at Migration Watch giving another possible explanation, bearing in mind there was net migration last year of 252,000.
Thursday, 24 November 2011
James Higham and Pavlov's Cat alert me to an article in The Daily Mail:
A couple of lovestruck farmers said 'I moo' when they got married in a cow themed wedding.
Beef farmer Michael Hanson, 26, and surveyor Hayley Morgan, 31, decided they wanted to tie the knot in an 'udderly' brilliant style that celebrated their country lives. The bride arrived at the church in a 2.8 tonne tractor which transported the happy couple after the service to a muddy field to have their portrait taken with a herd of British Blue cattle.
The couple even had cow and calf named tables at the reception and a British Blue themed wedding cake complete with icing figures of their three dogs and of them as cattle. Guests' names were written on cattle ear tags on the tables and they enjoyed a four-course dinner with, what else, roast beef.
The couple then honeymooned in Texas where they spent three weeks touring cattle farms.
Luckily, nobody was injured.
From The Soaraway Sun:
DOCTOR Who star Matt Smith has split up with model Daisy Lowe...
Call me old fashioned, but hasn't he split 'from' and not 'up with', in the same way as you get 'divorced from' somebody and not 'divorced up with' somebody?
They showed a "new" episode of Top Gear yesterday, which presumably means it's only the third repeat, in which they road tested some electric cars. They said that the cars are actually quite OK to drive, but their range is less than 100 miles and then you have to plug them in to recharge the battery, which takes about 12 hours.
It strikes me that the manufacturers could get round this problem by having their own "filling stations" dotted around the country, where they hire out their own pre-charged batteries. So you turn up, whip out your flat battery and exchange it for a charged one and pay your £10 or however much they want to charge to be competitive with petrol, which can't be too difficult, as there's no petrol duty on electricity.* A bit like with the Calor Gas bottles. And just about any shop could be a "filling station", all it needs is a spare plug or three.
* If there were a duty like petrol duty on electricity used to charge car batteries, we'd probably find that electric cars are woefully uneconomic to run as well as being very expensive to buy. Neither are they "zero-emission" in the first place, unless they are only charged with nuclear or wind generated electricity. But these are secondary issues.
UPDATE: Richard in the comments points out that the Israelis are already doing this, the whole process takes two or three minutes:
Deputy Prime Minister Nick Clegg will today suggest that banks are racially discriminating against certain ethnic minorities in their lending decisions and will demand an inquiry into the matter.
In a lecture to be give later today, Clegg will claim: "Firms owned by individuals of black African origin have been four times more likely than so-called 'white firms' to be denied loans outright... Bangladeshi, Pakistani, black Caribbean and black African-owned businesses have been subject to higher interest rates than white and Indian owned enterprises."
Wednesday, 23 November 2011
Spotted by Denis Cooper in the FT:
Germany saw one of its poorest debt sales on Wednesday in what was seen as a failed auction by many market participants amid fears the eurozone’s debt crisis is spreading all the way to Berlin.
Marc Ostwald, at Monument, said "I cannot recall a worse auction ... If Germany can only manage this sort of participation, what hope for the rest. Yields are at completely the wrong level."
Mr Oswald said the bid-to-cover ratio was only 0.65 times as the German debt agency sold just €3.644bn of its new 10-year Bund of the €6bn targeted.
Chuckle, chuckle, tee hee, people are starting to worry about the German government having to bail out all the other Euro-zone countries.
As Denis points out, Germany hasn't had a failed bond auction for nearly three years.
Mr G, over at HousePriceCrash:
Out of interest, are you saying that the domestic rate system was a land value tax? [Yes I was] If so, I'm afraid that puts me off LVT even more.
Under the rating system you had situations where say, the rateable value of a house was £200, 4 working adults living in this house would still only pay the £200 that 2 working adults would pay.*
Ah, I hear you say, but there are 4 people in the house instead of 2. Under a fairer tax system which I believe we both would like to see, shouldn't each individual pay the same amount if they are working or have the means to pay?
Perhaps the poll tax was fairer than it was perceived to be?
I gave the stock answers over there, but we can look at the respective merits of LVT and Poll Tax by contrasting two diametrically opposed possibilities.
As a matter of fact, the cash cost of the core functions of the state is negligible, five per cent of GDP or so, which we could easily pay for with duties on fuel, booze, fags and gambling. All other tax revenues are either redistributed (in particular old age pensions) or wasted/stolen. There is a big overlap; health and education are a mix of redistribution, waste and theft.
So let's imagine our minimal state, with no taxation at all (apart from the duties mentioned above), no redistribution (so no old age pensions) and no waste/theft - there'd still be massive privatised tax collection by landowners who rely on the government to protect their interests, but hey - and consider two options, both involving the collection of £60 billion with the sole aim of redistribution and decide which one we prefer:
We introduce a Land Value Tax (which would be about 1.2% of current values) and give everybody a Citizen's Dividend (which is like negative Poll Tax) of £1,000 a year. Administratively it would be a doddle.
This would dampen house prices slightly, dampen credit bubbles, make houses a tad more affordable for future generations, encourage more efficient use of land and housing, alleviate absolute poverty at the lower end, and the average household in the average house would end up a few hundred pounds a year better off.
We introduce a Poll Tax of £1,000 per person (which is like a negative Citizen's Dividend) and pay it out as an annual Land Value Subsidy, so if you own a house, you'd receive 1.2% of its current value. Valuing the houses is not difficult, but collecting a Poll Tax is, as we well know.
This would push up house prices slightly, fuel credit bubbles, make houses less affordable for future generations, encourage inefficient use of land and housing, worsen absolute poverty at the lower end, and the average household in the average house would end up a few hundred pounds worse off.
* This is all arrant nonsense of course. When we had Domestic Rates, there was still income tax and so on, so the four working adults were paying £40,200 a year in income tax and Domestic Rates; and the two working adults were paying £20,200.
From the BBC:
Something or other takes place "in far greater numbers than was ever imagined", the government warns.
Ministers say gifts such as money, food, drugs or alcohol are often used as a means of coercion. They say robust strategies are needed to ensure that something or other does not happen. Minister Tim Loughton is launching a plan to make sure agencies work together to tackle the problem.
The Action Plan will bring together the police, the Crown Prosecution Service and support organisations like Crisis. The plan will also look at improving education in schools and helping parents know what tell-tale signs to watch out for. In October, the deputy children's commissioner, Sue Berelowitz, launched a two-year inquiry into the scale and scope of something or other. Ms Berelowitz said thousands of children could be affected and the issue reached across race and class.
Launching the action plan on Wednesday, Mr Loughton said: "This country has to wake up to the fact that something or other is happening in far greater numbers than was ever imagined. It could be going on in every type of community and in every part of the country. Too many local areas have failed to uncover the true extent of it in their communities and failed to properly support victims and their families. It is not good enough that some local areas don't recognise it as an issue. Something or other is an extremely serious crime and must be treated as such, with the perpetrators pursued more vigorously."
Mr Loughton said it must be made easier for victims and their families to go to court. "It is worrying that many incidents go unreported because victims are unwilling to come forward," he said, "The action plan is a big step forward and looks at something or other from the perspective of the young person, analysing what can go wrong and what should happen at every stage."
From City AM:
THE TREASURY is preparing to water down a key recommendation in the Vickers report that would protect savers in the event of a bank going bust. Investors and banks have argued that Vickers’ suggestion that retail depositors should be paid back before all other creditors if a bank collapses could risk destroying the market for bank debt and cause corporate deposits to flee the UK...
HSBC and Standard Chartered, the banks most likely to leave the UK, have lobbied against the requirement that they issue billions in bail-in bonds – bonds that can be written-down in the event of the bank’s collapse. The measure would cost HSBC $2.1bn a year, its chief financial officer Iain Mackay said recently, which he added would be "too high" to justify staying in the UK.
i. A bank holds financial assets, i.e. money lent out at interest, and all financial assets require corresponding financial liabilities, i.e. ownership. So a bank can finance itself with a mix of deposits, bonds/loans and share capital/retained profits (to use three broad categories, there are of course huge overlaps between them).
ii. In proper free market capitalism, there is a balance between risk and return. So if a bank has £20 in assets and generates £1 in gross income, the senior staff swipe 10p for themselves and the rest is dished out between the three classes of financiers (depositors, bondholders, shareholders).
iii. If the bank were funded solely by £20 in deposits, they would receive 4.5% interest and bear the whole risk; if it were funded entirely by bonds, they would also receive 4.5% and bear the whole risk etc.
iv. But people's risk preferences are different, so some are prepared to accept a lower return in exchange for bearing less risk, and 'risk' for these purposes is where they rank in priority of repayment. For example, if the bank is financed with a third from each category, the depositors are paid 1%, the bond holders 5% and the shareholders 7.5%.
v. Remember also that how a bank is financed has little impact on that £1 gross income, it's just a question of how it is split up. The whole point of Vickers is to release the taxpayer from the burden of bailing out banks.
vi. Simplest would be to increase their share capital/retained profits, either by issuing shares, paying out less as dividends or paying out less in obscene bonuses. Or we can invent a new category of finance called 'bail-in bonds' which are a hybrid of bonds and share capital. So if the bank is financed with a quarter from each category, the depositors would be paid 1%, the ordinary bondholders 1.5%, the bail-in bondholders 5.5% and the shareholders 10%. And so on; but the total cost of finance from the bank's point of view is exactly the same, it always adds up to 90p.
vii. I don't know how HSBC calculated their $2.1 bn a year cost. Using my simple examples, this would be the extra which they have to pay to those bondholders from iv. who choose to subscribe for the slightly riskier 'bail-in bonds' in vi. These bond holders receive 27.5p interest(£5 x 5.5%). But we can minus off from that the 1.7p less which depositors are getting and 25.8p less which ordinary bondholders are getting (£6.67 x 5% minus £5 x 1.5%). Whatever you do, it always adds up to 90p.
viii. Unless, of course, what HSBC are really saying is that their bank is not particularly well run, i.e. risky, and that if their bondholders are expected to bear some of the risk (clearly the share capital is not enough, or else there'd be no risk to bondholders at all), they will expect $2.1 bn more a year in interest or dividends. They could of course just run their bank properly and get the interest cost down that way or they can fob off the risk onto the taxpayer (i.e. you) and keep the rewards to themselves.
Tuesday, 22 November 2011
According to the BBC and others...
Manchester City has reported an annual loss of £194.9m for 2010-11, the biggest in English football history. But the operating loss does not include the club's huge sponsorship deal with Etihad Airlines, worth a reported £35m a year, or revenues from this season's Champions League campaign. Uefa's Financial Fair Play rules, which come into full effect in 2013-14, say clubs must break even over three years. However the latest figures fall outside the accounting window for that.
The previous biggest Premier League loss was £141m reported by Chelsea in 2005 - when they went on to win the league....
Although City's results next year will be boosted by the 10-year sponsorship deal with UAE's Etihad, questions have been raised about the £400m agreement. Etihad is based in Abu Dhabi, which is also the home of Sheikh Mansour, a member of the emirate's ruling Al-Nahyan family. Concerns have been raised that the deal has been inflated to help City meet Uefa's financial fair play rules.
Liverpool managing director Ian Ayre has said: "Are Etihad, City and Sheikh Mansour related parties? If they are, it's up to Uefa to rule on them." Arsenal manager Arsene Wenger has also claimed the deal "raises the real question about the credibility of financial fair play".
Look, these top Premier League clubs are not a business as such but a status symbol. Once yer oil sheikh or oligarch has got a string of penthouse apartments, a private jet and a sea going yacht etc, the ultimate status symbol is a Premier League football club. The owner is quite happy to subsidise the club to the tune of £100 or £200 million a year, it's conspicuous consumption, it's a way of showing off how rich he is, if he made a profit on his ownership that would defeat the whole object. The owner doesn't look at that £100 million or £200 million as a loss any more than he looks at the running costs of his jet or yacht as a lost, it's just a cost of living.
As to the second point, whether income from a sponsorship deal with a related party counts as proper income or not, well who cares either way? There are people who are not quite rich enough to buy a whole team, so what they do is sponsor one, have the stadium named after them for £10 million a year, see e.g. Newcastle, Arsenal.
If the sponsor concerned, Etihad, is an arm's length third party and is prepared to pay £400 million over ten years for sponsorship to boost his own image/ego, then that would count as proper income, but why is this any different from the actual owner chipping in a couple of hundred million to boost his own image/ego? It's not as if the owner expects much in return, in a financial or material sense. One day his money will run out, or more likely he'll get bored and then that will be the end of that chapter.
From an article at the BBC:
The House Builders Federation said the lack of mortgage availability since the 2008 banking crisis had been "the biggest constraint" on new homes and the indemnity scheme would help to address this.
There's a nice chart in that article showing the number of houses built for private purchasers, which shows annual new construction/sales of rather more than 100,000 from the 1950s all the way up to 2009 or thereabouts, since when it has fallen to a much lower figure.Gross mortgage lending will be a lot lower this year (£130 billion-odd) than it was in the peak year 2007 (£363 billion) but that is still higher than in all the years leading up to 2000. And somehow all the houses built up to the year 2000 were sold, so what's the problem now?
From today's editorial:
The housing bubble is at the heart of Britain's economic crisis. For one happy generation, rapid house-price inflation fuelled by ready money and a shrinking supply was a guarantee of previously unimagined riches. By the peak of the boom in 2007, 75% of us owned our own homes.
For the lucky ones who got in early it was an investment that doubled in value and delivered a promise of lifelong security. No government will lightly wake the voters from such a dream, and on the evidence of Monday's housing strategy, the coalition is determined to persist in the deceit that we can return to the heady days of a decade ago.
I don't remember them saying this as loudly when Labour were in charge, but hey. Better late than never.
Monday, 21 November 2011
Thank you to everybody who took part in last week's Fun Online Poll, results as follows:
Which is your favourite brand of crisps?
Kettle - 24%
Seabrook's - 21%
Walker's - 13%
Also rans: Tyrell's - 6%, Brannigan's - 5%, Golden Wonder - 5%, TESCO (incl. Premium) - 3%, Lay's - 2%, Smith's - 2%, Burt's - 1%, Tayto - 1%
Honourable mention must go to McCoy's, which I missed off the ballot paper. Dick Puddlecote, Shades, Andy Nicholas, Adam Collyer and Sniper all named McCoy's as their favourite.
Duly fired up, I bought some Seabrook's and some Golden Wonder for research purposes yesterday. My lad reckoned that Seabrook's Prawn Cocktail are the best crisps ever, but I have slight misgivings about crinkle-cut crisps, they seem a bit artificial. The Cheese & Chives seem a bit inspid and they proudly say New 90% less salt on the back. I was very impressed with Golden Wonder's Salt and Vinegar, which make your lips go pale pink like in olden times and bonus points for getting green/pale blue the right way round, but for some reason, their Ready Salted are dark blue and not red, which sort of spoils it.
Turning to idiot commenters, I believe in free speech and really don't like deleting comments (by the same token, I didn't disable the facility which allows commenters to delete their own comments should they wish to do so), but there are some people, usually hiding behind twatty pseudonyms, who have nothing to add to any debate apart from personal insults. The three people I'm thinking about are all hardcore Home-Owner-ists, but that might be a coincidence.
I'm not sure what the correct procedure is here, so that's this week's Fun Online Poll.
Vote here or use the widget in the sidebar.
A 73-year-old farmer died of severe head and chest injuries after being attacked by his bull that gored and dragged him at his farm.
The man along with two of his friends were trying to move the Angus bull when it turned and hit his master, gored him and pushed him along the ground at his farm in Acheron, 115 kilometers north of Melbourne in Victoria province...
This is the second such death on a Victorian farm this year where livestock were involved. In April, a 60-year-old man died after suffering abdominal and chest injuries when he was crushed against a fence by a charging cow on a farm in Inverloch.
It's not clear what rôle Robert De Niro played in this, but hey.
From The Guardian, 26 July 2009:
First time home buyers could be thrown a lifeline under plans being considered by the Treasury to underwrite 'risky' mortgages, allowing people with only small deposits to buy homes.
Since the credit crunch took hold, banks have demanded far tougher criteria for lending, asking buyers to provide between 25% and 30% of the price of a home as a deposit.
From The Guardian, 21 November 2011:
Among the plans is a scheme that will give a helping hand to 100,000 prospective buyers currently frozen out of the housing market because of the need for large deposits.
Banks are currently demanding deposits of up to 20% of the value of a property from first-time buyers. Under the proposals, homebuyers will be able to secure loans on a newly built home with only a 5% deposit.
From The Metro:
Man attacked by seagulls attracted to his moustache
Spotted by Dearieme at kvue.com:
Erwin Mendel, 79, said he and his wife were trying to give medicine to a sick cow, when it was startled by nearby dogs. Authorities say the cow became agitated and pinned Irene Mendel, 79, against the fence. It then "head-butted" her several times.
I ended up watching 'Countryfile' yesterday afternoon on BBC1, they had a feature about the relatively poor health and safety record in farming. They reported that there are lots of cattle-related injuries and that this year, there have been six fatalities in the UK. Was it really as many as six? Did I give them all a mention?
The programme is still available on iPlayer, scroll about forty minutes in.
Sunday, 20 November 2011
From The Daily Mail:While I've the same misgivings about the tax/welfare system paying some people to have as many children as possible while penalising everybody else, and encouraging people from the third world to come here merely to claim benefits, what does 401 people per square kilometre actually mean?
One square kilometre = 247 acres.
There are 62 million people and 27 million households in the UK = 2.3 per household
So 401 people = 174 households
At average residential density of 12 homes per acre, they need 14.5 acres for housing
Let's double that for roads, places of work and public parks = 29 acres, just over one-tenth of the area
That leaves them with 218 acres, nearly nine-tenths of the area, for agriculture and forestry, or well over one acre per household, which is in fact quite enough to grow food for one household if necessary. And if you look at actual land use in England, that's exactly how it pans out, ninety per cent of people live in a few dozen urban areas which cover six per cent of England and the rest is farmland and forests. Am I really the only person who ever looks out of a car, train or aeroplane window?
Shelter Cymru has made a bid for column inches in the Western Telegraph, claiming "Pembrokeshire is 19th on the list of places in Wales with the highest proportions of homeowners at serious risk of losing their homes through repossession". Now, presumably, by "places" they mean local authorities, of which Pembrokeshire is one.
However, there are only 23 LAs in Wales, so what Shelter Cymru is actually saying is that Pembrokeshire is fourth on the list of the list of places in Wales with the lowest proportions of homeowners at serious risk of losing their homes through repossession, but I suppose that wouldn't sound quite the same.
The Daily Mail gives us a good example of arbitrage in action:
A criminal swindle of the nation's $64.7 billion food stamp program is playing out at small neighborhood stores around the country, where thousands of retailers are suspected of trading deals with customers, exchanging lesser amounts of cash for their stamps. Authorities say the stamps are then redeemed as usual by the unscrupulous merchants at face value, netting them huge profits and diverting as much as $330 million in taxpayer funds a year.
But the transactions are electronically recorded and federal investigators, wise to the practice, are closely monitoring thousands of convenience stories and mom-and-pop groceries in a push to halt the fraud, the Associated Press reports...
Illustrating yet again that the most efficient form of welfare is straight cash payments. If you ear mark a part of it for food, then those who want to spend money on something else will sell the food stamps at a discount.
Or shops will mark up all their prices and then offer discounts for cash payment, in the same way as Housing Benefit (welfare payments earmarked for rent) allows landlords to charge an HB claimant a higher rent than a non-claimant would be willing to pay to live at the same address.
Saturday, 19 November 2011
Don't miss the free CD in today's Daily Mail!
I already had "Millennium Prayer" and "Mistletoe and wine" in my compilation of Xmas
crap songs, but I didn't have "Saviour's Day" (which is really rather good) or his version of "Mary's Boy Child" which is a hilarious reggae spoof. Or at least I think it's meant to be a piss-take. It's even funnier if it was meant seriously.
Well worth 90p of anybody's money.
From The Telegraph:
Richard Branson’s Virgin Money has been accused of “asset stripping” following leaked details about the structure of Northern Rock’s sale. The sale of Northern Rock, which netted the Government £747m in cash is being part funded by existing cash in the bank itself. More than £250m of “excess capital” will be taken out from Northern Rock to help pay for the bank.
Oh dear, oh dear, oh dear, where to start?
When a company is being bought/sold, it is fairly usual to agree a target net asset value for the company in advance, and the purchase price paid on completion is adjusted up or down if the actual net asset value at the date of completion happens to be higher or lower than the target (which it usually is). So if the current owner of the company whips out £1,000 on the day before completion, it is of no advantage to him and the purchaser isn't bothered because the final selling price is then adjusted downwards by £1,000.
So VM paid £747 million for a company (or group of companies) with a net asset value of £912 million*. If NR really had £250 million in spare cash sloshing about, then in theory the government could have taken out that money and agreed a lower selling price of £497. Whether the government takes out the money and accepts a lower selling price or VM takes out the money and pays a higher selling price does not make the blindest bit of difference.
* NR's balance sheet total as at 30 June 2011, minus six months' anticipated losses to date of completion January 2012 minus £150 million in bonds which the government has allotted to itself.
Friday, 18 November 2011
From the FT:
In any single currency area resources are always magnetised to the economically successful regions. To counterbalance this, political action is needed. Central government collects taxes from successful endeavours and redistributes resources to poorer areas.
This is not done just by regional aid, but by welfare transfer payments and paying the wages of public sector employees or building infrastructure. Were it not for this process, market forces would always tend to make rich regions richer and poor areas relatively poorer.
There are many examples where this... works well – in most developed countries – but there are others where it does not...
The implications of a single currency were understood by the leaders who formed the EU. The mistake was the euro’s premature introduction. The attempt to force political union before economic convergence and before populations were ready for it, has turned the euro from being an incentive to convergence, as was intended, into a powerful centrifugal force.
Not blindingly original, but a very good summary.
I suppose you could argue that it's not a problem if the wealth divide widens, which is fine for inhabitants (and esp. land owners) of the wealthy regions, but doesn't go down too well with people in the poor regions: they vaguely recognise that part of the increase in wealth in the wealthy regions was at their expense, and most of them wouldn't be prepared to move to another country or even to another part of the same country to try and catch up again, even if the wealthier regions welcomed them with open arms (which they don't).
As I've mentioned before, just like Soviet Socialists, the Home-Owner-Ists have a deep seated phobia of free markets, they neither welcome them nor even understand them. They choose whichever side of a free market transaction they can paint in the most unfavourable light and completely ignore the upside; in free markets of course, the upsides always outweigh the downsides.
One argument trotted out many times in response to that modest proposal by the Intergenerational Foundation goes as follows:
TC: Yet more government intervention to try and solve the problems created by... government intervention (nationalisation of land and the planning system).(1)
The genius of this idea being, of course, as thousands of older people downsize they compete with first time buyers for smaller houses forcing prices up and creating more unaffordability.(2)
1) It's nice to see that TC admits that land has been nationalised, in fact land has always been nationalised, it can't possibly be anything else because land 'ownership' is merely an agreement between the land owner from time-to-time and 'everybody else' with the government as referee.
But with typical Home-Owner-Ist DoubleThink gusto, TC blames the planning system on 'the government'. I don't think the government could give two hoots about the planning system, it is the Home-Owner-Ists themselves who impose all the restrictions, so it's like totalitarians complaining about police brutality.
2) It is not inconceivable that there would be more demand for smaller homes by older people, but overall demand for such housing would not increase, as young couples will quite happily leap frog the "bottom rung of the property ladder" and buy the larger ones straight off.
We know that young couples have a fixed housing budget, so if SDLT, Council Tax etc were replaced with Land Value Tax (or Property Value Tax) and there were more larger homes being sold, the selling price of larger houses would fall.
This would flatten the differential between the purchase price of smaller and larger homes, is all, with an equal opposite increase in the differential in ownership costs, that's how prices respond in a free market, and, free markets being what they are, all in all it would lead to a more efficient allocation of resources, in this case housing.
Dearieme alerts us to a posthumous animal attack story in The Daily Mail. There are absolutely no details in the article at all, so we'll have to take it at face value.
Mark Easton provides the obvious answer to the question.
What's interesting is the list of 'formers' and 'exes', to which we could add Bob Ainsworth. And I suppose Professor Nutt, who became a 'former' as a direct consequence of not waiting until he was a 'former' before he said what he said.
Thursday, 17 November 2011
A town in south east England has voted by a majority of 2:1 to change its name in a bid to escape association with the infamous Sacha Baron Cohen character – Ali G.
Staines is well known as the character's hometown, a fact residents are keen to undo by naming their burgh Staines-Upon-Thames instead.
It is believed that the rebranding initiative will allow the town to escape such negative associations, bringing with it a host of economic benefits.
Economic benefits? Respect...
'The town was derided. Despite its situation along both banks of a beautiful stretch of the river, property prices are well below average.”
Nah man, dat is rank. You'll get more economic benefits from getting me mate Dave to sell you an 1/8th outside the John Nike Leisure Centre.
Spotted by Julia M in iol news:
A man and a woman have been seriously injured when a car hit a warthog and collided with a truck near Senekal in the Free State, paramedics said on Wednesday.
A warthog ran onto the N5 between Senekal and Paul Roux while the car was approaching around 8pm on Tuesday, ER24 spokesman Derrick Banks said. After hitting the animal, the driver apparently lost control of the vehicle and collided head-on with a truck that was coming from the opposite direction, he said.
The couple was taken to Senekal Hospital. The truck driver was not injured.
Interesting that they refer to a 'pair' in the headline, but to a 'couple' in the article. The former suggests 'two people' and the latter suggests 'two people in a relationship'. Marks deducted for "have been" instead of "were" and "a car" instead of "their car" but bonus points for "the couple was" rather than "the couple were". You win some, you lose some.
All the usual suspects have rehashed the story about Virgin Money buying Northern Rock plc for £747 million, which they reckon produces a loss for the taxpayer of £400 million. That is based on sales proceeds of £1 billion and an entirely spurious figure of £1.4 billion which "taxpayers had injected... into Northern Rock".
The taxpayer did no such thing, £1.4 billion was an entirely made up figure for the share capital of the reconstructed NR, i.e. the amount by which its gross assets exceeded its liabilities when it was set up. The other half of this transaction is a corresponding shortfall of £1.4 billion in Northern Rock Asset Management (the bit which still belongs to the taxpayer).
Ho hum, so let's do this properly. If you look at the relevant bit on NR's actual website, what it says is this:
* Agreement has been reached with Virgin Money for the acquisition of Northern Rock plc – the sale is expected to complete by the end of the year
* The Government will receive £747 million in cash on closing of the sale, with the potential in the future to receive over one billion pounds in total.
There's no explanation of how this additional £250 million-plus will be calculated or what would trigger the liability, but hey.
UPDATE, the print version of today's Evening Standard article explained all, there's another £50 million due in cash (why not now?), the government allotted itself £150 million in NR bonds (reducing the net value of the assets sold) and if NR is floated within five years, then Virgin Money has to pay another £80 million. We can forget about the £80 million, but adjust the real purchase price to £797 million.
As it happens, NR had net assets of £1,122 million as at 30 June 2011, from which we deduct the £150 million extra liabilities, giving us a net asset value as at today's date of £972 million, against a purchase price of £797, that's a real book loss of £175 million.
What we do not know is what the goodwill value of NR is, which we would add to the book value to give us the real loss. It is quite possible that NR has a negative goodwill value, as it has made losses of over £200 million in each of the last two years; if we assume that NR will lose another £200 million before it returns to profitability or break even, then we can adjust the £175 million loss to a £25 million profit.
The fact that Gordon Brown might have wildly overpaid for the whole thing in the first place is an entirely separate issue, that is sunk costs. Perhaps we can claw a bit back by placing a charge over the royalty income from his books?
From the BBC:
Romi Alexander of So Natural, which supplies Himalayan Crystal Salt, said: "Table salt is a highly refined, processed white substance that's devoid of nutrients."
Interestingly, the BBC's rehash of the fakecharity press release doesn't round off with a sound bite from a government minister agreeing that 'something must be done'.
From The Daily Telegraph:
First-time buyers to get cheaper mortgages, George Osborne to say in autumn statement
The aptly named CASH pointed out, probably quite correctly, that although 'posh salt' costs dozens of times as much as 'ordinary salt' it is not in any way healthier*. Their whole raison d'être is to encourage people to use less salt, so their thinking, presumably, to discourage people from using 'posh salt' and preferably to use no salt at all.
That's not how The Daily Mail seems to have interpreted it. Their view appears to be, OK, in that case we'll just buy ordinary salt. What's worse (from the point of view of CASH) is that if people buy the cheaper version, they'll probably buy more of it and hence use more of it.
CASH do make one good point though: "It is disgraceful that chefs still encourage people to use so much sea and rock salt.
'This has the added danger that, as the crystal sizes are much larger and don't taste as salty, more salt is consumed." I had noticed that with posh salt, the big lumps don't seem to taste of much, presumably because they don't dissolve quick enough in your mouth.
* They define sea salt and rock salt as 'posh salt'. But surely even the most ordinary of ordinary table salt is either made from evaporated sea water or dug out of the ground? I think the only thing that's 'posh' here is the label, or the size of the crystals. Which leads me on the expression 'cracked pepper', don't they just mean 'pepper'? Isn't it traditional for dried pepper corns to be ground up a bit or otherwise reduced in size before being used to cooking, flavouring etc?
Wednesday, 16 November 2011
Another favourite trotted out by the Home-Owner-Ists goes along the lines of this:
"I bought my home under a private contract, I've paid for it and it's in my name. It's my 'property' and nothing to do with you or anybody else."
1. Even if that were factually correct, it is irrelevant. Employment contracts are private, but we still have PAYE; buying stuff in the shops is private contracts and you still have to hand over 20p in VAT for every £1's worth of goods or services you buy etc. So that argument, if based on actual facts, is in fact an argument against income tax, VAT and so on (and these are very bad taxes indeed for this and a hundred other reasons). And your skills and labour, or the goods and services provided in the shops are private property as well. At no stage does 'everybody else' have a hand in creating any of this value and neither are they burdened by such exchanges.
2. The whole argument is based on a crass misrepresentation of the nature of land ownership anyway:
a. Land ownership is always an ongoing contract between the land owner on one hand and 'everybody else' on the other (with 'the state' as referee), and that 'everybody else' includes the government, the local council and all those people who contribute to the rental value of your land, whether that's by providing local amenities (jobs, shopping and leisure opportunities) or merely by respecting the land owner's right to exclusive occupation.
b. Land ownership in the modern sense can only originate by some sort of agreement between 'the state' and the land owner. That agreement may have been reached by simple force, i.e. when the Normans invaded and simply declared themselves owners of most of England ('the state' and land owners were more or less synonymous) or when colonialists conquered foreign countries and claimed the land for their respective empires and then sold or gave bits of it to themselves.
c. In a modern context, land itself is worth little, the real value is dictated by the location and the generosity of planning permission, so if a farmer has an acre of farm land worth £10,000 and the council gives him planning permission, the land is now worth £1 million, so he has effectively been given £990,000 (he has to up to half of that back in taxes and fees and bribes, of course). But in economic terms, giving a farmer planning permission for one acre is much the same as giving him another ninety-nine acres for half price, or giving him forty-nine acres for free. And 'the state' can't give somebody land without first taking it away from anybody else. Of course, the council also preserves the value of land which already has planning permission by being very restrictive about handing out any more planning permission, so this underpins the scarcity value of any existing plot with planning permission or a building already on it.
d. So we have to distinguish between the parties to the contract for the sale of land (Mr A sells to Mr B) and the actual subject matter of the contract (the rights of the land owner as against 'everybody else'). Land ownership is NOT and never has been created by private contract. Mr A does not 'sell his land' to Mr B, what actually happens is that Mr B replaces Mr A as a party to the agreement with 'everybody else', so up until the date of sale, the agreement is between Mr A and 'everybody else' and after the date of sale, the agreement is between Mr B and 'everybody else'. Some of the land seized by the Normans (or the Colonialists) has never been sold, it was passed down to their current living descendants, who have much the same rights as any land owner who paid for his rights since. The subject matter is exactly the same.
e. With the benefit of hindsight, we establish that whichever branch of 'the state' was entering into such agreements (i.e. creating private land ownership rights in the first place) struck an incredibly bad bargain on behalf of the people whom they are supposed to represent and who were being burdened in perpetuity (i.e. 'everybody else') which is why land owners can sell the bundle of their very favourable rights (less modest obligations) under the agreement with 'the state' to others.
3. To use a simple analogy...
a) If Mr C accepts an offer of employment from Mr D, then the parties to the contract are also providing the actual subject matter of the contract. Mr D provides the work place, the customers, the training and Mr C provides his own skills, labour, time. Mr D hopes that this will increase his total income, and he pays part of this to Mr C as wages and keeps the rest as his own profit. Subject to certain employment laws, either party is free to terminate the contract at any time, and no burden is placed on 'everybody else' or on future generations (or Mr D or Mr C's children). And I see no good reason why 'the state' should collect half of the income which Mr C and Mr D generate in tax, or why they should collect any at all (except maybe an 0.005% deduction to cover the cost of running Industrial Tribunals if the parties opt in to this rather than any other form of arbitration).
b) Conversely, perhaps the King of African country E sold some of his subjects into slavery to slave trader Mr F for their market value, and Mr F transports them across the Atlantic and sells them to slave owner Mr G in the New World for their market value. The parties to these contracts are the King, Mr F and Mr G, but the subject matter of the contract is the slaves and their children. These slaves and their children in perpetuity did not negotiate the contract, enter into it voluntarily or receive market value for their labour, and they are - morally at least - entitled at any time in the future to rescind it and declare themselves free men, i.e. demand market wages for their labour (or seek work elsewhere, like Mr C).
c) When land ownership rights were granted by 'the state' in the past, these were granted by somebody purporting to act on behalf of 'everybody else' within their jurisdiction (i.e. whatever part of the world's surface area they can control by force) in perpetuity. And from the point of view of 'everybody else' (i.e. the slaves and their children) they struck a bad bargain, ergo, 'everybody else' is - morally at least - entitled to vary the terms of that agreement and demand something approaching full payment for the value of the benefits (minus modest obligations) which 'everybody else' is generating and which land owners are currently receiving for free (which is mathematically broadly equal to the burden which land owners are placing on 'everybody else').
Headline in DT:
European Union debt crisis: Britain must help rescue eurozone, say Germans
It strikes me that this is third time in 100 years that we have been asked to rescue Europe from the failure of the German political class and leadership. On the previous two occasionas it cost us (and the Commonwealth) blood and treasure. This time, so far, it has just cost us treasure.
Having lost twice just what part of fuck off do they not understand?
(BTW I do not believe for one moment that that Merkel's view reflects the views of the majority of the German people).
Tuesday, 15 November 2011
I am not Mark Wadsworth
There is growing realisation in the UK (and in Italy and Greece) as to just how unaccountable and out of control are the ‘technocrats’ and the bureaucratic quangos in which they serve. These nouveau institutions are beloved by politicians as a method of putting responsibility at arms length, and crucially outside the disciplines of the genuine Civil Service or the rule of law.
These nouveau institutions are the creation – in the main - of socialists (of both the right and left). Their purpose is to proto-nationalise by regulation all types of enterprise. The excuse used is that they are needed to ‘protect the consumer’. This is, of course, nonsense. The ‘consumer’ is best protected by a vibrant and competing business sector without special privileges for any sub sector (banking? Trades Unions?) and the firm application of the principles of ‘buyer beware’ and ‘professional responsibility’. You might also add that Baking must take its role as a fiduciary more seriously. No central planning bureaucracy, especially one without democratic accountability and whose funding is under no democratic or market control is never anything other than self serving.
I have quite a bit of experience of one set of these outfits, those that regulate financial services. There is a trio of these; the Failed Financial Services Authority, The Financial Ombudsman’s’ Service, and the Financial Services Compensation Scheme. They were all introduced under the now entirely discredited FSMA 2000. Brown’s, at the time much lauded, ‘tripartite regulatory system’, but now revealed as a ramshackle construct designed purely to proto-nationalise all financial services by sclerotic, inept, overweening tick box reg-yew-lay-shun and, by destroying all the existing checks and balances and entirely eliminating the necessary separation of powers and making every one of the new quangos utterly unaccountable, ensured that he, Brown, could do just what he liked with our wealth, the end game of which we saw in banking failures in 2008.
The Failed FSA is set to be replaced by the Financial Conduct Authority (FCA) in 2012/2014 and there is a special Commons committee looking into how the FCA should be best organised. You will not be surprised to learn that the Failed FSA’s submission is that the FCA, in order to function effectively, must be subject to less accountability and should not in any way be subject to sanction by the Courts. It should be entirely outside the common law legal system of the UK. Considering that the regulatory and financial failures are entirely due to the predictable failure of technocrats (aka capricious bureaucrats with a self over-estimation of their skills and IQ) one might think that the Failed FSA evidence would be given very short shrift by the Committee. But, no, they are taking the Failed FSA seriously.
Whether or not you agree with me about financial services being full of a lot of good blokes, as well as not a few rotten ones (as it true of pretty well all trades and professions) you ought to take seriously this further erosion of freedom and the usurpation of power by capricious and unaccountable functionaries. This is the same mindset that puts approved European unelected Technocrats in charge of Greece and Italy.
It is not just me that thinks like this. You will see above a scanned image of the leader from one of the trade magazines.
In any event if any of you want to have your say and to halt the march of the bureaucratic state you can make your point to the Committee at:
As they say in the charity ads on TV, please help, every contribution however small will help some disadvantaged native. The native in this case being your neighbour.
The results to last week's Fun Online Poll were pretty conclusive:
What do you think caused the poor visibility that led to the M5 pile up?
Fog - 61%
Smoke - 8%
Other, please specify - 30%
I'm glad to see that most of you share my cynical view that they only tried to blame it on the fireworks because of this knee-jerk reaction that Somebody Is To Blame and Something Must Be Done. And if that involves Banning Something Which Is Pointless But Fun, then so much the better, of course. The most interesting comment was this one, which I shall have to take at face value:
Ryan: I know somebody who was in the accident. It was caused when a small car pulled out of the slip-road between two lorries. One of these lorries put on its brakes hard causing it to jack-knife and everyone else piled into it. Nothing to do with fireworks (ended ages before apparently).
Which suggests that the accident wasn't even caused by poor visibility in the first place, a thought which hadn't even occurred to my cynical mind. Although it seems beyond dispute that visibility was bad at the time (having ruled out fireworks, we are left with fog), which may have made the crash worse than otherwise.
My recent post on crisps attracted a (to me) staggering twenty-five comments, people were naming crisp brands which I had long forgotten (or never heard of). I didn't realise that so many other people had such strong views on the topic. So that's this week's Fun Online Poll: "Which is your favourite brand of crisps?"
Vote here or use the widget in the sidebar.
Next week: "What's your favourite type of nuclear reactor?" Suggestions as to the best way of classifying the basic types welcome.