Saturday, 17 February 2018

Cow of the week

Cow escapes on way to slaughterhouse, smashes through metal fence, breaks arm of man trying to catch her then swims to safety on island in lake

H/t James Higham

Friday, 16 February 2018

Killer Arguments Against LVT, Not (435)

From the BBC:

A plan to raise council tax on second homes in the Yorkshire Dales could affect 3.4 million householders across the UK, it has been claimed...

According to the Yorkshire Dales National Park Authority there are about 1,500 second homes in the Dales - more than 10% of the housing stock.

It argues second homes "deny a home to a permanent resident and push up prices" and increasing tax would "help attract and retain families to live and work in the area"...

If the government agrees, there would be a charge of £8,500 a year on a Band D property...

North Yorkshire County Councillor John Blackie said: "Put simply, firms will pack up and the local young families running them will move away and find their livelihoods where work is available for their skills. It happened in 2001 when foot and mouth blighted the Upper Dales."

Tuesday, 13 February 2018

Corporate governance, short-termism and shameless greed neo-liberalism... and Carillion.

They do the hard work so that I don't have to!

At Flip Chart Fairy Tales, a good summary of 'what went wrong' at Carillion*, seguing into a general discussion about how to diagnose short-termism and whether its ill-effects are even measurable.

At Stumbling & Mumbling, a riposte:

We have some more empirical evidence here. Let’s say that stock markets were too short-termist. In such a world, we’d expect them to under-price growth stocks and pay too much for stocks that pay high dividends. 

Generally speaking, though, the opposite has been the case. For most of the last 30 years, high-yielding shares in the FTSE 350 have out-performed lower-yielding ones: the main exception came between 2003 (when tech stocks were under-priced) and 2010**. And the FTSE Aim index – which contains many “growth” stocks” has horribly under-performed the All-share index since its inception in the mid-90s. 

This tells us that stock markets have generally paid too much for growth and too little for dividends. They have been too long-termist, not too short-termist.

Of course, managers can be as irrational as the rest of us. But it’s possible to be too long-termist as well as too short-termist. The biggest problem with corporate governance – as highlighted by Carillion - is not that bosses are too short-termist, but that they have too much power to plunder firms for their own private gain.


Warming to his own theme in his next post:

One feature of neoliberalism is that restraint in the pursuit of self-interest is now absent. Bosses lack Smith’s “impartial spectator” which tells them to hold back, and instead feel no compunction about jostling others. They are content to plunder customers, pensioners, sub-contractors, workers or future workers.

Among her many claims for expenses, Glynis Breakwell, Vice-Chancellor of Bath University, claimed £2 for biscuits. Many of us would not have done so, thinking it too petty-minded to bother. Neoliberals, however, not only are petty-minded but don’t mind being seen as such by others...

And there’s the rub: where they think they can get away with it. My story here is not just about morality. Perhaps there never was a golden era of benevolent paternalistic bosses. What’s happened since around the 1970s is that the restraints upon bosses – from law, social norms and trades unions – have diminished. The problem isn’t just greed, but power.

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* On the topic of Carillion, a look at their 2016 accounts is an eye-opener.

Page 92 "consolidated statement of changes in equity" shows that opening net assets were £1,016 million, to which they add reported profit for the year of £129 million and deduct £83 million of dividends and a £440 million increase in the pension scheme shortfall (plus/minus various other bits and pieces) to arrive at closing net assets of £730 million.A massive fucking loss, in other words.

They were honest enough to disclose the pension scheme shortfall, but why on earth was this not treated as an expense in the year, meaning an overall loss before tax of about £311 million? In which case, cancel the dividends and directors' bonuses for a start, methinks.

Page 93 "Consolidated balance sheet" is even more damning.

Gross assets were inflated by £1,670 million of "intangible assets" which is completely made-up numbers, they are worth nothing, in which case the balance sheet would have been negative overall (deduct £1,670 fantasy assets from reported net assets of £730 million).

What are these "intangible assets"?

They are accounting alchemy which enable you to book future profits before they are even earned. When you get a nice juicy PFI contract, with annual costs of £1 million and guaranteed income of £2 million, running for 25 years, you have actually landed £25 million in easy profits. So you sell this contract to somebody else for the net present value, let's say £15 million.

I met a former colleague who works for one of these sharks, who do nothing but buy and sell PFI contracts without ever lifting a spade. Each year, the company which has bought the contract books £1 million actual cash profit and writes off £0.6 million, 1/25 of the £15 million paid in advance, net income £0.4 million.

To what extent Carillion were selling contracts to themselves by doing an Enron with shell companies I do not know, but the end result is the same. And then they would trot along to the willing bank and borrow (say) £10 million secured on the £15 million fantasy asset and use it to pay bonuses and dividends. Pension scheme didn't get a penny, or course.

If that seems a bit esoteric, it is no different to taking out a second mortgage to "release" increases in "equity" in your home. The value of the home is just the net present value of the rental income. You can either collect/enjoy a bit more rental income/value every year in future, or cash in today, borrow against it and spend it all in advance.

Car hits school

From the BBC:

A car crashed into the front entrance of a secondary school at the height of the morning run.

The black BMW was seen driving "at speed" around the car park of Fir Vale School in Sheffield at about 08:25 GMT before it hit the building.

Two men, aged 23 and 20, have been arrested on suspicion of dangerous driving and causing criminal damage.


Inevitably, they were driving a BMW.

"When people of the same trade meet together... the conversation ends in a conspiracy against the public"

In the light of that Adam Smith misquote, let's cast a wry eye on this self-preening article in City AM:

There is no need for a “Hippocratic Oath” specifically in relation to tax, as McDonnell called for, since chartered accountants already ensure that taxpayers – individuals, companies, and others – pay the right amount of tax due under the law. In this way, we help reduce the tax gap by supporting good tax compliance.

Of course, it would be naive to hope anyone would take this purely on trust. Which is why, in addition to being subject to legal requirements, chartered accountants and members of other professional accountancy bodies are also required to follow a professional code of ethics...

But what is rarely mentioned is that almost a third of registered tax advisers are not members of any professional body. This means they are not required to follow any ethical or professional standards at all. If politicians truly wish to get tough and raise standards, ensuring that the high bar set by the chartered profession is applied across the board would be a good start.


Sub-text: raise barriers to entry by "regulating" everybody who isn't a Chartered Accountant, who nobly "self-regulate".

How effective is that "self-regulation"..? From The Daily Mail:

Britain’s big four accountancy firms have been savaged by MPs who have accused them of “feasting on the carcass” of collapsed construction giant Carillion and collecting more than £70 million in the process...

Veteran Labour MP Frank Field, head of the Work and Pensions Committee, said: “The image of these companies feasting on what was soon to become a carcass will not be lost on decent citizens. The former directors of Carillion are, unlike their pensioners, suppliers and employees, alright.

“These figures show that, as ever, the Big Four are alright too. All of them did extensive – and expensive – work for Carillion. PwC managed to play all three sides – the company, pension schemes and the Government – to the tune of £21 million and are now being paid to preside over the carcass of the company as Special Managers.

“It was perhaps telling that, with their three fellow oligarchs conflicted, PwC were appointed to this lucrative position without any competition.”

According to information published by the committees, KPMG has banked £20.2 million in fees since 2008, PwC £21.1 million, Deloitte £12 million and EY £18.3 million.


So 'not very' and yet again, we are presented with evidence that they are actually thieving scum.

Monday, 12 February 2018

Big scary numbers!

From City AM:

Water companies have hit out at Labour after the shadow chancellor John McDonnell described the industry as a "national scandal". Labour attacked the water industry today, saying the private sector was handing out "scandalous" amounts in dividends, which have totalled £13.5bn since 2010...

Divide £13.5 bn by eight years and by 27 million households and (say) 3 million businesses, that's an average of about £50 a year, one-third of the cost of the TV licence. I can't get too upset about that.

But compared to my annual water bill (rates not meter) of about £500, that seems quite a chunky dividend. Most competitive businesses pay about £1 or £2 in dividends for every £100 of turnover, not £10. If Labour were really worried about this, instead of making token gestures, they could simply cap prices at a few per cent below current levels, dividend halved, perceived problem solved.

And in the blue corner:

Michael Roberts, chief executive of industry organisation Water UK, has condemned McDonnell's attack on the sector, saying that private companies have invested heavily in water networks and have brought down costs for consumers.

Roberts said: "It's wrong for Labour to suggest that our water system is broken. Water companies secure capital provided by lenders and shareholders, who need water companies to make a return in order to finance significant improvements to the industry. He said that the water sector was "starved of cash" under public ownership, and that private firms have invested in reducing leakages, and have improved water quality.


Change the record, mate. Water companies were privatised nearly thirty years ago, you've had plenty of time to sort it out. Dividends are paid after deducting interest costs, so that's double counting. Further, borrowing money ("to fund investment") while continuing to pay big dividends is Carillion territory. Re-invest your current profits first, if there's nothing left to pay dividends, then so be it.
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Also from City AM:

Renters in the UK paid out £51.6bn to landlords last year, the highest rent bill on record.

The UK's rental bill rose by £1.8bn in 2017, according to research published today by Countrywide. The estate agency group said the rise was driven by an increase in the number of renters, and rising rents; the average cost of a new let rose 2.4 per cent year-on-year to £958.


Two-thirds of that is location rent and that IS a "national scandal", not so much that tenants are paying it, but the fact that private landlords are collecting it.

Either way, we're not talking about £50 a year from every household, but £6,000 a year being channelled from every "asset poor" househol to a small minority of "asset rich" households.

And what does Labour have to say about this? They dared mention LVT briefly in their manifesto but beat a hasty retreat once the Homeys co-ordinated their strategy and started mis-describing it as The Garden Tax.

Sunday, 11 February 2018

Another one of those "car hits house" stories.

Driver, 22, critically ill in hospital after crashing Toyota Auris into a house while being chased by police

"I'm sorry, can I do that again?"

Watch the first forty seconds of this for a breathtaking display of insincerity. Apologies that the sound is so quiet, you'll have to turn it up to the max to hear it.


Saturday, 10 February 2018

Short list

"Female athletes whose surnames end with "-ke" who became in/famous for being good looking rather than winning anything of note"

I can only think of two.

This one and this one.

Friday, 9 February 2018

"The Darkest Rush Hour"

From Wiki and Wiki:

The film commences in May 1940, on the last day of British rule in Hong Kong in late 1997.

The opposition Labour Party in Parliament demands the resignation of Detective Inspector Lee of the Hong Kong Police Force for being too weak in the face of the mysterious crime lord Juntao.

Lee tells Conservative Party advisers that he wants Sang, Juntao's right-hand man as his successor and manages to escape. Sang does not want to become Prime Minister as he is busy recovering numerous Chinese cultural treasures stolen by Juntao.

So King George VI must choose the only other man whom other parties will support: Winston Churchill, whom he presents as a farewell gift to his departing superiors: Chinese Consul Solon Han and British Commander Thomas Griffin, the First Lord of the Admiralty.