Friday, 31 May 2013

Liberty Reserve

News this week is of Liberty Reserve, a global online currency exchange, which got shut down and its owner arrested for money laundering because it allowed sending money anonymously. Now personally I have trouble believing that every single dollar at Liberty Reserve was of criminal origin and used only to buy criminal goods. You can't "launder" money in a system which doesn't contain clean money as well as dirty one. But it is certainly true that a part of the money was dirty.

That could also have consequences for other anonymous online currencies, like Bitcoins. Basically anonymous online money has been declared to be illegal by itself, because it "could" be used for illegal activities.

Even if you don't do anything illegal, you are likely to cultivate a different image in different social circles. The quintessence of a private life is that it is private, and if everything about all aspects of your life can be researched online that privacy vanishes. There are a lot of activities that are legal, let's say political protest, partying hard, watching porn, spending too much time playing games :), where somebody might well wish that not everybody he knows can find out all the details. As the internet has a long memory, indiscretions of your youth might well crop up many years later. And not everybody is fully aware of these potential consequences and always guarded in what he publishes on the internet.

Having anonymity on by default can save us from ourselves. And the global push towards eliminating anonymity on the internet has downsides which aren't always well balanced with the advantages of being able to catch criminals.

Thursday, 30 May 2013

Selling RBS cheap

Chancellor George Osborne is plotting to sell off state-owned RBS on the cheap, at a loss to taxpayers.

With growth stalled, the economy bumping along the bottom and the number out of work growing, they are casting around to buy votes. Now they are looking at a giveaway to the public of bank shares that the taxpayer already owns.

That timetable depends not only on how quickly RBS and Lloyds, 82% and 41% taxpayer-owned respectively, are cleaned up but, critically, on the state of the economy. Without growth the share price will stay low. But the conservatives seem intent on letting politics not economics decide the timing of the sale. They know that the RBS share price is nearly £18billion down on what was paid for them in 2008.

Today, after three years of austerity and constant political interference in the bank’s management, the taxpayer has lost out. If the shares are sold at a knockdown price it is us, the taxpayers, who will take the hit. The government should sell when the share price has recovered. That will depend on if and when growth returns.

Wednesday, 29 May 2013

Snooper's charter

Theresa May is pressing forward with attempts to use the events of last Wednesday in Woolwich to revive the ill-fated "snooper's charter", and Alan Johnson throws his support behind Therasa May.

The policy, officially called the Communications Data Bill, was left dead in the water last month after Nick Clegg withdrew his support for it, but the changed atmosphere could provide May with a chance to bring it back to life. Theresa May said "Intelligence agencies need access to communications data. It is essential to do their job."

The bill would force internet providers to keep much more information about phone calls and online communications, and for greater periods of time, than is currently the case.

Alan Johnson said "We need to get this on the statute book before the next general election, and I think it’s absolutely crucial". But he added "Indeed, I think it’s a resignation issue for a Home Secretary if the Cabinet do not support her."

Tuesday, 28 May 2013

Tax rate cut

The Treasury is busy spinning the latest income tax receipt figures as proof that it was right to abolish the 50p rate. Last month the new top rate of 45p raised £11.5bn, £1.3bn more than its predecessor. Do lower rates, as the right has long claimed, produce higher revenues?

Not quite.

The spike in tax receipts is most likely due to the income shifted from last year to this year in order to benefit from the lower rate. As the Institute for Fiscal Studies notes: "Receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012–13 to 2013–14 in anticipation of the fall in the top rate of income tax from 50 per cent to 45 per cent".

This, of course, is a trick the rich can only play once, just as, in the opposite direction, they shifted £16bn into the previous tax year when the rate was still 40p. This, of course, was precisely George Osborne's intention. Having falsely claimed that the anomalous first year of the 50p rate proved that it was ineffective, he will now use the anomalous first year of the 45p rate to argue that he was right to scrap it. How much would the 50p rate have raised? We'll never know; George Osborne cancelled the experiment.

Monday, 27 May 2013

What crisis?

The papers are dominated by piccies of 'Call me Dave' & 'Sam Cam' enjoying a coffee at breakfast in Ibiza. The PM has taken a couple of days off with his family and if you believe the media during a national crisis.

Sorry, did I miss something?

Last week there was an horrific attack on a young man in a London street who happened to be a British soldier and it appears that is the reason he was killed, by two lunatics who are being called terrorists. Where is this national crisis then?

We have heightened security status in the country but apparently it has not been increased because of Woolwich, we are being advised that vigilance is good, but I do not see a case for forcing the PM to stay at No. 10. I think there are two many fingers in the vote of no confidence pie to see any credibility in this story.

Friday, 24 May 2013

Let us not forget the Euro zone

The European Central Bank [ECB] are still not concentrating on GDP, but the highly flawed CPI including oil and VAT that they are trying to hold well below 2% will inevitably produce the sort of slow GDP growth that will inevitably produce recession. The ECB is not at the zero bound.  Over the past few years they’ve been repeatedly steering Euro zone inflation through conventional policies of raising and lowering the short term interest rate.

Euro zone tight money is keeping Euro zone GDP flat, and that’s a sufficient condition for a recession. Yes, they may also have supply-side problems, but that’s beside the point. Tight money is a sufficient condition for recession. They can adopt a policy of 4% GDP growth if they want to; they simply don’t want to. Until that dynamic changes, the Euro zone will continue to under-perform.

Thursday, 23 May 2013

Risk aversion

A description of an investor who, when faced with two investments with a similar expected return (but different risks), will prefer the one with the lower risk.

A risk-averse investor dislikes risk, and therefore will stay away from adding high-risk stocks or investments to their portfolio and in turn will often lose out on higher rates of return. Investors looking for "safer" investments will generally stick to index funds and government bonds, which generally have lower returns.

Are our banks heading in this direction and is it good news?

Banks today are being told to risk less, save more, because of the financial crisis of 2008, and because today's view is that banks should not be like casinos. So will banks go back to investing in only government bonds? I doubt it.

The basic idea of a bank is to take in deposits, keep some as cash and use the rest to earn for the bank. The model is still sound, what needs to happen and is not happening is the control of people and not the banks. The people employed are the ones that need to be managed in the future in a way that allows banks to continue, and that is up to law makers, the government. I have seen no action in this direction so far and that needs to change.

Wednesday, 22 May 2013

Apple's tax avoidance

Here are a few quotes from the US congressional report into Apple:

"Apple Inc established an offshore subsidiary, Apple Operations International, which from 2009 to 2012 reported net income of $30bn, but declined to declare any tax residence, filed no corporate income tax return and paid no corporate income taxes to any national government for five years."

"It is as though a bunch of alien techies arrived from Mars, sold us $30bn (£19.6bn) worth of smartphones and laptops, and then took all the moolah up to the stratosphere, where they simply circled the earth."

According to the senators on the Permanent Subcommitte on Investigations, Apple transferred offshore into low-tax countries the economic rights to its intellectual property - its valuable and usually patentable knowhow - with the result that it avoided around $10bn (£6.5bn) of US tax every year (what the senators characterise as $44bn, or £29bn, of US tax avoidance over the past four years).

The senators point out that Apple has continued to accumulate vast amounts of cash in places other than the US, and those cash holdings now exceed an eye-popping $102bn (£67bn). In the US, for example, corporate tax generated 32.1% of all federal taxes in 1952. Today that proportion has fallen to a puny 8.9%. Similar trends of corporate taxes generating a shrinking share of the state's costs hold in the UK.

Some would argue, the desire of Apple and other multinationals to minimise the taxes they pay in the US, or anywhere for that matter, may be rational for them individually but is bonkers for them collectively, since over time it will erode the very infrastructure of the global economy which allows them to thrive.

Tuesday, 21 May 2013

The good news

I do not care what happens to Chris Huhne or Vicky Pryce, both prominent members of the rotten, arrogant elite who have helped to wreck my country. However I mention them because unlike most people sent to prison their release got as much publicity as their sentencing.

Even the BBC could not ignore the fact that their sentences [eight months, but they served only two] were actual, deliberate official lies. Almost all prison sentences are. Nobody seems to have thought about what this means. What sort of state orders its judges to utter falsehoods as part of their conditions of employment?

And what sort of media have let this festival of lying go unchallenged for so long?

Crime statistics are fiddled by the authorities. These are the same sorts of people who think children are growing cleverer because they get more high grades in GCSEs and A-levels.

Can they now please address their complaints to Steve Williams, chairman of the Police Federation, who last week revealed that pressure was being placed on frontline officers to minimise recorded crime?

Monday, 20 May 2013

Swivel eyed loons

The Conservative factions are warring so zealously over Europe that a formal split in the party is no longer unthinkable

Faced with an unprecedented revolt against the government's programme by its own MPs, we were told that David Cameron was "relaxed". When more than half of his backbenchers went ahead and defied him, and senior members of the cabinet declared in public that they were with the rebels in spirit, his spokespeople announced that the prime minister was "profoundly relaxed". So when the Tory party completely devours itself, Number 10 will presumably tell us that David Cameron is "totally soporific".

According to the Spectator, which specialises in navigating this crazy maze, there are "eight key Eurosceptic factions" in the Tory party. It is highly reminiscent of the leftwing groupuscules that flourished in the 1980s, immiserating the lives of Labour leaders and doing so much damage to that party's electoral prospects. As is the way with zealots, their demands become increasingly surreal.

Friday, 17 May 2013

Time for Ed to lead

Once again the Labour party is being spared embarrassment by Tory divisions over Europe. It is a familiar pattern. When the Conservatives are quiet and organised the spotlight falls on Ed Miliband. He appears to mumble or fluff his lines. The script isn’t gripping the audience. Labour MPs shuffle uncomfortably in their seats. It all starts to look a bit awkward. And then everyone’s attention is distracted by fighting somewhere off to the right of the stage, an unseemly scuffle that looks as if it might end up with David Cameron falling on his backside or being dragged into the wings never to return.

Yet there is another familiar cycle that afflicts the Labour side. It is the pattern of doubt over the viability of Miliband’s bid for power being filtered through the urge to remove Ed Balls from the shadow Treasury brief. The argument is well-rehearsed and has two pillars.

First is the belief that Labour will not persuade wavering voters that it has something fresh and exciting to say about the economy (a pre-condition for victory) as long as the man delivering its main economic message is perceived as an incarnation of the politics and fiscal strategy of Gordon Brown. The second concern is that Balls is congenitally opposed to any public rehearsal of ideas for reforming the way government and the state function; that he is a classic Treasury centraliser and sceptical about the need to urge innovation in the public sector.

The real tension is both subtler and more profound. It is between the need to defend Labour’s legacy of investment in public services and the impulse to imagine different ways of effecting social change. It is the dilemma of how to rehabilitate the abstract principle that government can be the citizen’s friend while also attacking the current government as a menace to society.

The uselessness of the coalition is coming to be seen not just as a measure of Cameron’s deficiency, but of Miliband’s inability to press home an advantage.

Thursday, 16 May 2013

Europe split has more history

Ed Miliband has had much fun mocking the Tories' divisions over Europe, but his party now faces some of its own. A new group "Labour for a Referendum" will be launched with the aim of forcing Miliband to commit to holding an in / out vote on EU membership after the next election. The organisation has the support of 15 Labour MPs, including Keith Vaz [a former Europe minister] and former Northern Ireland spokesman Jim Dowd.

It is worth remembering, that it was once Labour, not the Conservatives, that was most divided over Europe. The 1975 referendum on EEC membership was called by Harold Wilson after his cabinet proved unable to agree a joint position [Wilson subsequently suspended collective ministerial responsibility and allowed ministers to campaign for either side, an option that David Cameron may well be forced to consider] and Michael Foot's support for withdrawal was one of the main causes of the SDP split in 1981.

This weeks launch is a reminder that those divisions have not entirely been consigned to history. While the Tories are now split between 'inners' and 'outers', in Labour the fundamental europhile-eurosceptic divide persists.

Wednesday, 15 May 2013

Bedroom tax - continued

"There is no doubt this policy is driving people to the edge of despair," says the shadow chancellor in response to the case of Stephanie Bottrill.

The Sunday papers were full of the distressing story of a woman who threw herself in front of a motorway lorry because she was worried about how she would pay the "bedroom tax". One should always be wary of ascribing motives to any suicide, but in this case there does appear to be a direct link.

In a letter to her son, the woman, Stephanie Bottrill, wrote: "Don't blame yourself for me ending my life, it's my life, the only people to blame are the government, no one else." A damming statement indeed.

Under the "bedroom tax", those social housing tenants deemed to have one spare room have their housing benefit cut by 14 per cent, while those deemed to have two or more have it reduced by 25 per cent. The measure will cost tenants an average of £14 a week more in rent or an extra £728 a year. After being ordered to pay an extra £20 a week, Bottrill reportedly attempted to downsize, as the government has advised claimants to do, but found "nothing suitable" offered to her.

As I have noted before, in England the problem is not an isolated one.

Previous entry

Tuesday, 14 May 2013

Town Hall rich list

After the dust dies down from the local elections, the Taxpayer's Alliance have published some current details:-

103 councils have increased the number of staff who receive over £100,000.00

Birmingham council doubled the number of staff who receive over £100,000.00, the biggest increase of any local authority

During 2012 there were 636 council employees who received over £150,000.00

Of these 42 council employees received over £250,000.00

The largest payout was to Katherine Kerswell in Kent County Council who received £589,165.00

Monday, 13 May 2013

Europe referendum

This week sees the Conservatives find out who their friends are on the inside, that is the percentage split for those who want to stay in and those who want to leave.

The PM David Cameron is under greater pressure to allow a move that will guarantee a referendum in 2017, partly because of the huge UKIP success in the council elections but mostly because so many people are now airing the view that we should opt out of Europe.

I voted to go into Europe back in the 70's, my main reasons were geographically we are part of Europe, I think we should be politically part of Europe and had been advised that we would be financially better of in Europe. 30 years later the truth is available.

Yes we are still geographically part of Europe, Politically you must be joking, it is nearly impossible for a central location to give advice or orders that 27 or more countries can follow at the same time and on the finance side I have seen no evidence that our failing economy would collapse any further if we were to leave Europe.

In 2017 I shall be voting out...

Friday, 10 May 2013

Follow Germany

There are a lot of suggestions that England should follow Germany economically. Germany is currently the backbone behind the Euro zone, so much so that it always seems to appear as though Germany is bailing out every Southern European state. How did they get to this position?

Data now available:-
RGDP [annual rate]
 2006 Q1 – 2,263,994.4 million euro
 2008 Q1 – 2,429,934.8 million euro
 2012 Q4 – 2,463,022.8 million euro

 2006 Q1 – 40.7 euro
 2008 Q1 – 42.6 euro
 2012 Q4 – 42.6 euro

 2006 Q1 – 38.94 million
 2008 Q1 – 40.25 million
 2012 Q4 – 41.71 million

Hours worked at an annual rate
 2006 Q1 – 1,428.5
 2008 Q1 – 1,417.2
 2012 Q4 – 1,385.9

Unemployment Rate
 2006 Q1 – 10.6%
 2008 Q1 – 8.0%
 2012 Q4 – 5.4%

It would be a mistake to assume that the German miracle was an illusion due to slow productivity growth. The welfare loss to a society from a 5% RGDP shock is much greater if 5% of workers lose their jobs, as compared to all workers staying employed, but working 5% less hard.

One of the reasons that our unemployment drops during this period is the incredible rise of temporary jobs, effectively creating two jobs from one. This has not helped our balance of payments. Do we have to wait six years for this to change? Of course not, we can vote in 2015, that is if people can be bothered too.

Thursday, 9 May 2013

Nigel Farage MP

He has confirmed that he will contest a seat in 2015, but which one?

In Kent where he was born, or Buckingham where he tried his had against the current speaker, John Bercow?

I would have thought were his strongest support was, which currently stands in Lincolnshire, so perhaps Boston, which by coincidence has been hit by the BBC regularly in the past week...

Wednesday, 8 May 2013

Global democracy

In China, 1.3 billion people can vote so long as it's for a Communist.

In Russia, 141.9 million people can vote for whoever they like as long as Vladimir Putin agrees with them.

In Saudi Arabia, about 12 million women can't vote for another three years unless the king changes his mind and they object to him appointing or unappointing them from his council at whim.

In all 88.7% of the world's population doesn't have the right to vote for whoever they want without being bullied, killed, coerced or made somehow illegal. That's 6.1 billion people out of a total of 6.9 billion on the planet who don't get the say we all take for granted, sitting here reading whatever we like on the internet on whizzy computers.

In the country I live in there are 47 million people registered to vote in local elections, there were local elections held last Thursday, and less than half of them will bother to do so.

That's around 24million people not helping to decide which unqualified tosspots will be deciding on digging up their street, imposing one-way systems, collecting their rubbish, running their swimming pool, taxing their house, maintaining the street lights, running libraries and deciding how cheap their state-provided carers should be and how many minutes is enough to get someone out of bed, wash them, feed them, and wipe their bum.

Yet those 24million people aren't disbarred from using any of those services or complaining if they think they are rubbish. And lots of people tend to think that if someone is issuing taxes, then you get to have a say in how they spend it.

The trouble is that democracy, once it's won, is taken for granted and local democracy is just painfully dull. Nothing seems to change, so what's the point in voting? Well there's one thing that's changing, which is that fewer and fewer people can summon up the enthusiasm to put a 'X' in a box.

Tuesday, 7 May 2013

A blip? I think not!

After all councils across England and Wales have declared, UKIP has 147 councillors, far in excess of where it was predicted come before the elections.

First it was about 25 then 50, then people said they were exaggerating, now it stands at 147!

Although there have been murmurs of protest, that the party's success was a self-fulfilling prophecy once the press started boosting Farage and co as a viable electoral force, there is no doubting that it's an important threshold for the erstwhile members, and the conversation has turned to what happens next.

For the Conservative party, the consensus seems to be that treating the party as laughable collection of far right xenophobes hasn't worked. Instead, the commentators suggest, it's time to look back to UKIP's roots as a single-issue anti-EU party, and outflank them their.

For the Labour party there have been gains, presumably voters that were not happy with a protest vote for UKIP. That should offer very little comfort to Ed Miliband. Farage’s party came a respectable second place in South Shields, suggesting that voters who have been culturally inoculated against backing the Tories for a generation have no such qualms about UKIP.

For the Lib Dems, what can I say, they seem to be returning to the ranks of a pressure group, which frankly is scary considering they are in government at the moment!

Saturday, 4 May 2013

Oh Dear

Before last Thursday's election the conservative view was:-

"They are clowns, fruitcakes and racists!"

After the election the conservative view is:-

“It’s no good insulting a political party that people have chosen to vote for. It’s right that we show respect for people who supported them. We are going to work hard to win them back.”


Friday, 3 May 2013


I bought my first house in 1979 and at that time ALL my friends were taking out the "new contemporary" endowment mortgage. The biggest thing since sliced bread and I took out a repayment mortgage.

They had been sold the lie, "everything will be all right in the future // your on a win-win situation".

I did not go against the grain to be belligerent or a rebel and I did not have the foresight to know what is happening today, however most if not all of my family had advised me that only paying interest was a) like renting & b) none of us can see into the future and what it will hold. 25 years is a long time and financial change is almost inevitable. Paying off as you go is the more prudent way.

I could sit back now and smile at my contemporaries, however, some of the stories I am hearing are truly horrific. People who have been paying as little as £100 a month for years without extra saving could now be facing bills of thousands of pounds, maybe tens or even hundreds of thousands of pounds.

So what do mortgage companies do now? Oh well never mind, we’ll just let you live on regardless, or you cannot pay so get out. It appears that repossessions’ could go through the roof as early as 2015. That should give the coalition something to think about, as they try to get voters to register their mark while wondering where they will sleep tomorrow…

Thursday, 2 May 2013

Crime is falling

We are in a recession, I have forgotten which one, double, triple, whatever, however we are part of an austerity programme that according to the old rules should raise crime.

Murder is down. Violent crime generally is down. Property crime is down. In fact, almost every category of criminality that you can think of is declining. Here is the even better news. This is not a blip. The downward trend is now very well established and can be traced back over many years. And here is the funniest bit of this news. No one is really sure why. Those who think of themselves as experts on the causes of crime confess to being nonplussed. The majority of them predicted that a prolonged economic squeeze could only lead to more crime. They are scratching their heads trying to figure out why the opposite is happening.

An abundance of theories:-

The reduction of lead in petrol.
The proliferation of CCTV.
The steep decline in the cost of consumer goods such as televisions [one of the favourite items stolen during the summer riots].
An ageing population.
A more feminised society. [Men are becoming less larcenous and dangerous under the moderating influence of the more law-abiding sex].
A more middle-class society.

Which one is correct? or do they all have their part to play in the overall picture?

Wednesday, 1 May 2013

Local elections tomorrow

The surge in support for Nigel Farage's party means the Tories are prepared for losses well in excess of the 350 seats forecast by election gurus Rallings and Thrasher. The figure of 800 seats that appears in yesterday's Sun can almost certainly be dismissed as expectation management but it's not unreasonable to suggest that the party, which currently holds 26 of the 27 county councils up for election, could lose between 500 and 600.

Nigel Farage said on the Today programme that his party's membership has risen by 50 per cent this calendar year. Another UKIP election candidate was unmasked as an extremist [Somerset candidate Alex Wood]!

However, he came unstuck over tax. After last week distancing himself from his party's general election policy of a 31 per cent flat tax rate, the UKIP leader spoke of introducing a "two tier flat tax", an amusing contradiction in terms. I suspect he is making it up as he goes along.