Wednesday, 30 September 2015

Silver Spoon Politics

Is silver spoon politics finished?

The biggest political revolution happening at the moment is the surprise leadership election of Jeremy Corbyn for the labour party. Why did the three safe candidates lose out so heavily?

The popular thought why over 250,000 people voted for Jeremy Corbyn over the other three Blairite clones is because they wanted change, so what change do they want?

Jeremy Corbyn’s answers may be wrong, but many of his questions are right. Instead of patronising his supporters, the insular ruling elite and their allies in big business and big finance should realise they are the cause of Corbyn.

Love him or hate him, a Corbyn victory means that political pundits can no longer claim that the age of mass parties is over or that young people are irredeemably apathetic. Not only about the result but at the sense that political business could return to normal.

Yesterday Corbyn gave his first party conference speech to the faithful in Brighton and it was clearly different to what was expected. He wanted to impress on his audience the move towards a kinder politics. He attacked David Cameron's shocking broken promises and vowed to create a more caring society. There was not a lot of policy but it appears that he has consolidated his position and presumably over the next twelve months detail will be added.

It has been claimed that Blair's new labour has moved on, perhaps passed away would be a better description and new politics has moved in, can it last?

Tuesday, 29 September 2015

Tax Collection

John McDonnell said during his speech yesterday [Monday 28-Sep-2015] that he will clamp down on large company tax dodgers like Amazon, Google, Starbucks & Vodafone. Vodafone hits back.

The telecoms company said it was “disappointing” the issue of its tax affairs had been raised again. The company has come under fire from campaigners in the past over the amount of corporation tax it pays on UK earnings. It claimed there was “no truth in the allegations in the past and there are none now.  As we have made clear on numerous occasions, Vodafone has always paid its taxes and for the last financial year (2014/15) we paid around £360m in direct taxes in the UK,” a spokesperson said.

In a statement, the company argued investment in a competitive market had left it making “minimal profits” (£41m) in the UK. “As the Government wants to promote investment in essential infrastructure like ours, the UK tax rules mean that relief’s for our investment are set against the profits we make,” the spokesperson said. “In addition the Government understands that we have to borrow huge sums of money to be able to invest for the long term, so they allow us to take the interest we pay on those borrowings off our profit too.

Vodafone paid no UK corporation tax in the year 2012-13, arguing at the time Britain was "one of the least-profitable mobile markets anywhere in the world".

We are in an age of deep public spending cuts and real austerity. And this [tax avoidance] is not a victimless crime, if you like. If this was seven or eight years ago, pre-financial crisis, I do not think it would have had the same impact it has had now.

The four companies mentioned will continue for as long as they can to dodge their responsibilities because they can, I suspect there is no government that can change this, it is up to people to stop using the relevant companies, but how likely is that going to happen when Joe Public says, where do I buy my books from, coffee from, how do I search the net and I’m not giving up my phone, the companies will continue to take the piss.

Monday, 28 September 2015

Electoral Reform

The current voting system is called First Past The Post [FPTP], also known as Single Member Plurality, Simple Majority Voting or Plurality Voting and has been in place since 1922.

Breakdown of the positions at the general election of 2015

Conservative [36.8%]
Labour [30.5%]
UKIP [12.7%]
Liberal Democrats [7.9%]
SNP [4.7%]
Green [3.8%]
DUP [0.6%]
Plaid Cymru [0.6%]
Sinn Féin [0.6%]
UUP [0.4%]
SDLP [0.3%]
Other [1.1%]

Let us take one example, the obvious one UKIP. Total votes cast 30,691,680, UKIP received 3,881,129 which is 12.7% and they have 1 MP. 3.8 million people feel aggrieved because their voice is not being heard.

In a time of greater political pluralism, British politics is no longer well served by a voting system that was designed for a two-party era. Nor are the interests of British democracy. Arguably the biggest democratic-deficit associated with FPTP is that election outcomes are effectively decided by a handful of voters who happen to live in all-important marginal seats. The overwhelming majority of us live in safe seats where we are increasingly neglected by the political parties both during and between elections –and where we have little chance of influencing the result of general elections.

Proportional representation [PR] is an electoral system in which the distribution of seats corresponds closely with the proportion of the total votes cast for each party. For example, if a party gained 40% of the total votes, a perfectly proportional system would allow them to gain 40% of the seats.

PR is used by more nations than single winner systems. Among the world's 35 most robust democracies with populations of at least two million people, only six use winner-take-all systems for elections to the legislative assembly (plurality, runoff or instant runoff); four use parallel systems; and 25 use PR.

PR dominates Europe, including Germany and most of northern and eastern Europe; it is also used for European Parliament elections. France adopted PR at the end of World War II, but discarded it in 1958; it was used for parliament elections in 1986. Switzerland has the most widespread use of proportional representation, which is the system used to elect not only national legislatures and local councils, but also all local executives. PR is less common in the English-speaking world; New Zealand adopted MMP in 1993, but the UK, Canada, India and Australia all use winner-take-all systems for legislative elections.

Maybe now is the time for change?

Friday, 25 September 2015

The future of oil

Oil futures settled lower at the beginning of the week, as a slumping U.S. stock market fed concerns that the outlook for energy demand will continue to soften.

Prices, however, pared some of their losses by the settlement as petroleum-products futures took a last minute turn higher following a report that Colonial Pipeline Co. has shutdown petroleum-product pipelines. The October contract for West Texas Intermediate crude settled at $45.83 a barrel on the New York Mercantile Exchange, down 85 cents, or 1.8%, on its expiration day. November crude, fell 60 cents, or 1.3%, to $46.36 a barrel.

Meanwhile, November Brent crude on London’s ICE Futures exchange, [which is priced as US] +0.59%  turned a bit higher, up 16 cents, or 0.3%, to settle at $49.08 a barrel.

Last week’s decision by the Federal Reserve to leave interest rates unchanged rattled investor confidence over the state of the U.S. economy and, in turn, the outlook for energy demand. U.S. equities, meanwhile, traded sharply lower Tuesday, following losses in Europe. Analysts polled by Platts forecast a weekly decline of 700,000 barrels in crude supplies.

The oil market is also seriously concerned about an economic slowdown in China, which is currently dragging key commodities like crude oil and base metals down and China has accumulated about 200 million barrels of crude in its reserve so far and aims to have 500 million by the end of the decade, according to the International Energy Agency. It’s currently filling a 19 million-barrel facility at Huangdao and will add oil at six sites with a combined capacity of about 132 million barrels over the next 18 months, the Paris-based adviser on energy policy estimates.

This does not bode well.

Thursday, 24 September 2015

HS2 finance

High Speed Rail 2 has not even started yet and the money being thrown at executives is unbelievable.

Simon Kirby is Chief Executive of High Speed Two [HS2] Limited. Kirby is also a director of the Major Projects Association and the National Skills Academy for Railway Engineering. He is receiving £750,000.00 just for HS2, and remember he is a civil servant.

For that staggering salary he is not the top man in charge, he will only oversee certain infrastructure projects such as the redevelopment of King's Cross station in London, the Forth bridge overhaul and the Thameslink upgrade.

He has been promised a £300,000 loyalty bonus from Network Rail in April, just before he leaves, no matter what happens whether it succeeds or is a total failure.

So what will the public get for this expense?

This morning on BBC Radio 4 Today program he refused to answer directly any question put to him by the presenter Mishal Husain and merely repeating his broadcast statement showed that we are paying for a mouthpiece that has no clue as to what is going on.

Tuesday, 22 September 2015

China's best friend

The UK and the People's Republic of China were on opposing sides of the Cold War, while the Republic of China and the UK were allies during World War II. Both countries are permanent members of the United Nations Security Council.

Today, however, China and Britain enjoy a friendly, cooperative, and close relationship. China and Britain have established a full strategic partnership and close cooperation, this is currently being consolidated by the chancellor‘s visit to Beijing the capital of China.

The reason being China acting as a powerhouse. Its economy now is over three times what it was in 2005. While the UK and most other developed countries suffered during the great financial crisis from 2008, the country that exists now has an emerging middle class, working in the services sectors, living in the vast new cities being renovated or simply built from scratch, whose future patterns of consumption will be crucial for global growth.

Like it or not, China supports the unity the EU offers, at least financially and economically, and while it would never publicly state anything on this, it would almost certainly regard a UK exit negatively one would presume.

The UK as an intellectual partner of China, as it attempts to build a new kind of economic structure and deal with some of its huge environmental and sustainability issues, is a new kind of role, and one of the few where it can be liberated from the shadow of its historic issues with the People's Republic.

I have already mentioned their stock market crash so no need to revisit that, but what about human rights? Well that is another matter entirely...

Monday, 21 September 2015

Europe in crisis

The crisis in the Eurozone lays bare a range of problems that go way beyond the issues of Greek debt or political paralysis at the European level. It is often discussed as a crisis of European integration or a crisis of national economies within Europe.

Critical political economy stands in the tradition of classical political economy. It analyses the economy as part of society and provides a framework for an integrative analysis of the economy and political processes. For this reason, it can be considered a disciplinary perspective. At the core of a critical political economy, there is a class-based framework for the analysis of society, which aims at contributing to the struggles and overcoming specific historical forms of capitalism such as the current neo-liberal European mode of production.

It is obvious that the current economic policy framework of the Euro area is inappropriate to deal with the current requirements. In fact, the current policy framework and the stance of the policies applied have even reinforced current account imbalances through different channels.

First, they have been unable to prevent significant inflation differentials to emerge within the Euro area, mainly by undermining the conditions for effective wage bargaining conditions as a main tool for this.

Second, they have not provided the appropriate tools for domestic demand management to adjust the actual growth rate of each country towards the BPCGR [balance of payments constrained growth rate], mainly by applying a ‘one size fits all’ policy with respect to government budget balances and government debt in the context of the SGP [Stability and Growth Pact].

Third, due to the lack of any consistent industrial and development strategy for the Euro area as a whole and for the catching-up countries in particular, ensuring that capital inflows into these countries support long-run sustainable growth, they have not provided any effective policy tools to adjust the BPCGR of the high-growth current account deficit countries towards the respective growth rates.

There should be changes in the objectives of the ECB to include that of the external value of the currency, and interest rates would have to be set with regard to their effects on the exchange value of the euro. The target exchange rate would be set by the Council of Ministers of the Eurogroup, and the ECB would be required to support that policy [through its interest rate policy and through interventions in the foreign exchange markets].

The objectives of the ECB would have to be changed to include that of support of the external value of the currency. Interest rates would have to be set with regard to their effects on the exchange value of the euro. It is very important for the EMU to formulate an official exchange rate policy and abide by it. The achievement of full employment without inflationary pressures should be the ultimate objective.

We might be looking for an out within the next two years, but every political change in Europe will affect us whether we are in or out.

Friday, 18 September 2015

Syrian update

Last Wednesday Syrian President Bashar al-Assad [speaking for the first time on the global immigration issue] blamed Europe's refugee crisis on Western support for "terrorists".

The Syrian government describes all the armed groups fighting it as terrorists. The insurgents in Syria range from the hard line Islamist Islamic State to nationalists viewed as moderate by the West.

Assad has been buoyed in recent weeks by signs of increased military support from his ally Russia. In his comments he made no mention of reports of Russian military activity in Syria. What he might not realise is Putin's ultimate goal is not to help Syria but merely control it as they [Russia] move through.

Moscow says the Syrian government should be part of a broad coalition to fight Islamic State, taking it out of the final calculation during the land grab programme.

I wrote about this earlier:-

Is the Foreign & Commonwealth office just sitting indoors reading about this and nodding their heads in disbelief or do they have their finger on the button?

Thursday, 17 September 2015

Phone hacking moi!

Rebekah Brooks has returned as CEO of News U.K. a post she was forced to resign four years ago under threat of imminent arrest.

Brooks could be on an annual pay packet of as much as £3m if she is paid in line with her predecessors, so no tax credits required here. It is possible she has received 16 million over the last four years in the wilderness.

But what of the outstanding court cases?

The CPS [Crown Prosecution Service] is considering bringing corporate charges against News International [now News UK] over phone hacking.

Chris Bryant the Shadow culture secretary, last week referred to reports of Brooks’ imminent return as “two fingers up to the British public”, said her failure to handle the phone-hacking scandal raised questions about her competency to lead the company. “So far as I can see, Rebekah Brooks’ defence was that she was incompetent and had no idea what was going on and the end result was that the company lost £300m,” he said. “It mystifies me that Rupert Murdoch would want to reappoint her.”

Has Rupert Murdoch brought her back because she is incompetent, hardly has he brought her back to trade in the courts for a deal, maybe or has he brought her back because he has no choice due to what happened during the scandal?

We should find out over the coming weeks.

Wednesday, 16 September 2015

Oil price

Goldman Sachs says the global-oil market will remain in a supply surplus until the fourth quarter of 2016 and hence the forecast that oil could hit a new low of $20 a barrel.

OPEC isn’t even trying to help stem the flow of oil or the drop in prices.

In recent years, the shale boom and increased production from the U.S. has greatly reduced OPEC’s ability to dominate world oil markets. OPEC must also deal with the fact that more oil will be coming to the global market, which will further exacerbate the glut of supplies because of Indonesian and Iranian oil.

Tuesday, 15 September 2015

The Russian Bear

Vladimir Putin President of Russia has started to move his troops to Syria seeing an opportunity to move West. Is this enough for the UK government to act decisively?

There have been growing numbers of Russian troops over the last two months that have been sent to a Russian naval maintenance facility in Tartus, in western Syria. There is talk of moving the Russian naval base at Tartus to Rmaileh, north of Jableh. Large Russian ships currently have to be unloaded at Latakia. Relocating the base to Rmaileh would resolve the capacity problem and provide the Russian military deployment with a more integrated structure.

One of the reasons these movements are happening now relate directly to Turkey’s efforts to create a safe zone north of Aleppo in northern Syria. Russia opposes the zone, which would be located about 93 miles from Jableh.

Although it might appear the Russian activity at Jableh is designed to boost Syrian army operations, to strengthen the regime's political efforts and fight against IS, the long-term goal is a new military strategic balance in the region and Putin's aggressive land grab.

Putin must be thinking that the risk is worth taking, and the main reason to think so is the calculation that now Russia will have locked the West out of the conflict in Syria – at least as far as fighting the Assad regime goes.

Today’s UK politicians say the answer to the refugee crisis is at source, well the Russian President seems to have beaten them to it.

Monday, 14 September 2015

Assisted Dying

Parliament has overwhelmingly rejected amending the bill, are they really this out of touch with the public?

Two principles; First, that the criminal law should rarely [if ever] be used against those who compassionately assist a loved one to die at their request - so long as that person had reached a voluntary, clear, settled and informed decision to end their life. Second that very strong safeguards are needed to protect those who might be pressurised [in any number of ways] into taking their own lives: those who encourage the death of the vulnerable should feel the full force of the law.

However, over the years it has become increasingly clear that there are two inherent limitations in the guidelines. The first is that although those who have reached a voluntary, clear, settled and informed decision to end their lives can now be confident of the compassionate assistance of loved ones without automatically exposing them to the criminal law, the only assistance they can be provided with is the amateur help of those nearest and dearest.

The second inherent limitation in the guidelines goes to the heart of the argument advanced by those who do not want any change in the law. They rightly point to the risk that some people might be pressurised or encouraged to take their own lives by those who do not have their best interests at heart; and argue the blanket criminalisation of assisted suicide, subject to the operation of the guidelines, offers the best protection against abuse.

The safeguards in the Assisted Dying Bill proposed by Rob Marris MP are certainly strong and robust. A person may only be provided with assistance to end his or her life if a High Court judge sitting in the Family Division, by order confirms that he or she is satisfied that the person has a voluntary, clear, settled and informed wish to end his or her own life. An order can only be made if the person in question has made a declaration about their wish to end their life, which must be counter-signed by a witness who must not be a relative or a person directly involved in the person's care or treatment. And only those diagnosed by a registered medical practitioner as having a terminal illness and less than six months' life expectancy may apply to the High Court.

So, in the end, the question before Parliament last Friday was whether we have got the balance right under the current law. At the moment, those with a voluntary, clear, settled and informed decision to end their lives can receive assistance to commit suicide, but only the amateur assistance of loved ones unless they have the means and physical ability to travel to Dignitas in Switzerland. Professional medical assistance so that they can die with dignity and in peace at home is denied.

Parliament had the opportunity to re-balance the law in this difficult and sensitive area and they failed.

Friday, 11 September 2015

Savers beware

The Bank of England yesterday announced [as expected] that interest rates would not change and remain at the ludicrously low 0.5% which means we are not producing enough, we are not spending enough and of course who would save at 0.5%.

On the other hand the Treasury is quietly getting on with it. It quietly announced yesterday that it was unveiling its Autumn Statement alongside its spending review on November 25, and getting on with it means cutting spending. The summer Budget this year went as smoothly as the Chancellor had hoped, in part because there was no official analysis of the impact of his national living wage on in-work benefit cuts.

But since then there have been think tanks number crunching and today the IFS verdict is that the NLW offsets just 13% of the other cuts to household income in the Budget. And that 13% is exactly the same figure the Resolution Foundation came up with recently.

For a short period of very low interest rates, savers might be prepared to dip into their capital to maintain their spending. But the longer this period of extremely low interest rates continues, the more likely it is that savers will start to cut back to reflect their lower income. So the benefit that the economy receives from low borrowing costs is offset by lower spending from savers, and this low rate has been in place for over eight years.

So what exactly has to happen to get decent rates?

Thursday, 10 September 2015

Two Days

Yes, two days to go until we find out who is the next leader of the labour party is.

Bookies position at 06:00 on 10-Sep-2015:-

Jeremy Corbyn (1/6) odds on favourite
Yvette Cooper (15/2)
Andy Burnham (10/1)
Liz Kendall (200/1)

Of course the bookies are not taking into consideration the balloting rules of sorting through each candidate as the votes are used and are only concerned with a first past the post system.

There has been speculation that Jeremy Corbyn will romp home on the first process, however, when the second stage kicks in the second place votes will allow one of the other three to charge forward.

I consider this a rather optimistic view as I suspect Jeremy Corbyn will hold the first place through all the processes the Labour Leadership have to comply with.

Roll on Saturday.

Tuesday, 8 September 2015


This is the new name of Subprime mortgages.

Gone are the days when lenders handed out mortgages without requiring documentation and down payments. Today’s purveyors of subprime call the loans ’nonprime’ and require as much as 30 percent down to safeguard their investment. And they see a big opportunity for growth as tougher federal lending standards shut out millions of people with poor credit from the mortgage market.

One statement that came out of America concerning this earlier this year was “You’re going to have to make all types of loans, ones that conform to all the new standards and ones that don’t, to keep powering the housing recovery, there needs to be a solution for people who don’t fit in the box, and rebuilding nonprime lending is it.”

The current level of subprime lending is a trickle compared with the flood that helped spur the housing boom. The loans are made to the riskiest borrowers, with low credit scores, high levels of debt and inconsistent income.

Investors are taking a pass on subprime for now. Lenders have to either hold onto their loans or sell them to private equity firms until they establish a strong enough track record to offer mortgage-backed securities to investors.

The bundling of subprime mortgages into securities to sell to investors will not be viable for a few years. Investors will not buy subprime bonds unless the mortgages have low loan-to-value [a comparison of the mortgage balance to the worth of the home] and borrowers have proven their income.

The question arises why does it have to be connected with subprime even in name only, why did they not just release a new product that was viable for the market?

Monday, 7 September 2015

Hinckley Point

Hinckley Point C is the latest in nuclear power stations and will fill a desperately need gap in energy to "stop the lights going out" when the coal fired stations are taken off-line.

However, EDF the French owned conglomerate has announced the opening will be delayed due to financial issues.

The latest delay raises the prospect that Hinckley may now in fact be overtaken by other proposed British nuclear power projects with far quicker build times. The safety of the Flamanville plant has been questioned due to the danger of flooding of the kind experienced during the 1999 Blayais Nuclear Power Plant flood.

We all know Britain has an energy problem even if we cannot all agree on what, specifically, the problem is. Rising costs, changing climate, peak oil, foreign oil, public safety the issues are complicated, the solutions even more so.

Each individual power source like  coal, nuclear, solar or wind is not sustainable by itself. But some combination of various systems, various compromises and improvements and treaties between mutual belligerents, taken together, hold out the promise of a world where we and our descendants continue to enjoy comfort and prosperity.

The government has made it clear that a range of methods is the best solution, however, when one of them goes down what answer do they have in place?

Friday, 4 September 2015

A week to go

Yvette Cooper’s strong line on Syria has impressed many Labour members and a VERY strong and passionate attack on Corbyn at the end of the Sky News live debate. But is it too late to affect her hopes of clinching the leadership?

Andy Burnham is also confident he can snatch victory. Burnham is interviewed by Andy Grice in the Independent and his camp claims one in five Labour members and supporters previously committed to Jeremy Corbyn is now undecided. He still seems to be flip flopping on his views weekly and it might be time for the voters to realise this.

Jeremy Corbyn is still flying the flag [the red flag] and odds on favourite with Chuka Umunna’s backing now that he is not running with a line that everyone should stick together. That is going to be a bit tricky if Corbyn wins. During the debate he got the most support, is that because everyone went there to support him or is he still getting his message across?

Liz Kendall is staying mum at the moment, although to be fair she is saying the same message today as she said two months ago. Perhaps that is the stability that the Labour party could do with.

Saturday 12th and we will know.

Thursday, 3 September 2015

Body on the beach

The Independent newspaper has published a picture of a dead baby on a beach in Turkey which is connected to the migrant/refugee story.

It is a shocking picture [it is supposed to be] and it has got everyone talking about the current migrant/refugee situation, so the debate has begun.

It could have started last week when Germany said they would take 800,000 and Britain said nothing, but it didn't. It could have started the week before when 800 died in the Mediterranean after their ship sank, but it didn't.

It has started now after a picture of a little Kurdish boy face down in the surf is on the front pages of the press.

Why did it take so long?

Wednesday, 2 September 2015

China's bad month

Since 1978, China has engaged in an unprecedented and wildly successful experiment, moving gradually from a command economy to one based on markets; in small steps transforming a system where administrators controlled the goods that were produced to one where prices allocate resources.

The day has come for China to become more closely integrated into the global financial system, and this has a number of implications. The most important is that as prices and quantities of financial assets [rather than goods] are determined in markets, bureaucrats lose a great deal of control. But, as recent events clearly demonstrate, Chinese authorities are reluctant to let go.

Capital controls make it possible for China to maintain a fixed exchange rate while policymakers could adjust interest rates to stabilise their domestic economy. These same capital controls are incompatible with the objectives of making Shanghai a global financial centre. The devaluation of the yuan earlier this month by the People’s Bank of China’s [PBOC] has not allowed any form of stabilisation as the downward spiral continues.

Fewer people are willing to work the long hours for the low wages offered by manufacturing and more people are moving towards the cities for work. Policymakers in China look to be quite unhappy about the constraints this is creating. The government needs to alleviate the pressure to save on its working population.

All eyes are on what the authorities will do to next.

Tuesday, 1 September 2015

Ashley Madison

The recent leak at Ashley Madison, an online dating service of extra-marital affairs, did more than embarrass a few politicians and celebrities [all male].

It also revealed that the whole site was a huge scam.

For over 20 million men who checked their Ashley Madison messages there were only 1,492 women who did the same.

Apparently the leak also showed that many of the female profiles were simply fake. At least in this case the old meme that there are no girls on the internet proved to be quite true.