It is Obvious

Chris Rick has got altogether too much to say

Archive for April, 2010

Who are you?

Posted by chrisrick13 on April 29, 2010

It is obvious: someone will win the election.

I have a friend in Baltimore. He is always amazed that the British PM can say “That’s it.”, stomp off to the palace to get permission to dissolve parliament and 3 weeks later there is a new government in place. In the US they have fixed terms and elections that are fought over a year or more at huge expense. As with the Major election of 1997 if you go to the end there comes a point where you can predict that and the election process might effectively take several months. However it really does not start in earnest until that visit to the palace.

I had a look at past election seat counts starting in the late 1800’s. There were uncontested seats (45 on one occasion) but in that period up to the end of the first world war I could see the progression of the process from a two party system to a two and a half party system and then back to a two party system with the Labour party replacing the Liberal party.

I think the Conservative party has a level of support in this country that will never dwindle below a certain level. They are a right wing party and there is little to challenge them. BNP can be discounted even though a lot of people do not like ‘Johnny foreigner’. UKIP only have one issue.

The Labour party are left wing. How far left are they? It ebbs and flows. It has far left elements and centre left elements. It is left wing.

The Liberal party is… Ask anyone where the Liberal party is on that political line and they will have trouble. Certainly they are not right wing. But where are they? Perhaps a two dimensional map is needed. One axis is left/right and the other is…something else. Perhaps state size. Wherever they are the Liberal party has a lot of people saying they will vote for them. However at the last minute they will realise that they are not quite sure what they are voting for and return to the comfort of a known beast.

However it is close now. A lot of Labour supporters do not want to vote Labour and they can see a better alternative to the Conservatives. I have been predicting a hung parliament for a long time but I am going to change now. The Conservatives will win with a small majority. Liberal and Labour will be within 20 seats of each other. The Conservatives will throw their hands up in horror when they see ‘the books’ and we will suffer for the next 10 years. However after a year they will go back to the country for a mandate and get it. We will be back to a two party system and Labour will not be one of them.

It is obvious: someone will win the election…and someone will lose.

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Ring-a-ring-a-roses

Posted by chrisrick13 on April 27, 2010

It is obvious: circles go round.

Greece’s problems are perplexing. It has such a small GDP does anyone care what happens? I suppose that the agonising over what to do by the ECB does not augur well for other countries that are going to default as well. Italy and Spain are off in that direction and they are much bigger. Portugal and Ireland are small as well so who cares about them. Ireland has acted, Portugal has not.

The ECB loan needs to be approved by individual countries. It cannot be given quickly. Some countries may not approve it. I wonder how Portugal feels about helping out Greece with a loan. I wonder if Greece has to contribute to its own loan?

Then there is the IMF loan. The euro countries contribute to that including Portugal. So does the UK.

This is all being done to stop a default on loans made to Greece. Loans made by whom? Certainly there are several billion from UK banks. Many more billions were loaned by German banks. This means that Germany is contributing to the ECB loan, the IMF loan, and bank loans when the default eventually comes. Note that the loans are not to fix Greece’s problems. They are merely to allow Greece to borrow money to replace old debts with new ones at a higher rate of interest but not as high as the market wants.

How will Greece fix its problems? I really have no idea but the most likely seems to be default or a writing-off of a percentage of the Greek debt. Then all this looks likely to be repeated in Portugal and Spain. Germany will again be the biggest contributor. It has the feel of a system out of control.

As this scenario is played out in country after country what is happening? The living standards of the people are being reduced. We are in the ‘race to the bottom’. Indeed the talk of devaluing currency making exports cheaper is becoming a race. Some countries won’t do it as fast and will run a deficit buying cheap imports. Then they will be faced with a need to devalue to catch-up with the rest of the race, or catch-down.

The biggest problem is that this is not a smooth transition. Along the way there will be winners and losers. It might even out over time but for individuals it is happening now.

It is obvious: circles go round…and bite you in the tail.

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Living on a budget – at least one

Posted by chrisrick13 on April 21, 2010

They are shouting at each other so I can talk. When I shout I always back it up with claws. It is much more effective. Ask Timmy on the other side to Jenny – caught him weeing on one of my trees. We had a long conversation first, done it before, but it never gets anywhere. I’ve still got a lot of his fur between my toes. You can never solve anything with talk it always needs a fight to fix it.

They are shouting about budgets again. I don’t understand them. This time it is about in and out. How simple can it be? Everything you eat goes in and the same amount comes out the other end. I know because I’ve checked. Sure, it looks different but I’ve seen feathers and other stuff I know I ate. It’s a bit like temporary saving. You have it for a while then leave it for someone else after you have got what you want out of it. If you didn’t you’d be the size of a…big thing or very small.

Why balance a budget anyway? They flutter around all over the place. I suppose they are balanced, but you don’t balance them they do it themselves. You don’t have to look because they just do it.

Have you noticed how much the big things change their fur? Well apparently he thinks that she is changing her fur too often. Also she isn’t growing her own but using someone else’s and this means we have to save. The result is that I get less food so I am with him on this one. I’m always amazed that their priorities are so different. When I try and take Timmy’s off him he always puts up a big fight. Better to live in your own fur and make it last.

Now they are threatening to live in two different big-thing boxes. They always do that. Seems to me you can share the food, use the same fur and sleep on top of each other to keep warm – a lot simpler. (I do my bit by following them around until they go to sleep and then lying on them.) You can even share budgets though it is better to have one each (at least). They won’t live in different boxes – trust me. Next they’ll go to the top of the box, I won’t be allowed in and they’ll be doing elections. Bet I won’t be able to see them on the flat thing.

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Bang

Posted by chrisrick13 on April 19, 2010

It is obvious: a trigger is a dangerous thing.

I have defended and attacked economists.  They draw graphs and fit them to nice curves to predict the future.  In a stable world that has validity.  They also cannot analyse for the effect of triggers.

I have wrriten about it earlier, but I maintain that the conditions for a ‘crisis’ are in place nearly all the time.  ‘Crisis’ is a euphemism or shorthand for a dreadful mess where a lot of people suffer in one way or another, most importantly, including me.  It just needs a trigger event to make it happen.  Trigger events are not in any way predictable and neither are their effects.  All you can do is, smugly, nod wisely after the event.

THE volcano has stopped air travel.  Bad enough and it may go on for some while, or they will start flying and planes will start dropping out of the sky.  Greece relies on tourism for a large part of its income and there is not a lot of that at the moment.  If you are Greek and unhappy with a Greek bank you can walk in, walk out with a pocketful of euros and walk in to…some other bank that you trust more.  (I had difficulty with that sentence as I tried to think of any bank I trust at the moment.)  There is no currency change charge.  You are clear of the Greek banking system in short order.  Greece has no money to pay bank collapse insurance claims and has got less each day because of  THE volcano and consequent reduction in tourist activity.  So Greece is set on a downward spiral.  Almost a perfect storm.

Just as an aside, if Greece went out of the euro, who would buy and use a drachma?  The only people would be those in Greek banks, which have collapsed because of runs, where the government would forcibly convert the euros to drachmas.  We could have a country running on a currency other than its own (viz Zimbabwe, Vietnam) – the drachma is official but everyone uses euros.

It is obvious: a trigger is a dangerous thing, especially when it is not your finger on it.

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Nobody is looking

Posted by chrisrick13 on April 16, 2010

He’s watching the flat thing.  Not this one, the other one.  I don’t know why he bothers.  Nothing ever comes out of it.  I’ve tried going in but there is a window in the way.  There are a lot of birds not in my stomach because of that bloody glass.  Save him a lot of money in food if he took the glass away.

He used to spend time playing with me, but spends all his time hitting this plastic now.  When his sons were around they used to have female big things in their flat things with none of their fur on, or cars racing around.  I worry.  If any came out they are so close there would be no time to dodge.  They would know all about it.  Ginger down the road found out – very flat he was and un-talkative.  Then some big things in yellow picked him up with a spade and we don’t see him any more.

I understand him now.  He thinks I don’t but I act stupid and I can get him to do all the things that he wants me to do.  I sometimes watch him call me for ages then he comes into the garden and carries me in.  I worry about his health.  He seems to be putting on weight, so sometimes when he comes to me I run about a bit until he has had a decent exercise then I let him carry me in.  You have to manage big things properly.

He spent a lot of time talking about the budget.  I don’t know why he bothered: they are hardly a mouthful.  Now he is talking about the election all the time.  I used to do that with Jenny next door, but the vet has seen her and she isn’t interested any more.  I’m not letting any vets spot me.  I wonder if a vet has seen him?

He’s saving.  I’m not sure what that is.  It meant there was less food in my bowl for a while.  I had to bring a lot of mice and birds in to show his female before the food went back to normal levels.  Is saving about going hungry?  I thought saving was about keeping things.  Whenever I try to save a mouse somewhere they always find it and save it in that tin thing with a wavy top on it.  I suppose that when they have saved the mouse it is no longer mine.  I never get to see it again.  Maybe someone saved Ginger.  It does seem a big risk.  You save something and it suddenly becomes someone else’s.  And the saved things, they never come out as good as when you first saved them.  Maybe I’ll stop saving and just consume everything I can.  It seems a lot better than risking someone looking after your savings for you and then deciding that they’ll save them for themselves.  I’ll save internally from now on.

He was watching something called  ‘election special’ last night.  I couldn’t see any – just three male big things talking to each other.  I was soon asleep when they started talking about budgets again.  You definitely need more than one if you are hungry.

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It won’t happen

Posted by chrisrick13 on April 15, 2010

It is obvious: I worry about a lot of things that never happen.

 I remember worrying about the Cuban missile crisis.  I remember worrying about BSE and making the whole family avoid beef for 10 years.  I remember worrying about bacteria developing resistance to antibiotics and humanity running out of effective ones.  I worried about asteroids hitting earth.  I worried about a super-volcano erupting because one is due soon.  I worried about ice-shelves melting and dropping into the sea.  I worried about oil running out.  I worried about the inner London motorway coming past my garden.  I worried about my house subsiding.  I worried about the pain down my left side…but after 30 years I have stopped.  I worried about the hole in the ozone layer.

I need to stop worrying.  None of them are going to happen.

I have something to worry about now though.  I am in the position where I personally do not owe anyone any money at all.  I have lived on the credit of a mortgage for 32 years, but that has gone.  If the world’s financial systems stay stable (sic) I might even have enough to live on until I am gone.  Now all I have to worry about is the debt that the government has run up on my behalf.  I can’t complain as they have helped pump up the bubble that is my wealth in property.  I also worry that the political parties that are most likely to be in power soon have no plans to do anything meaningful about that debt.  There is £750bn in visible debt.  There is £1,000bn in unfunded pensions.  There is £1,000bn in PFI debt.  There are a bunch of other little bits.  With 30,000,000 households that is £100,000 each.  I borrowed almost exactly that to buy the house I am in.  It took me 20 years to pay that off…and some considerable effort.

It is obvious: I worry about a lot of things that never happen – I’ll stop worrying.

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Revolution

Posted by chrisrick13 on April 14, 2010

It is obvious: change is coming

I am meeting a lot of people who have exited from the democratic process.  They all express a recognition of the futility of it.  This varies from those who do not have a voting option that they care to take, to those who want to vote a certain way but are dismayed with what they see their party doing.  I have heard a lot of calls for the option ‘none of the above’ on the ballot paper.  This at least allows those who are still interested to register their disapproval rather than being labelled as a no-voter.

Add the dis-engaged people to those who are not interested (HDUD’s), those that can’t be bothered, those that don’t understand, and those that can’t even spell democracy and we will soon have a very small number of people who actually take part.  At this point is it a democracy?  What alternative is there for those people?  Rioting on the streets or revolution?

I am always pleased to hear of people not voting as it makes my vote more valuable.  At the moment my vote is worth something like 3 times what it should be.  My personal problem is that wherever I am my wife is and I’m sure she always cancels out my vote with an opposite one!

If the economy does as poorly as I think it will, there will be a lot of people with no stake in society with a lot of time on their hands to do…just about anything.  That will be a scary thought given some of the people I know.  Indeed I have a school report that says: when this child grows up he will be a member of the criminal classes.  So I also fall into that scary class.

My dissatisfaction is that neither of the two main parties has said that they will reduce debt, a precursor to which is taking the deficit to zero.  Currently the deficit is 40% more than tax receipts.  Cutting spending is not efficient but will take down the deficit relative to reduced income.  Add in the interest bill and cuts in spending of over 50% are needed to move this country to living within its means.  Taxing the few wealth producers left in this country will not help much.

So the numbers with a stake in this society will reduce rapidly as the economic collapse is played out.  Many of them will be in the 30% or so still taking part in the democratic process.  This is a number far beyond that needed for a society to collapse.

It is obvious: change is coming – have you bought your shotgun yet?

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Democracy

Posted by chrisrick13 on April 13, 2010

It is obvious: you can fool most of the people most of the time.

I really hate it when tv programmes go to the man in the street to get an opinion.  They always have equal numbers for and against the particular question so there is no help there.  Apart from that I can get the opinion of the man in the street any time.  What I can’t get is the words of a knowledgeable person on the subject.  I’ll accept that there will be an agenda, but I’ll get information which I don’t get from the man in the street.  That is what I want the media to supply.

But yesterday I got some really good information from an interview with a man in the street.  The question was about the Labour government and the first response was:  “Labour?  Are they the ones in power at the moment?”

Thus is the strength of democracy.  This man has just as big a say in the running of this country as I do.  Perhaps the only difference is that I will vote and I’ll put money on it that he doesn’t.

All the debate leading up to the election is on sophisticated economic measures.  Little of it seems to be on any other topic.  Will any of that even reach that man in the street let alone be of interest to him?  There is little chance of him putting himself in harm’s way on the debate.

Yet he probably contributes more to this society than I do.  His reward is the same amount of say in government as I have…yet in my constituency if they put a jar of marmalade up as the candidate it would win provided it was Conservative marmalade, so I have little say.

It is obvious: you can fool most of the people most of the time and for many of them no effort is required whatsoever.

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If it looks, like a duck, waddles like a duck and quacks like a duck it must be a…cut.

Posted by chrisrick13 on April 12, 2010

It is obvious: it is not easy to work through spin.

I had hoped long ago to move off the economy on to education, which I have barely touched, diets, motorway driving, stamp collecting, the fluff down the back of my chair and other much more interesting topics.  Alas, I am back on the economy again.  If I can just get it out of my system…

The debate between cuts and efficiency savings continues with less furore, or maybe a lack of media interest.  They amount to the same thing, but few seem to realise that.  We are now into debates between direct taxation (income tax) and VAT.  There are threatened VAT rises, income tax rises, tax cuts and, of course, the tax that is not a tax NIC.

I am tired of those debates as they are all different views of the same thing.  In order for the UK to reduce its deficit (the amount extra the government spends each year over its income) and one day its debt (how much the government (us) owes other entities) we have two options.  Either we make a lot of stuff that other countries will queue up to buy off us, or we spend a deal less than we get in from other people.  And that last phrase is the key to understanding what is happening.

We can cut government spending and the result is that a lot of civil servants will be without a job. They will go onto benefits and are a good deal cheaper to run there than on a salary in an office.  As a result many other people and companies will lose jobs and contracts, and, instead of living off the salaries of civil servants the people will go onto benefits.

The tax income of the government will be drastically reduced.  However so will the amount it pays out.  As the processes no longer function, the inefficiencies in those processes are also lost.  Economic activity in the country reduces.  What it means is that a lot of people have a much lower standard of living enforced on them but the government will spend a lot less and go into surplus even with reduced income.

It is very lumpy though.  The person who loses his job on £40,000 a year in the NHS goes on to £5,000 a year benefits.  Also the approximately £40,000 a year providing a desk and an office for that person and all the other requirements also go.  For the person who didn’t lose their job nothing changes.  The only change anyone notices is that the person was a sister on a ward, and with all the other lost staff the hospital closes a ward. A number of people get kicked out of hospital beds who otherwise would stay there and some die as a result.

The recovery is choked off.  Hold on a minute what recovery?  This has not choked off a recovery, it has brought our government income down and the expenditure down more.  We are on our way to economic stability.  So what if a few people die when they could have lived.

What has happened is that the people who work making things for export are unaffected.  They are still busily building and selling stuff abroad.  Indeed, nobody leaves and all work very hard because there are 300 people queued up waiting for their job.  Any time someone retires or dies from overwork, the replacement is the best out of a choice of several hundred.  He used to earn £40,000 a year and is now on £5,000 benefits.  He will happily work for £20,000 when the retired (dead) person worked for £30,000.  It is a virtual circle or improved efficiency and quality for lower cost.  We are taking big leaps to the bottom.  (Dollar a day.)

 Do not worry about choking off a recovery we are merely stopping self-delusion with cuts (or tax increases).

So what about the lumpy nature of cuts?  There is another way to smooth it out.  Everyone can take pay cuts.  That is an easy one to sell.  We’ll all do that won’t we?  The government can increase well targeted tax increases…and then hold the line on public sector pay rises.  Then we can share the pain around.  There will be some losers and gainers but they cannot all be catered for.

What about the 20% who hold 80% of the wealth of this country?  I really don’t know.

We are close to the point where we can choose our pain or someone else will choose IT for us.  Sadly most of the people in this country do not realise that.

It is obvious: it is not easy to work through spin and the reward for doing so is often not great.

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How many angels can dance on the head of a pin?

Posted by chrisrick13 on April 9, 2010

It is obvious: numbers do not lie.

If the government is to spend £168bn more this year than comes in through taxation then the money will have to be borrowed.  The interest on that money next year at current rates will be £7bn.  So a £7bn cut this year just means that we will need the same borrowing next year to stay put.

What does it mean for next year?  It is obvious: a £14bn cut just to stay at the same borrowing level.  The current government plans propose to take us to double that before the deficit is reduced by half.  Interest payments will be 10% of income and still we will be borrowing.  The visible debt will be three times the income.   The trap is already sprung.  Now we not only have to cut spending to stop increasing our debt, we have to cut to pay the interest.  If we cut so that outcome = income then we will be lurching along under the current burden for as long as we care to.  If we cut spending just a little further we will be lurching along under the current burden for a long time (rule of 70).  If we cut spending a lot then we will pay our debts and have taken big steps in our race to the bottom –  live on a dollar a day.  Lets get used to living at that level now.

It is obvious: numbers do not lie, ever.

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