It is Obvious

Chris Rick has got altogether too much to say

Archive for May, 2011

Hey! I’ve had a really cool idea…

Posted by chrisrick13 on May 30, 2011

It is obvious: a lot of companies have money problems

A number of year ago I (we) decided to buy a second home.  There were plenty of reasons but the main ones were:

1.  There had been a big slump in house prices and they were on the way up.  I thought that it would be that way for some time to come.
2.  I had been ill and did not really know what my work situation would be, so rather than expanding the house-size that we lived in we could get a second and could sell it if we couldn’t support it.
3.  It could earn its keep as a holiday rental and we could still spend time in it.
4.  For some reason I was nervous about giving lots of money to pension companies: give us lots of money and at the end of 30+ years we’ll give you some back…honest guv.  I thought that diverting some pension money into another property meant that I could actually use it and live in my pension.

We did it and, roll forward 15 years, it is the best thing we have done.  We can spend time in Dorset and each year it does not cost us much at all.  At the moment we have an, unrealised, potential capital gain that far exceeds what pension payments might have given us.  Should have sold it a while back, but we like it too much.

When we bought it we got a mortgage from Nationwide.  Told them what we were doing and for 15 years all has nearly been OK.  I paid off at an accelerated rate to shorten the loan period.  Then I paid off a lump sum for which they charged me £90.  I know that they did not incur £90 of costs, but I guess that I was not keeping to my original agreement.  I now owe £127 on the mortgage and my payments are £1.67 a month.  To pay it off early will cost me £127 plus the £90 redemption fee.  I keep it on as it provides a simple way to re-mortgage or mortgage another property.

Last week I got a letter from the Nationwide.  They have noticed that I am dealing with the mortgage from a different address to the property that the mortgage was taken out on.  If I am letting it out they want to know and charge me £50 to record that in their system.  They also want to increase my mortgage rate by 1.5%.

As you might imagine I am incandescent over this:

1.  I told them that I was going to rent the place out when I took the mortgage 15 years ago.  I am disinclined to pay them £50 to record that fact now when I told them a good while ago what I was doing.  If they don’t have it in their system that is not my problem, nor my cost to re-record it.  Indeed I am thinking of charging them for my effort.

2.  The mortgage is on a property that earns an income unlike a mortgage on a home that does not.  It has long been my understanding that the interest rate on a loan is strongly correlated on the risk associated with the loan.  That includes the likelihood of default and the assets tied to the loan that can be used to repay it should there be a default.  On a £300,000+ property with a £127 mortage that earns over £12,000 a year I might have thought that my interest rate would be quite low based on risk?

3.  Why am I being singled out for special treatment just because I happen to have two houses?  I only have a mortgage on one of them.  Maybe I live in my main house in Dorset when I can and have an apartment ‘in town’ that we spend our time in and use that address for all the management of our affairs?

No, someone in head office has had a bright idea about ways to squeeze more money out of people who can jolly well afford it.

As you might imagine, I spoke to someone at the call centre.  Their letter had talked about letting the house out.  I asked them what their definition of ‘letting’ was.  She did not know.  I explained that I rented it out, but otherwise we lived there as much as we could (not very much, but still as much as we could).  She kept going back to the mortgage people and coming back with “don’t knows”.  I asked her how I was supposed to make a judgement about my declaration to the Nationwide based on a technical definition that their own experts did not even understand…she did not know.  She suggested that I wrote a covering letter to them.  I fiercely remonstrated with her.  Did she think I was unemployed with nothing better to do with my time (sic)!  I lost it and said that I and my family was withdrawing all out money from the Nationwide and I would start by putting some back in and paying off the mortgage in full…now (idiot).  Not easy to do this it seems, but she entered into her system to pay £127 plus £90.  It came back and complained that it was a sum greater than the mortgage and would not let her do it.  Bah!

It is obvious: a lot of companies have money problems, but why do they all seem to queue up at my door for money to help them out.

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…and again

Posted by chrisrick13 on May 26, 2011

It is obvious: they never let up

My wife is a teacher who specialises in children with speech and language difficulties and literacy problems.  She not only teaches children but also teachers how to teach these children.  She is somewhat of an expert and, having been made redundant at the the end of April, starts her new job on Tuesday with a hefty pay-rise.  I resigned from my job at the beginning of May so I just need to keep her in good health and well motivated and I can avoid ever needing to work again.  I can get away with this as she does not read my blog.

The reasons why children have the difficulties that she deals with are many and varied, but one of them is autism.  Indeed, as she explains to me, autism is not a state there is a scale which we are all on.  Most of us are close to zero, many are well along that scale.  There is a point where you can be declared ‘autistic’ and there are a few people who are there and beyond.

A while ago she came home with a test that she asked me to take.  There were 50 questions about me and my attitudes and thoughts.  I dashed it off in no time at all.  It is only a rough guide, and I forget the exact numbers, but if you scored more than 28 you could be classed as autistic.  I passed the test scoring 34.  Alas, this did not elicit any special treatment from my wife – I am derided and bullied much as I always have been.  I understand that I am what is called a functioning autistic: I am smart enough to simulate acceptable behaviour.  I passed the test on to a number of my friends.  None of them scored as high as me but I seem to remember that they were all pretty close to autistic.  They are all brighter than me so they are probably functioning.

I declared to them that I was going to work on a virus that killed anyone with an autism score of less than 30 (allow a little margin for error) as a way of solving the world’s problems.  To which one of them responded (Mark) that I shouldn’t bother as there was bound to be someone out there with an autism score of 48 working on a virus to kill people scoring less than 40, and with that level of autism he would be much more likely to succeed than I would.  This is because people with autism tend to be very single-minded and persistent.

When I was younger we didn’t have a shower.  I used to have a bath (once a year whether I needed it or not).  When I got to 18 I was playing a lot of sport and either lived in rented places or had a home of my own where there was a shower.  So for 40+ years I have had a shower every day and on many days 2 showers.  Certainly in excess of 14,000.  A few of months ago I became interested in the process of showering.  A bit late in the day you might say.  I saw a film many years ago about soldiers in Vietnam.  One of the medical staff advised them to wee on their feet while in the shower as this reduced the number of foot infections dramatically.  Up until then I had assiduously always wee’d before I got in the shower.  Suddenly I had a dilemma.  I will keep my resolution private!

However after 40 years without thought I had noticed that I could buy shower gel with a brand name for about 10 times the cost of gel without a name.  As I have mentioned before, there is no comparison unless you are comparing like with like.  So I set about measuring how big a blob on my hand was enough, and just enough, to get a decent shower.  Definition of ‘decent’ does not matter as it is a constant as I apply it.  My measure though was that I was clean enough that my wife did not complain about a nasty smell around the house.  I found that the blob was the same size for both types of gel.  By this measure of buying cheaper brands and instead of just filling my hand with gel but squirting quite a small blob of a size that I am now familiar with, I am saving myself at least £50 a year.  I also note that I tend to shower for less time as there is not nearly as much foam to wash away.  This is saving me quite a lot on hot water as well.  (Foam is like tracer bullets: they do no damage but tell you if you are actually hitting what you were aiming at – foam does no cleaning.)

The other day I had run out of gel and could not see any of the cheap stuff.  I notice that quite often they have run out of cheap stuff on the shelf which is why I keep a small stock of all cheap stuff at home as it means I can last until the next time I am in the shop and do not have to buy an expensive one.  (Probably this is another deliberate policy: get you in for the cheap stuff, but often run out so you will buy the expensive one.)  However I had had a long run of gel not being available and my own store was gone: I needed gel.  I bought the biggest cheapest bottle I could find which which was Natursan.  When I used it I discovered that it was colourless.  This made it very difficult to measure my standard blob in my hand.  Now their advertising is that it is ‘natural’ with no funny colourings.  I went on the internet.  Here I discovered from several sources that it is a deliberate policy as we will always put a bit more in our hands to make sure we have enough and by being colourless we err even more to excess meaning that they sell more.

It is obvious: they never let up – do I have the energy to keep going?

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Hold on a moment while I kick myself

Posted by chrisrick13 on May 21, 2011

It is obvious: there are other things in life

There were 3 significant events in the progress of man: the discovery of fire, the invention of the wheel and the invention of the dishwasher.  We have had one for 30+ years and it has transformed my life.  “For hands that do dishes”  Bah!  Not done a dish for as long as I can remember.  It was the smartest thing I ever did.  It has given many hundreds of hours of my life back to me to dispense with as I wish.

There was a time when my wife and I started buying rinse aid independently.  There was, in both of us, a thought that we would soon run out and a bottle was bought.  Eventually we realised and what was happening and have not bought any for a good long time.  During this time my one task has been to fill the dishwasher with salt.  I’ve not bothered to look into why it has to have it or whether I can put it on my dinner.  However I regularly buy a bag.  Then I get on my knees and struggle with the cap to the hole where salt goes.  It is always stiff for some reason.  then I snip a corner off the bag, hold it by another corner and pour it into the hole.  Inevitably I spill some on the floor of the machine, but that seems to have little effect on the next wash.  Then I pour until the salt is almost coming out of the salt-cellar.  I spill some more as I stop the pour and screw the lid back on.  Then I stand up with the satisfaction of a job done if not well done.  I am standing there with maybe a tenth of a bag and awkwardly look around the kitchen wondering what to do with it.

WHAT!!!!!!!  For 30 years I have never got a bag of salt into the washing machine.  I am constantly buying in an amount too big for the machine.  This just supposes that I can precisely judge when the cellar is empty.  A lot of the time it is not empty when I gor for a refill.  It has taken me 30 years to realise how easy it would be for the salt sellers (sorry) to put, say, a third less in the bag.  Then I can happily use all the bag every time.  But no.  Why?  It is very obvious.  This way they can sell more.

I have, after the aforementioned 30 years, beaten them.  I have a container with a spout.  When I buy salt the bag is emptied in here – it is well big enough.  Not a crystal is wasted.  When the light comes on to say salt needed I spin the top off, pour a decent amount in and put the top back.  Not a single crystal lost.  I no longer have bags lurking under the sink with snap grippers, just a smart container.

It is obvious: there are other things in life.  Why do they do it to me?

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The storm has not passed us by – we are in the eye

Posted by chrisrick13 on May 20, 2011

It is obvious: house prices are on the move.

The two guys who renovated the house next to mine have dropped the price.  A flurry of viewings…and they are going to start renting it at the beginning of June.  They have followed the market down, as so many of us do, had they offered it at today’s price 6 months ago it would have sold and they would have had fewer costs over the last 6 months.

Today I hear that the average first time buyer is aged 43.  It was amusing to listen to pundits (not trusted to the man in the street this time) saying all the reasons why first time buyers are so old.  I remember when I graduated all my peers got a job (sic) and bought a house.  They were all just in time to catch the boom created by the Barber budget in 1972.  I cleverly stayed at university and missed it.  They were all just half that age.

I also heard that the number of mortgages is down.  This is no surprise and is linked to the age of the first time buyer.  Huge deposits are required that not many have.  Not many are that confident that they will have a job to support a mortgage over 25 years.  Inflation is making the finding of the monthly payments hard as wages fail to keep up with inflation.  Nobody believes that houses will rise in value.  Some even foolishly believe that the MPC will stir into action and raise interest rates – don’t worry.  Indeed with real inflation at over 7% the average house needs to increase in value by £11,000 a year just to maintain its value.  Instead they are drifting down, already off their peaks by more than 10% in absolute terms, much more in relative terms.

What will happen to house prices?  It is a market and is a market where the trading pattern has changed.  If there is no demand then the price will fall until there is, much as for any market.  It does take time as for most of us it is our home.  As long as we can pay the bills then we can just sit there.  The problem comes when people die and when people get kicked out for not paying their bills.  The houses are set adrift on to the market and a bunch of sharks are swimming around ready to snap up unconsidered trifles.  A market bottom is quickly found, maybe even a Brown’s Bottom.  But this market is beset by ‘chains’.  Long lines of people selling their house and buying another.  At one end are people getting out of housing.  They are dead, going into a home, leaving the country, and, increasingly, forcibly being booted out to rely on the state, their dreams shattered.  At the other end are first time buyers except that the 21-year-olds of 40 years ago are choosing not to join any chains.  That means that we have a 20-year gap to bridge.  Everyone sit still and don’t die.  The market is changing its shape.

This is a spiral that a lot of vested interests have been trying to prevent starting.  Major intervention is powerless against market forces, words can at best slow or delay the start, nothing can stop the march of time.

It is obvious: house prices are on the move – the direction is down and I can’t see the end of the slope no matter how hard I try.

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It’s cold out today

Posted by chrisrick13 on May 18, 2011

It is obvious: there is no energy shortage

The deckchairs were out in force for re-arrangement at the Rick household at the back end of last year.  We had converted our house from a nest with 3, ever open, squawking mouths demanding food and attention to a home of peace and tranquillity.  Not a mansion but plenty of room for 5 and room in excess for 2.  At this point the decision was made to put a conservatory on the back and thereby nearly double our living space.  There were plenty of places for me to hide from my wife – we didn’t need it.  Obviously there was an executive over-rule and it was built.

It was finished in December, but long before then the under-floor heating, don’t ask, had been turned on sucking cash out of my (our) bank account.  The conservatory is on the north side of the house.  It was mostly cold in there.

On March 16th things suddenly changed.  The sun now rose high enough that the conservatory came out of perpetual shadow and started getting sun.  It was particularly effective when we were both out all day.  Come home to a cold house in the evening, open the double doors to the conservatory and dump enough superheated air into the house to keep it warm all evening.  Even with the hot weather over the last few weeks it has been cool of an evening.  If we were in the conservatory during the day the outside doors were open, the ones to the house shut.  Then reverse that in the late afternoon and heat the house for the evening.

Our house has an integral garage with the door, nearly obviously, on the south side of the house.  I got the car into it once.  In there amongst a lot of ‘stuff’ is a fridge, freezer, washing machine, condensing dryer and central heating boiler.  Quite early on I put a drying rack on pulleys so clothes come straight out the washing machine and get hoisted up to the roof.  We hardly ever use the dryer because it is so hot in there.  It would be wouldn’t it, with all that energy being used on those devices.  But that is only a small part of it.  At any time of year if you clamber to the front and put your hand on the up-and-over car door it is warm.  In summer it is so hot that it hurts your hand.  The door is painted black on the outside.

All the time the sun puts a lot of energy onto this planet.  On the shaded side the earth radiates the same amount back into space.  If there were not that balance we would not be around.  There are small imbalances.  For example a lot of dead things have stored the energy that they incorporated into their bodies in oil in the ground for millions of years.  We are now releasing that energy into the atmosphere.  The system oscillates.

Trouble is that most of the energy that arrives at the earth is not in useful form and usually arrives at times when we don’t need or want it and in a form that we don’t want…except that conservatories and garage doors are good converters.  The conservatory is even a good conserver.

So we don’t have a looming energy shortage, we have a conversion and storage crisis.  For the first time in my life I am moved, by price, to put some serious thought into energy consumption.

It is obvious: there is no energy shortage, just a motivation problem…but that will soon be fixed.

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Another one bites the dust

Posted by chrisrick13 on May 12, 2011

It is obvious: you can get most of the people to do what you want most of the time.

I was going to say that everyone knows, but they can’t or it wouldn’t work, so, a lot of people know that the most profitable items in the supermarket are placed at eye height as they are the ones we look at most and will buy.  I suspect that where the item is gender specific that male items are a little bit higher than female ones.  There are a lot more ‘tricks’.  For example the stuff displayed at the end of aisles sells quickest.  I spend a lot of time in the supermarket on my hands and knees or painfully stooped over.  As an example I could mention fizzy water.  All the named brands are on the top shelves where the cost is about £1:80 for a litre.  At the bottom, and very awkward to get at, is the own brand fizzy water at 10p for 2 litres.

This is another trick of the supermarket that relates to negotiating tactics.  When I buy meat I can see that the cheapest pack is often the most expensive per pound…it is just packed a little smaller than cheaper cuts.  But it is not a lot smaller, just enough smaller to make it cheaper for the pack than for meat that is much cheaper per pound but in a bigger pack.  The problem with this though is that we don’t know what we are buying.  Before entering a negotiation always make sure that what you are negotiating is a fixed item and that you both have the same understanding of what it is.  Try asking a supermarket worker what the difference is between two chicken breasts of the same weight but different prices.

We end up doing what the supermarket wants us to do, and it wants us to maximise its profits.  At least, most of us do most of the time.  So it is with driving on the left in the UK.  Most of us do it.  There is a good reason and few want to test it out.  My father once told me he was not going to drive on the continent.  He had heard that they drove on the right and when he tried it on his local high street he found it too dangerous.  Society persuades us to drive on the left by the mechanism of self-preservation.  I’ll stop there before I get in too deep on motivation.  However the roads are full of subtle ‘tricks’ that encourage us to drive more safely than we might otherwise do…and some not so subtle ones.

There are a class of people who are very susceptible to this kind of manipulation.  These people are vulnerable.  They are victims.  I see them a lot, but I most often see them now in the news as suicide bombers or purveyors of terrorist atrocities that end in their deaths.  They are easily manipulated into killing themselves and others with them.  They deserve only our pity.

What of the manipulators?  These are people who see the world not ordered as they might like, who have decided that death and mayhem are the only ways to change the world to match their view of it.  They prey on these innocents and use them.  You never see the leader of a terrorist group leading by example.  They are beneath contempt.

So when I see that one is killed I rejoice.  There is a clear message being sent: sit safely in your bunker and send people to their deaths, but be assured that we will get you eventually, the next knock on your door might not be the groceries being delivered.  Have no doubt, the message is clear and effective to those who matter.

It is obvious: you can get most of the people to do what you want most of the time, and some of them all of the time.

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Finger in the air

Posted by chrisrick13 on May 11, 2011

It is obvious: there are a lot of good words

Today the governor of the Bank of England said that inflation would hit 5% and growth would be lower than expected.

Given that his sole purpose in life on the MPC is to get inflation to 2% you might think he would have something to say about this, but no.  Of course it is all due to external factors beyond his control.  So what about QE?  Every independent commentator I have read says that QE = Inflation.  There is a factor under his control.  However it is very obvious that external factors always have a big effect on a national economy.  It does not stop you doing something

He might say that it is difficult for him to control inflation.  I would agree 100% with him…and then listen intently to what he was proposing to do.  However he is going to do nothing!!!!!

Then I am perplexed by two words he uses: temporary and forecast.  UK inflation is temporarily above trend.  It has temporarily been above trend for 2+ years and will be above trend for another two.  So I think I need him to define temporary for me – I tried a while back.  Then I am drawn to the BoE forecasts.  At the moment our inflation rate is 1.2%…as forecast by the BoE last year.  These forecasts are drawn up at regular intervals.  What I would like to see is that at the end of each interval the graph is extended for another time interval from where it was last drawn to.  There might be minor corrections for reality matching forecast.  This is forecasting.  No.  What I do see is a complete re-drawing of the graph each time it is presented.  Each new graph is an admission that the previous one was rubbish.  I would laugh at this except that the government is acting and planning based on this information.

Perhaps the worst thing is that there are plenty of independent commentators out there getting inflation and growth right week, after week, after week.

It is obvious: there are a lot of good words, none of them adequate for the disaster being hatched.

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They get you coming and going

Posted by chrisrick13 on May 9, 2011

It is obvious: they do it

Last month I went to Durham for a funeral.  That meant it was an early start, a few hours in Durham and then come back.  We were not sure if one of both of us were going until the evening before.  I sat at the computer for nearly two hours trying to buy tickets.  At first I thought I was on the wrong web-site.  Clearly from the prices I was being charged, I was on a site where I could buy trains not tickets.

Eventually I got the hang of it and chose trains and times that gave me the cheapest journey.  The cost was £300 for two of us.  When I pressed the ‘buy’ button the page told me that it was going to try and get the tickets, repeatedly coming back and offering first-class fares at £600 each.  In the end we juggled departure and return times and got tickets for £400 for two of us.  Even that was a price that changed (upwards) twice while I was looking.

Is that cheap?  Certainly cheaper than flying and more convenient being dumped in the middle of Durham than at Newcastle airport.  What about the car?  A round journey of 500 miles comes out at about £65 for diesel.  I have already paid for fixed overheads but even if I include them it would be less than £400.  We would have had to leave at midnight to be sure of being there.

Bus was the best option…but we needed to travel the previous day meaning a night in a hotel and other costs.

So I guess that the train people about have it right.  A balance between the maximum cost possible where the convenience keeps you off other forms of transport.

Today the cheif executive of ATOC (train operators) was interviewed on tv about rail costs.  He gave the usual evasive interview.  I really don’t know why they bother, I could have done it just as well with no knowledge of train operating.  Then he was asked why the increases were 6% this year and what would they be next year.  He had an answer: it was a formula based on RPI.

WHAT!!!!!!!!!!!!!!!!!!

We now have two measures of inflation.  These are used selectively.  RPI, the higher, is used for charging to get money in.  CPI, the lower, is used to calculate money going out.  At least that is the way things are going.  For rail fares for example, which measure should we use?  I imagine that there is a good argument to say that we use the one that does not include housing costs.?  CPI.

It is obvious: they do it…because they can, everywhere.

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