It is Obvious

Chris Rick has got altogether too much to say

Archive for August, 2011


Posted by chrisrick13 on August 31, 2011

It is obvious: a lot of pieces are falling into place

Remember: one is not a good sample.

It was about 24 years ago that I would, foolishly and far too often, bundle up the family with three young children and drive into Croydon of a Saturday morning.  We would fight to park and then fight through the crowds to find a cafe and finally wander the shops spending money on things we did not want or need.

I came to my senses, eventually, and I have barely been there over the intervening 24 years.  Much has happened.  The Whitgift Centre was covered over making it into a pleasant place to shop, with a lot of varied stores – you could get just about anything there.  The Debenhams across the high street became another shopping centre with expansion.  The Drummond Centre was built next to it.  An old furniture store was turned into a cinema complex.  The high street was pedestrianised.  The tram was built that ran to two stops at either end of the high street.  A lot of smaller investment was made into shops, cafes, and restaurants.  Definitely investment had gone into the centre and it was a much improved place.

But bad things also happened.  Allders closed because it simply did not sell what people wanted.  Perhaps the culmination was the burning down of Reeves Corner on the edge of the centre in the riots last month.

The council contributed.  Having run out of money it opted to sell cash generating assets and use that money to pay bills over the short-term.  It effectively took income for the next 100 years and spent it over 3 or 4 years.  The reverse of PFI.  Much like a sinking fund.  Of course it was a Labour run council.  One of the assets that they sold was the car parks.  They also insisted that the car park fees be raised to discourage people driving into Croydon.  After all there was a tram to get people in.  However the predominant shopping pattern now is that for anything beyond a pint of milk and a loaf of bread, people drive to the shop, throw their purchases in the car and drive home.  In the past I had not taken my car to Croydon because I couldn’t find a space.  Now I don’t go because of the cost, but when forced to, I park in an empty car park.

The result is that the centre is ‘owned’ by large numbers of pushy youngsters with loud music, lots of shouting, littering and what I can only describe as threatening behaviour.  Along with all that discouragement for shoppers there is the dreadful state of the economy.  More than a third of the ‘units’ are closed.  Many of those that are open are new and destined not to last long.  The centre of Croydon is dying.  There is nobody there.  I wonder if that pattern is being repeated throughout the country: large investment in city centres that now has no return?

It does affect me because I pay council tax.  Sorting out the centre will be paid for by me.

It seems that wherever I look I can see things that, with hindsight perhaps, were done poorly.  All of our past mistakes seem to be readying themselves for retribution in the near future which will need money.  The past generation can’t pay, the next generation won’t pay (and can’t if they are not in productive employment).  It is up to my generation, yet many of them are not in any position to pay.  The government wants us out there spending to save the economy.  If we don’t spend it then the government will soon take it off us.

It is obvious: a lot of pieces are falling into place and I don’t like the look of the picture that is being revealed.

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I’m unemployed (8)

Posted by chrisrick13 on August 31, 2011

It is obvious: they have won

I went in, for the last time, and told them I could not sign on in two weeks as I was on a training course.  So I was told I had to sign off.  I complained and was wheeled in front of a manager.  A nasty woman.  She repeated the words.  I said that I was engaged in activities that were designed to get me a job.  She smiled derisevly at me and said the problem was that I was not available for work.  I said that I didn’t have a job but if one came avaialble I would instantly walk out of the course and start doing it.  She was horrified: “What about the people who paid for your course?”  “That would be me,” I replied.  She sat back, “you have to sign off”.  I told here what I thought of her organisation.

Following that I got 6 letters from the Job Centre.  This was the paperwork required to take me out of the system…and to keep Job Centre staff busy.

So now I have reduced the job seekers count by 1.  When you see the count on the news, remember to add 1 to it as I am still job-seeking.  In fact given my experience you probably need to add 1 million to it.

It is obvious: they have won…they always do.

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Read all about it

Posted by chrisrick13 on August 30, 2011

It is obvious: it is easy to sell newspapers

Step forward the headline writers of the Daily Express.  Today just about all that they could squeeze onto the front page of the paper was the headline: House prices to rise by 21% over next five years.

I might try for something equally as significant: the sun will rise in the east tomorrow.

Given that there are a lot of people out there trying to predict this sort of thing and can’t get it right when they are predicting tomorrow, I wonder where they get their certainty from over such a huge timescale.  The implication though was that it was good news.

So investigate the numbers a little more.  Inflation is at 4.5% if I choose the governments preferred measure that does not include housing costs, will it be higher or lower over the next 5 years?  Assume the same.  Then over that period the value of money will have decreased by 24.5%.  Not such a catchy headline is it: Value of your house to drop in real terms by 3.5% over next five years.  If you add in repairs, maintenance, insurance and council tax then you could put in a sub-heading: And you need to spend £16,000 over that time for an average house to keep it in decent shape.

What prompted this big headline?  I am not going to read the Express to try and find out.  If I was a conspiracy theorist then I would say it was some vested interest trying to keep confidence in the housing market high.

It is obvious: it is easy to sell newspapers – just shout loud, content is irrelevant

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Buddy can you spare a dime?

Posted by chrisrick13 on August 29, 2011

It is obvious: we all follow the rules

EU rules state that member countries are not allowed to run a deficit of more than 3% of their GDP.  We all know that.  What country would have the temerity to break EU rules?

Well, 15 of the 17 do.  The two exceptions are the economic powerhouses of…Luxembourg and Finland.

So who is going to help who in the EU?

With low growth who is going generate any wealth to have the ability to help delinquent countries…and why would they.

It is obvious: we all follow the rules…when it suits us

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Posted by chrisrick13 on August 27, 2011

It is obvious: you can make accurate predictions about the economy

The first two quarters this year saw GDP growth at 0.5% and 0.2%.  Of course you have to remember that in the last quarter of 2010 the economy shrank by 0.5% due to it being so cold and in the second quarter this year, grew by only 0.2% due to it being so hot.  These figures are not that accurate or useful.  They do give a relative feel for things and have a large effect as so many people act based on that headline number.

At the moment the treasury prediction for UK growth stands at 1.7% for the year.  The quarterly figures cannot simply be added up…but it is close enough.  So for half the year GDP growth stands at 0.7%.  This implies that over the second half of the year the economy will grow by 1%.  We will be doing better than in the first half of the year by a considerable margin.  Have a look around.  Do you think that we will be doing more in this half?  The US economy is, frankly, in a mess and slowing.  Europe has its own super crisis and is slowing.  These two represent our major trading partner…the opportunities for exporting.  Inside the economy the government is lurching round to spending less, but has yet to achieve that, everyone is saving like mad (except me).  Is there going to more of the enemy, growth, in this half?

If we matched first half growth in the second it would be positive proof of miracles.  1.4% is extremely optimistic.  The treasury publishes an average of independent forecasters’ predictions which is 1.3% at the moment, which gets closer to realism.  1% growth for the year is an extremely optimistic forecast.

So sit there a moment and think of the obvious.  What does your estimate at growth come out at?  Why do the Treasury and BoE estimates never come out low?  Why can they never do better than even the ‘man on the street’?

The Treasury average for independent predictions of inflation is 4.5%.  At the moment it is 4.4%.  This is more difficult to predict as what is being measured is very hard to tie down.  The BoE predicts that it will reduce…which they have said for some time now.  However as they are carrying out policies that will increase inflation either they are lying or they are expecting deflation to come out of left-field and won’t tell us what it is.

Given the generous interpretations of such terms as ‘temporary’, ‘medium-term’, and ‘2% inflation target’ I want to make a prediction:  England to win the world cup in 1966.

It is obvious: you can make accurate predictions about the economy relative to the performance of anyone with a vested interest

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My dad

Posted by chrisrick13 on August 27, 2011

It is obvious: we all have one

Give me the boy and I’ll give you the man came from Francis Xavier and is a chilling commentary on the power of indoctrination.  Yet we all do it.  We have our children for more than the seven years that he required and inevitably shape the adult.  But I was too busy with the mundane activities of earning money and just getting them safely to adulthood.  So my indoctrination was only the rules that I lived by being required of them.  Where did I get my rule-set from?  From my dad, and where did he get his from?

When I go out I put rubbish that I generate in my pocket or in my bag.  At home I dump it in the bin.  Been doing that for 55 years.  So do my children.  Suppose I just cast my litter on the pavement where I could not see it?  Then that chain would be broken.  Easy to break and I can’t think of how you might re-forge it.

Walking with friends last weekend while putting the world order back on course I had cause to mention things my dad had told me.  I’m sure there are more but 4 immediately came to mind:

Never get on or in anything that does not have a steering wheel and brakes.  His concern was with horses, donkeys and camels.  However I would extend it to airplanes, skateboards and things that float.

I have no money worries…I have no money.  He worked hard all his life, an engineer of considerable expertise.  He worked as a civil servant for the army.  So when he stopped working with precious little money he had a pension.  Being home drove my mum out to work so all-in-all things worked out quite well.

Money will not make you happy…but you can be damn comfortable in your misery.

Never force anything.  This one works very well for me.  However it is not complete.  I watched him many times and then eventually after watching him free a seized nut with a chisel and very big hammer I posed the question and he added the important words:  unless and until you understand it completely.

Those four have served me well and I wished I had paid more attention to the second one and its implications.

It is obvious: we all have one…and they are with us long after they have gone.

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Holiday time

Posted by chrisrick13 on August 20, 2011

It is obvious: I have been away

At some point along the way I’m going to be able to say: I told you so.  What I find intriguing is how the public perception denies the obvious but gradually swings around to different positions.  I remember outright denial of a double dip recession not so long ago.  Now I hear the groundwork being done to prepare us for one.  Latest is the BoE giving low odds on one happening.  Given their previous performance on forecasting this makes a double-dip an absolute certainty.  Of course it is…it always was.

I have been drawn by the debate on taxation which brings me back to the prostitute’s question or the house price question.  The Laffer curve is an example of this.  It simply says that if the government taxes at 100% then it will get no income as nobody will have any incentive to work.  If it taxes at zero percent it will similarly get no income.  Therefore there is a rate in between which maximises the government’s take.  The Laffer curve is by no means universally accepted.  It provides no useful data.  What it does do is to give an insight into the fact that increasing taxes does not necessarily increase government income.  Indeed for every point on one half of the curve there is a point on the the other half that yields as much income for a lower tax rate!  Indeed for every point bar one there are at least two tax rates on the curve that yield more tax!  For a chancellor it must be heart wrenching.  The shape of the curve can be modified a little by ‘tax-engineering’.  I suspect that GB was attempting that all the time.

This is why I have an interest in taxing the rich.  I will define rich as anyone with more money than me – a view that everyone holds whether they admit it or not.  Should I tax a rich person so that he/she pays the same tax as everyone else or the same percentage as everyone else?  I think that if we all paid, say, 20% on everything earnt then I could go along with that.  The government would save a fortune in tax collecting fees.  Or perhaps a punitive rate is required of rich people for…having more money than me.

That then brings me round to maximising the tax revenue of the government.  If the government always acted in my best interest and spent my taxes efficiently for the greater good then maximising the tax take is obvious.  Do you believe the government is like that?  Do you think they are good spenders of your money?  I do not.  Perhaps as a good citizen I ought to minimise the money I give to the government, spend it efficiently on my own needs and live to a christian ethic?  I wonder that the likes of Buffet and Gates are not already doing that and doing it much better than the US government.  They pay less than 17% in tax but are in the process of giving away more than 50% of their wealth to charities doing good, efficiently in ways that count.  I think I trust them to do a better job than the US government.  I would be hard pressed to find someone I trusted less than Gordon Brown.

What of the ideal that we all pay the same tax or people richer than me pay more?  Perhaps if we moved to that state where things were all evened out we might discover that the whole pie was smaller so the net ‘richness’ of us all was reduced.  This could be because rich people gave up doing as much of the things that made them rich because there was little point.  This net reduction in richness might mean 1 hospital less, or 100 ambulances less, or 1,000 policemen less.  Then we can put a cost on taxing the rich that is counted in bodies.  Not such an easy argument then is it?

So are high taxes for rich people justified in terms of who can spend the money better or are they a way of punishing someone for being richer than me?

I wonder that the debate is on tax rates for the rich when it needs to be on what the government does with it, a question that will be much in our minds over coming years.

It is obvious: I have been away…thank goodness.

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Inside Job

Posted by chrisrick13 on August 4, 2011

It is obvious: you can do just about anything you want

I gave in and watched “Inside Job” yesterday.  It is a film about the 2008 crash in the US.  In summary I am amazed that not only are none of the architects of this crash in jail, most of them are still in post earning fortunes.  Particularly interesting are the cameos from LaGrande and Straus-Kahn given their recent activities.

I have refrained from comment on world economics and the media’s coverage of it over recent days.  There is just so much and I would be repeating myself.  This film has stirred me to return to the blog.  What stood out was the well documented consistent warnings of disaster handed out by many people that were studiously ignored by those with the power to do something about it.  Sitting here in 2011 it is obvious, with a huge dollop of hindsight that a disaster was not an ‘if’, but a ‘when’.

This brings me to today.  I notice that attention has moved away from Greece.  This is a country that cannot service its 340bn euros of debt that is now setting about running that debt up to over 500bn.  This is a country that needs remarkable growth to enable it to pay back its debts and has an economy predicted to shrink by at least 4% in each of the next few years, and, given the performance of that predictor in the past, probably needs that number doubling.  So the efforts of the European rulers and central bankers has been to create a problem twice the size of today’s problem in two year’s time.

The word I hear all the time is ‘growth’.  It seems that all modern economies (and economic theories) rely on growth.  As long as you have more money this year than last then you have money to repay debts and the confidence to take on more.  When growth stops then you have a problem.  You stop spending and your lifestyle becomes…ugly.  However your income is going down or staying the same as inflation continues apace.  Therefore you have to cut even more, borrow more, or spend savings.  For someone who been living within their means they start off by reducing the amount going into savings.  There is probably nothing in their budget to cut, so some long time later they start going into deficit and start to spend savings.  How much better for them to have had a long time to prepare.

So it is that most countries are cutting their spending so as not to borrow any more money and even trying to generate surplusses to pay back debts.  We can’t all do that at the same time!  Also they have to do it quickly as they have no reserves and are over-spending.

In a no-growth, or low-growth world there is no way to export out of trouble.  Reducing your wages to compete (a dollar a day) is just a race to the bottom when there already some fierce competitors sitting there.  Devaluing you currency is something everyone else is trying to do already unless you are in the Euro and cannot.

There is no easy, and more importantly, obvious way out.  Even if there were an obvious way I have little confidence our world leaders would choose it.

So what happens?  I don’t know.  The 1930’s is a good model.  1914 and 1939 might also prove good templates.  As an individual I could direct you to for the 31/7/2011 strip.  Failing that I return to an old theme of investing in yourself.  Perhaps a time has now come to learn some more basic skills as well those you currently have.  What I would also do is to provide a way of powering your electronic stuff for the duration of long power-cuts…but that is possibly too pessimistic.

You don’t need economics.  Just look at the scenarios and ask yourself the questions.  For example:  the UK has high and rising inflation, it has a deficit that despite government efforts is rising, it has a debt close to the point of a debt default spiral occuring, it has an economy with little growth that will optimistically dip in and out of recession for a long time.  What will happen over the coming years?  Cutting government spending certainly solves the money numbers, but it is inefficient.  You cut, say, 10% from spending and it shrinks the economy by 8%.  So to get to surplus from a deficit of 10% needs a 50% cut in spending.  Just lose the NHS and Social Welfare.  Need to triple the size of the police and the army though.

This is the situation in the middle of the country where a man in a fast car pulls up at a farm gate and asks the farmer leaning against it “What is the best way to London?” to which the farmer replies “Well I wouldn’t start from here.”

It is obvious: you can do just about anything you want – you just have to have the nerve.

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