It is Obvious

Chris Rick has got altogether too much to say

Archive for December, 2011

Goldfish of the world unite!

Posted by chrisrick13 on December 30, 2011

It is obvious: I can remember everything

This year Osama Bin Laden was killed.  Carefully buried at sea so as many of his followers as care to can visit his grave.  Does anyone remember how to spell Al Qaeda?  Can anyone name his number two or his successor?  The brand has gone.  The world’s press are no longer interested.  Not least a number of intelligence agencies have made joining Al Qaeda a poor career choice.

Do you remember the Euro summit on 26th October?  The Eurozone bailout fund was to be boosted to £1tn and China was to be asked to contribute.  Debt was to be reduced by…you know I can’t remember.  No ‘hair-cuts’ have taken place so far.  £109bn was to be provided to European banks.  We have had a summit since and I think it is accepted that everything agreed at a previous summit is abandoned at the next one.

Who won the FA cup, the Grand National, the Women’s singles at Wimbledon?  Who won X-factor (yeuuk).

Can you remember how much you paid for gas or Electricity?  How many hours did you spend watching television?

So what should you remember from last year?

It is obvious: I can remember everything I want to

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I want Moore

Posted by chrisrick13 on December 29, 2011

It is obvious: you can have anything you want

The first computer I bought to develop commercial software on cost £3,500 in the late 80’s.  It had 128k memory that I think I upgraded to 250k.  It had a 40Mb hard drive.  Yes, that was an ‘M’.  What might £3,500 devalued pounds buy you today?

The speed of technological advances are not a surprise.  It is simply when you get older and live through some that you can appreciate what has gone on.  I can go back another nearly 20 years and talk about the computing power at my university when I was an undergraduate.  You probably would not believe me.

Around about 2000 I bought a 1gb USB stick.  I remember it cost me £109.  A couple of weeks ago I bought a 32Gb stick for £27.  I only bought that because I washed my 16Gb stick.  It still works but I don’t trust it any more.  I had used about a third of it.  Now I have 32Gb I can record all of everything I have written in my life that I have a copy of (blogs, books, e-mails, programs, documentation)  I can also include the scans of all the certificates that the Rick family have gained in their lives.  There are a lot of these from the ’10 Yard under 5 hopping certificate’ to the much less useful PhD.  I can’t do all our photographs and videos.  I’m not sure about those so when the cost comes below £27 for a 64Gb stick I’ll grab all of them.  At 128Gb I can grab all the backups of all the computers I’ve ever owned.  Not sure I really need any more than the encrypted file of financial information and passwords, and the copies of my books.  This has changed my life.  I have everything I need to run my life in my pocket.

Alongside that I have a Blackberry.  I’m barely on top of it but the calendar function has also changed my life.  I make a point of putting everything into the calendar as the future commitment arrives.  Then every time I look at my phone I see the next 3 appointments.  Oh and it also makes and receives phone calls.

Earlier this month the Gadget show described a monitoring device that you can wear on your wrist.  I think it just does pulse.  It might do blood pressure but don’t know how it does that.  For someone in the gym every day who is trying to keep at about 2,500 calories intake and expend a few more this would be perfect.  It only takes the gym equipment, which now will take a USB stick to record what you have done, to talk to the monitor and you can turn over all the recording and calculating to your PC when you walk close to your router.  Still I’ll be old enough not to care any more by the time that arrives…or maybe not.

It is obvious: you can have anything you want a lot quicker than you might reasonably expect.

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I can see the future

Posted by chrisrick13 on December 29, 2011

It is obvious: predicting the future is easy

I have agonised over the last few days about making some predictions for 2012.  In 2003 the new year predictions were concerned with where the FTSE100 might be at year-end, could inflation be a bit up or down, would the price of oil be $10 higher or lower and other minor considerations.  This year it is whether the Euro will survive, will there be sovereign defaults, will there be a global depression, and even will the world economic system collapse.  It really is a different order of magnitude of the events and they are all ‘something bad or not events’.  None of them are ‘something good or not’.  The glasses are definitely half empty.  So I think I should try my hand at prediction as bad as I have been at in the past.  I think that the only thing I might do is to make you think a little.  Remember how much you are paying for this prediction!

Most of the countries in Europe have run up a lot of debt.  Too much debt.  The mechanisms do not matter but debt can be serviced with more debt as long as there is growth.  Next year there will be little growth in Europe.  Indeed there will be recession.

Most European countries have too much debt…by any measure you care to think of.  It has to be paid off and again the mechanism is unimportant.  So far the ‘people in charge’ have determined that the problems created by the debt can delayed until something better comes along by running up more debt by one sneaky method or another.  At some point there are no options and debt repayment (or default) has to begin.  That will happen this year.  Some country or bank somewhere will run out of money.

I cannot speculate what the consequences will be.  I think and hope that there will be a short and hard general reset.

This makes my prediction about house prices moot.  The average price of a house is about £165,000 the average UK household income is £26,000.  The banks used to lend out 2.5 times your salary to buy a house and, grudgingly, added in the salary of your partner.  That is a generous £98,000.  That ratio was chosen for good reason and worked pretty well for the long term average of bank lending rates.  It meant that your mortgage repayments were a manageable proportion of your income.  There are a lot of people with no job.  Salaries are not going up in line with inflation.  The ability of households to repay mortgages is what determines the price.  It is distorted in London by foreign buyers and various regions of the UK are in slightly different states.  The implication is that house prices will go down.  If there is a default then house prices will halve.  If not then the reduction will be quite small.  This is because sellers won’t and it is just those forced out or moving to something better who will.  So I think that in line with the 5% reduction in real terms due to inflation, the costs of owning a house and the 5% reduction in real price that the average homeowner will be paying £20,000 to stay in their house in 2012.

Inflation is expected to plummet by the Bank of England in 2012 – which means it won’t.  We may get a temporary reduction early in the year but it will be back at 5% at year end.

The price of oil is tricky as I think it works in concert with the world economy.  If there is a major world recession then the price goes down and economic activity picks up.  If there is global growth (not sure how that is achieved) then the price will go up providing pressure back towards recession.  I think that the price will be lower in line with my other predictions.  If there is a short dislocation then oil will be on major upwards march at the year end.

Is there anything else worth the effort of predicting?  Man Utd to win the Premiership.  Leicester Tigers likewise.  Rangers for the Scottish version.  Man Utd also look a good bet for the Europa Cup.

It is obvious: predicting the future is easy…getting it right is the tricky part (you saw that coming)

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Who do you want to be when you grow up?

Posted by chrisrick13 on December 23, 2011

It is obvious: I want to be remembered

The spelling in this entry will be variable.

Today they buried Vaclav Havel.  Someone instrumental in the removal of communism from Czechoslovakia.  A man of high moral standards and impeccable integrity.

As a consequence I want to list two groups of people.

First:  Saddam Hussein, Gadaffy Duck, Robert Mgabe, Adolf Hitler, Hausni Mbarak, Lauren Gbagbo.  An unruly bunch and you probably get the idea.

Second: Vaclav Havel, Mikhail Gorbachev, Winston Churchill, Nelson Mandela.

I have chosen the people carefully and they include one prediction.  It is notable that one group lost power when it was wrenched from them.  The other freely gave it up.

As a world leader, which group would you rather be in?  It is unseemly the way that people like Mgabe do anything they can to retain power.

It is obvious: I want to be remembered but I won’t have any choice in what I am remembered for.

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No Minister

Posted by chrisrick13 on December 20, 2011

It is obvious: a week is a long time in politics

Sir Humphrey Appleby had all the good lines in Yes Minister.  They were provided by the real politicians in their world of double-speak.  No politician can say ‘Yes’ or ‘No’.  Everything they say has to come with many fuzzy adjectives and adverbs so that in the future there is plenty of room to put an interpretation on those words that fits the way things have actually turned out.  The, almost, universal favourite is: never believe anything until it is officially denied.

10 days ago David Cameron did something unusual.  He also did something very clever.  He stood up and was counted.  More than that he either has some very smart negotiators advising him or he just acted on what, to the rest of us, is simply the ‘bleedin obvious’.

He stood against 26 EU nations at the Brussels summit.  He stood against the Labour party.  He stood against the Liberals.  He stood against the media.  What he did not stand against was public opinion and the inevitability of the situation.  His body language and facial expression showed the extreme pressure he was under, but he did it.

How things have changed.  There are 5 nations of the 26 that are starting to wiggle.  What is more interesting is the position of France and Germany.  French politicians and bureaucrats railed against how unjust it was that France should be on the verge of losing its AAA status while the British were not.

I have to break here to mention the debt management people in the treasury.  They have consistently pushed most of our debt into the long, long grass at very low rates.  They have given us a chance that if there is a huge economic dislocation our debt burden will come to call long after that dislocation.  They should be given medals.

Now German officials have started making peace offerings to the UK.  The British have said that if the Eurozone wants to do anything with 26 nations then it does it with officials and material that is not paid for by the 27 nations.  We have a bloated bureaucracy in Brussels and now they will need two.  Britain has said they can forget any contributions from the third largest EU nation that is related to the Euro.  They can also start to think about no contributions for the EU at all.  They can also watch an implacable enemy of any IMF involvement in bail-outs for the EU.

In short the UK demands at the summit were small…compared to the effects they would prevent.  However this in not right from the perspective of some nationalistic demand.  In total futility France was demanding of the markets that they punish the UK and give France an easy time.  All the UK did was to ask for safeguards for our major ‘industry’.  They denied us and cast us out on our own.  It is appropriate that we then act in the way that is best for us.  France are doing that and doing us down at the same time and they have been doing exactly that with the CAP for the last 30 years.  The hypocrisy of France is astounding.

What is more astounding is that so many people have attached themselves to the Brussels summit.  After the earlier 4 summits failed completely the percentage bet was on this one failing.  Apart from 26 EU leaders starting to look even more stupid and especially Sarkozy, three more people have foolishly criticised Mr Cameron.  First there is Ed Milliband.  I hope he is constantly reminded of his words of the last 10 days.  Add Mr Balls as well.  Then Mr Clegg who has tried to tread the line between not ditching the coalition and trying to hang on until the summit treaty unravelled.  He has made a good effort but I think not quite carried it off.

I read an opinion today that said you cannot solve a debt problem with more debt.  So far that is all we have had.  More and more are we being prepared for the Euro collapse.  It is no bad thing.  Do you pull a plaster off one millimetre at a time or in one quick yank?  I like mine over and done with.

It is obvious: a week is a long time in politics especially when you have backed the wrong horse.

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This Sceptred Isle

Posted by chrisrick13 on December 16, 2011

It is obvious: I was going to be an economist but instead started writing fantasy novels

When I was at junior school the atlases showed most of the world as pink.  They had all been printed some years earlier and pink was the colour of the British Empire.  We were one of the few empires to dismantle itself and not fight until ripped apart.

Now there is little pink on the map.  Do we need Johnny foreigner?  Or more accurately who needs who most?  We are linked through debt to most of the world.  The EU is our biggest export market.  That is what interests me.  Given that the EU sells much more to us than we sell to it do we care about being excluded from the European Market?

Can the UK, or even England manage without trade?  Or at least trade with the EU?  Of course we can manage in an insular fashion.  We are only selling stuff abroad now that absolutely nobody else can provide of the same quality at the same price.  As a net importer a trade war will do us little harm.  I won’t have my morning orange juice.  I’ll probably revert to drinking beer as tea, coffee and wine will become very expensive.  A lot of other things will change, but we will survive and probably do better than we are now.

Therefore I believe that the EU cannot do anything to us.  Being a thorn and extracting what we can from the EU while there is still something to extract will do us no harm.

I think I read today something that typifies the bureaucracy that is the EU.  The French presidential candidate tipped to beat Sarkozy in May has said that he will renegotiate the treaty agreed last week in Brussels!!!!!!!!!!!!!!!!!!  I know lots of exclamation marks are ungrammatical, but it knocked me back.  I wonder what is better: to opt out after failed negotiations or to opt in and then negotiate for better conditions just when everyone thinks the whole thing is done?  The French are acting to form and I don’t blame them for that.  Sweden has wiggled, France has pretty well said it will – how many more worms do you think are going to wiggle?  Portugal looks like it is not just going to wiggle but jump up and kick all the other worms in the line.

The French man is safe though.  The 26 and the new treaty will be an irrelevance by the time he has the helm.  He will not have to worry about it.

The other thing that I have done is to sample the CNBC news channel.  Full of exuberant Americans.  However it is interesting as they get a lot of financial people on as guests, ask them simple questions and get simple answers.  Yesterday a fund manager was asked if Greece would default.  His answer: yes.  The most useful thing is the consensus.  It is that the Euro is going to collapse.  The only thing missing is that they can’t come up with an exact date.  However when pressed none of them so far have got beyond mid-year.

I think 2012 is going to be interesting whichever way it goes.

It is obvious: I was going to be an economist but instead started writing fantasy novels – same skills

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Wiggle, wiggle

Posted by chrisrick13 on December 15, 2011

It is obvious: run for the hills

Already some of the worms in the EU summit line have wiggled.  Sweden is most notable.

It seems that the leaders of many countries agreed the deal last week, but subject to parliamentary approval.  I think they knew well they would not get it.  A gamble that is paying off and enabled them to stay under-cover as David Cameron took all the opprobrium.

This is democracy in action.  The leaders can agree what they want but the parliament will have none of it.  Except in Italy and Greece where that is not the case as they are no longer democracies.

I also notice that Greece is well into its rescue plan and has once again reported a worsening economy.  At some point the population will crack.  Italy has to follow.  I suspect everyone is running in fear of being rescued.

There were some big numbers at the summit last week promising money from many places.  (Not to fix anything but just to keep countries from defaulting for a little longer.)  From those places, when asked, there is a shrug of the shoulders.  China in particular has said they might lend money but first there are some conditions to doing that.  Does that not sound like the UK last week.  As the conditions are those that allow China to continue some of its shocking behaviour I expect the EU to tell them where to go (sic).  It seems that there will be a demand for £30bn from the UK!  Japan has said that it might help when it sees some action from the EU but can’t see any yet.  Most countries are not paid up to the IMF (the UK is) and this includes the USA.  There is little chance of extra money there.  In any even it can’t be used to prop up the Euro.

The plan from the summit really lacks all the features that identify something as a plan.  What has happened is that the summit has bought a little time, but not much

There will come a point of dislocation soon or the EU will act decisively and there won’t be one.  I see no action from the EU except an increase in the summit frequency

It is obvious: run for the hills – the good thing is that you won’t need to be there long.

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What do you mean

Posted by chrisrick13 on December 13, 2011

It is obvious: it is easy to fool everyone

I am so fed up.  Inflation is down –  says all the media I have looked at/listened to today.

NO IT IS NOT.  Inflation is still 150% more than the MPC target.  However inflation is up.  What is down is the rate of increase.  Inflation did not increase by as much as in the previous year-on-year…but it did increase.

I suspect that the difference between speed and acceleration is something that most people have difficulty with.  The same as the difference between deficit and debt.

A very similar state of affairs was recorded in the housing market yesterday.

To put that in perspective the following things are becoming less and less valuable each day: your salary, your house, your savings, and in particular your pension.

It is pain but not really very much yet.

It is obvious: it is easy to fool everyone.  What is interesting is who is doing it and why.

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Half a life?

Posted by chrisrick13 on December 12, 2011

It is obvious: my word is my bond

Shaun Richards has observed the half-life of summits and the words of our leaders.  The recent EU summit finished on Friday and there was a weekend of pause.

Today the Italian stock exchange is down 3.2% and bond yields are over 6.98% well on the way to 7%.  The half-life of a European summit looks like it can now be measured in hours.

Christmas is coming so much financial activity is closing.  In the new year there is a lot of bond activity required – whatever is happening now will be thoroughly tested in January.

What of the new European plan?  If they are lucky it will be in place much too late.  The plan does not fix anything.  It might help stop a default in the future but it relies on: don’t start from here.  It is fixing a problem that we are a step beyond, and it is not a fix anyway.  Does it qualify as a plan?

Mr Cameron may or may not have done the right thing.  However it will seem completely irrelevant in a short while.  It will soon be every man for himself.  The only possible chance now is radical and illegal action by the people in charge and central banks as problems hit.  The word I have missed out is ‘coordinated’ and I cannot see that.

It is obvious: my word is my bond unless I’m a European state/bank/politician/central bank then all I have is words and they are worth nothing

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My tea is sloshing about a lot today

Posted by chrisrick13 on December 11, 2011

It is obvious: I’ve got a short memory.

Think back.  Remember the £1tn rescue fund, the £109bn to banks and something else.  October wasn’t it?  No, I don’t remember either.

Remember there were 10 days to save the Euro…and the rest of the world.  No matter that the UK is not in it, but there is a deal.  It will be in place if all goes well by the end of March.  That is not 10 days.

What does the deal do?  I can’t remember much even though it was yesterday.  I do remember that it is to punish nations who borrow too much…by taking money off them.  I do know that unelected people are going to oversee and effectively approve national budgets.  Another major bit of democracy that is gone that at least is still under democratically elected control in this country.

Does the deal, that we are not in, fix any of the problems?  No.  At least the ECB is working hard to prop up banks with liquidity problems.  We are pretty well at the stage with the ECB rule relaxations, where if you are a bank you can empty a waste-paper basket into a plastic sack and deposit it as collateral at the ECB in exchange for a couple of billion Euros.

The same problems we had last week are alive and well this week.  If the Merkel/Sarkozy plan works then they will still be there at the end of March and the plan will keep them there for longer.  This is because something will come along and rescue the world economic system while they can-kick.  That ‘white knight’ is growth.  All the predictions I see have ratcheted growth forecasts down to close to zero.  I’m afraid Rick’s law does not handle the turn from positive to negative very well.  Maybe it needs modifying so that when the numbers get small enough multiply them by a factor of 10 and turn them negative?  Banks need growth or they go bust and we aren’t having any of that soon.

So as we watch the Euro sail off to its uncertain fate there is little comfort standing on the docks.  If the Euro goes, so does the pound.  The last government could have had us in a good state with, literally, money in the bank.  Then it could have been Cameron calling the shots with Merkel and Sarkozy as irrelevant side-kicks.  However it was a Labour government which means debt, and we are in a poor position.

I have heard that Cameron was comprehensively out-manoeuvred at the summit.  Just a minute.  Wasn’t that a summit to try to save the world?  Why would anyone out-manoeuvre anyone else?  Surely they were all pulling together to get the best solution possible?  Or were they all defending their own corners?  If so why complain because Cameron defended ours?

I once read that if you lined all the worms up that you could dig up out of a garden…that one would be sure to wiggle and spoil it all.  So it is with the latest plan.  Cameron has decided his deckchair needs to be in a position somewhere different to where the others want it to be.  How irrelevant that will seem as the iceberg looms up.  Will they have their chairs in place by then?

It is obvious: I’ve got a short memory.  Who said that?

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