It is Obvious

Chris Rick has got altogether too much to say

Archive for May, 2012

Excuse me while I throw up

Posted by chrisrick13 on May 29, 2012

It is obvious: for evil to prosper…

The UN security council can do nothing about Syria, or at least the people being killed there, because Russian and Chinese vetoes or at least the threat thereof in the UN Security Council prevent it taking action.

Russia and China wield their vetoes as they do not believe that external bodies should interfere in the  internal affairs of other countries:

Tibet …

It is obvious: for evil to prosper…only needs good men not to act

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Would you go to a politician for an idea?

Posted by chrisrick13 on May 25, 2012

It is obvious: do not focus on ideas


Skinning cats is messy.  That is why there is more than one way to do it.  Perhaps some new skills will be developed in this area soon.  I remember (not personally) that there were plans for a week of cat and dog burgers during the second world war…

The argument against economic austerity runs in two steps.  You are not spending enough money on hospital beds/policemen/looking after poor people/keeping old people out of sight/entertaining childern for 9 hours while I work.  A very selective list and one that usually headlines a small part of the whole: there are 3,000 less nurses (say) but there are over 300,000 people in the health service and more money is being spent than when there were 3,000 more nurses.  A deeper investigation is needed but there is no time for that in a headline or a PMQ.

There is a loud cry for the government to take action to create growth.  I’ve just started myself off…but I’ll stop before the rant.  The government will create growth by…?  Everyone has a ‘pet’ solution with no guarantee.  I would implement an idea if the proponent promised to hack both legs off if it did not create growth.  Bet there would be few proposals under that scheme.

Why would anyone think that a government would be good at creating growth.  They have no expertise in that area.  In general the people in power are skilled at getting power but not a lot else.  Someone go and fetch the cat.  If you are going to ‘do’ austerity then you can choose to spend less intending to use the excess income to pay down debts.  There is another way.  Here, pussy, pussy.  You can choose to grab less.  You can then show the reduced income and do an arithmetic reduction of budgets all round.  You could cut VAT and let the general population decide where growth might come from with what they decide to buy.  You could do much the same with taxes on the individual.  (But it is tricky leaving democracy to the people.)  You can follow through easily enough what happens.

How about putting the problem into the hands of the bunch of brightest, most energetic, most ingenious people?  There are a lot of them and collectively they have a much better chance of coming up with decent solutions.  Do simple things that encourage small businesses.  No employers NIC on companies earning less than (say) £20m.  No tax on profits for the same companies provided that half of the profits are invested (simple rules) in the business.  Free child care.  Anything else provided it can be described in less than half a page.

How do these measures help?  The government grabs less, leaving that money up to a lot of smart people to decide how to spend it rather than a few civil servants deciding.  It takes a while, but provided you can brdige it, the economy starts to grow as the businesses thrive.  The worst ideas wither the best grow.  The point is that there are a lot of them.  Many do work – the failures do not matter.  That is enough.

Do not let the political debate limit your thinking.  “Do you want a biscuit or a cake?”  Don’t limit yourself to thinking about biscuits and cakes, ask for an ice-cream.


It is obvious: do not focus on ideas, look for more ideas.

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Don’t tread there! The elephants are back.

Posted by chrisrick13 on May 24, 2012

It is obvious: nothing changes

Our economy is not in good shape.  During the time Labour was in power we had borrow and spend by both government and people.  The only exceptions were people like myself who did not borrow and spent less than they earnt…those earnings only occurring because of the borrow and spend by others.

Most of us were unaware.  The government was not. “No more boom and bust” and “27 quarters of continued growth” are words that should go down in infamy.  Those responsible should have the same fate as advertising executives, telephone sanitisers and certain company directors in Hitchhiker’s Guide to the Galaxy.

The problem is that with austerity, of which we have had little, which stops the debt getting bigger (eventually) and reduces it (eventually) the income of the government and therefore the ratios which determine whether it has sustainable finances rapidly deteriorate and the situation gets worse as lenders put up their interest rates to us.

If the government borrows and spends then the economy might grow but all that means is a bigger problem that is only a little further away.  We can see what happens as Greece is already there.  Indeed there are many believe that the government should do austerity during a boom.  Having done the opposite for many years the previous government have put us in a hard place.

Austerity is not working, ooops, will not work, when it happens.  That is a prediction not a fact.  What can the government do?  QE does nothing useful.  Dropped interest rates seem only to have increased bank margins as you can see if you take out a mortgage or a business loan.  All the governments initiatives seem to have little effect.

So what do we do?  Alas, I think nothing more.  Government cuts the spending.  Let the economy contract.  Put a safety net out for the people at the bottom of the pile (dreadful mixed metaphor I think).  Do we care if we lose a thousand gift card shops and the attendant jobs?  No.  The people who make Hawk trainers can still sell them to middle East despots – no skills are lost.  What is happening is that we are taking some steps on the race to the bottom.  We will be paying ourselves less.  There will be a reduction in living standards, but only from some aspects.  We gain competitiveness and, I hope, not lose ‘real’ jobs and the infrastructure to support them.  At some point the economy will stabilise or even grow.  A tricky result to get.  Alas, it won’t happen.

We are going to suffer pain and somehow the population has to be told and accept that there is a price to pay for the borrow and spend that we all enjoyed in the years of the Labour government.  (As much as the contempt I have for what was done by Labour I have no confidence that a Conservative government would have done much different or better.)

It is simple.  We can choose pain, get on with it and arrange it so that the pain is under our control and minimised.  Or we can each look after all our own interests and rely on pushing problems on to our children (when we will be old and infirm) suffering pain, where others choose the timing, severity and type.  As a rational creature I know which is preferable.  I also know what will happen.  Having gone through the logic I realise that there is little point in my howling into the wind.  Oh dear.

It is obvious: nothing changes until someone suffers pain

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My, you are a big girl Topsy

Posted by chrisrick13 on May 23, 2012

It is obvious: My onions are growing.

I have a lot of trouble with GDP.  How can I, by providing a service for someone else, increase GDP.  If he coughs and I slap him on the back he pays me a tenner.  I cough, he slaps me so I give him a tenner.  Has GDP increased by £20?  Surely GDP increases only when I start with something add my labour and sell it for more (preferably to Johnny foreigner).  This is economics and is beyond the remit of this blog which only does logic.  The logic is poor the economics non-existent.

Armed with Dr Bartlett and my prostitute’s question I can only laugh derisively at the increasing volume of noise developing around the word ‘growth’, mostly, applied to GDP.  The word is trotted out by politicians with lots of chopped logic and no questioning of where the growth is going to come from or how it is to be sustained.

Next time you hear the word ‘growth’ from a politician/banker/economist/man-on-the-street ask yourself the Tony Benn type questions:

1.  How will it be achieved?
2.  How long can it be maintained?
3.  What relies on it?
4.  What will stop it?
5.  What do we do when it stops?

Question 1 cannot be answered.  There is no growth tap that you can turn on.  All you can do is to create circumstances that you hope will cause growth to occur.  The trite phrases of the form “we will do x and we will have growth” need to be questioned closely.  They can hope/guess/expect but they cannot guarantee.

Question 2 is only applying exponential growth curves.  So that you can ask where it leads.  In 35 years 2% growth will double whatever it is you are growing.  Can you see that happening?  If not what will happen?

Question 3 needs asking because the continual search for growth and its costs need to be related to what is trying to be achieved.  We are trying to get 2% growth in the economy so that?  The banks can be kept alive.  We can continue to borrow and spend based on increased income being used to service the loans leaving them to paid off by future generations.

Question 4 returns to question 2.  You have proposed actions to engender it so what might stop it.  This might make them consider expending all natural resources or getting to the stage where we each have only a square yard to live in.

Question 5 is a horror for a lot of people, but a different way of living might not be that bad!  10 hours yesterday in front of a terminal I probably would have swapped for 10 hours digging in a field in the sun.

Within a finite system growth is necessarily limited.  On an exponential curve, within one doubling period you  use up as much of whatever it is (oil, water, iron, …) as you did during all earlier time.  When anyone talks of growth don’t just ask yourself the 5 questions ask the person talking or the person sitting next to you.  (I can’t do that as I would just get a slap from my wife so you have to do it for me.)  Follow the consequences of their statements.  It is very important.

One small thing.  If you think something is being used up with a short doubling time then if you acquire some there is not long before it will double in value.  Apocalyptic stuff like dried food might result in you staying alive.  Other things might result in you becoming a lot richer which could result in a longer or shorter life but certainly a more comfortable one.

It is obvious: My onions are growing.  They are about the only things that are, and I’ll soon put an end to that.

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Season start?

Posted by chrisrick13 on May 21, 2012

It is obvious: be prepared


The Horsemen of the Apocalypse (1st XV) will soon be trotting out for the start of the season.  Perhaps not, but there is a lot of evidence heading off in that direction.  I spend a lot of time trying to treat with the same contempt the views I hear propounded that match mine as those that don’t.  (There are some small islands of…I can’t think of a good word…sanity.  I’m thinking of Shaun Richards.  There are other sources that seem to have an open position and no axes in need of edges, but not many.)  Try as I might the apocalyptic views are more believable.  The evidence is best interpreted toward a dislocation.  Indeed that is a good analogy.  If you break an arm you are in plaster for weeks and there is some time before all arm function returns.  My wife dislocated her knee on Gatwick rail station after (luckily) a holiday and was rushed off to hospital where she lay on a bed screaming until a doctor tired of the noise and popped her knee back in.  We walked out and went home.  So it is with the economic stuff.  A lot of pain to come.  Everything stops until it is dealt with and then a rapid return to near normality.

The analogy continues to work.  So far nothing has been done to fix the problems.  There is a lot of lying on hospital beds and screaming.  The patient passes out from the pain but soon awakens to scream even louder.  Doctors know about knees but nobody has had previous experience of the crash…what do I call it…of 2008.  So I have some sympathy.  Also any  action would cause more pain before the relief and the people who did that would be forced out of power by a grateful electorate/media.  Given that there was no pleasant fix to the problem, no fix was ever likely and is still not.  We have to get to a point where it is obvious that there is only one course of action.  Then our leaders and bankers will take it.  Not before.

My concern focusses on money, cash, and its alternatives.  If I had retired and my major asset was pension money arriving in my bank account each month from some large insurer then I would be worried.  By the same token there would be little I could do.  Invest in myself would be the only option.  Be prepared for effort required to survive.  If I had assets (as I do) then there is a strong desire to make something of them should the value of money rapidly decline.  It is no different to a pension other than having control and the opportunity to do something, and then berating yourself for having that opportunity and not doing anything.

There is a fine philosophical question here.  Does putting money into a pension fund give you the moral right to live your life out in luxury based on the proceeds of that money?  How did that money act in the world such that it could thrive and grow to give you an income?  If you dig down a little the money likely funded a lot of stuff you might not want to be associated with.  Trouble is that practically everything you have done over the previous 40 years had much the same effect as well.

No matter I know what to do with my assets.  I simply have to find out what the people at the top are doing with theirs.  Where is Manuel Barosso putting his money?  What is the head of Barclays doing with his?  Monsieur Hollande has just been getting all the information in his first days in the job.  What is he doing with his money?  Maybe that is a little too obvious.  It has to be their wives/husbands, the family trusts, their business partners.  Does not matter, close to them the clues are there.

If I take the advice of those who are prepared to say something they fall into two main groups.  There are the members of the Horsemen of the Apocalypse supporters club.  They say buy gold.  There is another group who say to find companies that are strong and buy…but not just yet.  Even though many are good value there are more downs to come.  What is strong?  The meaning is best given by examples I have seen quoted and they seem to imply strong for this situation.  Tobacco companies are cited, though I will never buy.  (On the same basis I wonder if it is possible to buy shares in the Mafia?)  Others are those that can set a price.  This means near monopoly positions in things people need.  You want companies that have a value that will be retained in relation to the value of money at any given time.  Companies that are strong in other markets around the world are an obvious example…provided you can find somewhere doing better than here.  Utilities might qualify though they are subject to government regulation.  Telecoms has to be a big winner from the point of view of people not doing anything and not able to afford to get about!  Purveyors of cheap food points at MacDonalds.  My philosophical question still applies but damnit I’m not a socialist.

I have watched a lot of erudite people try to summarise the current economic problems.  The one sentence pithy statement: it is about debt, property bubble, trade imbalances, fiscal union without political union, fixed markets, and banking conspiracy.  There are enough of them all with a measure of accuracy that the short description is simply not possible.  However I did read a short statement, and I will not give my source, about what needs to happen in Europe.  It said that Greece will leave the Euro and its fate becomes irrelevant to us all.  Then Germany will have to pay all that is required to keep the Spanish and Portuguese economies functioning.  If that does not happen then the fanfare can be blown to get the 1st XV on to the pitch for the start of play.


It is obvious: be prepared – even if you are not a boy scout or girl guide

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Make Way! Home truths coming through.

Posted by chrisrick13 on May 20, 2012

It is obvious: I’m bored with Greece

The room fills up with elephants and naked emperors.  Outside the packs of Cassandras can be heard howling their I-told-you-so’s as they corner previous disbelievers.  On the street, walking becomes dangerous with vast numbers of people swerving rapidly through 180 degrees.  Traffic comes to a halt as vast hordes cross the streets claiming they were always on the other side really.  There is the sound of swishing and laughter as any number of cans are kicked at and missed or only dribbled a little way along the road.  The sound of thuds deafens as use of English experts leap out of high windows under the weight of so many clichés.

I have thought about the conspiracy theorists.  If I were a sufficiently powerful banker to be a conspirator with the likelihood of any effect I would already be rich enough that money was not a driver.  Power might be, but part of that is the knowledge that others know you have power and an anonymous banker can’t have that.  Governments might fit the bill, but  they have a conspiracy…it is called the manifesto.

I wonder at what might be said and how we have been prepared.  I don’t hear much of ‘Tory Cuts’ anymore.  The main reason being that there haven’t been any yet.  They are coming and will be brutal, but they have not started yet.  I wonder that at the next taunt that Cameron doesn’t stand up and say: Actually old chap we haven’t managed to cut anything yet.  Would the consequences of that truth be too painful?  He could certainly say that the previous captain set a course and tied the wheel in place so well that he hasn’t been unable to undo the knot yet.  Would that then just be incompetence?  Look at him.  So bad that he can’t yet undo the mess we created.  I would think him safe from that taunt.

Not that Cameron is not so bad at his own navigation.  Growth now seems OK for the Coalition.  They have managed to adopt plan B, austerity and growth, and got away with it.  There is no chance of growth but it is making it hard for Labour to find something to criticise.

What of Greece.  Default and exit.  I would hope that central bankers and politicians have been planning for it/them.  Perhaps the plans actually come out quite well.  “Hey!  Look at this.  It isn’t so bad after all.”  Then the idea moves up the levels of power until someone decides it is policy.  Perhaps just on the basis that they have failed at everything else so this can’t be worse?

Has a plan C been adopted by the conspirators in Europe?  Let Greece go and watch it die.  This is  showing the instruments to the rest of the PIIGS.  Keep them in line with the threat that it is where they will go unless they follow  instructions.  Quite a risk if Greece recovers in any sense.  Will European conspirators therefore work hard at ensuring Greece does  not recover?

Beware though that the Greek people are pulling away from the extreme parties according to the polls.  It only takes a few percentage points and the austerity parties will be able to put together a coalition.  Then the Greek people will be ground into poverty over a long period.  Their only choice is which kind of pain do they want to suffer.  Short and sharp or dull and lingering.  Neither of which will guarantee a cure.

What is the problem?  It is the same as in the UK and many other countries.  They (we) have been borrowing money and spending it.  Provided we can keep increasing earnings then we can service the loans and even pay some off.  Not that we would do so given the chance.  Without the growth in earnings not only can we no longer spend borrowed money we have to allot some of the money we do earn to paying off debts.  Just to be clear, if I earnt £10,000 last year and borrowed £2,000 for a year to spend then this year my income from all sources has reduced from £12,000 to £10,000 and I have an extra £2,000 of expenses.  So instead of spending £12,000 on myself as I did last year I can only spend £8,000.  Except it is worse than that.  As things are so bad my income has gone down from £10,000 to £8,000.  So instead of £12,000 to spend I only have £6,000.  My life has changed dramatically.

However if I get another job and instead earn £14,000 in the year not only will the lender let me keep the £2,000 he will let me borrow another £1,000.  So if I pay some interest I will have £14,500 to spend on myself.  What a good result.  Except next year the situation has more invested in it.  Also when my income rise to, say, £20,000 and my debts to £10,000 I’m starting to have a problem.  The money I borrow is barely covering the interest payments.  I have to borrow more and am soon in the same position as the UK is now.

It is obvious: I’m bored with Greece.  Don’t worry it will pick up again soon.  Maybe I will be able to watch UK instead.

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He hasn’t got any bl**dy clothes on!

Posted by chrisrick13 on May 16, 2012

It is obvious: when you have no logical explanation then you are missing information

“We have been through a big global financial crisis, the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest fiscal deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart without any obvious solution.

“The idea that we could reasonably hope to sail serenely through this with growth close to the long-run average and inflation at 2% strikes me as wholly unrealistic.”

Sir Mervyn King said today.

So why has he been predicting that inflation would naturally drop back to the desired range when these events (and their consequences) have been in place for such a long time?

It is obvious: when you have no logical explanation then you are missing information.  I still can’t think of any reason why he has still got his job.

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Don’t quit when you are ahead

Posted by chrisrick13 on May 16, 2012

It is obvious: consistency is valuable

The BoE has reduced its prediction (sic) for 2012 GDP growth to 0.75%.  Late last year it had 1.25% and a year ago it was 2.25%…which is 3 times the current prediction (sic again).  Alongside this remember that it predicted that inflation would come thundering down this year to its target range and it went up last month.

I apply Rick’s Law and half the prediction to .375% which brings it close to my prediction, but I got there in one go.  I am infected by the BoE though as I now feel that I ought to reduce it.

It is obvious: consistency is valuable – it means you can ignore a lot of stuff

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You heard it last here

Posted by chrisrick13 on May 13, 2012

It is obvious: sometimes you don’t need a trigger

I have just had an e-mail from ‘Market Oracle’.  An interesting set of messages I have had from him over the years.  Ignore his bias, this last one describes what happens when Greece leaves the Euro.  At least it is his vision and it somewhat coincides with mine.  He says you need at least two months cash in the house as there will be a bank holiday for a month.  Everything will be sorted out but inflation will be at prodigious levels.  He says that as poor as the housing market is as somewhere to put your money that it is at least an inflation proofed asset.  He thinks that shares in strong companies would be good…but fails to say what one of those is!  He recommends that all your money be easily accessible.  It is all very well getting your cash from the government compensation scheme but with inflation running on, by the time you get your £85,000 (max) out of the compensation scheme it might not buy very much.  He lists banks not to have any money with.  He also recommends the NSI instant access account as it won’t close and you can get your money quickly from it.

All I ever see is people who have saved a bit being punished.  If you don’t have any money then you don’t have any worries – apart from putting food in your stomach.

The other thing I have seen this weekend is some analysis and commentary on the Chinese economy.  I have seen two commentators say that there is no precedent for an economy like China’s.  Nothing like it in type and nothing in scale.  They both said that any prediction about this economy is not likely to be accurate.  What they both did, and it is why I liked them, was that they said on an exponential curve something pretty big had to happen soon.

Just in case I am too depressing I found something to cheer you up.  Last week Mr. Barosso said that the end to the Euro crisis was in view.  He will be right, but not in the way he intended.

It is obvious: sometimes you don’t need a trigger…as you watch the avalanche approach is one of them

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Good times ahead

Posted by chrisrick13 on May 11, 2012

It is obvious: I’m not depressed

I noted some while ago that there were two types of job creation.  There are those jobs where there is something new being done.  Restarting steel production in Redcar is one, if you ignore the losses when it closed a couple of years ago.  Some foreign manufacturer opening a new car plant is another.  They are new jobs.  There is new activity.  The other type of job creation is like Tesco opening 100 new stores and employing 5000 people.  As a result 200 small shops and a several large ones will close putting 6000 people out of work.  Nothing new, especially jobs is happening.  The transition takes a while though .

This latter case can be viewed from the other side.  Clinton Cards is about to close with 8000 jobs lost.  Why is it closing?  People are still buying cards.  It is because competitors have taken all its business.  You can be sure that they will be more efficient and are maybe employing (say) 6000 people to steal the business.  So what has happened?  There are 14,000 people in the business of supplying cards at the moment.  Clinton Cards has run up debts to keep trading and move its business to a profitable one.  The banks and the shareholders have lent the money that was used, amongst other things, to employ 8000 people for a couple of years.  They are now going to lose that money.  The net loss of jobs over several years is only 2000.  Some people were living on borrowed time, literally, but did not know it.

I wonder how many other companies are on that same track?  They are running up debts to keep going until something better comes along (sic).  A cheque in the post maybe.  Are we sitting around with a couple of million people effectively living off bank loans until the companies eventually go bust?  We’ll have both the debts and the unemployed then.  I hope not.

I am still bemused by the complaints at coalition cuts.  Given that the deficit is still growing there can be no cuts.  At best the government is slowing the rate of increase.  So the cries that the government cuts are harming the country are incorrect.  I wonder that Cameron does not say it on tv.  “Look chaps we haven’t managed to cut anything yet so you are little early complaining about the cuts.”  There is stuff coming, and that will start to have effect soon.  It will probably start just when a lot of companies eventually give up as described above.

However I think there is no need for the government to worry about its performance.  They are really ‘rearranging deck chairs on the Titanic’.  The coming financial dislocations will swamp anything the government can do and take all the headlines for many months.  It will be a scapegoat for years to come.  Perhaps the Conservative strategy all along was just to trundle for a couple of years and then work in the ashes of the current system.  Perhaps they have played the long game and the Labour strategy was too short-term?  It might be worth asking Mr Milliband exactly how he expects growth without borrowing when most of our international markets are in recession.

So I am still trying to predict when the trigger event will occur, what it will do, and what I can best do to prepare.  If my farming plans work out then I can survive the winter on onions and apples.  Perhaps a little roast fox, and I would really like to see a large pot of grey squirrel stew whether I eat it or use it to mend the drive.  Same for a pigeon pie.  I’m sure that shooting pigeons early in the morning is sufficient reason for a shotgun licence on the nod.

I have the Greek elections as a date to watch.  The future of much of the world will likely be down to 4 or 5 million disgruntled Greeks.  Spain has problems but I can’t see where they are going and do not know enough about the likely course of events.  France has some interesting times ahead but I place them further away.  All the ‘numbers’ I see in the press, which are of doubtful provenance, show only bad news.  Something has to trigger soon.  But what?  And what do I do?

I will keep my mantra going.  Invest in yourself.  Think about moving a small amount of your cash into tradeable assets and keeping some cash around (small).  Increase the food in your pantry (but not your freezer) a little.  Nothing you can do will enable you to live even months if things in general go into short supply, but being able to last out a week might see you in good shape.  I think I will get some sort of power supply that will charge up when power is on and enable me to run PCs’ and heating pumps and CH electrics for a few hours when it is off.  Maybe it is time to blow some money on vicarious pleasures!  Do it while the bangs per buck is high!  Putting on a few pounds in weight might be useful and could be enjoyable.

It is obvious: I’m not depressed but there are plenty of people need to work at not being so in the future

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