It is Obvious

Chris Rick has got altogether too much to say

Archive for June, 2012

Look at it this way

Posted by chrisrick13 on June 19, 2012

It is obvious: all things are relative

I looked at GDP figures from three sources at the weekend – they were all pretty much in agreement.  Starting at the bottom there are places that I would never dream of going to and small places that are mainly islands and places that I would find a little isolated but nice enough to live in: Tonga and Samoa are 176 and 179.  The numbers go up to 2011 so saying that Greece is 35 and UK is 7  is probably incorrect today.

If I switch to GDP per person then it is a very different story.  At the bottom are Congo, Burundi, Liberia, Ethiopia and many places I would not be seen dead in…or would likely be dead in, were I seen there.  The per capita GDP is in the 200’s.  I didn’t mention Somalia that only appears on two of the lists at GDP of 139.  The first qualifying country for me is 126 The Philippines with GDP at 2,223.  Jamaica at 89 and GDP of 5,402 is the first really tolerable place.  At least they play cricket, or used to.

So I move up the list to Greece at number 29 with a GDP of 27,000 and just 6 places above that: the UK with GDP of 38,000.  It is now a lot worse in Greece I suspect but it is not Somalia.

So why is everyone afraid of a reset in European economics?  probably nobody will die out there, or a lot less than dies in Somalia every day courtesy of the Horsemen of the Apocalypse (1st XV).

It is obvious: all things are relative.  Look at the absolutes as well as the gaps.

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Back to the future

Posted by chrisrick13 on June 17, 2012

It is obvious: there is time

In several places I read that the UK long-term GDP growth rate is close to 2.5%.  This carries no useful information for the future but it does allow me to pose a framing question.

Getting economic growth is the answer to all our problems, I am repeatedly told.  Should we get back on to that long term growth rate we will double our economy in 28 years.  During that time we will consume more than we have consumed in all previous history.  (We will then probably have twice as many people, cars, houses, Tescos stores, landfill sites, power stations, wind turbines, economists.)

Not going to happen.  What might we manage to grow to?  Suppose you think that we might be able to get up to 20% bigger.  That will happen in 8 years.  What then?

So the UK economy (and the world for that matter) can grow on trend and in somewhere between 8 and 28 years that will be the end of growth.  Shouldn’t we prepare…mentally at least?

Growth at very low rates barely distinguishable from zero is possible for a long time.  What do we need to do to maintain a no growth economy?

Put another way, we are going to be living in a no growth world for a long time and that starts sometime in the next 30 years.  How best might we spend the next few years in preparation…or shall we start the (last) party now?

It is obvious: there is time, but not much.

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A stitch in time saves…Spain

Posted by chrisrick13 on June 13, 2012

It is obvious: Gary Lineker used to roll the ball over the line

Spain will be bailed out by the ESM.  This does not exist yet.  Only 4 nations have ratified in their parliaments the legislation to bring it into existence.  Germany has not yet ratified it – the major contributor – and won’t before July.  Spain and Italy will supply a third of its money.  How will they do that?

I wonder when it will come into existence and if it will be in time.

I’ll just check to see if I have really got any trousers on.

It is obvious: Gary Lineker used to roll the ball over the line – they were all goals though

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Anyone got a party hat?

Posted by chrisrick13 on June 13, 2012

It is obvious: I can see it clearly now

 

Shaun Richards is one of my heroes.  Today he put the case for declaring recent times as a depression, not a recession.  He also talked of ways out of it.  He would be my first choice for Chancellor so I would like to see the plan tried.  I know he is as confident as I that it won’t.

He did not say it, but the implication is that this economy will be in good shape when it is growing.  That is one of my triggers.  I will reiterate it but from a slightly different angle.

We need growth so that…what?  I think it is so that banks can recover as they cannot exist without growth.  I am happy that we ‘go for growth’ provided that we use, what may be a last opportunity, to get our economy and our nation to live and thrive in a no-growth world.

Credit another of my heroes: Dr Bartlett.  (I saw a video of him last week.  It is quite recent and he may be alive.  I hope so.  I hope he is around to see the events he so eloquently describes actually occur.)  Assume that we are trying for and achieve 2% growth.  All is well with the economy.  In 35 years we will consume as much as we consumed in all previous history and will be doing twice what we do today.  Twice as many people, cars, houses, roads, Tesco stores, landfill, everything.  It is obvious we are not going to manage that.

This time the exponential curve is on our side.  We could set a growth rate of 0.1% and we take 700 years to double.  That does not rescue us today even if that is an optimistic growth rate.  There is a good argument that if we take 700 years to double it won’t help much as China is doing 9% and doubling every 7.  Why should we be virtuous when others won’t be.  Let’s assume we can manage 2% growth starting tomorrow…this is a fairy tale, stop complaining.  What growth can we manage?  Do you think we could grow by a fifth?  There would be 12 million more people, 5 million more houses, another 600 Tescos stores?  Sounds reasonable.  That happens in 9 years.  What then?

Any way you look at it there is very little time left to do anything.  Were we to get the 2% growth, and we won’t, we have 9 years to prepare for a very pleasant existence into the future or we can just party.
On balance I think I’m going to party.

 

It is obvious: I can see it clearly now so why have I still not done anything?

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What did you do in the war?

Posted by chrisrick13 on June 12, 2012

It is obvious: don’t worry

I just read that the Spanish government said it was committed to its programme of economic reforms.  I am also committed to my programme to grow a pair of wings…but I didn’t say two weeks ago that my banks were sound (and am now waiting for an audit to tell me what state they are in) and I would not need a bailout.

Once credibility has gone it is a long time in coming back.  What is surprising is that it has taken so long for credibility to go and it still really hasn’t as we are all desperate to believe.

I ran around the usual suspects last night.  They are coming down to a consensus of about 2 to 3 months.  Most of them are not that precise about what will happen.  We are approaching events that have never happened before.  Not even close.

I still say that there will be a brief reset then ‘things’ will carry on much as before.  There will be winners and losers and we will all be living a different type of life.  It will be a notch or two down but from another perspective might be several notches up.  For those who had nothing or very little there will be no change.

There is a famous phrase I use a lot: don’t just do something, sit there.  The implication is that you think and then react.  Now is the time to consider the only thing you can really do anything about and that is to be ready for the reset which will be short.  Any longer thoughts are not likely to be that accurate other than my thought that you should invest in yourself.  Have a serious think and make some low-cost preparations.  If you have assets, think about how you might protect them.  If you have liquid assets think about spread.  If you have illiquid assets think about making them liquid.  Have a think and then do something.

I remember when I was about 10 we were all worried about a nuclear war, and came close with missiles in Cuba.  There was a clock face on some big American magazine that was set closer to 12:00 as an assessment of how close we were to a nuclear war.  It was set very close to 12:00 but then wound a long way back and was then dropped as the risk was deemed to be zero.  Now we have something else to worry about and the clock is getting very close to 12:00.

It is obvious: don’t worry, prepare

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The rain in Spain

Posted by chrisrick13 on June 11, 2012

It is obvious: you can rely on me

I wrote this before Shaun Richards’ post this morning.

On the 28th of May the Spanish PM said that there will be no EU rescue of the Spanish banking system.

Sir Humphrey Appleby step forward.  This is the latest in a long and continual stream of lies by ‘people in power’.  It might have been done for ‘good’ reasons.  (I will have to get my ‘ key reinforced.)  It does not matter.  Telling the truth is simplest.  I wonder if anyone will ask the PM why he lied on the 28th.

There is a ‘bailout’.  This is a word I have a great deal of difficulty with.  Wikipedia calls it a loan to an entity with serious financial difficulties or facing bankruptcy.  This has not fixed any problem.  It has merely bought time until, at best, the loan has to be repaid.

So we all rejoice as some time can now elapse without the consequences of the problem having to be faced.  Has anything been done of any consequence?  One of my rules is that nothing changes until someone suffers pain.  So it is the case here.  Pain has been delayed so nothing will change.  After all only about £300 has gone from each of our individual pockets to make the loan to Spain.  I’ll be round for the cheque later.

Is there any urgency?  We are waiting for an audit of the Spanish banks.  So what have they been doing for the last 4 years?  No pain, so they have been doing nothing.  Perhaps just lying to keep the pain away.

There are a lot of Cassandras out there who have been analysing the bailout in detail.  Not that the detail is known yet as there is the matter of deciding who is going to take the risk.  One of the repeated themes is that in any bailout or simple expenditure of EU money it has first to be given to the EU.  That is done in a ratio to the size of the country.  Obviously Spain does not contribute.  Ireland and Portugal are not in any state to lend money…neither is Italy, but it is in there for nearly a quarter of the loan.  You and I are in there though.

It is obvious: you can rely on me but who am I going to rely on?

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Watch out! Idiots about

Posted by chrisrick13 on June 7, 2012

It is obvious: I should stop trying to write fiction

 

Yesterday I heard that Michel Barnier, Europe’s financial services commissioner, had suggested that the too-big-to-fail banks should be fixed by forcing losses on shareholders and bondholders.

A while ago I put £100 into Northern Rock and duly collected my shares when it floated, closing the account and spending it.  My best investment that I stuck in a PEP/ISA and forgot about.  I’m pretty sure that I got dividends.

Even further back I bought TSB shares at the privatisation.  I eventually sold over half of them at a good profit.  The rest I kept and opted to convert dividends into shares…at many pounds each…slosly building up my holding.  I still have the shares worth 20p each or thereabouts.

Who is this idiot suggesting that shareholders should have losses forced on them?

 

It is obvious: I should stop trying to write fiction: reality is better entertainment

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Bottoms up

Posted by chrisrick13 on June 7, 2012

It is obvious: it is good to talk

I have written about 450 blog entries.  Actually many more but a lot of them never made it to the light of day.  That is about a quarter million words.  There are themes that are deliberately repeated, but if you take out all the duplication then it is the philosophy of my life in not very many words at all.  Is that the definition of a philosopher: someone who can take a simple idea and write it in a 3-volume treatise.

Are we all that simple at the core?  A few driving ideas and principles repeated endlessly.  Is that why it is so easy to fool us and herd us along in large groups.  Just a few buttons pressed have us all moving in the same direction.  A set of buttons that we do not even know we have?

Of course if you have sat down and thought about even a few of your driving ideals then you are a different proposition.  You have ready answers and the tools and methods that enable you to see through most of the biassed information that you are exposed to in order to manipulate you.  You can be a Plato, a Foucault, a Marx (!), a Korzybski it is easy.  Then you are armed.

One of my repeated themes is the race to the bottom.  As a nation we have to compete with everyone else in the rest of the world.  It is a zero-sum game so one man’s export is another man’s import.  If we don’t export then the nation will become very poor as we struggle to pay for imports.  Of course if there is growth we can borrow against future earnings of future generations and enjoy ourselves now – another theme.

There is the wide horizon – yet another theme of mine (this one part stolen): extreme regimes will be defeated by MacDonalds and the internet.  Though if I go back to basics it is satellites or rocket technology.  Wernher Von Braun defeated them all when he designed the V2 rocket for the nazis in WWII.

It is no wonder that China is terrified of Google and the internet in general.  Not only is it impossible to lie and make it stick, everyone can see just what life is like in other countries and demand it for themselves.  A common theme of the extreme religious regimes, those perversions of communism (such as Stalinism, Maoism) or simple dictators is that power is retained by a small group.  When enough people rebel change is rapid.

As a friend pointed out to me at the weekend: it is not just a race to the bottom.  While we have to get a lot poorer to compete with low paid slaves in China it is not just a one-way journey.  The competitors are working hard to push the bottom a lot higher than it is now.  It is still a zero-sum game though and 2 dollars a day is not a great deal different to a dollar a day.

Still, along the way there will be a lot of anomalies and I’m going to try to live in one.

It is obvious: it is good to talk and even better to listen

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No news is…

Posted by chrisrick13 on June 1, 2012

It is obvious: there is a lot going on

 

Will Greece default over this weekend?  It is the last bank holiday weekend this year.  They will try to avoid doing it at the peak of the holiday season over the summer.  There is not anybody around who can make that decision.  ‘No’ is the answer.  We’ll have to wait and see how the people vote.  Then wait for the tourists to go home.  If it does happen before September then it will not be a Greek decision.

I am still troubled by the Irish referendum process.  This time they will vote ‘Yes’ I suspect.  However in the previous two they voted ‘No’ and had a second vote.  To be even-handed we need a second vote this time…whatever the result.

Mario Draghi said last night that banking in Europe was in urgent need of reform.  I cannot find words of sufficient impact to comment on that statement.  Four years on from a massive banking crisis and the head of the ECB thinks that banking reform is urgently required?!  What has happened over the last four years?  It might have been easier to let the banks go.  By now a new system could have been running for quiet some while with no big banks to oppose it.

The CBI have predicted growth of 0.1% for the UK in 2012.  This is like predicting a win for Man U at half-time when they have a 3-0 lead.  Rick’s law  requires it to be halved though.

Growth of the Indian economy has fallen to 5.3%.  At this rate they will double their economic activity in 13 years.  During that time they will consume as much of everything as they have already consumed in previous history.  Not going to happen is it?  China is on 9 years for the double.  Will that happen?  That is a tricky prediction.  You could take the view that everyone concerned will act in their own best interest and many of them will do it too late.  I think that China will descend into civil war.  It is not likely to try to distract its population with acquisitive wars.  I think it very likely that India and Pakistan will start fighting and very likely go nuclear.  I think that Israel will ‘get its retaliation in first’ if it thinks the US will abandon the region.  Europe will reform in a looser union.  We won’t descend to a ‘Mad Max’ world.  The point is that we have a ‘system’ that needs growth to survive and as we have turned the corner on the exponential curve there is not long before growth will be impossible.  We will have used everything up and left none for our descendents.

Spain has signed up to the new EU treaty with the penalties for over-spending…but has just negotiated a one-year opt-out.  It seems that the provisions of the treaty are optional.  Why did the UK opt-out permanently?  I’ll ask that question in a year.  Given Spain’s promises to cut its deficit why does it need an opt-out?  Because the promises are words and words that will not match reality.  Spain has said it will not need a bailout.  I refer you to Greece and Ireland saying the same.  Ireland is a bank with a country attached.  Greece is a Butlins with a country attached.  I wonder what Spain will be?  A motorway from Gibraltar to London with some good service stations?

Landrover has just made a huge profit.  Why couldn’t that be done under British ownership?  As good as the news is I wonder if it is sustainable.

It is obvious: there is a lot going on that shouldn’t be

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