It is Obvious

Chris Rick has got altogether too much to say

Archive for July, 2012

Anything in time…

Posted by chrisrick13 on July 31, 2012

It is obvious: the end of the world is nigh

I have stayed away from coment on the impending reset for some time.  There is a certain excitement waiting for the defining moment.  The trigger I have been speaking of again and again and again.  However there comes a point when it really is boring to reflect and talk about the subject.  It will happen so just get on with your life.  Make preparations…and even that is boring as I have been saying it for so long.

What does provide relief are the comments from those ‘in charge’, which is something of an oxymoron.  They are the people who have been put in positions where they can make a difference.  That difference is supposed to be for the better though.  So I read, yesterday, comment from Jean-Claude Juncker.  He is president of Luxembourg (‘Null pointe’) and president of the Euro Group which exerts political control over the Euro, Monetary Union and the Stabilit and Growth Pact.  He said that in the next few days the eurozone leaders would decide what action would be taken to stabilise the eurozone.  He added: There is no time to lose.

What disappointed me was that there was no comment in The Times where I read it.  They could have said something like: action is promised in a few days while they have done little to fix anything over the last two years so what reason is there to believe this statement any more than all the prior ones.  The last great mechanism to save the situation was proposed several months ago and was promised for July yet the main contributor, Germany, is not even voting on the measure until September.

There is little can be done to prevent a reset but you can be sure that if there were something then those ‘in charge’ would fail to do it.

It is obvious: the end of the world is nigh.  Perhaps the Mayans were right


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What now?

Posted by chrisrick13 on July 22, 2012

It is obvious: shouting loud is not enough

I am puzzled.  The economy is in a position from which there is no recovery without pain.  We owe a lot and it has to paid some time, some how.  There is little chance of any growth that would allow us to sail out with more loans based on ability to service those loans into the future.  We all have to get poorer and that can happen in many different ways.

While that is playing out over the coming years a similar set of conditions are in place in many countries that include the USA and a lot of Europe.  Also about half the world’s populations lives in two countries (India and China) that are growing at 7% a year (and more in the recent past).  Applying the prostitute’s question and the rule of 70 they will double in size in 10 years consuming as much over those 10 years as they have in all previous history.  It is obvious that they will fail to grow at that rate and double in size in 10 years (if ever) by definition they will revert to zero growth or less over the next 10 years.

If it is so obvious that there is going to be a major reset why are two questions, so far, unanswered: when will the reset begin, what can the individual best do?  All the Cassandras out there are getting the direction right but they are not getting the timing at all.  They are all strangely silent on what to do to preserve your assets.  It bothers me that there is perhaps nothing that can be done.

I have been saying for some time that house prices in the UK will fall and I really missed it.  People taunt me about when it might happen yet they dropped 20% from peak in 2007 to bottom in 2009 and 10% now in absolute terms.  In inflation adjusted terms that 10% becomes 22%.  Sounds like a drop to me  Few people seem concerned.  So it is not the curse of Cassandra in that nobody believes the prophets, actually nobody is listening.  Our wealth reduction is under way.  I wonder when we will all notice?

I have thought that the population in general simply believes that the government will look after them and there is no need to worry.  I wonder where the evidence for that comes from?  Clearly evidence actually seems superfluous to requirements.

The bad news is that with the heavy rain of recent months my onion patch has been a lake for much of it and is an almost total failure.  That leaves me to slug it out with the birds, insects and the bloody squirrels for ownership of the apples, pears, plums and cherries that are a bumper crop this year.

It is obvious: shouting loud is not enough, poking with a sharp stick does not do it either.

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It’s all gone noisy over there

Posted by chrisrick13 on July 18, 2012

It is obvious: even I could tell

I missed posting this for some reason.  Here it is anyway about 2 weeks late.

As various truths, elephants in rooms and emperors in the nude, become undeniable the people in charge have stopped denying.  Central bankers are now talking about Greek default and withdrawal from the Euro.  As little as 6 months ago it was always denied and said to be impossible, but only by the people at the top.  The finance people in large companies, the money traders and people like Shaun Richards were pointing out the obvious and giving hard numbers and had been for some time.

I am in a rush to get all my cash out of Barclays.  It is unpalatable putting it into NS&I but it seems the only thing I can do for the moment.  I wonder at my shares ISAs with L&G, my pension with Standard Life (and others), my cash ISAs only just agglomerated in Nationwide.  If inflation sets off I need to find something to buy with the cash.

I read about the Spanish banks being forced to set aside £30bn for bad debts.  I have to ask where they are going to find £30bn to set aside.  The banks have nothing.  I also notice that the total debt owed to these banks that is non-performing is about £1.8tn.  So the total provision for bad debt will optimistically be 2%.  Obviously the banks will now be well set up to withstand hard times!  Perhaps a few deck-chairs still need arranging though.

I’m looking for good news.  Perhaps if I can find some way to preserve what cash I do have I will be able to afford that Greek Island I have been talking about for so long.

I’m still on my mantra of investing in yourself.  Perhaps you should also make sure you have the tools to allow you to practise that investment.  The word ‘tool’ is in its most general sense.  If you are a writer then a pencil is enough but perhaps you should also have a computer.  If you have become a plumber then not only do you need a blowtorch but also a bike with a basket on it.

Have you got a bike?  Have you got a couple of very robust locks?

Just a minute though.  It all falls down.  Then what happens?  A lot of people will be working very hard if not just to survive but then to get something back.  Existence might be very hard.  Many of us will come out of the dislocation a lot poorer than when we went in.  Some will be richer.  But a new and tolerable normality will return, and it will return fast.

Indeed I am hearing more people coming round to the idea that a brief reset is much better than a long drawn out incremental transition.  A reset could be fun, especially if you have few assets to reset.

One more thought about what to do.  The Boer (I think word) lager comes to mind.  This is a safe area created by a number of people acting in concert.  It goes beyond making a bulk purchase of shotguns for you and your neighbours.  Build networks and groups everywhere you can.  Start with your neighbours (mine are all older than me so it will not be physical skills we are pooling) but build contacts in every area that you can.  For someone with no social skills like me that is not easy to do.

It is obvious: even I could tell.  So why haven’t I done more about it?

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Good idea 6,823

Posted by chrisrick13 on July 17, 2012

It is obvious: I know what I’m doing

In the sixties Heinlein wrote Starship Troopers.  Not a bit like the films…or rather the films were not a bit like the book.  Turns out that Heinlein was a bit of an extremist.  In the book he had the idea that you could not vote unless you signed up and did a stint fighting the ‘Bugs’.  These insect things were a bit of a nuisance so nobody who signed up ever left.  Not sure how voting was done.

I was with a friend for lunch on Monday and he spiked an idea for me.  My son blames the world’s ills on capitalism.  I disagree with him as I think that capitalism is a good way to get things to happen.  However we all act in our own self-interest and corrupt capitalism.  So I blame democracy for not regulating capitalism.  It is a poor way of going about things but everything else that has been tried, is being tried, is worse.  I know my vote is worth a heck of a lot more than anyone else’s because I have thought about things.  Funnily enough the person standing next to me on the bus absolutely knows his vote is worth a heck of a lot more than mine.  The woman three seats down knows that her vote is worth more than the two of us put together and most other people on the bus.

I read another science fiction story based on the idea that there were super AI’s around and what they did was interview just one person chosen at random and based on his/her profile and the answers given the AI was able to decide on how the country/world should be run for the next few years.  We’ll maybe get there one day.

So if my vote is worth more than the next person’s why not give me the chance to prove it.  I’m not going to join the army.  I’m too old anyway.  I always support England, be it Tiddleywinks, football, rugby, cricket, or international watching paint dry matches…oh that is cricket.  I should get an extra vote every time I watch.  I certainly should get an extra vote every time I drive to the tip.  Jury service ought to earn me votes.  Putting my bin out on the right day for a year is worth reward.  Everyone who doesn’t watch Coronation Street for a year gets an extra vote.

How about getting votes based on how much money I voluntarily give to the government.  Then there would be none of this funding of political parties rows.  Instead of spending £1m on advertising to get 10,000 votes using money given by a donor, why not let the donor give the £1m direct to the government and be awarded those votes cutting out the middleman?

Why not the army as well.  An extra vote for every year of service.  Police, nursing, hospital porters.  Any job that involves an element of self-sacrifice.  After 9 stamps on your Nero loyalty card you get an extra vote instead of a coffee.  Airmiles are a good trade in: vote instead of creating carbon.

While we are at it there are plenty of reasons to cut a person’s vote.  Reduce it by the number of driving penalty points you have.  Years or months in jail can count against you.  Reduce it for being overweight or smoking.  Watching East Enders halves whatever votes you have.  Same for Big Brother, X-factor, Deal or No Deal.  Not picking up your dog’s poo.

If you play your cards right you might be able to vote yourself into parliament.  A few of you can get together and stop someone getting in.  Perhaps we would need a trading system like carbon credits so that people with lots of votes can sell them on the open market.

There is a lot of potential here.

Then we really would get the government we deserve.

It is obvious: I know what I’m doing – at least I think I do

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Memories are made of this?

Posted by chrisrick13 on July 16, 2012

It is obvious: the good old days are poorly remembered

I have cleared out some of my financial papers.  I am a squirrel and have found it hard.  It is something I will pursue over coming weeks.  I have nearly everything going back a long way.

In front of me I have my mortgage statement for 1989.  At the start of the year we owed £104,848.  At the end it was £104,658.  The mortgage started off at £105,000 and on a sinking fund the early years make slow progress against the principal.  Just £190 taken off it.  The interest rate at the start was 13.75% and at the end had moved to 14.65%.  We gave the bank £13,531 that year.  I don’t have the following year where we paid nearly £1,500 some months, but the year after we paid over £13,000.

We took on the mortgage confident of being able to service the loan and paid it off a few years ago.  Inflation over those 23 years was about 2.75% which, handily, means that in today’s terms that mortgage would be £210,000.  I wonder that I would have such confidence for that size of loan today or that anyone might care to lend it to me.  The mortgage represented about 66% of the value of the house.  I would hope to get more than £315,000 were I to sell it today.  However this also tells me that today my house ought to be ‘worth’ £330,000.  It dropped after we bought it to something like £120,000 so maybe it ought to be ‘worth’ £240,000.  I think it is ‘worth’ more but am bracing myself for it to move to that lower figure.

Things improved after 1991 so although we skirted negative equity we did not enter it.  Also it tells me that had we timed it right and moved 2 years later we would now be in a much bigger house.

For today I saw a surprising survey result from  Rightmove.   It was saying that the average asking price for houses was £240,000 and the average selling price was £161,000.  These are averages and subject to distortion but nonetheless are an interesting insight into our collective psyche.  At the weekend I was with a friend who inherited his mother-in-laws house 5 years ago but has been unable to sell it.  As I started the prostitute’s question with him he answered it recognising that he could sell it tomorrow (I would give him a tenner on the spot) were he able to ask a price it would sell at.

It is obvious: the good old days are poorly remembered but it does depend on where you are standing now.

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Don’t you love a good number?

Posted by chrisrick13 on July 16, 2012

It is obvious: I saw a film that frightened me last night

The average price of a house where I live is £247,000.  In May 2008 it reached £280,000.  The price has declined by 11.75% in absolute terms.  It has been lower, but is at the moment in a narrow range with no obvious trend.  If I am generous on the downside I could say that over those 4 years inflation has been at 4%.  In terms of 2008 money the price is £209,788.  That is a reduction of 25% in real terms.  The average cost of maintaining a home used to be a stable number, but with big oscillations in house prices it is not an easy number to come up with.  At 3% that average house costs £8,000 a year to maintain in 2008 terms.

If you live in that house only the maintenance costs and stuff like council tax and insurance matter to you.  If you are going to retire and downsize or it is a second house that you are going to sell to live off the proceeds (and I know one person who is going to do that) then over the last 4 year you have lost nearly £100,000.  If, like me, you will likely be spending a lot of that money abroad then you have lost £120,000 in 2008 money.

If you had been in the stock market and got the timing right your £280,000 would now be worth £560,000+.  In cash you would be down maybe 10% or £30,000.  Other stuff is beyond me.

I don’t hear much in the press about house prices other than the continual ‘house prices down 1% (ish) on last year’.  That’s not anything to worry about everyone says.  But it is.  In under 60 years the absolute cost of your house will have halved and in that time inflation will have taken the relative value to a sixteenth of what it started out at.  Who cares about 2062, I certainly don’t, but that 2008 average house will be worth £17,500…IF I PROJECT ON STRAIGHT LINES.

How many times have I screamed about straight line projections!?  So you need to have a think about your house.  It might be the sleeping giant in your life but you perhaps need to wake it up on occasion.  You certainly need to feed it.

It is obvious: I saw a film that frightened me last night but I don’t need the cinema for that kind of thrill

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How easy is it?

Posted by chrisrick13 on July 14, 2012

It is obvious: a fool and his money are easily parted

While I was in Perth at the beginning of the year I hired a house to sleep 12 (and we stuck 17 in for some of the time).  Having paid $6,000 it annoyed me that there were a lot of ‘niggles’ about the place.  The pool lights did not work and they would have added a lot having the pool lit at the end of each day.  When I rang the owner there was a comment that it was difficult to get them mended but no thought that they would actually be fixed.  The house was in an area where all the houses had pools and lights that worked.  There were other faults and I really should have pressed the point.  Certainly a lot of stuff that I put effort in with my rental house was not done here.  After we left there was a bogus retention from my deposit for something that we had not done.  We will never go back yet a small effort would have had us recommending the place and using it if we went back with large numbers.

I had a sore throat for much of the time and did not start running on the beach until the last 3 days.  I went with Katherine as all the other sloths lay abed.  On the way back we stopped at a beach front cafe and had coffee, studiously avoiding the cakes.  On the third day I looked at the people buying the coffee.  We had been in at 07:00 and at 09:00 and in the first week when not well had driven past and dropped in at 06:30.  The press for drinks over that 3 hour period I estimated at $10 a minute.  I’m sure it was more.  That 3-hour morning period was easily replicated over the rest of the day.  I did the arithmetic for a 200-day year including cost of coffee, staff, lease or rental.  The person who runs it is getting $400,000 in his/her pocket each year.  They could  use a manager leaving $300,000 and all they would have to do would be to stir themselves to count the money each week.

The cafe was ‘done’ well.  The detail was covered.  A certain ‘feel’ or ‘look’ had been created.  Serving was efficient and fast, courteous and helpful.  None of it remotely difficult to achieve.  If it is that easy why am I not doing it?  Perhaps not a cafe, but something?

I shall ponder that over coming weeks.

It is obvious: a fool and his money are easily parted while a lot of  ‘smart’ people never join up in the first place.

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How interesting

Posted by chrisrick13 on July 13, 2012

It is obvious: I am writing fiction for fun

I just dipped into the news on the internet and two lovely items got my attention.

First Lord Browne, ex of BP, was telling a conference that due to the ‘fracking’ technique the US had effectively got unlimited oil and would stop importing oil by 2030.  He was talking at a conference on water, food and oil scarcity.  Fracking caused earthquakes when done just off the coast of Blackpool and is well known to pollute water tables.  I wonder whether he was talking about making the problem or fixing it.  Maybe he was just indicating the opportunity to switch an energy problem for a water problem.  His new job?  a Director of fracking firm Cuadrilla.

The government is creating a fund that banks can use to borrow money cheaply to lend to small businesses and people wanting mortgages.  They can borrow from this scheme up to 5% of their current lending and if they lend more they can get more from the scheme.  The interest on my savings account at Barclays, only a temporary home I add, is under 1%.  Isn’t that cheap enough for them?  I’ll lend them money at the same rate the government does any time and I’ll put money on it that it is more than 1%.

It is obvious: I am writing fiction for fun but reality is stealing all my outrageous ideas

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Posted by chrisrick13 on July 13, 2012

It is obvious: you can’t teach an old dog new tricks.

The hospital my son was born in was pulled down a few years ago.  There is a brand new one in its place.  I have been there.  It is certainly new but it does not have the feel of endurance.  Already I can see signs of wear.  The NHS trust that uses the hospital was created a few years ago by combining 3 failing trusts.  (In my first draft I put ‘owns’, but they don’t.)  I’m not sure how putting the three failures together was supposed to create a success.  However there was an existing model that they followed: in Spain three failing cajas where combined to create Bankia which now needs 30bn to survive.  (Not the only example in Spain which is an indicator of problems to come.)  Were I a cynic (sic) I might say that the aim was deceit and delay.  The trust has now declared bankruptcy with large debts.  Would you want to be lying in a bed in that hospital?  In fact there are 3 new hospitals in the trust and it is these that have caused the bankruptcy.  Don’t get ill in Croydon

How did the losses occur?  Step forward one of my favourites: PFI.  The Private Finance Initiative was introduced by the last Conservative government but they were kicked out of power before they could really crank it up.  That was left to the Labour party.  PFI is a way of spending capital money but making it look like current account expenditure.  This is an old trick from company accounting used over many years.  The accountants were there long before the politicians.  Its operation is simple.  A company builds a hospital for £100mn and charges the NHS nothing.  The NHS lets a contract where they pay £20m a year to the company to use the hospital.  They also pay the company £40m a year to run the hospital.  The cost of running the hospital is about £20 a year.  The contract is let for 10 years.  You work it out.  When you have done that I’ll be round for your cheque if you live in Croydon.

It is obvious: you can’t teach an old dog new tricks.  They aren’t that hot on old ones either.

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Duck! No, I saw it coming.

Posted by chrisrick13 on July 12, 2012

It is obvious: there are many ways to make money

When I was at university I supplemented my grant by betting on horses.  It was hard work and the supplementation was small so I gave up and gave up ideas of doing it for a living.  My take was to look for horses that were mis-priced.  Does not happen a lot as everyone else has a good idea of what is likely to win and bookies set prices that means they don’t lose.  (Ever seen a poor bookie?)

At the time I was doing it there was a horse called Brigadier Gerrard.  Somewhat of a legend who won 14 (high-class) races in a row.  Come number 15 I thought it was still in winning mode and was just a way to print money.  I put £10 on and the odds were 1-9.  It duly won and I got £11 back.  This was at a time that my grant to survive the year was £300.  So £10 was a lot of money.  The following day I put the £1 profit on a horse whose name I cannot remember.  It won at 25-1.

I then sat down and had a long think about what I had just done.  Had I assessed the risk on Brigadier Gerrard correctly?  In his next race he was priced at 1-11…and was beaten by Roberto.  To show what his class was he ran twice more and won them both at better odds…and I didn’t put a penny on.

Every day I see people being stuck in jail for stealing £20 from a shop, diverting £5,000 cash from a company account for, swindling old ladies of tens of thousands for poor house repairs.  How foolish.  I see the likes of Madoff who swindled billions but hung around to be caught – even more stupid.

Were I to steal any money I would do it in one hit, it would have to be more than £5m, and I would have had to find somewhere desirable to live that has no extradition treaties.  If you are going to do it, do it big, do it quickly, do it only once.  Fail any of those and you are daft.

I can see how temptation happens though.  I often look at the coffee loyalty stamp at my local Nero…

Obviously this leads me to the LIBOR fraud.  By manipulating the rates Barclays, for example, maybe made £100m.  That was big for them if it was all profit or the person doing it was on a 5% bonus.  A lot of people out there lost billions for just a small change in the interest rates, and they are coming back after their money.  It was Brigadier Gerrard’s 16th race.

If you can get put away for a week for stealing £20 how long do you get for billions?  It will be interesting to see.

It is obvious: there are many ways to make money – it seems, all with risk attached except banking

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