It is Obvious

Chris Rick has got altogether too much to say

Archive for March, 2013

The race to the bottom

Posted by chrisrick13 on March 21, 2013

It is obvious: its budget time

I’m not talking about pay.  Alright, I will.  The BoE is setting us on a solid march.  They have inflation clicking along nicely and have the value of the pound tracking down as well.  Mervyn King sent a signal last week that it had gone far enough and it has paused at $1:51.  I wonder where he got the mandate to do that?  So the effective cost of the labour component of British goods has gone down by an effective 15% over the last year for someone buying our stuff in dollars.  Of course I would like to think that our manufacturing is so advanced that the labour component is miniscule.

The race to the bottom I am interested in concerns the OBR and the BoE.  The Office of Budget Responsibility and the Bank of England.  They feed off each other but are fighting to see who can have the worst economic forecasts in the universe.  It is a close run thing.  I could laugh except that government policy is based on their forecasting…or do they generate numbers that support an already decided policy?

I am pleased to see that Mr Chote (head of the OBR) was on television defending his organisation’s record.  The body language was wonderful to watch.  They have just halved their predictions for GDP.  This is Rick’s law in action.  Alas they are still nowhere near my prediction and Rick’s law still applies.  So a GDP prediction now halved to 0.6% still has Rick’s law applied to it and should be 0.3%  Unfair of me really and it shows Rick’s law is not accurate.  It should not be cutting such predictions in half, it should be quartering them!

While I’m at it I heard Ed Balls on the radio saying that he had been shown to be right over the last two years and the government should have listened.  Afraid not.  Over the previous 13 years he had been shown to be completely wrong.  The percentage play was to do the opposite of what he said.  I know it is not possible but it would have been fun to see Osborne agree and do what Balls demanded.  They could be asking him: what now Ed.

I might return to my body count costing.  I’ve not been there for a while.  We are paying £50bn in interest every year.  How does that translate into lives lost?  A lot is the answer and I am loathe to work out the numbers.  Perhaps we could make some saving by replacing the armed forces with the NHS – after all they have killed a lot more people over the last 50 years than the army has.

It is obvious: its budget time – lots of good material for blog writers

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Press the button

Posted by chrisrick13 on March 19, 2013

It is obvious: there are a lot of thin ends of wedges around

The telephone hacking and all the press stuff that went on to cause the Leveson enquiry was bad.

That represents a tiny fraction of what the press did over the years that it was going on.

I want the press there in its full force.  I want people in power and with privilege looking over their shoulders.

When the press does it wrong I want there to be easy and full retribution to be in place for those wronged.  I want the reporters to make the extra call, to do the extra check, to ask the extra question.

I want it made easy when a clear line has been crossed for the little man to put matters right.  I do not want the press regulated in any way at all.

It is obvious: there are a lot of thin ends of wedges around they are so easy to go up but there are big drops at the end

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Finger on the trigger

Posted by chrisrick13 on March 18, 2013

It is obvious: I can do it

I thought I might start a bank run.  I’ve been waiting for a trigger so why not create one to save the waiting?  Bank runs are just people losing confidence in a bank’s ability to give back any money that they lend to it.  The reality does not matter.  Just 5% of depositors need to queue up and demand their money and the bank has gone.

I saw comments from the man on the street about the Cyprus government just arbitrarily grabbing 6% or more of savers’ money.  If that is reflexive and fair on everyone they should have been giving money to people who are overdrawn.  Letting the bank go bust is probably better as the loans are assets and might prove mighty difficult to recover.  I have moaned long about these insignificant media samples.  No matter.  One woman said that it was bad to do this but the alternative was worse.  Then she paused in that moment of realisation: oh dear, we have no hope.

It has been done before and not so long ago.  Remember Ireland and its pension fund?  Real money.  Billions of it.  The Irish government grabbed it and promised to meet all future liabilities.  Taking it from a funded pension scheme to one that relies on the current generation to pay the pensions of the previous one.  Just like in the UK.

Remember the BG pension fund in the UK?  The government grabbed the money getting, for every  £10bn of cash, £20bn of future liabilities.  This safeguards the BG pensioners…until it is realised that the fund could not meet the obligations when it is only fair to the rest of the UK population to reduce those pensions.

Ever more am I convinced that you should spend your money now while it has value and acquire skills that will be in demand in the future.

So what about a bank run?  I think I’ll pick on NatWest.  Did you know that it is nearly out of money and its assets do not meet its obligations?  Get your money out fast.  The insurance scheme might well work but you will wait a long time for your money even supposing you can prove how much of your money the bank has.  Act quickly before others do and you miss out.  Spread the word to your friends.

There that should do it.

It is obvious: I can do it and I just have

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Live it up

Posted by chrisrick13 on March 16, 2013

It is obvious: you never had it so good

I was writing an entry on inflation and reversed into this idea.  I might mention it again.

How much money do you need to survive and what takes it to a tolerable level?  If you know Maslow then we are barely up to the second level in his hierarchy.

I come from the perspective of owning my house.  I don’t share it with the bank.  This puts a lot of people in much more interesting survival zones.

So my biggest single cost is council tax at £210 for 10 months a year.  Can’t avoid that.

Then I really am not going to get by without water and that is £80 for 10 months a year.  I know that I could go to a meter and pay less than that.  One of my friends does not flush her loo much and gets in her son’s bath water after he has gone to bed – her bill is close to zero.  I have seen an African guy wash his hands with a glass of water and still have some left to drink.

I need to eat and I know that I can do healthy food for £5 a day…easily.  Lose a few pounds as well.

I want light and some hot food.  A pound a day does that.  I’ll give some extra – call it £2 because I’ll have a wash most days.  However I don’t have soap in my budget so I might wash in the toilets of the local shopping centre – I can get there for free on the bus.  Don’t have toilet paper…but what are free papers for?

I am going to surf off my previous investments much as the UK is doing.  So I won’t need to buy any clothes for a long time.  My house is full of stuff – too much stuff.  So I have a kettle and a cooker.

What is missing is maintenance.  When the kettle breaks or the roof leaks they stay broken.  I have watched retired people live in a degrading environment – inexorably it happens.  When my eyes go out of prescription the glasses do not change.  Teeth stay hurting.

For entertainment I would have to go to the library if it has not closed.  Also do it to keep warm as you will notice there is no heat in my budget.

This describes a life better than most have on this planet.  Not one I want to move to though!  Yet as a pensioner it is about all I am going to afford as that number is close to the pension payments.  I wonder how much more you can squeeze out from welfare or in addition to the pension?  I wonder how many people have money set aside to move up Maslow’s hierarchy?  How many people are going to move into retirement not with savings, but debts?  Though I have said before that is not a bad strategy.

You added it up?  It is £5,455 a year.  So what do you spend the rest of your money on?

It is obvious: you never had it so good – think about it

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Were you at the party?

Posted by chrisrick13 on March 11, 2013

It is obvious: I think about those less fortunate than me

The impossibility of sustaining 2% growth in the economy is something I might have mentioned before.  Doubling our economy, the result of that growth rate, is just not possible in 35 years.  However it is also not ever possible in my view.  Indeed we are probably not that far from the maximum size of an economy that this bit of land can support.  This means that there might be patchy growth over the next few years and then that is it.  No more growth…ever.  Of course there might be some technological invention or development that enables more growth (nuclear fusion) tomorrow and aliens (friendly ones at that) might land any day.

This does not mean the end of civilisation as I know it.  It just means change and lots of it.

I have been party to this and indeed it has been a party.  Over my lifetime we have managed to arrive at the point where if all debts are considered the low estimate is that the nation owes 4 times the GDP.  At the moment that is a huge burden on us.  Roll back to interest rates that were in place in the 1970’s and we would be paying 50% of our GDP in interest.  Something will snap long before then and interest rates will eventually head off in that direction.

We have to tackle that problem and reduce debt and efforts are being made.  The economy is being manoeuvred into a high inflation one.  Savers are being robbed.  The economy is being made more competitive through a lowered value of the pound and the lowering of wages in real terms.  Government spending is (not) being lowered.  It might be that the rate of increase is being slowed (deficit) but the amount owed is not being reduced (debt).

So savers are being punished and those working are paying more taxes and getting wages that buy less.  Is there anyone else that can help out?

How about the £200bn that goes to pensioners, poor, disabled, ill, and those without jobs?  How about not bothering with an NHS which would trim a lot of non-contributors out of the economy?

How about asking everyone where they would like the government to cut back on spending?  I would like that if a decent list were drawn up and at the bottom was the option: anywhere as long as it does not affect me.

It is obvious: I think about those less fortunate than me – I don’t actually do anything about them

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