It is Obvious

Chris Rick has got altogether too much to say

Archive for July, 2013

Look out

Posted by chrisrick13 on July 23, 2013

It is obvious: I’m smart

I’m in the remotest place I’ve ever been to.  I paid a lot of money to sit in temperatures 10 degrees C less than in England.  Wall-to-wall sunshine but a bit windy and…cold.  No central heating but I can turn the air-conditioning on if I want.

Why does this town exist?  It is at the end of one of the few rivers that exist in this country.  Not what we would classify as a river.  Occasionally during the year it rains inland and scours all the decent soil off the land and dumps it near the end of the river.  So there is good farming.  Also there are a lot of shrimp just off the coast.  Or at least there were.  So 600 miles of road lead from semi-civilisation to nowhere.  The road goes another 400 miles to nowhere else.

But there is stuff in the ground just north of here.  The country is Australia and it is busy exporting itself to China.  You can capture a country by persuading its inhabitants to bring it to you.  Invading army not needed.  I’ve seen it done in business and perhaps it is not deliberate but China has poured money into Australia for its stuff.  Australia has spent heavily getting its stuff extraction as efficient as possible.  As the Chinese economy shrinks so will the money it pours into Australia.  Then what?  Australia will have a problem.

Australia is a country that has killed the inner reef, and so messed with wildlife that there are not enough animals to eat the vegetation resulting in huge bush fires.  It is the country that has destroyed the indigent population with little hope of the survival of that way of life.

In more recent times it has created a housing bubble and houses are down 20% from their peak.  More is to come.  They have lost to the Lions, are losing the Ashes series and got fewer gold medals than us.  They also stuck a speeding ticket on me for doing 120 in a 110 limit.  Would never happen in the UK.

I think I have persuaded my son that he is in no rush to buy a house.  He gets a good deal on his rent so it took little persuading.  He does, as do I, have assets and no good idea what to do with them.  With money you are at least agile and can get out of it and into an asset quickly if you need to, but what asset?  Cyprus has served a warning though.  If it is easy for you to move and use the government might decide to curtail that.

If you hold money anywhere, and by that I do mean bytes in a computer and no more, then the purchasing power of that money is reducing.  This is Stalin’s twin grindstones of inflation and taxation.

I split my reading into to two groups now.  There are the propaganda messages from governments and the media in general.  There are independent commentators who fall into two groups: those with an axe to grind and those who try for simple analysis.

The latter group is in consensus that the ‘good’ news is a mirage and we are in a worse place than last time to cope with the coming crunch and one is coming.  The problem is that nobody will recommend best courses of action.  It is the axe-grinding group that do the recommendations.

It is obvious: I’m smart but not smart enough

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That works

Posted by chrisrick13 on July 15, 2013

It is obvious: it was unexpected

At the weekend one of my readers told me a tale of the NHS.  Hospital catering departments have worked hard to cut costs on feeding patients.  They have done it well.  A day of calories that won’t bloat a person lying in bed all day.  Healthy food in that it does not exceed RDA (recommended daily allowance) on all the bad stuff.  They are doing an excellent job as the food is also, generally, edible.  There are 500 beds in a hospital means there are 500 patient meals needed each day.  They are doing it for (I think) £1 a meal.  It is amazing.  Also there is no other yardstick for them.  They are to be congratulated.

A recent study shows that if you give sick people high quality food, they recover quicker and need less care later on.  So if you spend £2 on each meal then the bed empties a lot sooner…to be filled by another body (person).  After that the costs to the country are reduced as the person recovers quicker to a better state.

The catering department have no incentive to do other than £1 a meal.  They are knocking out 500 a day and care little about precisely which mouths the food goes into.  The hospital have no incentive either other than the small one that over time with better feeding they see their medical statistics improve…but not today.  They can keep their costs low today with things as they are.

So it needs some entity to step in and say that we will double the NHS patient food bill for bigger gains a few years later for the nation .  It also needs a mechanism to make sure that the money is only spent on ingredients and not on new kitchens and staff wages.

Has that entity stepped in?  Isn’t that what we have governments for?

So we have a system where a part of it is rewarded for ensuring that the end product is sub-standard.

It is obvious: it was unexpected…it’s not now though

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Posted by chrisrick13 on July 9, 2013

It is obvious: I’m a wet

There was a time that we used to put 3 or 4 bins out each week for collection.  The gaping mouths have gone and we have a different attitude.

We recycle our vegetable waste.  We eat little prepackaged food so there is a fair amount.  I have noticed the changing colonies of creatures in our bin.  We have a lot of ants now.  We used to have a lot of worms.  So I think that it is a move to the dark side.  We had some slugs at one stage, but they have gone.  I also noticed that the level in the bin oscillates around half full.  The liquid goes and things compress, but someone must be coming and emptying it secretly at night.  If they ever stop emptying it I will have to find something to do with the compost.

We recycle paper as well as plastic, glass and tins.  We do this at no direct benefit to ourselves and are happy to do it.  This means that our general bin has very little in it.  I would do more were there things I could do.  Perhaps taking the various plastic cards away from my wife would help.

I can be smug.  We are using our car less and less.  We are reducing our energy consumption.  We are watching less tv.

We barely use a bath and though we have two powerful pumped showers with roses the size of dinner plates we time our showers and try to keep them short.  I have set the toilets to the smallest flush and I certainly only flush infrequently.  Not easy to do, but there is no down-side to it as far as I can see.  I probably ought to go and wee in the garden.  Given that any water you drink in London has already been through 9 other people – what the heck.

I have a dreadful admission.  We are not on a water meter!  I now have a delicate equation to work out.  We can certainly pay a lot less on a meter.  This is because the water companies have increased water charges by large amounts to ‘encourage’ laggards such as I to move to a meter.  However having a four-bedroom house and it is a positive selling point for a large family to be on a flat water charge.  They are well ahead of the game not having a meter.  What to do?!  I’m thinking of putting my hose out to the fruit trees and running it each night for a couple of hours.

Do you know how much potable water there is  and which way that number is going?

It is obvious: I’m a wet hoping never to become a dry

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Phew! Wot a scorcha!

Posted by chrisrick13 on July 8, 2013

It is obvious: I’m full of energy

For many years I have been very busy raising a family (as part of a team), doing a job working long hours and just keeping on top of stuff.  In my mind there was always a balance.  I have little time to dispense so I’ll just let a lot of things go and spend my time running in money or doing things I enjoy.

Now that I don’t have hungry mouths squawking at me and no sensible job I do have a lot of time.  Suddenly I have the time to chase things I never chased before.

I’m running my money a lot tighter than I used to.  I have an Amex credit card that I pay in full each month.  I get airmiles on it and it is no difference to me how the money comes out of my account but one way means that I will get an extra flight at some time or better seats.  They took money a day early and pushed me into the red last month.  Just for a day.  Got a £22 ‘fine’ from the bank.  I prevaricated for a few days and then rang the bank.  No problem then took the charge off.  5 years ago I would have ground teeth and worked an extra hour.

We have 6 bulbs in the ceiling in the lounge area and 4 side lamps.  In the dining area it is 6 and 2.  In the kitchen it is 4 and 2.  The hall is 7 in the ceiling.  So it goes on and I often, as the only one who does, turn 50+ bulbs off when we go out.  A long time ago I switched to long-life, low-energy bulbs.  I remember that they cost £7 or more but a year ago I got a special offer and snapped up 50 at 10p each.  Recently the next step down has started and I have bought some LEDs.

My electricity bills certainly took a step down.  But that is not the end of the story.  In this country you have the heating on during the day for easily 60% of the year.  More for me.  Those filament bulbs lit the house and heated it.  The energy ‘waste’ was not that great.

So it is for the kettles that I am constantly exhorted not to over-fill.  I heat up a full kettle and make one cup of tea.  What happens to the energy that was put into the kettle?  It warms the house.  So there is a saving on small kettle loads and energy-saving bulbs…but not much.

I have turned my hot water down a few degrees and I am playing the game of not keeping a tank of water hot and ready for an instant shower.  It is a game and some times I come in from the gym and have to manage my time for 20 minutes while the water heats up.  A combination boiler might be the answer.  I have entered a trade-off and I am hoping will have more money to dispose of how I wish.

I see the government telling us we can save £60m by only boiling the water we need.  They did not tell us that it will up our central heating bills by £Xm.  I wonder how many kettles will be boiled dry by accident and need replacing?  Another £Ym.

So it is a message.  A bit of propaganda.  Good propaganda.  But it is only part of the story.  It is really irrelevant as well.  I won’t pay attention unless I see a good reward for doing it and that reward is complex as I have to consider what I might be doing otherwise while I come to my equation result and enter the market or not.

It is obvious: I’m full of energy – all of it bought and paid for

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How does that work then?

Posted by chrisrick13 on July 5, 2013

It is obvious: when you fire a gun

The MPC has announced in hopelessly coded language that it is not putting interest rates up any time soon.

Take the punch bowl away just as the party gets going was said by a Federal Reserve chairman many years ago and has been repeated by many others including the just exited Mervyn King.  We have signs that the economy is ‘picking up’ so why are they leaving the punch bowl there?  Either they are idiots or they are at least smart enough not to believe their own spin (lies).

So are the MPC members having a 6 month break?  Maybe a year away?  What if things do not stay as they are?  Are they saying that they know what they are doing and have things set up just right?  If there are any changes then they’ll reconsider their position?  That is the state I would like them to be in and I certainly don’t need them to tell me.

Are these words for the wider public?  All the insiders know what is really going on so they need something to keep the general population quiet.

For an organisation that has an appalling record of predicting the future to say what it will be doing in the future is stupid.  I can think of no other word.

Does this count as an official denial of rises in interest rates thereby confirming it is going to happen?  It certainly gave the pound a burst of speed in the race to see who can devalue the most.

Write this date in your journals.  Let’s see how soon “markets were wrong to assume that it would start raising interest rates soon” actually is.

It is obvious: when you fire a gun it is important to know which end to point away from yourself

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Never a borrower nor lender be (bah!)

Posted by chrisrick13 on July 1, 2013

It is obvious: I’m interested

Four and a bit years of 0.5% bank rate.  More years of inflation above the level that the BoE is supposed to keep it at.  Even more years of ‘official’ inflation a long way below the real rate.

I thought of shuffling money into ISAs on April 5th.  Research revealed I could get an improvement on my investments of 0.5% by switching.  £50 on two cash ISAs?  I could not stir myself for the complications which included having to watch for a bonus end date.

What do I want to see?  I want interest rates back up to the 12% I was paying on my mortgage in the early years of taking it on.  I am told there will be carnage if that happens.  House prices will crash, milk will curdle in milk pails, there will be a plague of frogs, temperatures on the West coast of America will move into the 120s.

I don’t have any debts and I drink my coffee black.  I’ll take the risk.

It is obvious: I’m interested – are you?

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Stand up straight!

Posted by chrisrick13 on July 1, 2013

It is obvious: it is a zero-sum game

I am in the mode of revisiting old themes.  At the weekend I was once again drawn into expressing the prostitute’s question to someone.  They were talking about selling an ‘asset’.  The quotes are because I’m not sure it really was an asset.

I went through it: will you sell it to me for £1m.  The obvious answer came back.  So will you sell it to me for £5?  An equally obvious and robust answer came back.  So I said that it was not that they could not find someone to buy but that they had a price in their mind that nobody would pay.

We were talking about a house in a foreign country where they speak the same language as us.  It was painful but I asked what they wanted now: £X was the answer.  I asked what they were offering it at 6 months ago: £X+£30,000 was the answer.  I asked where they would be now had they sold it for £X 6 months ago?  No interest payments.  No maintenance.  Interest on (£X less loan repayment) for 6 months.

The response was that there was a price that they could not go below because of loans on the property.  I asked them what they could sell for and come out even and what they could sell for with a loss that they could, somehow, manage.  I asked them what they would do in 6 months had they not sold it.  The response was that house prices might go up.

I offered them their bottom price and said that I would give them £1,000 less next week, £2,000 less the following week and so on.  I just hope that they will think clearly about where they are.

As best as I can tell there are no aliens investing in our economies and taking profits to another planet somewhere.  So the world is an single economy where for every endeavour or trade someone increases the amount of money they have (bytes in a computer owned by a bank somewhere) and someone increases the assets that they own.  I’ve got pounds and would rather have a pair of shoes to walk around in.  The shoe shop has shoes and the owner wants some pounds to go to the pub tonight.  Everyone is happy (ish).

So when I sell shares in the XYZ company because…of a bunch of very good reasons…there is someone who is prepared to buy them for…a bunch of very good reasons.  One of us clearly wrong in our judgement – usually me.

When I see people exhorting me to invest in something as insurance against the coming economic reset it is often very alluring.  However I am reliant on that someone, who I might class as an idiot, being around to pay me my gains when they prove to be wrong in their view of the future.  If they have made enough poor decisions (I might say bets) then they are not going to be around to pay me my ‘profits’.  The loser is then the gainer as they have had the use of my money and do not get to pay it back.  Oh dear.

The point is that we are all in this together.  We need everyone to be a winner but some will win more than others.  How do we manage that?  The answer is growth.

This morning I read several newspapers (over people’s shoulders) and internet articles.  They all said that the new governor of the Bank of England was starting today and his main task was to get the economy growing.  I know he can’t do that.  If he could then he could make all the money he might need for several lifetimes in a couple of months on his own account.  Why bother taking the governor’s job?

Indeed growth needs the governor to effectively find a bigger fool who will lose so that we can gain.  In a world of reducing resources or at least resources costing more and more to find growth is going to slow to nothing.  Unfortunately stability is not a good state to be in.

It is obvious: it is a zero-sum game, lets hope we don’t all have zero

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