It is Obvious

Chris Rick has got altogether too much to say

Archive for December, 2013

I’m too old to die

Posted by chrisrick13 on December 24, 2013

It is obvious:  if you see a shadow on the ground don’t look down at it

I have watched the Labour party switch of attack on the economic performance of the government with interest.  I have sympathy for their attempts to hold the government to account.  They are hampered in that two of the major architects of the disaster we are in now, sit in the camera on the opposition front bench every day.  Anything they say has roots in the mess the pair made while in power and left for anyone to sort out and not admit they did it.  They started with the ‘plan B’ attack.  They have had to abandon that as the government has engineered what looks like a boom and working ‘plan A’.

So now they have caught on to the increase in inflation compared to the increase in wages and developed this attack.  These two numbers show that we are getting poorer.  It is essential that we do get poorer if we are to ever get the economy…and here I am at a loss for a good word…fixed.  What I mean is that on our behalf the government has to spend less than it gets in taxes and get some debt paid off.  We also have to get what we spend on imports close to what we get from exports.  In this regard we are competing with people who earn a dollar-a-day.  The decrease in our living standards is essential to ‘fix’ the economy.

Of course we don’t want to get poorer.  The Labour party are berating the government for making us poorer knowing that they will also have to do it when they next get power.  Missing from their criticisms are any proposals about how they will ‘fix’ things.  Neither party can admit that lower living standards are inevitable.  So although Labour are criticising government for the drop in living standards neither party can actually discuss it.  So why is the media not hammering our politicians with these questions?

I am amused to hear that low interest rates are essential for the economy to recover.  If they are that essential why has nothing much happened over the 5 years that we have had low interest rates?  All these economic functions are zero-sum.  Low interest rates help borrowers and they can spend.  High interest rates help savers and they can spend.  After 5 years isn’t it time to try the other way and give the savers an opportunity to spend?

Higher interest rates are coming to a bank near you.  The rate of exponential increase in GDP that is required for our economy cannot happen – ever.  I have shown that 35 years is impossible but have also rolled that limit in to less than 5 – that particular crunch is at most a few years away.  Before then we will have the inflation acceleration crunch.  The government will be forced to increase interest rates.  There is a narrow window to do this and stay in power.  The government can alienate younger voters and rely on pensioners to keep them in power, but pensioners are going to start dying in large numbers soon.  They have to act before I die off.

The major source of most people’s wealth in this country is their house and the value of that house is predicated on a 21-year-old contracting to work and save to pay off a 25-year mortgage…for 25 years.  Economic slavery really.  I know I wouldn’t were I in that place today.

It is obvious:  if you see a shadow on the ground don’t look down at it look up

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They are not out to get me

Posted by chrisrick13 on December 11, 2013

It is obvious: have faith

I’m not a conspiracy theorist.  This makes life much more complicated.

I look at a lot of stuff on the internet.  I look at 24 hour news a lot more than I should.  I am now captive in the car for 2 hours a day listening to Radio 4 news as I cannot stand DJs choosing what music I listen to and talking over the intros.  So I see/hear statements that seem like facts.  I find it difficult not to assume that there is substance behind what I see or hear.

Today I saw this:

“We think there are good grounds to be optimistic that the majority of households will cope with a slow but certain transition to more normal interest rates,” said Bob Pannell, the chief economist for the Council of Mortgage Lenders (CML), this week.

With the same amount of value I could say that I think Santa Claus exists.  I would like to see a reference to a body of work that put valid scientific method into arriving at that conclusion.

What I do have is logic.  Were that statement true and provably so then there would be no harm in increasing interest rates.  Banks would not have ‘non-performing assets’ (big losses) hidden in their balance sheets.  There would be no need for the support that the government is giving to the banks.  All would be well.

Clearly the statement is tosh.  Why did he say it?  Why was it not critically analysed and published with caveats or simply not published at all?

No it is not a conspiracy, just people acting in their own self-interest.

It is obvious: have faith – it’s cheap

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Horsemen of the Apocalypse (1st XV)

Posted by chrisrick13 on December 10, 2013

It is obvious: I’m never going to make a difference

The team has not been out for a while as I struggle to come up with an optimistic view of things.  For a long time I have operated a strategy of getting on with things but being ready for a reset.  Not a wipeout crash but a rapid tearing down and a re-build to a different shape.  Long ago I gave up finding an insurance policy.  There is not one.  My only thought is the enduring one of investing in yourself..  You can plan to work all your life: you have to do something with it.  Why not continue to build…whatever it is you do.

There are preparations you can make and not least of these is a plan.  If we get to a reset then some things will move fast and others will be slower.  So there is opportunity to move any assets you have from something falling slowly into something that has crashed or into an appreciating asset.

For example houses will fall in value.  This will be because interest rates have gone up just a few percentage points or lots of people lost their jobs.  Houses will be a good store of value over the long-term, but you can’t eat an iPad or a brick.  If you can hang on to it then you will be able to realise that value in one way or another on the other side.  However if you have cash that is buying less its decline will likely be slower so, and this is the key, get your timing right and buy a house.  Do not buy a property now or soon.  I’ll write more on what to buy another time.

Stocks are volatile.  If you see a big one day fall, get out.  You might miss a top by a little but you will have a lot of cash that you can invest back into shares.  Much like 5 years ago.  Timing is all.

What about the shotgun, food and water, and barbed wire around your house?  You might be able to suffer less for a while but you are unlikely to bridge a reset without serious effort and money.  Don’t bother.  Go on a decent holiday instead.  The one preparation is that if things start to look ugly get some cash out the bank.  A decent amount.  Its purchasing power might fall but you will be able to buy things when others can’t as the cash machines and cards in general are not working.  You might even consider getting some US dollars.  Who knows.

For the rest focus on living life and enjoying it.  There might be a good game on tv especially if the Horsemen of the Apocalypse have a full-strength team out.

It is obvious: I’m never going to make a difference except to myself

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Bright idea 253 – A price for everything

Posted by chrisrick13 on December 7, 2013

It is obvious: I’m too poor to afford principles

I was thinking about student loans.  They are a tax.  It also seems unfair to me as the government will get more tax income from the person than otherwise as they will earn more.  We will tax you to gamble on earning more and paying us more tax as a result.  To take it completely away from elitism I have an idea.

Offer anyone who wants it a ‘student loan’.  The quotes are important.  You can take it out at any time.  The cost is that when you work you will pay income tax at the prevailing rate plus 1% (or 2% or 3% or whatever).  That is the only rule except that there is also an age factor that takes account of how old you are when you borrow.  At 21 it is flat as above.  At 40 multiply by, say, 2.7.  At 60 multiply by, say, 10.

That is it.  Simple.  Why the quotes?  Nobody checks whether you are actually on a course.  You are only going to get 3 years of loan though.  You can emigrate.  You can live under the railway arches.  You can put it down as a deposit on a house.  You can buy a Ferrari.  You can develop a serious drugs habit.  You can play the stock market.

What you can do is mortgage your future.

While we are at it, the government can pay for useful behaviour.  How about £200 a year for every year that you have a working GS chip implanted?  One of my previous ideas fits in.  Have local energy generating stations and pay per megawatt for all the energy you generate on an exercise bike.  There is a lot of useful behaviour that a little cash encourage.

Why should it be one way?  Allow me to pay to do things that I might not ordinarily be allowed to do.  Tricky to think of anything.  How about £300 a year and I can park on single yellow lines without fines.  Must be others.

It is obvious: I’m too poor to afford principles – might be able to find a bob or two for some vices though

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Good idea – 11326

Posted by chrisrick13 on December 5, 2013

It is obvious: get your own back

I was moderately amused by my wife’s retirement date.  Younger than me she retired before I did.  Then the government started pushing up the retirement age for women and as it stands she will now retire two months after me!

Ho, ho, ho.  But what does it mean?  For a start she is over 60 and still working.  So we are better off that she is bringing in a large salary and not a pension.  If she did not have a job then her pension is still a couple of years away.  We would be £20,000 worse off.  Multiply that by a million women of a similar age and you have £20bn off the pension bill.  The government can use it to build HS2.

For those who do continue working they will pay NIC which stops at retirement.  For my wife that is nearly 3 years later or nearly £20,000 in extra payments.  So the total cost if she works until November 2015 is £40,000.

But she has paid her dues.  She has always been paying NIC and tax (unlike me).  There was a contract or she thought she had a contract.  But the rules changed mid-way.  Does not seem right.  The government might say that they have invested in public health, research into good diets, food standards and a bunch of other stuff to increase her life expectancy so they are justified in changing the rules.  A lot of people given the choice of extra years of life living in poverty might opt for a different deal.

It does seem reasonable to increase (or decrease) the pension age in line with life expectancy.  Who would trust the figures the government came up with?  It needed advertising in advance.  In line with my boundary condition theory, move it but warn you are moving it and we will all organise our affairs to maximise our outcomes and minimise our losses (maximin).  Perhaps we can arrange to die or, as Hot Black Desiato did, arrange to be dead for a year for tax reasons.

But the government has announced dates for moving the pension age up.  Too little, too late.  Don’t worry though the people making those decisions are over 50 where there no change planned in their pension age.  I remember a science fiction story, made into a film: Logan’s Run. Everyone had an isotope planted in their hands that marked them for death at…21 or something low as there were so many people on the earth.  The person getting this to happen was the first one to step into the killing booths as he was over 21.  That is how it should be for politicians.  They should be first up for every law enacted.

I have a rule for e-mails.  Whenever I mention someone I always put them on the copy list.  It keeps me honest…or dishonest.  I wonder if the politicians might be a little more honest and effective if they had their laws visited on themselves.

It is obvious: get your own back has two interpretations

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I didn’t tell you so

Posted by chrisrick13 on December 4, 2013

It is obvious: we live in interesting times

Still with the problem of provenance (isn’t that somewhere in France) I heard that big variations in weather activity are on the way.  Not that we haven’t had a few already.  In the past I looked at both arguments and it seemed very like the cancer and cigarettes debate of 30 years earlier.  Whether the increased variation is cyclical itself or caused by us matters little in the short-term but in the long-term it better not be us.  There is only one earth and we are all on it together.

The high-speed and long length communications means that we are all in everything together.  There are less disasters and things going wrong, wars, people dying than there were a hundred years ago.  We just hear about it now which we didn’t then.  I watched pictures of events surrounding the murder of Lee Rigby yesterday.  Anything happens anywhere and it is likely someone with a phone will get it all and sell the footage to the BBC.  (Should it be called the bitage now?)

So in the world of increased variation we are much more in it together than we might like.  Similarly with economics and trade.  Do you remember the ‘news’ that China was going to throw money at us a few years ago?  Such tosh is the other side of fast information transfer: the disinformation goes just as fast.  The shiny Mr Cameron is in China selling them stuff in return for not complaining about human rights abuses.  I see a nice fix to a lot of our problems: we could sell them Scotland.  It would work on so many levels.  No referendum needed.

The interconnectedness of it all is the problem together with so many things being zero-sum.  We get our currency down and somebody else’s goes up.  We buy more than we sell and have a trade gap and someone else has a trade surplus.  It is like a person who runs up an overdraft.  They work to get rid of it and build savings.  The bank smooths things out with the overdraft until the person gets back into balance…at a cost.  So it is with countries until things go wrong.

In an uncertain world reducing lines of communication, reducing trade will improve stability.  The mantra is growth and exports.  I wonder if we should try for self-sufficiency and shrinkage.  We could stick two fingers up to what the world thinks of us.  Keep things short.

It is obvious: we live in interesting times, much too interesting

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I’ve not been well

Posted by chrisrick13 on December 2, 2013

It is obvious: take your medicine

I read everywhere that the central banks have run out of weapons in their attempts to…what are they trying to do?  Have we lost sight of what they are trying to do?

There was a ‘credit crunch’, whatever exactly one of those is, bankrupt banks and a fear that the economic world system was about to collapse in catastrophic fashion.  Drastic action was taken and continues to be taken.  But what has been achieved?  I wonder that if no action at all had been taken that we would be in any worse place.  The ride would have been more scary for sure.

A collapse has been prevented.  The chances of it happening in the near future have been hugely increased.  If it does happen the bad effects will be greater than if the central banks had just stood by and applied judicious triage.

I do now think that the actions of the central banks have only supported banks.  That this helps national economies, their populations or companies is coincidental.

So there is a lovely irony here.  Interest rates can not really be lowered.  Maybe a quarter of a percent.  QE has been halted and despite the claims of ‘it would have been much worse without’ few believe that.  There is nothing that can be done for large effect.  The schemes that the chancellor has introduced and the words of the governor are small things that nibble at the edges.  I will take the jaundiced view that they are being put in place for a little face saved for a rainy day that will come later.

So there is nothing they can do to any large effect?  Oh yes there is.  Try putting interest rates up a quarter percent or winding £20bn out of QE.   There will be huge effects.  But not desirable ones.  However those undesirable effects are coming along anyway so why not do it?

It is obvious: take your medicine there is less pain doing it now and it starts working sooner

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