It is Obvious

Chris Rick has got altogether too much to say

Archive for March, 2014

Cooo. Cooo.

Posted by chrisrick13 on March 31, 2014

It is obvious: the student loan pigeons are coming home to roost

I worked for a company on tenders for work that they did not want to get.  They had to be in the club.  If they did not tender with realistic bids then they would not be asked to tender for things that they did want to do.  There was some skill, effort, and money went into plausible bids that would nonetheless fail.  Luckily these skills were well practised when they came to bid for things they really wanted to do.  Occasionally there was a disaster and they would win a bid they did not want to win.

So it is with student loans.  At £1,000 a year and with well fewer than 50% of people doing degrees it was something worth doing.  Now a good way of cutting out 50% of those applying for a job is to reject all those without degrees.  For most people, to be in that club means a debt approaching £40,000.  Is that a club you want to be in?

In the US my daughter-in-law’s parents re-mortgaged their house to pay for her college education.  Another friend’s daughter-in-law has over $300,000 of debt on her way to becoming a surgeon.  In her late twenties she needs to earn a lot of money to pay off that loan while she can still see to cut straight…and maybe have some children on the way.  What if you have run up £40,000 for that famous degree in media studies?  Are the club fees really worth it?

It is almost Groucho Marx’s quote: I’m not going to do a degree that a university is stupid enough to let me do.  A lot of school pupils are doing that equation as they come to end of their school time.  When degrees went to about 5% of the population the cost was well worth it.  Now that 50% of the population are getting degrees at many times the cost it has become obvious that they just aren’t worth it just to be in the club.

It is obvious: the student loan pigeons are coming home to roost – they go well in a pie when you have no money.

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I can see it – they haven’t got any clothes on

Posted by chrisrick13 on March 20, 2014

It is obvious: If you put 1,000 worms in a line…

In the period around the budget I have heard many discussions about the £10,000 tax-free allowance and where it should go.  (I am at the end of my tolerance of the phrase “hard-working…”.  Too many people I see are far from that.)  On the minimum wage you will get £13,124 a year on a 40 hour week.  You might get some tax credits but that is too complex a piece of research for me.  So you will pay £625 in tax.

I think it quite reasonable that the people who earn very little pay little tax.  This allowance is targeted accurately at the low paid.  Yes the high paid get it as well, but they get stuffed for lots of tax at the other end of their income.  When you are paying tens of thousands of pounds in tax, £625 is not a behaviour changing factor.

There is a living wage that is not official or standard or anything.  It averages out at about £8 an hour and on it you bring home £16,640 a year.  If you can’t bring all that home it is very likely that you will end up grabbing some money off the government.  That money will be the same as the £1300 you paid in tax.  So why not set the tax-free allowance to £16,640?

What will have to happen is a balancing tax increase.  A vote losing tax increase.  It could be sold to the public though.

Does not matter that we all get it including the rich.  It is easy to calculate and a lot of people will simply be out of the tax system.  People with little money and little earning power will benefit directly.

So why do they keep a tax that is aimed exactly at the people who earn very little.  You start paying at £7,748 up to…quite a long way now.

I am talking about my favourite tax: NIC.

So why not simply add 14% to the basic tax rate and drop NIC?

The main reason is that despite seeing their contribution on their payslip every week/month most people are too stupid to realise that it is a tax.  Another reason is that without it there are 40,000 people who would be out of work.

This would mean that the basic rate of tax would be 40%.  Shocking.  It is already so why are you shocked.  It is like roads that are re-surfaced.  The tax system is hugely simplified in one go and a lot of people, who have no money anyway, stop paying tax.  Thousands of accountants, tax advisers and civil servants are out of work as even an oxygen starved goldfish can calculate tax.  We watch to see who will be first to dig up the road so we watch to see which government will introduce an exception to the tax rule and put all those accountants back into jobs.

It is obvious: If you put 1,000 worms in a line…one of them will be sure to wiggle and spoil it.

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Still stupid

Posted by chrisrick13 on March 18, 2014

It is obvious: I have lots of ideas

I think I have come up with a new business idea.  First I attract a lot of people to my scheme.  The tag is that it costs nothing to join and they will get money in their pockets.  Sounds too good to be true but on this occasion it isn’t.  I will offer to spend the time to go through all their expenses such as energy bills, phone bills, insurance, broadband, in fact anything and I will take 10% of any reduction in their bill that I make for a year.

I have just switched energy supplier.  I did it a while ago – too long a while ago.  I have saved £60 a month.  £720 a year.

I know I can cut my house insurance but getting like for like cover takes time so I have not done it.  However sitting down and working out exactly what I need and buying only that is a good thing.  I know that when I do sit down and do it that I will be saving another £60 a month.

Why, oh why have I not done it sooner?

If I could just hand these tasks over to someone else I would happily pay them £150 to get £1250 off my bills over a year.

I went through agonies over multiple phone/tv/broadband connections but eventually did cut those bills by about £60 a month…and perhaps more but it is difficult to compare.  Perhaps that experience frightened me away.

There is no catch to the deal I am proposing.  I only take money out of savings .

Perhaps there is another deal on simple shopping.  I go to Sainsburys and look round their shelves.  When I see a half-price deal I buy a load.  I have got local people to let me know their needs and I can accurately buy what they need when it is cheap.  Cut a deal at 50% of the savings.  Have to go into Sainsburys every day so there is a big downside.

The problem is that I am not contributing in any useful way to man’s existence on this planet.  I am just converting the advertising budgets of large companies into subsidies for shoppers.  Hmmm maybe I am doing something useful.

It is a cottage industry not a decent source of income but the thousands I have saved for myself in recent years are worth having.

There is a better idea.  Force companies to sell things on very simple tariffs and do not allow them to subsidise ‘loss-leaders’.  Then we all know that the price we see is a like-for-like comparison with other prices and the companies can only compete on efficiency.  The most efficient survive, the others go out of business.  Never happen as we are too stupid as a herd to make it happen.

It is obvious: I have lots of ideas – nothing wrong with an idea

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Where are we now?

Posted by chrisrick13 on March 17, 2014

It is obvious: shout out loud

The average mortgage interest rate now is 3.5%.  Lots of flaws in that statement but it will do.  For much of my mortgage-paying life it was twice that.  For some of it the rate was four times that.

Buying a house today?  Average (sic) price £250,000.  So £9,000 a year in interest.  Expect it to be £18,000 for a good proportion of the life (death) of the mortgage.  Be prepared for it to be £36,000 a year for some of that time.

Having a few seconds thoughts?  See if you can dig up a few ninth and tenth thoughts.

It is obvious: shout out loud – won’t make any difference.

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One is not a good sample

Posted by chrisrick13 on March 17, 2014

It is obvious: there is always a bigger fool

The guy who does the jobs I am too incompetent to do and cleans my windows is selling his house.  He has been rattling around that idea for a year or more.  He was going to sell and get a pub which I had to work hard on dissuading him from until he researched it.

About 9 months ago he was looking at £290,000 and today he has had an offer for £350,000 after 35 people viewed it at the weekend.  If that is not the definition of a bubble I don’t know what is.

He will be done with his £100,000 mortgage, moved south and in a house for £200,000 in any state…as he has the skills to convert it into something nice and will live in a hole in the ground until it completes the work.  He is even considering renting and watching property prices for a year or two.

He has worked hard to bring up two children on his own and get to this stage and I am pleased for him.

He is about to do what we all hope to do.  He has found a bigger fool.  Someone is going to buy him a house and put £50,000 in his pocket by committing to paying £1,000 a month (at least) to a bank for 25 years in the hope that they can find a bigger fool at the end of that time for the same deal.

Alongside the doubling of GDP over the next 28 years this is another bit of logic that proves the economy of this country cannot be rescued.

Today Shaun Richards dug out a press release from 2008 saying that there were to be 10,000 new homes in Ebbsfleet where after the announcement of 15,000 last week the only progress has been for the number to go up by 5,000.  Not to forget that to meet the projected GDP numbers we need more than 1,000,000 new houses each year and the people to fill them.

If you want to play the timing game sell your house now, rent somewhere and hold your nerve as house prices go up.  Then watch them go down and still hold your nerve.  Buy after they have started to creep up for 6 months.  At the same time pray that nothing goes wrong with all those pounds you have in the bank.

If you want to play it safe, keep your house and your skills.  At the other end of the economic problems you will have an asset that will quite quickly move to its long-term average of about 3.5 times a person’s salary.  It is an asset that on reduced expenditure will keep you fed and watered for about 7 years with state pension added in keeps you going for about 10.  With good skills that figure pushes out a long way.

…and buy a shotgun.

It is obvious: there is always a bigger fool, just make sure it is not you.

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Smile you are on…

Posted by chrisrick13 on March 9, 2014

It is obvious: it wasn’t me guv

Do you remember when you were up to mischief as a child?  You thought you were being so smart.  Your parents would never know what you were up to – hidden, secretive.  Roll forward 30 years.  Your children doing stuff so obvious and they thought they had you fooled.  Ho ho.

Reporters standing in places throughout China and the police harass them until they stop taking pictures.

The troops in Crimea without insignia…but the trucks still with their registration numbers on so that the Russian regiment that they belong to can be identified.  Then observers try to get into Crimea where they are shot at and denied access.

That nice Mr Putin thinks he can fool the world.  Well he can, but less and less of it every day.

He even shuts down the internet and censors content…but not from satellite links.  It takes time.  It is inexorable.

There are not many pictures coming from Crimea.  Compare that to any event in the western world.  Half the people close by have phones held high and are streaming straight to You Tube.  This keeps people honest.

If you have nothing to hide you are in the open.  Otherwise?

It is obvious: it wasn’t me guv – oh yes it bloody well was

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Bang!

Posted by chrisrick13 on March 3, 2014

It is obvious: there are no squashed hedgehogs on the roads any more

That nice Mr Putin has stopped anyone intervening in the internal affairs of the nation called Syria.  However it is OK for him to intervene in the Ukraine.  Two-faced git.

There is one good thing about the world economy: everyone relies on everyone else.  So Mr Putin has seen the world markets moving against him and he is in a poor place to rescue his economy.  He has the oil and gas weapon.  Now he can just sell it all to China instead of Europe.  It will cause problems for Europe.  However relying on China is not that smart a move.  The Chinese are far smarter than he is and they will need help soon enough.  Once you have used oil and gas supplies as weapons, as everyone forecast he would, the value of those weapons decreases.  If he weans Europe off his oil and gas it will take a very good offer to get Europe back again and he will need to.  Mr Putin has done the only thing he knows how to do: send the tanks in.  It is a different world now.

I am back to a familiar theme: triggers.  Is Ukraine going to be a trigger for step changes in the world economy?  No.  The problem is that it does not need a global trigger.  Just one country has to have a problem and everyone else will.  Ukraine is not that country.

What about UK triggers?  My theory is that triggers are, by definition,  unexpected which makes them not subject to prediction or analysis.  However there are future events in the calendar that might make us vulnerable to otherwise harmless trigger events.  The European elections are only 7 weeks away.  UKIP to come first?  Quite possible.  Then the Scottish referendum comes soon after.  I want Scotland to go but it will be the worse for the sum of the parts.  We should stay together.  A few months ago independence had no chance.  It does now.  Then there is the backstop of the general election in mid-2015.  It really does not matter what the result is, present policies will burst the bubble soon after it.  I wonder that the coalition is daring Labour to try to win and sort the mess out.  Maybe the Conservatives did have the right idea to take power at the election knowing they could hang on for 5 years and put Labour back in for the mess.  Have you noticed the colour of Mr Milliband’s hair?

It is obvious: there are no squashed hedgehogs on the roads any more but there are still hedgehogs around.

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