It is Obvious

Chris Rick has got altogether too much to say

Archive for September, 2015

Hippo birdie

Posted by chrisrick13 on September 24, 2015

It is obvious: I had a lot to say

I started this blog a little over 6 years ago.

I wanted to write down the things that moved me and think through my arguments, my positions.  I thought that a few people might read them and challenge them.  Not many but enough to change my attitude to a number of important things.

If I stop commenting on the ludicrous things that I see and hear and see every day then my output is reduced almost to nothing.

I have taken a stance on just about everything that matters to me.  I have prepared my arguments and can express them on many topics.

What now?

A much lower level of output but I have a couple of ideas…

It is obvious: I had a lot to say…did I say that before?

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Black is white

Posted by chrisrick13 on September 24, 2015

It is obvious: I need to save some money

If the UK (we) carries on borrowing and spending then at least one of three things will happen.

The interest bill will become so large that we cannot pay it.  It might be that when the interest on our debt costs, say, 5 times that of the NHS we will opt not to pay it.

The entities that have been lending us money will see us as too big a risk and will increase the cost of borrowing from them.

The entities that have been lending to us will decide that we are too big a risk and stop lending to us.  This forces us to repay debt at a fearsome rate.

The response, and I have heard it lots, is that we invest in our people/infrastructure and we will increase productivity and GDP our way out of trouble.  In that case with just 2% GDP growth we will double our GDP in under 35 years.  In a service based economy that will mean that we will have to double our population.  I can’t drive two cars at once.  I can’t travel to work twice every day (once might be nice!).  I can’t eat twice as much.  I can’t heat my house to 40+ degrees.  So we will need two Londons, two Birminghams, two Sheffields, and on for all the new people…most of them immigrants.  Said it before.  I’ll try to double my wine consumption if that will help.  Double number of children…hmmmm.

I would also like to see some numbers about the investment returns on building a bridge/road/HS2/power station.  We are a developed enough place that the small difference of any infrastructure investment on our efficiency or output is very, very small.  Think of the bridge over the Humber estuary.  Cost a lot of money and by taking out a 30 mile drive to get from one side of Hull to the other has changed Hull a lot.  Has it doubled in size or wealth?  No it has not.  In no sense has the ‘investment’ had any net return.

So any socialist (and it always is socialists) who insists on spending our way out of trouble today is saying that they want the good life now with a guarantee that this country will crash in an economic mess far greater than Greece within 35 years.  A very selfish view.

It won’t be as long as 35 years before the crunch comes.   That number is just an outer limit.  It might not even be as long as 35 months.  At the long end there are a lot of people alive today who just do not care.  Me for one.  If it is much shorter then it could well affect 97% of those alive today.

Challenge that spender to quantify his numbers.  Force her to consider the hard decisions.  Do we let the little old lady die because there is no hospital bed today or do we let her 20 grandchildren die of Smallpox in 35 years because there is no NHS.  “What is the best way to London?”  We are here so think of a way!

It is obvious: I need to save some money – better get spending then

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Been here before

Posted by chrisrick13 on September 14, 2015

It is obvious: digging inside a hole does not get you out

That’s it then.  The Labour party has committed suicide.

We should expect no other.  A very small group of (well-meaning) Labour activists and party members from a long way to the left have voted Corbyn into the leadership.  Democratic?  Possibly but not sure where the union votes stand on that.

There is the problem though.  The idealists, the socialists motivated enough to join the Labour party have marched behind Corbyn.  What about the people who vote Labour?  Few of them will vote for Corbyn.  Perhaps those on benefits who see a larger trough with Labour will stay with the party.  It is not enough though.

Never forget that a week is a long time in politics.  It could all swing round.  However the people running the Conservative party seem to be smart.  They certainly out-thought me.  I think they will give Corbyn an easy ride for some time.  Give him the opportunity to dig a big hole.  He has certainly come out digging today.  Then they will publicly pick apart his policies.  PMQs will be a good watch over the coming weeks.  In the meantime the remains of the Labour party, the bit of it that got 14 years in power will be plotting.  I think that Conservative policy will try to make sure Corbyn is the leader in 4 and a bit years.  They will have to work hard to see him survive!

Today one of Corbyn’s supporters with zeal in his eyes talked on tv of Corbyn’s economics.  He said that all the country was behind this refreshing new approach.  Just a minute sir.  You do not speak for me.  You do not speak for most of the people I know!  He went on to say that this was not a time for austerity and that we should invest in building this country to get jobs and economic prosperity.  I would ask him what his link is between building a bridge or nationalising an industry and prosperity or jobs?  When he says ‘we’ I know he means me…through taxes.  His opponent on the tv said that cutting expenditure as the Conservatives were trying to do (sic) or raising taxes were just two different sides of austerity that will cut the deficit.  At least in that small measure the Conservatives are more honest.

The country is in a very poor place with all its debts, both on view and hidden.  When we have to borrow money at the average long-term interest rate visibility will be high for all debts.  That time will come.  Eventually.  Stirling (pun on purpose) work fixing loans to the government for very long terms on low rates is happening now and has been for a while.  But a lot of debt will quickly roll over to the new higher rates when they come.  There are plenty of home owners will go bankrupt when interest rates rise but it takes time to get someone out of a house.  In that gap the government will beat them into bankruptcy.

Corbyn’s consideration of this is that if we borrow more money all will be well!

If he wins then I am in a group that will benefit out of all proportion – the elderly.  Just need to get assets abroad and I can live comfortably with a trickle of repatriation of those assets.  I can even use them to have my sons send food parcels in from abroad!  If not food then something that has a good exchange value.

It is obvious: digging inside a hole does not get you out, getting help from someone with a bigger spade does not improve your prospects

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Is that a castle I see?

Posted by chrisrick13 on September 10, 2015

It is obvious: you want to own your own home

The housing market is a market but one that is heavily interfered with by government.  ‘Market forces’ simply does not apply.  There are huge lurches in price (not value) as all the interference does not dampen and stabilise but runs positive feedback and creates chaos.  Who cares?  A house is where you live and whatever the cost now is irrelevant because you are in it.  The problem comes if you have to sell and the ‘market’ has moved against you or your circumstances change and you can no longer afford to own it.

If the price oscillates it is difficult to see if there is a trend in house prices but you can work out what ‘forces’ might apply to influence the trend.  It is not important to home owners as they are in their home.  However it is important to people who are retiring and have hopes that some of the value of their house will provide income in their retirement.

A word of warning.  All the house price numbers need to be considered either as absolute numbers or inflation adjusted.  That makes it tricky as there are so many inflation numbers many of which are dodgy at best.  I wonder if that is deliberate by government?  The average price of a house according to Halifax in mid-2007 was about £200,000 and in 2012 dropped to about £160,000.  That is a fall of about 20%.  Over that period inflation was about 20%.  So in 2007 terms that average house was worth only about £130,000.  This is a drop of about 35%.  From that low it has gone to about £200,000 which is about…£150,000 in 2007 terms.  Not good from an investment perspective but  given the negative interest rates on bonds actually not bad for the last couple of years!  You still have to be in the right part of the country as the average only applies to a few houses in the country!

Assume that there will be some large dislocations in the economics of this country what will be the trend for house prices?  Bear in mind that one of these dislocation might be exchange rates of the GBP.  So you have to stand in this country as your house will!

We have to build another 20 million houses over the next 20 years to hold the increase in population needed to get GDP growth that will enable the country to service its debts.  Yeah.  The likely projection of UK population growth against the current rate of building sees this country short of 3 million houses over the next 10 years.  Provided there is not a breakdown and collapse of this society it means that demand will be much more than supply.  Prices will go up but might not go up in real terms.

It means that the people who drive the market will less and less be able to enter the market at the bottom.  Indeed they will not want to.  This implies that large rich entities will buy these houses and rent them.  This is akin to feudal lords owning everything and letting peasants live in houses on their land if they work for the lord 24/7 – i.e. pay rent.  Will our society stand for that return to the middle ages?

If you have property beyond your home then probably hang on to it even in the face of tax increases.  It is going up in value.  It should not but I am no Canute.  There is at least a year in this bubble and probably more.  It will turn quickly when it does though.

It means that property you own has become a gamble.  The same as all assets that you might own.  Maybe owning a debt is better…?

It is obvious: you want to own your own home and you need the people around you to do the same

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I still hate the BBC!

Posted by chrisrick13 on September 2, 2015

It is obvious: there is a lot north of the border

Yesterday in the car I had PM or some-such on the radio.  The SNP education minister was being questioned.  They were trumpeting their education initiative including the re-introduction of testing to determine how children were progressing.  She was asked why the SNP had supported the stopping of testing in the coalition with Labour in 2004.  She answered a completely different question!

I almost pulled to the side of the road better to listen to the wings being pulled off this odious fly when the question was repeated.  But no, the interviewer moved on to another question!  Do they have no killer instinct?  Paxman did.  I think that perhaps they don’t listen to the answers.  An opportunity to make politicians more honest and more accountable.  What an easy tactic: answer any question you like if you don’t like the one that was asked.

That put in mind the SNP economic promises based on £11bn a year net oil revenue at the time of the referendum.  Of itself that figure was always under question.  The spending and funding of £11bn was based on a $120 a barrel oil price.  Today the UK (sic) government is subsidising Scottish oil production at the level of £1.5bn a year at the $45 price.  Were Scotland independent how would it fund not an £11bn input but a £1.5bn outflow?

The oil price will not stay this low forever but it has done a year and at least another year is very likely – more is quite possible with a global downturn in activity and new producers coming to the market (Iran, improved fracking techniques).  Could Scotland withstand 2 or 3 years of no income?

When the oil price does inevitably rise how much oil will there be for Scotland to drag out the ground and how much will each barrel cost to produce?

I wanted shot of Scotland but to my annoyance I think that the whole is greater than the sum of the parts.  Given the chance I would still have voted YES to independence.  There are too many rugby defeats for me ever to like Scotland.

It is obvious: there is a lot north of the border: heather, mountains, water, sheep, rain, snow…

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