It is Obvious

Chris Rick has got altogether too much to say

Archive for March, 2016

Degrees of freedom

Posted by chrisrick13 on March 30, 2016

It is obvious: I know what I am

I have to hope my wife does not read this and I am repeating myself

When I did my degree the percentage of people doing one was in low single

I thought it quite appropriate that people like me went and sat in front of
blackboards for 3 years.  I had friends who wouldn't chisel their fingers off
when doing woodwork that went on to become apprentices.  In between there were
those just with O/A levels various college qualifications of one stripe or
another (HND, OND).

My dad employed quite a few people in his workshop.  He trained apprentices, he
employed technicians to do complex things and he had a couple of engineers who
designed stuff.  He knew where to go to get the skills he needed.

Now it is different.  About 50% of the population have or are getting degrees.
 At that level people with IQs at around 100 must be getting degrees.  They
cannot be differentiated from a Stephen Hawking who just got a degree (to start

What is worse is that employers are using degree or not as a filter.  You have
to be in the club to stand a chance of getting a job.  That club is going to
cost easily £50,000 to join.

Someone with an apprenticeship is not a lesser person than someone with a
degree.  They are just different and it is useful to know that difference

What is the result?  A way round the problem has been adopted by companies as
indicated by this cut from a job advert:

(minimum 2.1 degree from a top 50 UK university)

Why bother moving the goal-posts?

It is obvious: I know what I am but it is not obvious to others now

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A leopard never changes its stripes

Posted by chrisrick13 on March 16, 2016

It is obvious: I can spot a Labour financial ‘expert’ at a 1000 paces

Did you hear the Labour party with its announcement about managing the economy?  They are going to do it in a financially responsible way in future.  So they were weren’t before ?

The words of a Labour councillor, when asked what they should do in the hard economic environment we are in today, still bounce around my mind.  She said that they should go out and borrow as much money as they could and spend it as it was so cheap at the moment.  Missing two points.  What happens when it gets expensive?  Who is going to pay it back?

But Labour said that they will not borrow money to spend.  They even avoided the ‘I’ word.  They did not say that they would only borrow to invest.  If they are not aware, whatever you borrow you still have to pay it back.  The lender does not care what you spend it on.  Investing in infrastructure is not investing.  It is spending.  When you invest you expect a financial return.

So that is an astonishing step for Labour.  They are not going to borrow.  Then they spoilt it by adding ‘in normal times’.  Normal time is when interest rates are 4% or higher.  A 1% interest rate rise will finish off the UK and we will be in anything but normal times.  The chances of a voluntary increase to 4% because the economy is booming and needs stabilising are just about zero.  So Labour won’t borrow in maybe 20 years time when things are ‘normal’.  It got one day of headlines before analysts picked it apart and it was forgotten.  Did they expect it to last until the budget and steal the Chancellor’s headlines with the budget.  Did they expect it to last in your mind?  Did it go down well with people who have and will always vote Labour?

Same old same old.

It is obvious: I can spot a Labour financial ‘expert’ at a 1000 paces – looks just the same as a Conservative one.

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That’s interesting

Posted by chrisrick13 on March 16, 2016

It’s obvious:  Look out!

As one of those who sits around like the cackling witches under the guillotine in Paris I often wonder when the head will arrive and how it will get there.

The country spends more than it earns and we have a huge national debt.  I do not have any debt but the people of this country have huge amounts of personal debt.  At some point the issuers of that debt are going to ‘send the boys round’.

I will mention that I am one of the debt holders as I am expecting a pension when I want to take it.  I nearly said ‘confidently expecting’ but I am not.  Alas I have no ‘boys’ to send round.  I have a vote but what use is that?

Pulling up at the gate of the country field a farmer leaning against it the driver asks “what is the best way to London” the reply is “I wouldn’t start from here”.  Alas “here” is where we are.  (Personally I am always “here”.)

I listened to some of the Chancellor today.  He tells me he is well on the way to fixing the roof while the sun was shining and is ready for the gathering storm clouds.  Tosh.  The government does nothing because you and I will not accept lower pensions, fewer hospital beds, people kicked out of prison because there is no room, holes in the roads, Russia flying bombers over Scotland (perhaps we could pay them to drop a few if they can target well), nasty stuff in our livestock and our food.  We will not accept a lowering of our living standards but will not pay for maintenance of it.

How will it happen?  I think it is simple.  Everyone is sure that the USA will do nothing with interest rates today.  There are plenty who think that some serious rises are on the way and soon.  Inflation might well be ready to rise.  The BoE sat on its fat arse for several years and watched inflation at 5% without doing a thing when its sole mandate was to keep inflation at 2%.  Thankyou Lord King.  How’s your pension?  Thank goodness that central bankers are so incompetent.  They have been collectively trying to get inflation up for a long time now.  If they actually knew what they were doing then surely they would have achieved it by now?

But inflation is coming.  Pressures are coming.  With higher inflation come higher interest rates.  Some of the truly economically healthy countries will act and put up interest rates.  The BoE will do nothing for as long as it can.  But there will be a squeeze.  Our exports will boom with a pound the same value as a dollar and a euro.  So will our imports.  The only way to get the pound to rise will be to raise interest rates.  Nobody will buy our bonds and lend us money.  Much of our debt is long-term but every day a hefty percentage comes due and has to be re-borrowed.  Only huge interest rate rises will persuade those lenders to lend us more.  They won’t have to bother sending the boys round they can just ask for their money when it comes due and not lend any more.

That is when our economy collapses.  Interest rates go up.  Not much.  There are many families still in negative equity on their home loan.  They are not the big problem.  There are many families who can pay their mortgage with bank rate at 0.5%.  Many of them can’t pay it at 1.5%.  When they start to default house prices collapse.  Importantly banks go bust.  These are the same banks that the government has supported for 7 years while it ignored the interests of you and me.

So that is how it will happen.  BoE base rate goes to 1.5%.  It is coming to a central bank near you soon.

It is obvious: Look out!  No look in.

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Ask the question

Posted by chrisrick13 on March 13, 2016

It is obvious: the EU is doomed

I am developing a dislike of Nicola Sturgeon.  It is unwarranted because she will take her revenge on the Scottish people.

Today she started the tub-thumping for Scottish independence.  Doing that is OK but the UK going for independence from the EU is not.  Not sure I understand the logic of that one.

I wondered how she was going to handle oil.  Form £9bn a year to fund her spending plans net oil revenue has gone to about £200m a year and is on a steep downward trend.  At the moment the UK is putting a lot of money into Scotland.

But that does not matter because in-land industry has grown faster than oil (offshore) has declined.  An interesting statement.  A little searching via by good friends at Google and it is seen as a downright lie.  Do I care – I’m not Scottish and don’t live in Scotland!

She was asked was she in or out the EU.  Her answer was that there were all sorts of problems with the EU but the benefits outweighed them.  Go on then Ms Sturgeon – give me one.  Just give me 3 provable benefits.  The question was not asked.

That is the problem I never hear a benefit from staying in the EU particularly from those at or near the top. I do hear un-provable dreams but no hard, solid benefits.

I was thinking about the stand against the USSR – the cold war.  Look at the NATO members standing against the USSR.  Spot the Europeans.  Of course they were all in the EU defence organisation standing toe-to-toe with NATO.  Errr – there was one wasn’t there?

Not seen too many benefits for getting out.  Oh I have.  It will cost us less propping up Brussels and French farmers.  Then if we are lucky we won’t have to subsidise Scotland so another big saving.  We’ll go back to making our own laws.  We might be able to turn back the tide of Johnny Foreigner…but I don’t see that as much of a benefit.

It is obvious: the EU is doomed and I think it will even go bang before the UK does

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Two stones with one bird

Posted by chrisrick13 on March 13, 2016

It is obvious: there is a silver lining to every cloud

I just heard results of a poll today.  After the last UK general election we all know how good they are.

It polled that the majority of the people living in Scotland would vote to leave the union if the UK voted to leave the EU.

What a golden opportunity.  Rid of both at one go!

I’m English.  Grudgingly, I am British (though I didn’t used to be when I was naive).  Very reluctantly I am European.

It is obvious: there is a silver lining to every cloud – looks like rain today

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Got your shotgun yet?

Posted by chrisrick13 on March 11, 2016

It is obvious: I’m in charge

Isn’t democracy a con?  How can my vote make a difference?  I can’t get someone to represent my views in a meaningful way in any forum.  I might vote for someone who is a package of views some of which I agree with.  That is the best I can hope for.  Then he/she only has small representation in another forum.  It ought to be possible to electronically collect everyone’s view on any topic in real-time.  Then just have a small group of ‘ministers’ who enact that policy.

I’m not sure that even the elected and un-elected people who run things are doing other than someone else’s bidding.  I’m particularly interested in the unelected people in the EU who run things.  I’m also interested in the un-elected people on the MPC who decide on interest rates and other things.  Half are BoE employees and the other half are appointed by the very people they are supposed to be independent of!  Has nobody noticed?

But we are all easily fooled and that is what the people at the top, both those in view and those not in view rely on.  Mr Cameron has good a good deal on Europe and has come back to support the ‘In’ vote.  He, of course, is strutting around the country shouting about the superb deal he got…

Hear Mr Blair on radio today saying that we should stay in the EU and that there will be absolute chaos if we leave.  How does he know?  He is the person who gave away our veto in Europe.  Do you know what he got in return for that?

Then we have the hapless Mr Carney.  Clearly he is dancing to someone else’s tune.  Remember unemployment going below 7% as the trigger for interest rates rises?  It is down around 5% where it has been for several years now…  He has a different message every time he opens his mouth.  He is smart so you know that this idiotic stumbling is not his doing.  There is every chance that he will complete his term with no interest rate changes and no QE (in or out).  Nice job and pension for 5 years of doing nothing!

So if things are not being run in my best interest then they are being run in someone else’s.  Who is to say that they have the slightest idea they know what they are doing or are in charge of things.

There is a good chance that the In/Out referendum will be pointless by the time we get there.  If not it will not be long before it is.

It is obvious: I’m in charge of very little

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Where have all the elepants in the zoo gone?

Posted by chrisrick13 on March 4, 2016

It is obvious: I am not a conspiracy theorist

Stunned and amazed.  Lord King the previous governor of the BoE has written a book…and people are buying it.  It reminds me of two candidates going for a job as a stockbroker.  One got his stock recommendations right about 60% of the time.  The other got them wrong 95% of the time…so they employed him.

I see comments about economic theory and the right way to run an economy.  A lot of it is Keynesian which was developed by Keynes and practised by him in the first half of the 20th century.

Does any of that body of theory work now?  I would suggest not when interest rates in this country are lower than they have ever been before.  There may well be some theories about what happens but it has never happened before so things are at best theories…and there are plenty of those.

One that I find particularly amusing is interest rates.  It has been the case that in an economy that is ‘over-heating’ (who said) that you put up interest rates.  People and companies can’t afford to borrow.  Those who have borrowed are short of cash.  (It goes to the banks.  It’s supposed to go to the lenders but that never seems to happen.  With huge ratios the banks are getting interest on £100 and only paying out interest on £5.  A licence to print money.  Oh that is what they are doing.)

The obvious thinking is that if you want to ‘heat’ an economy up then you drop the interest rates.  That is what happened in 2008.  Unfortunately the effect is not symmetric.  If you put interest rates up, in general, economic activity goes down.  There is less money to spend and putting it in the bank gets a good return – not sure who from.

If you drop interest rates people borrow and spend.  No.  The psychology is not the same.  If interest rates are low then obviously the economy is in trouble, people think.  So they cut economic activity and save ready for the economic hardship to come.  You can’t fool me is the universal thought.  You are doing this for a reason.  Within a certain band dropping interest rates a little give the ‘feel-good’ effect.  Beyond that it has the opposite effect.  I don’t believe that central bankers can’t see this.  So low interest rates are for another reason.

Negative interest rates are hard to think through.  I have premium bonds that pay out based on a nominal interest rate.  If that goes negative do we have to pay in each month?  Does one lucky person get to give National Savings £1m each month?  But if interest rates are negative there are plenty of things I will do that I won’t with positive interest rates.  I might buy gold.  I will hold a lot of cash.  I will perhaps buy a lot of cigarettes which were a universal means of exchange in the second world war.

Hold on a minute did I say I might hold cash?  The bank is charging me (say) 1% a year to hold my money but I can hold it for 0%.  Perhaps insuring cash and burglary will be two growth industries.  So any efforts by the government to stop us holding cash are preparing for that.  Look at two European countries that are putting limits on what cash can be used for (France and Sweden).  Why do you think there is a move to remove high value bank notes?  So the central bankers have thought this through and are preparing the ground.

The other reason for low interest rates and a bunch of other measures, in this country at least, is the housing market.  We are in a bubble.  Not debatable.  There are still millions of people in negative equity – they have bought something for a price that is much more than it is worth (they now realise).  There are a lot of families that are managing to spend what they earn at the current rates of interest.  At a higher rate of interest they will rapidly move to bankruptcy.  If interest rates go up then a lot of families will lose their homes.  Enough that there could be a break-down of society.  Imagine when the first person to who is about to be re-possessed put the bar-wire up and when bailiffs and even police turn up and everyone in the local community comes along and resists.

A house price crash is unthinkable…but it will happen.

Here is a quote from the FT via Moneyweek:

As the FT recently noted, more than 50,000 apartments in the £1m-plus target market are either being built or are in the pipeline. This is despite the fact that less than 4,000 such flats were sold in 2014, generally considered to have been a very good year for the London property market.

Foreign money is not arriving at the same rate as it has over recent years.  The government is making buy-to-let a lot less attractive with huge increases in taxation.  House price value falls are going to happen.  Beware if you already have a property and it is mortgage free then keeping it is probably a better strategy than putting into any other investment I can think of.  Even if you just hold large amounts of cash it is in a bank and it is just bits in a computer…

So the choice is between incompetents like King and Carney, well-meaning people following economic theory that does not work and others with a (not so) ulterior motive.

Invest in yourself and buy a shotgun.

It is obvious: I am not a conspiracy theorist – I don’t need to be

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I’m undecided

Posted by chrisrick13 on March 3, 2016

It is obvious: I am for Europe

I have been away as I did not want to subject others to a litany of told-you-so’s and more whining.  I care about my readership.

Today, with no time, I am moved to say a few words.

Brexit.  Thought I might start with something that is not a word.  I am dismayed at the opportunities to get information about this that I can trust.  I have seen a lot of debate about the economic affects of leaving the EU.  That is not what it is all about.  It is about Magna Carta.  It is about Habeas Corpus.  It is about elected people making decisions for us and not unelected people (in other countries!) doing it.

My favourite example is the banning of products from the Right Bank in…well it’s Israel at the moment.  I thank the officials in Brussels for making this decisions for me.  They clearly have a grasp of the situation that I will never be able to get.  I do have an idea that it is a foreign country just annexing another.  Clearly the EU will follow this policy consistently.  The symmetric policy applied to China for its invasion of Tibet must just be round the corner?

The other EU action much in my mind is the coordinated, integrated, unified action by the EU on the migrants from (mainly) Syria and many other countries.  It is good to see that under the EU guidance all the countries of the EU have acted as one to solve that problem.

I don’t have a reliable source but due to EU policy and the CAP in particular the average family’s food bill is £50 a week higher because of the EU.  I cannot believe that and I didn’t understand how that might happen.  However I discovered information on EU tariffs the other day.  Much of the food we eat carries a tariff imposed by the EU that does increase our food costs.  I looked into a bit and came up with a 5% figure.  The Ricks spend about £75 a week each on food and I reckon eat better than most.  So say it is £50 a week per person then £2.50 is as a result of the EU.  60 million of us gives £150m a week or about £8bn a year.  Add that to net EU contributions and we are £18bn a year better off.

Leaving he EU does not debar us from trading with it and, because of the WTO, treated as a ‘most favoured nation’.  It gives us a better chance with a market 3 times larger – the rest of the world.  As I said we are not contemplating doing it for trade reasons.  Trade is a result and we would be in the same place that we were in as a trading nation for all but 40 years of the last 1000.  Did we do all right before the EU?

But I don’t think it matters overmuch.  We will be better off out before the EU crashes.  If we are not then there are not that many years to endure before it does.

It is obvious: I am for Europe not running England

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