It is Obvious

Chris Rick has got altogether too much to say

Archive for the ‘Uncategorized’ Category

Got a sledgehammer – any nuts need cracking?

Posted by chrisrick13 on October 14, 2018

It is obvious: there are a lot of good ideas

I know it is not obvious but I am a big supporter of getting out of the EU. It is only an experiment and it has failed. It needs a reboot. I think it will get one soon. I don’t know what will cause it but when the German population realises they are paying for everything they might demand that Germany comes out of the EU.

Jean Monnet is considered one of the ‘the fathers’ of the EU. He was a French politician active at the end of the war. He was instrumental in diverting all of southern Germany’s coal production into France weakening German industry and strengthening French industry. He arranged for the Saar to come under French control for its coal also.  Such a good set of ideas that in 1950 tensions between the countries were increasing and to prevent conflict between the two countries (only 5 years after the war) he came up with the idea of creating the European Coal and Steel Community which has become the EU of today.

There are some chilling quotes attributed to him that on a little research are not all of good provenance. There is the general idea that the ECSC and now the EU were created to prevent conflict between France and Germany. My thought, as above, is, that the people creating it were just trying to fix a problem they had created earlier.

Is it right to force all the nations of Europe into a federation to prevent conflict? It certainly works in the US. It works in the UK. There are agglomerations of smaller states now forming larger countries that are working reasonably well in Italy and Spain.

Is there a simpler and cheaper way?  Yes!  Having the USSR as a big ugly bear on the border helped the countries of Europe adopt a unified approach. However one organisation ensured that there was a defence against the USSR and that any members would not attack each other. That organisation is NATO. It is cheap and effective while also providing some deterrence to Russia. Indeed without NATO we would already have a unified Europe…called the USSR.

With its tariffs the EU is anti-trade and isolationist. While it is trying to take down borders internally it is strengthening the external borders. It continues to support CAP which distorts trade and favours one country. It gives little to the member countries. Ask the people of Greece: what has Europe done for you?

We know what NATO costs as most countries are below the 2% of GDP on defense spending that it asks for. Wished the EU was a cheap.

It is obvious: there are a lot of good ideas and many more bad ones


Posted in Uncategorized | Leave a Comment »

Horsemen of the Apocalypse (First XV) – late kickoff on next game

Posted by chrisrick13 on October 3, 2018

It is obvious: predicting ‘when’ is difficult

2010 was the year that UK government debt first exceeded 60% of GDP.  If you include personal debt and a lot of unfunded liabilities such as pensions then it is a lot more, but the moment it is at 84%.

Italian debt is 131% of GDP.

German debt is 64% and has come down from 84% in 2010.

French debt is 97%.

Spanish debt is 98% and it too went over 60% in 2010.

Finnish debt is 61% only recently exceeding 60% and on a downward trend.

Belgian debt is 103%.

Debt for an economy is acceptable as the economy will grow and be able to service the debt.  Not pay it off.
Alongside that, 2% GDP growth is accepted as a normal rate of growth that countries can reasonably be expected to achieve.  Do not forget that 2% growth doubles an economy every 35 years.

There is a level of debt that means that a country can never grow enough and will eventually default.  That figure is 60%.  It is so well accepted that it is an EU rule that 60% is the maximum debt allowed by any member…60%.

Just for a giggle: the Greek national debt is 178%.

It is inevitable that these countries will eventually default on the money lent to them.  Take out Germany and Finland as they are both pretty close to 60% and we get 5 basket cases that include 4 of the 5 largest economies in the EU.

It is troubling for the numbers people that Germany did get their debt from 84% to 64%.

If EU rules are treated like the 60% rule then those about free movement of people can’t be that set in stone.  Indeed immigrants entering the EU must stay in the country they first arrived in.  So how come thousands of immigrants clustered around Calais trying to get into the UK.  According to the EU France should have been dealing with them…or Italy…or Greece.

What the 60% rule means, if it is right, is that a lot of EU countries will default.  If not tomorrow then next week, next month, next year.

Any large disruption but the UK leaving the EU could easily tip one of those economies into default and drag many more with them.

It is obvious: predicting ‘when’ is difficult, ‘if’ is not nearly so

Posted in Uncategorized | Leave a Comment »

Riddle me this Batman

Posted by chrisrick13 on September 27, 2018

It is obvious: we have no idea what we are doing

With the huge resources of HMG behind her, surely on March 29th Mrs May went into the front of her Yellow Pages and looked up the contact number for AAAAAAAAA_Negotiate_It Inc?

It might not seem like it but surely someone with some negotiating ability is in there advising?

In a negotiation if someone is not acting in any predictable way or the way that seems most obvious then you are probably missing information and that becomes the most important part of the negotiation at that point: find the missing information.

There is history there. The EU has been in a lot of negotiations over recent years. The way it operates is well known. It ought to be much the same for the UK. Not as much negotiating but still history to look at.

Here is what the EU is doing (possibly). If the UK leaves the EU it will be a disaster the EU will be gone unless a very accommodative solution is worked out. If that happens there will be a queue at the door. So the EU is trying to bully us into another referendum, which it is far from clear will be a remain win, or to giving in to all their demands. They have to keep that secret. If it does not happen then they know they can knock out a working agreement in a couple of months based on the work already done. Last minute down to the wire stuff. The EU has history. But the EU need to hang on as long as possible. Let us defeat ourselves.

So what is Mrs May doing? She is keeping us from a second referendum and running the EU out of time. A very fine balance and she is doing it. The deadline for the UK giving in is approaching fast. Who will blink first – I hope it is not the UK.

However I have said a lot in the past that it is unlikely that there will be an EU for us to leave. Along the way it has looked that I was going to be wrong on that one. A week is a long time in economics. Italy is in disarray. It needs and wants write-offs of debt. The largest debt owner, Germany, is not likely to agree to this. (At some point the German population is going to realise just how much debt they are on the hook for. Debt that will not be paid off. They might force Mrs Merkel’s hand.) The Italian government now looks like it might collapse before the budget and that puts Italian bond yields very high. The long night will begin.

Italy is not alone though. The French GDP has just recorded two quarters of 0.2% GDP growth. Be wary of these figures. France is running along on a prediction of 1.6% growth. It will be hard pressed to make 1%. That means that the second largest economy in the EU is rapidly heading towards recession.

The German economy is not doing so well either and the Fed keeps lifting interest rates. The ECB is on the point of tapering QE down to zero though not thinking of paying any of it back yet. This has the makings of a perfect storm.

I wonder if Mrs May has this in her mind as well?

It is obvious: we have no idea what we are doing – perhaps

Posted in Uncategorized | Leave a Comment »

One man’s cherry is another man’s…

Posted by chrisrick13 on September 22, 2018

It is obvious: fog in the Channel

There are a few simple rules to learn as a negotiator. I have learnt them. (It does not mean I am a better negotiator because I’m not.) If you lean the rules it does mean that there a lot of errors you will not make and when someone is trying a trick on you, you will spot it and know the counter.

There are two types of negotiation. The first is principled negotiating. Both parties are trying to get the best deal possible for them both. This is the long-term relationship where you will work with the other party over a long period to your mutual benefit. The carpenter and his lumber merchant. The farmer and his seed supplier. UK and EU???

The second is the adversarial negotiation. You will have no dealing with the other party after the current negotiation so get what you can at any cost. Second hand car salesmen fall into this category.

This second type of negotiation is the one that the EU have chosen to adopt with the UK’s exit from the EU. It seems they have not noticed that the UK is not moving away from the continent after the exit into the Pacific, say. It will still be there. There is business that can be done to mutual benefit…or not as the EU would have it. There is a mutual interest in defence for example with Russia regularly overflying UK territory to see if we respond.

Most of these rules of negotiation are very simple:

Never accept a first offer. After the deal is done one side will regret they didn’t ask a higher price the other will regret they didn’t make a lower offer.
Never allow time pressure. If the car is available until tonight at £10,000 walk away. It will likely be on offer for £9,000 tomorrow. If not you can be sure you will get it for £10,000.
Never split the difference. A good negotiator will just accept that as new price from which he can work.
Never negotiate by giving gifts. A good negotiator will accept the gift and not change his negotiating position or give any credit for the gift.
Never argue against yourself. Make your offer and shut up.
Never do a gentle barb. It makes you feel good. It annoys the heck out of the other party and makes an implacable enemy. Think of an example…hmmm…Salzburg on Thursday.

I could fill a book – as many have.

How does the UK deal with the adversarial other side? Two things: never underestimate your power and avoid criticism of your negotiating partner, traps for the partner to fall into and barbs of the partner that enrage them.

Note I have called the other party just that or a partner. They are not an opponent unless you are doing adversarial negotiating as the EU are.

After the rejection of the Chequers deal the UK should sit back and wait for a counter offer. Do not ‘improve’ our deal or they will do it again.

There is time pressure on the EU. As the various deadlines approach and are passed, the chance of a UK exit with no deal increase.

The big problem is ROI and the border with the UK. If this is closed then the ROI economy with its 2.4 trillion Euros of external debt will not last even weeks. Italy will quickly follow and the EU ship will be deserted in short order.

The EU knows this but they think that by doing unprincipled negotiating they can somehow trick the UK into a very poor deal.

If I was the negotiating team for the UK I would suspend all contact. Tell the EU that if they have something meaningful to offer we’ll look at it. Anything they send to us will take at least a month for any response.

I would say that Spain is nice this time of year for the negotiators…but it won’t be! Maybe the beaches of Western Australia are the place to be until the EU responds.

So what about the cherry picking? Who said that is not allowed? In this negotiation does the EU expect the UK to offer just to take the burnt scrapings off the baking tray and leave all the cherries to the EU? No way. Why don’t the EU do that? We will grab as many cherries as we can. So will the EU. Then we negotiate.

Problem is that the EU have forgotten that people of the UK we are good friends and implacable enemies, when we could all be working to our mutual advantage.

The EU is scared that if others see a good deal for the UK they will follow. If the EU was any good then there would not be any good deals to lure other countries away!

Taking this approach shows just how poor the leaders of the EU are. They confirm they are unfit for purpose. They certainly confirm to me that this European Union is not one I want to be in.

It is obvious: fog in the Channel – EU isolated

Posted in Uncategorized | Leave a Comment »

The Horsemen of the Apocalypse (First XV) – back-room team

Posted by chrisrick13 on September 22, 2018

It is obvious: we’ll all be richer outside the EU

Donald Tusk:
What power have you got?
Where did you get it from?
In whose interests do you use it?
To whom are you accountable?
How do we get rid of you?

Jean-Claude Junker:
What power have you got?

Michel Barnier:
What power have you got?

Mario Draghi:
What power have you got?

As an aside I might add –
Mark Carney:
What power have you got?

To name but a few. Then I might mention –

Theresa May:
What power have you got? I can appoint and fire ministers.
Where did you get it from? The British people via the ballot box.
In whose interests do you use it? The British people.
To whom are you accountable? The British people.
How do we get rid of you? Via the ballot box or your MP who got where he is via the ballot box – all boxes filled by the British people.

Then I might mention Viktor Orbán, the PM of Hungary. He is unique in the EU in that his party got within a whisker of an outright majority of votes.

I think he is quite objectionable for his views and even dangerous. Put him in a room with Le Pen and Matteo Salvini and there would not be much to disagree on. None of them are mass murderers but add in Hitler and they still might have difficulty finding points of disagreement.

By a 4-to-1 majority the EU parliament has voted to censure Hungary for immigration and other policies they are enacting. These are polices that the Hungarian people voted Orbán into power to carry out.

It is obvious: we’ll all be richer outside the EU and I haven’t even considered the financial consequences

Posted in Uncategorized | Leave a Comment »

The Horsemen of the Apocalypse (First XV) – comments from the training pitch

Posted by chrisrick13 on September 20, 2018

It is obvious: I’m not stupid

Last month I was in France where the price of diesel is a lot less than petrol. The reverse of the UK. Unless there is a big tax differential one population or the other is being taken for a ride…or both of them.

When the price of oil goes up and contributes, say, an extra 1p to the price of a litre of fuel (including tax) the price rise is always much more than 1p. The cost of the crude oil in a litre of fuel is very, very low.

I buy chicken breasts quite a lot. I noticed that the printed weight had gone from the label on the front to the one on the back. The pack I buy (for an unchanged price) weighs 640 gms when it used to weight 650 gms.

When I look at the calories for a pack of just about anything it gives a 100 gms price or a ‘portion’ price. It never says how many calories there are in the packet I am holding in my hand.

When the base rate goes up (just twice in the last 10 years) the interest rate on borrowing goes up the next day by at least the base rate increase. The interest rates on savings take a very long time to increase and are never as much as the base rate increase.

Everything in banking happens very quickly except crediting money to your account when you deposit a cheque.

Energy price rises are announced in spring and apply at the beginning of winter. Price cuts always happen in the spring, announced in winter. Energy is forward bought so any cuts in energy cost cannot be reflected in the price until the forward buying unwinds. Increases are applied quickly and forward buying forgotten about.

The Bank of England does not count RPI as a valid measure of inflation and uses the always much lower CPI but does use RPI when inflating payments to staff from its pension fund.

Counterfactual is king from government and BoE: I know that it happened despite what we did but it would have been a lot worse otherwise. Just once something that actually works would be nice!

I have a new, large wheelie bin from the council for paper and cardboard…but I cannot put shredded paper in it.

“Here are the main points of the news…” Who decided that then?

“The banks are safe now”. Vince Cable 16/09/18 on the Andrew Marr show…and not challenged.

My house is worth gazillions. It isn’t, never was and never will be. The current market value is gazillions and its price can move in any direction at any time, often very quickly, as that market changes.

Pay your (mostly “their”) fair share of tax. Can I define ‘fair’ please? Actually, can I find any two people whose definition of ‘fair’ in this context is the same? Why is that phrase never challenged when uttered on tv?

The government guarantees the first £80,000 in my bank account.  Yeah.  Right.


It is obvious: I’m not stupid – doesn’t help though

Posted in Uncategorized | Leave a Comment »

Horsemen of the Apocalypse (First XV) – new close season signing

Posted by chrisrick13 on September 20, 2018

It is obvious: a paper bag is difficult to negotiate out of

The Republic of Ireland (ROI) is famous for the government emptying its fully funded state pension and leaving an IOU in it. Despite that it has 2.43 trillion Euros of external debt.

Not a problem. Italy has 2.42 trillion. Spain, Portugal and Greece between them have nearly 2.4 trillion.

The ROI has something the others don’t have: the majority of their trade tied into a single state: UK.

If the UK went for a hard Brexit it could let the EU decide how it wanted to work the border with Northern Ireland. The Irish government would not be very cooperative at creating a hard border. The UK could also run a hard border itself.

This would be painful for the UK. It might even be very painful.

However it would only take weeks for the ROI economy to collapse. Because of the intricate linking of European economies with all that debt, Italy would be a close second for a collapsed economy. There is a good chance though that it will manage that all on its own long before Brexit. Spain, Portugal and Greece would all be looking for podium positions very soon after.

This is a lot more pain than the UK might suffer.

I am on the look-out for triggers and the ROI/NI border might be it.

So now the UK government should turn to the EU (un-elected officials) and say: Over to you. Then sit back and do absolutely nothing.

It is obvious: a paper bag is difficult to negotiate out of if you are a UK Brexit negotiator.

Posted in Uncategorized | Leave a Comment »

The Horsemen of the Apocalypse (first XV) – new season starts soon

Posted by chrisrick13 on August 7, 2018

It is obvious: Cassandra had a hard time of it

There are too many easy targets out there and too many people writing for me to consider it worth putting pen to paper regularly.

Then the weight of it all overwhelms me and I feel compelled to write.

I am a serial housing crash predictor. If you predict a crash long enough then it will happen. The advice is that things go on for longer than you can ever expect. Indeed we should have had a housing crash already but there are plenty of people working to stop it.

The trouble is that they are not fixing the problem They are can kicking. When it does happen the problem will be bad. I think short, but bad.

Why should there be a problem? Most people can afford the mortgage they have even if only just (JAMS). If interest rates rise then the problems occur. A quarter percent does nothing. We need 3 or 4 percent…and the economy needs that as well.

We need higher interest rates to kill off inflation or to protect the pound or to persuade people to lend to us. Just standard economics hugely simplified.

A bit more? We can borrow and let future generations pay it off if we keep increasing GDP. Even at 2% increase a year it is exponential and we will double the economy in 35 years…except we won’t.

There are a number of conflicting themes coming at the UK and one of them at least will have to go.

The net result is that a lot of people are going to become very poor. As long as one of them is not me!

My bet is that the government through the independent BoE (sic) will protect housing prices for a very long time. This means inflation will rise a lot and the value of the pound will fall and even collapse. I was alive when there were over 4 dollars to the pound. I might live to see 4 pounds to the dollar.

There is the potential for huge societal change in this country and probably many others.

This blog might be of some use if I could tell you what will happen and when. I can’t. It might be of some use if I could tell you how to stop any disaster. I can’t.

All I can do is offer some guidance (other than a shotgun, barbed wire and the spare bedroom full of baked bean tins.)

I think pension annuities are a big mistake. Take them all as cash. Do not leave the cash in banks. Spend the money or save it for an improvement in annuity rates.

I have deferred my state pension for 3 years giving me a 33% uplift on my pension should I take it now. I will delay some more but will take the money as cash when my tax position allows it.

Spread money across investments and countries but make that countries that you want to visit.

Buy some gold. Physical stuff you can put your hands on. Not much, but if things get really bad then you might find it very useful. It is priced in dollars so if the GBP does go to 4 to the dollar it will be a smart investment when it was only really insurance.

Keep some cash in the house. Be prepared for cash machines to disappear for a few days or even weeks.

I have a trigger theory but it does not help anything. Triggers happen and by their nature are not predictable. Brexit ought to be one. I expect the EU to change soon…but things go on for longer than you can ever expect. Greece, Italy and Portugal might be triggers.

It is obvious: Cassandra had a hard time of it but “I told you so” sounds better for the wait

Posted in Uncategorized | Leave a Comment »

Head for the hills – same route as last time

Posted by chrisrick13 on June 7, 2018

It is obvious: the sun will rise tomorrow

With poor provenance I read a paper that concluded that just 5% of the population disappearing would cause a collapse of our society in a very short time.

Failure of card processing last week caused a good deal of chaos.  That would be one of the key events.  Crucial systems collapse and there aren’t the people there to fix them.  Or they are there but can’t get to the processing centre because the trains are not running because drivers are missing or the petrol station has no fuel because the tanker driver is not available.

The interactions and dependencies roll on but it does show how vulnerable our society is.  Take out a small amount and society collapses.

There is nobody alive knows how to make a pencil or has the skills.  It is all done by large machines.  If the machine breaks down then there are no more pencils.  Same for a lot of other (important) stuff.

The TSB had similar problems as it moved to its new owner’s computer systems.  The train timetable changes created a lot of problems.  Both of those are still not fixed.

Suppose that your bank with all your money (bits and bytes actually), stopped responding to any of your attempted communication and denied you access to that money.  Suppose that every other institution of government is so busy that nobody cares about any of your bleating.  The phrase ‘paper millionaire’ takes on a new relevance and meaning.

This is possibly the main reason that our banks cannot be allowed to fail.  All credit and debit cards suddenly stop working.  Not just a percentage over a few hours but all of them for many days.  The banks know this and just carry on doing what they want to do knowing that government and everyone else is powerless.  How many bankers are in jail for what they did?  Many should be.  At the time of the credit crunch the banks promised the government over the weekend that unless they threw them lots of money then no cash machine would work on Monday and all bank branches would be closed.

Since then, nothing that will stop this happening again and stop the threat being repeated.

With zero interest rates (and many negative) and lots of QE in place (never to be repaid) there is nowhere to run to if there is another problem…and there will be.

I can see a few triggers.  Italy is one big trigger.  It needs different handling to Greece.  Not sure that it will get it.  Have you noticed that oil prices are high?  The coming sale of Aramco is the reason for that.  Need oil price high for Saudi Arabia to get a good price.  Hold on a moment though.  Why does Saudi Arabia need to sell?  What happens afterwards.  Have you noticed that prices leap up rapidly in response to oil increases.  Then only slowly go down when oil goes down in price.  “We buy our oil many months ahead at the prevailing rate.”  We (I) am not stupid – just impotent.

There are others but I have to mention Brexit – the main reason I don’t write much at the moment.  The dire predictions about exit have not materialised.  The optimistic outlook for Brexit is not proven.  We do not know what the economic effects will be.  My view is there will be huge turmoil and then very quickly a return to pretty much as it was before with some different mechanisms for trade and some changes in trading partner ratios.  I wonder if Trump will view a tariff on UK steel differently to EU steel and if we can do something in agile fashion to avoid it and take away trade from the EU?

Any way you look at it there is trouble ahead.  If I could just nail the date then I would be…a paper millionaire.

Have you got some gold in your investments?  Somewhere safe and I mean safe from the government grabbing it.  Have you got some cash you can lay your hands on?  Folding money.  If the banks do close their branches and cash machine then for a short while cash will be king.  Maybe long enough to fill your back bedroom with cans of beans!

It is obvious: the sun will rise tomorrow…probably

Posted in Uncategorized | 2 Comments »

Slow down

Posted by chrisrick13 on April 2, 2018

It is obvious: I don’t like a lot of the laws of this country

There are roads near where I live that I won’t drive along any more. Most of the roads around my house now have a 20 mph limit.  I was going to say it was a recent change but it isn’t.  Some of the roads should have a speed limit of 40 mph – 30 mph did not seem right and now they are 20 mph. If I drive at the speed limit long convoys build behind me. Many drivers make risky maneuvers to get past me. Many drivers are angry at me…for obeying the speed limit. I can’t handle it. I take different routes just to avoid certain roads.

Last week I was talking to a friend who had just been on a speed awareness course (caught speeding). He reported from the course that the reason there were no speed cameras in 20 mph areas was because the current generation of cameras cannot accurately record speeds that low. However the new generation do!  There will be a big payday coming soon.

Another friend argued with me about ‘making money’ out of speed cameras. I maintained my well advertised stance that if you wanted to give extra to society by breaking the law that was your choice. The cameras would not make money if the cars passing them were travelling at the speed limit or less.

The argument back was that it was different for traffic offenses such as speeding as it was often very difficult not to speed in some places where the cameras were (deliberately) placed. Peer pressure is very difficult to stand up against – I can’t.  I have found that driving my car at 20 mph is very difficult. 6 gears and 3rd is too high for 30 mph almost but certainly for 20 mph. I have to drive around in 2nd and that feels very odd.  There should be some pressure on car manufacturers to make cars comfortable to drive at 20 mph.

Somehow though it is unfair to make money out of a speed camera. Why is it there? To encourage people to obey the law. Why 20 mph? Because fewer accidents happen and fewer people die when they do happen.

There is a similar argument for illegal parking. Bah! So I started on the prostitute’s question. Is it reasonable to have speed cameras and speeding fines? No it is not. Is it reasonable to have life in prison (25 years actually) for premeditated murder. Yes it is. So somewhere between those two there are laws that it is ok to ignore and those that it is not. Please tell me where the line is? Rape? Manslaughter? Robbery? Mugging?  Fraud? And why should your ‘line’ be the one. Thought we had parliament and the judiciary to handle that?

The short answer is that the law is the law. If you choose which bits apply to you then you are breaking the law when you ignore the bits that don’t. Expect it to cost you in some fashion.

It is obvious: I don’t like a lot of the laws of this country which is not a good enough reason to ignore them

Posted in Uncategorized | 2 Comments »