Tuesday, July 31, 2007

The Things the Daily Mail says!

"The Bug that targets middle-class children - the young victims all come from clean, safe, homes"

Does it also affect house prices? Sadly I can't find it on the (much improved except Melanie Phillips is now free) Daily Mail website.

More on Nick Cohen's 2002 suggestion that it was because we owed the US money we fought the Iraq war

Thinking some more about this idea of his, it just doesn't seem plausible for another reason. Presumably the British government can borrow at dollars at LIBOR, or perhaps better. The rate in 2002 when Nick Cohen advanced this interesting and novel suggestion was just over 3%, so the government could have simply borrowed the money, paying an interest burden of around £14m a year - and repaid the US. Sure there would be a small loss due to the US loan being on better terms, but a tiny price in order not to have fought what Nick then called a 'needless' war?

Of course in fact we didn't need to borrow the money at all. Our dollar reserves were much larger than the remaining loan.

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Cameron critic asked for peerage

I think Cameron has got Ali Miraj 'bangs to rights' over his criticism, as apparently Miraj had asked for a peerage just a few days before. It doesn't look particularly impressive for the Conservative Party however, all this in-fighting.

Clearly it's been a tricky few weeks and I think the culprit, and who should take the blame, is George Osborne. This blog has consistently said he's not up to the job and should go, and apparently it was his overconfidence - arrogance I would imagine - that Brown would be a disaster that meant the  Tories so misjudged things.

William Hague clearly was not a success at the highest levels of the Tory party, but I'm sure he would be a better Shadow Chancellor. Osborne could be an effective Michael Heseltine from the back benches.

Monday, July 30, 2007

650 die in Chinese floods

Blimey.

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Was the Iraq War fought because Britain still owed the US £243m from its post-WWII loan?

I'm not sure I agree with this argument of Nick Cohen's from April 2002. £243m just wouldn't be enough money, not given the war must have cost a multiple of that (and that such a cost was easily foreseeable).

Ruth Kelly, the Treasury Minister, told Parliament the other day that Britain still owed £243 million. Rather than relieve the debt of Third World peasants, Britain, she said, intended to meet the bill in full by 31 December 2006. Ms Kelly is a revelation. Until her statement, Blair's sudden enthusiasm for a needless war against Iraq was a mystery; his failure to tell Bush that British troops can't be both peace-keepers and combatants in Afghanistan, a dereliction of duty; his inability to force a concession from Washington on any issue from Kyoto to steel tariffs, a national humiliation.

Now what was baffling is clear. Debtors are in no position to demand concessions from creditors. They must do as they're told. According to the Treasury, Britain will be free to have an independent foreign policy on 1 January 2007. I'll leave it to you to imagine how many wars Blair will have fought by then

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Nick Cohen on housing

A rather good Nick Cohen column on the pressures on housing in the UK, and the exorbitant prices.

He isn't very consistent, I think, about whether the middle-class are beneficiaries or not, and I don't think I agree with his sanguine view on how the very poorest will do - if living in (former) council house accomodation is so good, why do so few "middle-class" people seem to want to live in it despite its generally much cheaper price?

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Friday, July 27, 2007

Labour 11 points ahead

Fascinating poll in today's Telegraph, which as well as putting Labour 11 points ahead, Gordon Brown a net positive satisfaction rating of 7 points, David Cameron an enormous negative 17 points as Conservative leader, Minging Campbell a negative 28 points as Lib Dem leader, has some interesting views on Brown's initiatives.

Most favoured, by 74 to 17, is more powers to detain terrorist suspects. 73 to 18 want single parents on benefits to be made to seek work when their chlid is 12 or 7. Fourth most popular, by 71 to 15, is for Britain to no longer be joined at the hip with George Bush (this question was perhaps a bit loaded). Co2 targets 66 to 18. In fact they're all populat by enormous amounts, except David Cameron's...

Increase alcohol taxes, which is opposed by 49 to 38.

What a country.

The two most positive signs for the Tories are there is still a large net disapproval of the government's record to date, and the 'forced' question on which party voters would like to see in power, Labour or the Tories, is net 8 to Labour, down from net 17 at the election, when they only won the popular vote by 3 points.

Update: This seems a good time to remind people of Stephen Pollard's sagacity, from September last year:

What a load of hypocritical tossers (pardon my language but it's what they are) those Labour members are. They've spent the past decade bitching about Blair, and now that he's off into the sunset they cheer him to the rafters. Well live with it, you idiots. You're the ones who wanted rid of him, forced him to announce his departure [obviously we have subsequently learnt from Oliver Kamm that this is not true - MJT], and rendered him impotent. Ha-bloody-ha: now you're going to have to live with the consequence:
and from October:

Given that we're not allowed to call him [Gordon Brown] autistic now, let's just leave it at his psychological flaws. And the fact that he is unelectable.

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Thursday, July 26, 2007

US economic decline and the dollar

Anatole Kaletsky here and Ambrose Evans-Pritchard, here, discuss whether the dollar's collapse is a symptom of US economic decline.

I disagree with various bits. Kaletsky's is the more sensible, though I do wonder what he is on about with "European policymakers, by contrast, seem to have no idea of how currency markets operate." The Euro is the most free-floating of the world's three major currencies, and it's not really the fault of the ECB that it is currently so strong - you can lay the blame where you like, but the refusal of countries with major trade surpluses to revalue seems a much better place.

Kaletsky suggests the ECB should lower interest rates to reduce the value of the euro, a strange suggestion given much of the point of a single currency is to insulate monetary policy from such considerations, and given many say policy has been too loose anyway. Further, to what degree does the exchange rate matter? Clearly a strong currency is not always in a country/economic bloc's best interest, but people have been fretting about the euro's overvaluation since it went above parity (Kaletsky included) and my copy of The Economist tells me that the Euro Area has a current account suplus of $8bn, which it helpfully adds is 0% of GDP, and the IMF said today growth will be 2.4%, which is reasonable.

Evans-Pritchard has a track record of believing everything in Europe is close to collapse or in chaos, and here is no exception. The strong euro is going to cause an economic 'collapse', 'depression' etc, particularly in Spain. Spain does have a huge current account deficit, 8.6% of GDP, but then again so does Australia (5.5%) and New Zealand (10.2%) both of which have floating currencies and an independent monetary policy. Spain's GDP growth in Q2 was 3.9% annualised, and 2007 growth is set to be higher than earlier estimates of 3.4%.

So if an economic depression is around the corner, it's keeping itself well hidden. This kind of uber-pessimism about the European economy is an exact mirage image (though in much larger supply for various reasons) of some you get about the US economy, where the commentator seems to think that a continental-sized economy, containing most of the world's most successful firms, is going to collapse because some poor people were wrongly sold mortgages. "House of Cards", how are ya?

Anyway, I would overall actually agree with both of them, and be reasonably confident about the long-run prospects for the dollar and the US economy, mainly because (as Pritchard says to a bit) population growth estimates are in the US's favour compared with Europe, China and Japan. Furthermore the US has all the military power, good universities and many other natural and man-made advantages.

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I for one welcome our new cat Masters

The cat you do not want to come and sit next to you.

The Empire too, can we depend on you?

Interesting review of three new books on Empire in this week's LRB (subscribers only).

It got me thinking how the UK's economic output compared with those of the Empire. In 2006 taking all the countries that were in the Empire (including Canada, Australia etc) in 1925 (with some exceptions for which I could not find data, but the error caused will be relatively small), I get this* - the UK is almost exactly 50% of the size of the rest of the Empire, and so 1/3rd of the total, which accounts for 15% of world GDP, about 2/3 of the rest of the EU15 and 3/5 of the US].

UK GDP = $2,661bn
Rest of British Empire = $5,323bn
Rest of World = $45,827bn

[Nb: US = $13,742bn, EU13 = $11,487bn, Japan = $4,302, China = $3,088bn]

If you make the Dominions a separate category, you get UK = $2,661bn, Dominions $2,724, Rest, $2,598bn, i.e., three with almost exactly equal economic output.

In terms of size, the top 10 are:

UK 2,661
Canada 1,266
India** 1,197
Australia 822
South Africa 272
Ireland 250
Hong Kong 202
UAE 186
Egypt 129
Nigeria 127

* All figures using current dollar exchange rates at market values, at PPP the UK would lose some ground mainly to India.
** Pre-1947 borders.

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China largest contributor to GDP growth

So sayeth the IMF, in current dollar terms. This is the table I have derived from their data showing increase in GDP this year in current US dollars. I have updated it in line with their new growth forecasts, that China is still in 2nd is presumably because I haven't taken into account exchange rate movements (small, but there, in the case of the Yuan). Note our own proud nation in third place, enjoying semi-robust growth, high inflation, and a strong (and this doesn't take into account the 2.05) exchange rate. [Oh, look, it's hmtl table with the world's biggest header - I have no idea why]












GDP$bn
United States498
China458
United Kingdom287
Germany205
Russia188
France175
Italy141
Spain135
Brazil110
India97
Others1,118

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Wednesday, July 25, 2007

Opinion polls

For some reason Anthony Wells believes he can take a holiday, but hopefully he can answer a question I have when he gets back. Today's Guardian poll shows Labour 6% ahead, and most polls for the last few weeks have shown a similar result.

Yet Anthony showed us a lot of polls before Gordon Brown took over which suggested that he, and the Labour party, would be be less popular once he was Prime Minister. A lot of Conservatives and Blairites I think staked a lot on these. So the queston is really, are such polls always going to be meaningless (surely not, as I remember John Major had good polls before and after he took over), and if not, why were they so wrong this time - because people have been impressed by Brown more than they expected, or (my favourite) they are more relieved about Blair going than they expected? Or is there something else?

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It keeps rising

Not the water, which now seems to be affecting Oxford, but the pound. A few weeks ago I noted that on current trends UK GDP per head measured in any currency in the world would be higher than that of the US, perhaps for the first time since 1880.

The dollar then was trading at 2.03 and a bit to sterling, and today it is around 2.06. So there's no question now that UK GDP per head is higher than the level in the US. In fact, and I'll have to look this up, I think it must be in the top 5 or even 3 in the world.

Alistair Darling is truly a remarkable man.

I also think it can't go on much more. I have a US dollar bank account, which apparently does commission free transfers from sterling to dollars (the sting is if you then try to get it out in sterling I think, but haven't looked too closely) and I've decided to try my hand at currency speculation by depositing some money each week. We shall see - I tried this with all of £50 back in 2002, when it was 1.9 to a pound, and now have about £45 in there.

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Johann Hari reviews Nick Cohen

Former Harry's Placer Johann Hari reviews Nick Cohen's book, "What's Left", for Dissent magazine. By and large Hari nails Cohen's bizarre views and illogical conclusions in a forceful piece:

Cohen seems, by the time he writes passages like this, to have lost touch with reality....This book appears to have been written as Cohen hit a personal tipping-point..and an admission that Cohen is sliding into full-blown neoconservatism....After this, there are even worse moments, when his views disintegrate into a drizzle of dismaying right-wing talking points.


He concludes:

Cohen, ostentatious claimer of George Orwell's mantle, has forgotten the quality that made Orwell great - the power to face inconvenient truths. He simply averts his gaze from the burning vistas of Iraq that contradict his thesis, turning towards George Galloway to give him another well-deserved - but increasingly irrelevant - spit in the face.


Anyway read it all, as they say. I would add two things (of many that could be said) about Cohen and the book. On the latter, I think much of it was summed up for me by his concluding, with a flourish, with a description of a dedication made by Azar Nafisi's which didn't exist. Remarkably, and stretching the bounds of probability, this was an identical mistake (and it wasn't an easy mistake to make - I spotted it immediately and I'm hardly a careful reader) to one Christopher Hitchens made a few months earlier. So did Cohen actually read the book he was claiming the virtues of? This seems to be a theme of What's Left.

On Cohen, as I have said before, his one clear consistent theme is a hatred of liberals. When, in the months after September 11th 2001, Nick Cohen was publicly anti-American, he used to have a go at "liberals" for being too pro-war. Neither of these pieces reflects well on him. He has never explained why his anti-Americanism changed (I've read his book, the nearest we got was something on Normblog) or why he held it in the first place. But anyway, now of course it is "liberals" who are anti-American and insufficiently pro-war, even though the first charge is impossible to substantiate and the second seems well supported by events.

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Tuesday, July 24, 2007

DO NOT BE ALARMED

Children of England (London?), and other English people of a nervous disposition, do not be alarmed. That big yellow thing you can see in the sky is called the Sun, and it is generally a force for good. The sky is blue, which is also good news, and does not mean the end of the world.

Apparently normal service will be resumed tomorrow.

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Monday, July 23, 2007

London old and new


22072007437
Originally uploaded by mjtphotos
Walking past this church on Sloane Street on Sunday I remembered it was the same one as in this Chalmers Butterfield image, so I took a picture. It seems to have built an extension in the same style on the left.



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Nationalisation of UK companies by foreigners

We've been discussing this over at Tim Worstall's in response to this Observer editorial.

The Observer's argument is that very few people desire major nationalisations by the UK government of leading British companies, so why is it ok for foreign governments? Tim says he's fine with almost any such deal, and the distinction is that these purchases are for profit only, and thus mimic a market transaction, whereas a domestic nationalisation is usually for wishes to politically direct the company or (and also this is missing from from foreign control) a whole industry.

This is the main issue - in the 1990s governments used to fret about the bond market, but now although China owns a fair chunk of US public debt the US government seems quite relaxed (at least publicly) - presumably because it doesn't seem to sell them or threaten to sell them again. But can we be that relaxed about equity ownership, particularly as it is likely to grow as countries try to diversify from US Treasuries? Tim himself draws the line at defence contracters (presumably not the US or other allies though) and North Korea (for anything). Issues of national security led some commenters to say they wouldn't want Russia to be in charge of our energy generation. Hands-off governments could become hands-on ones if it comes to a decision between shutting a factory in the UK and one in their home country.

National security is a grey area. In a sense the UK as a country has ultimate control of corporate assets within its borders, foreign-owned or domestic-owned. It can alway nationalise foreign assets, and there's little the other government can do (remember Suez), although presumably there could be damage done before that.

Political interference of an economic or financial sense in those companies owned by foreign investment funds looks unlikely at the moment. It cannot be ruled out though, and even a minor level one would imagine is as bad as the British government doing it (assuming you are a free marketer). And how do you then stop it?

I also wonder whether the source of funding is as irrelevant as Tim says. What if British companies start lobbying (or bribing - illegal I think but Tim would say it shouldn't be) the Chinese or Russian government to help them in takeovers of other British companies. Surely that isn't a level free-market playing field and the outcomes (from a market point of view) could be very unsatisfactory.

Update: Well look at that - an example turns up as I'm writing the post.

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Sunday, July 22, 2007

Nick Cohen raises his level of poverty wages!

Regular readers will know that Nick Cohen believes an income of £100,000 is difficult to live on for "standard young couples" in London, whom he terms the "less fortunate" (see link and then comments for a version of the original post). That's household income, for a couple, in Britain's expensive capital. Obviously ludicrous, but in the Evening Standard two weeks ago, he went further. Talking about a game show apparently called, "What's My Wage", he said:

Except that I hear that the wage limit is 100,000, which is frankly a pittance in Gordon Brown's Britain.

So now it's £100,000 per person, and across the country, not just in London.

[The context - see comments - is that no Goldman Sachs employees or Linklaters (or anyone in the City from the headline) will take part either as the contestant or the person whose income is being guessed.

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The Met Office's flood warning

The Observer claims that the Met Office had warned the government that because of El Nino (do they mean La Nina?) it would be much wetter than normal this summer. Does anyone remember that warning?

Searching the news archives, I found this on April 15th " The Met Office predicted last week that this summer would be warmer than usual, but said it could not judge how much rainfall there would be", this on April 13th, " He added: "In terms of rainfall, there doesn't appear to be any clear signal whether or not it's going to be wetter than normal. At the minute we're expecting an average level of rainfall, but there is a significant chance it will be warmer.""

Things I learnt in The Economist this week

The UK's aircraft carriers tend to sail around without any planes on them. Don't tell the Henry 'Scoop' Jackson Society. Talking of which, Jackson's most prominent piece of legislation, the Jackson-Vanik Amendment, remains in force.


Oh, and Britain only had its first Papal Ambassador in the 1980s.

Panic, don't panic!

Apparently it's only 2-6 MPs out of the 200 or so, but the Telegraph reports there are plans to call for a vote of no confidence in David Cameron. This really is the politics of panic, particularly as the latest poll still puts them on 35%. I don't know what these MPs imagined Gordon Brown was going to do when in office - nationalise all Tory voters wives and replace the Queen with Arthur Scargill?

Elsewhere, Patience Wheatcroft demand government money to come to the aid of failed private pensions. This may be a good idea, and limitations of FAS are clear, but it seems a strange thing for someone usually so keen on keeping down government spending and letting the market work to be advocating. Matthew d'Ancona, a Cameron loyalist I think, says the Tories would be mad to lose "Dave". He claims, rather ludicrously, on the back of remarks from someone in the Shadow Cabinet (Michael Gove seems the most likely) that Brown is fighting, "Wiliam Hague's 2001 election campaign". Iain Martin just declares, "it's so unfair", apparently as Brown is not being given a real fight. Finally the Telegraph's leader stays loyal too, arguing that "division is disaster", which given New Labour's turbulant Blair years perhaps isn't so true as it once was.



Thursday, July 19, 2007

House prices

The BBC in this report makes a mistake (or at least fails to emphasise the right bit) that I often do, which is by focusing on an annual price change, you forget that most of it has already happened.

The Halifax has upped its house price growth forecast for 2007 to 6%, from 4%. However as the BBC notes, we've already had 5%. So in fact the real story is that it now predicts a sharp slowdown in H2 growth to 1%, from 5% in H1. You could say from -1% on the old forecast, though I doubt they've actually believed the old forecast for some while.

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Wednesday, July 18, 2007

The Things Daily Mail Readers Say!

Believe me, you elderly people - you and your ilk really do get in the way. I do my shopping in the afternoon and you can bet your life I'll come across two or three wheelchair users blocking the store gangways. Some even have a basket on wheels bolted to the front - it's like trying to pass an articulated lorry. I've found the only way to deal with these people is to give them a bump with my trolley. It seems to work because quite a few people give me a wide margin. Why can't supermarkets ban these people in busy periods? Perhaps they should only be allowed to shop in the early hours.

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Discrimination at the Top

I've never owned a new £20 note. Everyone else I know and see seems to have them, but I only get the old ones. They look nice the new twenties - why is the Bank of England discriminating against me?

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Tuesday, July 17, 2007

13 out of 14 people can do an important sum

Apparently. This seems good news.

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Congestion charge

Were the Conservatives planning to scrap London's congestion charge at the last Mayoral election? I can't remember, but I do recall that Boris Johnson, potentially the candidate at the next election, is very much opposed to it, calling it a "Poll Tax on Wheels" (the link has gone, but you can find it on Peter Cuthbertson's site here - you might need to scroll down past the "million moron march" post.

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Collective Responsibility

Maybe I am forgetting what this means, but I thought it was that even if a Cabinet Minister disagreed with the Cabinet's policy he had a duty to support it publicly. The idea being that a united body is much more effective than one that is publicly disunited. If so, then why do commentators keep pointing out that Gordon Brown now opposes things (such as the Manchester "super-casino") that he voted for when Chancellor - surely he was just following that principle?

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Sunday, July 15, 2007

The British a higher dollar income per head than the Americans?!

According to Yahoo! the Sterling dollar exchange rate is currently 2.0344. Taking data from the IMF World Economic Outlook, if that exchange rate prevails at the end of the year, then UK income per capita in dollars will be $45,491, 0.0023% higher than that of the United States. Indeed given relative inflation and growth it might be the case now. This is the first time at least since 1980 this has been true, and (given sterling devaluations) quite probably since the 19th century. I personally prefer Purchasing Power Parity comparisons, but in terms of economic power some people prefer to use market exchange rates.

Sting

A text message arrives from a friend somewhere (presumably) on the Continent:

"On holiday. Comment from next table: "He's a very accomplished man, Sting is".

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Expensive hotel expensive mistakes

I've got two, which is enough to make a blog post.

The first was mine, in the super-expensive Hotel Eden in Rome[1]. I was staying there five nights on a business trip. The hotel was one of the loveliest I had ever stayed in (then and now) and when you returned to your room at night there was a rather elaborate turn-down service, with poems and chocolates and toiletries etc. They also put out a bottle of sparkling Italian wine. I like, as you may have noticed, sparkling wine, and as it was all part of the perks I tended to have a glass or so most nights. Some nights I didn't really fancy it, but thought "hey, it's free". Anyway as you can guess, the wine was  not complementary AT ALL, in fact when I checked out it added something like 400 euros to the room billl.

[1] I went back last year, under my own steam, but only to the bar. A colleague of my girlfriend was trying to save money and passed over the cocktail list and ordered a bottled beer, which craftily didn't lose the hotel too much money, as it was 11 euros.

Worse was a friend of mine who was staying at the expensive hotel's expensive hotel, the George V, in Paris. He wanted to get his suit dry-cleaned, and so left it out (as indicated) on his bed. When he returned that evening the hotel staff had mistakenly assumed he wanted every single item of his clothing (also left on the bed) dry-cleaned, and every single individual item, down to each sock, was left hung up and wrapped in tissue paper. That apparently added equivalent to a night's stay to the bill.

Any better?

I'm back

Apologies for the lack of posts, but I was on holiday in France. What began as a trip to Normandy turned into a flight to the Venise Verte area of the Vendee (highly recommended) in order to find some sun,
Venise Verte
then a return via the Loire - where I can without reservation recommend the version of Cremant de Loire from Saumur, Saumur Brut (an absolutely fantastic champagne replacement - I couldn't tell the difference - and it's only £5 or less) of which I bought 24 bottles in various forms (white, rose, red) - and finally a very sunny Rouen, which was the biggest surprise of the holiday, being a beautiful, interesting and exciting city with an excellent lightshow on the catehdral (and their July 14th fireworks were good too). Also highly recommended.

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Thursday, July 05, 2007

Ah, so that was their decision

At 3:30pm the BBC's headline news story was illustrated with this photograph.


I think you could probably list all million words that a picture is meant to tell without guessing the meaning of the story from it.

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Wednesday, July 04, 2007

Wait Rose

I've just been to the newish Waitrose on Marylebone High Street, and they hand out little price scanners so you can scan your own food, then at checkout there's no additional scanning. I thought it was quite good. Normally I'm suspicious of this kind of thing, as it tends to be the company passing costs to the customer. But as you are already putting things into the basket (not sure it would work if there was two or more of you with a trolley) it probably saves time, if not effort.

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Tuesday, July 03, 2007

Pollard hasn't a clue on pensions

Stephen Pollard, who I vaguely recall is meant to be an expert on this sort of thing, declares:

What makes the sterility of the argument over public services all the more ridiculous is that none of this need be a problem. If, instead of using taxes to fund services on a “pay as you go” basis, we (to use the jargon) used funded financing, where money is invested throughout people’s working life, the demographic equation would be irrelevant.


Back in 2002 I was raving on about how this is obviously untrue, but I was hardly stating something new. The general principles have been well known for years - probably thousands of years given most pensions have been PAYG throughout history, normally in the guise of your children. This paper by Nicholas Barr sets out most of the arguments, but put simply any wish to consume in retirement what you cannot store now is going to require other people, and the number of them will matter.

It is shocking (ah, it's not really is it?) that someone of Pollard's standing should be so unaware of the basic financial issues. It's highly amusing that the article is about other people living on a fantasy island [1].

[1] Which is apt, as the simplified explanation in Barr's piece for why demographic issues are always key is Crusoe on his island.
[2] Like Barr, I am in favour of funded private pension provision (and a state pension), much less in favour of Pollard's idea of funded NHS provision. It seems to me that perhaps medical costs are too hard to forecast to make individual pre-funding a sensible idea.

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