The different type of blogger

Hi All,

People do blog about anything: from their pets to high end politics & religion or science fiction, or how bad Dr Who and Star Trek have become. Length does seem to be important and to me is indicative as to whom you are trying to get to read your blog- as well as the person writing it!

 Of course Twitter has changed blogging immensely, in that short snappy and out of context stuff can be churned out quicker than cheap beer, but the cultural attitude toward time has also changed things. Today people are celebrities and influencers for a timescale that seems like a flash in the pan, as are people’s concentration and willpower on a particular topic.

In terms of blogging this means that people can still write entire monologues/essays or short stories /novellas online, but how many people actually have the time to read this, if working? If you are working then the only time you have to yourself is that daily commute to and from work, in which case you will want shorter and more to the point pieces.

By contrast students and retired people, while on the opposite end of the age spectrum will, in theory, have more time on their hand, but who can say as to whether either of this group has the will to go around reading a large amount of stuff on the internet.

There is a caveat to all of this in so much as it seems that there are actually people who spend all day, every day on the internet and that’s all they do.

Then there is the most curious of all blogs, most of which are already semi successful. It doesn’t matter whether the writer does a paragraph or a monograph or on what subject. You will get a group of people who simply want to hang around the chat thread and make up comments based upon their own thoughts and whims or more often their own pet ideas or politics.

To my mind I think bloggers should always stick to their core beliefs and write for themselves. If you don't then you end up becoming a newservice and therefore may as well cash in a become a full time journalist for a newspaper. And get paid for the work!

Still Here

 Hi All

I'm still here and hopefully now,  well enough to start doing some more blogging. 

Climate Justice = Socialism by the back door

Hi All, 

There is one thing to be said about caring and worrying about our enviroment and recycling etc for our planet. There is quite another when all of this has become hijacked - as night follows day- by the far left. Hence, rather than just having discussions on how to move away from fossil fuels and to sutaniable energy like nuclear fusion, we are now into discussions on 'climate justice' and 'climate reperations' due from the west to the 'developing countries'. 

I can't help but think that if Africa had done what South East Asia has done, they wouldn't be banging on the climate justice pan. But in any case the idea of 'rich' nations giving everyone else $2 trillion a year is just insanity. Who is going to get this money ? African governments that are a by word for Kleptocracy, so the extended family of whatever tribe is ruling can buy another, ahem, Mercedes Benz ? Or is everyone in Africa going to get a pay check courtsey of the west every month? And how exactly is that going to be paid for? We are already discussing massive auesterity here in the UK. Why should our taxpayers, pay more to see their own living standards and services cut, so that non-British citizens can get a free lunch? 

In actual fact climate justice is just another word for left wing socialism, wherein there is a fantasy of redistributing wealth from one government to the next all will be well. Forgetting that even in the rich west there is a lot of poverty and homelessness.

The Technocratic Centralist Orthodoxy prevails

 

Hi All,

So after a brief reign, Truss and her libertarian wishlist is no more. Now we have gone full Italy and have a de facto ‘technocratic’ government as in the real Prime Minister Jeremy Hunt, who in line with the Treasury Orthodoxy is hell bent on balancing the budget- it is one thing to axe the Truss mini-budget to deciding even that is not enough. So austerity is back. And this time it will be worse, for two reasons. The first is that much of the low hanging fruit of Austerity One has been taken – as has the political consequences. Thus the conservatives cannot get away with no political consequence for  getting rid of the triple lock for pensions, in the same way they attack other welfare claimants. The other thing is that Austerity Two is being done in conjunction with the Bank of England raising interest rates, thus both fiscal and monetary policy are tightening at the same time : during Austerity One the Bank of England kept Monetary policy extremely loose as it poured billions into the financial markets, which reached back to people in the form of soft loans and increasing house prices .  It is also worth noting that Austerity One never eliminated the budget deficit and even George Osborne was still borrowing billions of pounds in 2016, let alone reduce the overall national debt. All Austerity One achieved was a reduction in the rate of borrowing, despite the cuts and tax increases.

The Bank admits that their actions will create a deep and long recession, but they have to in order to keep inflation in check. The thing is if there is a recession this automatically means that they government is going to 1) have less revenue as businesses and people go under/bankrupt/loose their jobs and 2) the welfare ‘automatic stabilisers’ will also kick in, unless the government intends to cut these payments as well, thus meaning the government pays out more in welfare. In both cases the government will have to borrow even more, because it has less revenue and has to pay out more money, even after other cuts have been made. When this happens and the government decides to cut even more, this will create a ‘doom loop’ of higher taxes and greater cuts, which will create a longer recession and less revenue, resulting in budget deficits and an increase in national debt.

Finally I have to say I find it difficult to understand why the left is gloating over all of this, well, yes I do get it to some extent. However the long term implication is that the Orthodoxy of the Treasury prevails and that is to try to have a balanced budget, via tax rises and spending cuts, with little time for radical innovations from either the right or the left.  I think Labour, when it comes to power, is going to have a big shock as to what it can and cannot do, without being bought down by the financial markets. Good thing we are a democracy.

What is that witch still doing here and why is Wallace being summoned to the Pentagon?

 Hi all,

So the vile witch who is currently pretending to be our prime minister has now lost another ideological soul mate and  senior cabinet minister -apparently at the behest of the real one Jeremy Hunt on a technicality - at this rate anyone who is in a similar vein might as well go now. It's not that I necessarily agree with these ideologues myself, but basically with all the u turns and willingness to throw anyone under the bus , it is quite clear that truss the witch will simply do anything to stay in power . Someone that supine doesn't deserve it , for to crave power for its own sake is SIMPLY wrong. What is she still doing here ? Just go!

People were of course warned by looking at that woman's profile , i.e. used to be lib dem, anti monarchy, remainer Crum brexiter now libertarian Thatcherite . Rubbish if I ever saw it. Nah she just wants the power and prestige and dam anything else.

Of more worrying concern is the news that our defence Secretary has been suddenly summoned to the Pentagon: previously he had a full diary and due to appear before the Defence Commitee. What is going on and what do our American friends know that required the defence Secretary to go in person ? Is Putin about to go nuclear? 

The official blurb is 

“The Defence Secretary is in Washington DC to discuss shared security concerns, including Ukraine.....

“He will be visiting his counterpart at the Pentagon and senior figures at the White House.”

But Armed Forces Minister James Heappey Has said on record that Wallace was meeting with his US counterpart for “the sort of conversations that [are] beyond belief really, the fact we are at a time when these sorts of conversations are necessary”.

God help us all!

A new Doomsday Book?

 Hi All,

With the Conservatives pretty much finished at the next election- it is a matter of how badly we loose- I think people must look at the opposition and see what horrors will be inflicted on us. 

 Labour are not much better.  They haven't as a party really changed since Corbyn, but the change is enough for respectable opinion. I initally thought that they would be constrained by the current crisis,  as while they like  to spend billions, they've got to be honest about the massive tax rises they are going to heap upon us just to 1) negate the cuts that are going to happen in the next two years and 2) to spend even more billions in their plans for the NHS etc. 

However rather than be honest with the public about the honest need if you want the dream of trying to fuel the NHS with cash, to raise income tax etc,  I can now see Labour turning this into the 'rich verses everyone else'. Alas the really super rich have good accountants and lawyers and will always find loop holes in such a complex tax system as ours .As ever it is the middle classes that will suffer.  Of course Jeremy Hunt will have taken all the low hanging fruit such as the stealth taxes or maybe even the triple lock of pensioners,  so one thinks Labour will go for broke and introduce a wealth tax, one of the left's dreams, I doubt this will be in the manifesto, but it will be the ultimate and probably greatest tax grab in history. 

A wealth or asset tax is a tax an things you own, rather than the income derived from it. In theory everything  physical is an asset, but there is little value in taxing a toaster, but more value in asset taxing gold bars (or even your gold/diamond wedding rings!).  In all likelyhood the easiest thing an asset tax could be applied to is property, but it could be extended to your savings, motor vehicles, or anything of actual physical value such as pet dogs and cats . 

In fact the Doomsday book of the 11th Century was written for that very reason- to asset the value of property for the new Norman rulers. You can imagine the amount of money that this will create for the government: the total UK property market in 2020 was calculated to be £7.5 trillion, whereas GDP was £2.4 trillion. If an asset tax was introduced on UK property  at 1%, this would raise £75 billion and at 10%, a massive  £750 billion, which would cover a huge portion of UK government expenditure. 

This would clearly have the left salivating at the thought of getting their hands on such a pile of cash. 

The trouble is that property is an illiquid asset and like most assets is subject to supply and demand. Furthermore the people owning property might be asset rich, but income poor. It is doubtful that a middle class family owning a £300,000 end of terrace will be able to stump up £3,000 or £30,000 at the blink of an eye, given all the other expenditures a household has to make, such as being able to afford what by that time would be an extremly expensive interest rate on the mortgage, even if so many millions are now renting and don't own their own home, then it is clear that landlords will simply pass on the cost of this tax to their tenants or if not they would probably be forced to sell the property. If enough do so at once it will of course make house prices and therefore the asset go down in value. 

But don't tell the left as they are going to turn this into all their envy and class war that they can think of to soak the rich, forgetting that there is a difference between being rich on paper and being rich in reality. 

coup d'état latest

 Hi all,

Interesting analysis from the telegraph as ever after our new Prime Minister Jeremy Hunt gave his first address in the house :

https://www.telegraph.co.uk/business/2022/10/17/jeremy-hunt-has-saved-day-must-not-lurch-austerity-overkill/

The past couple of days have basically been a political coup, albeit the British way of coup d'état  .

Have we learned nothing?

 Hi All,

It is of course zero surprise that the left is gloating over the current shambles of a government we have in the UK. A government which isn't conservative, but libertarian, which I guess is a post for another day.

Anyway, one thing is quite clear: the current government's tax cuts are going to have to be balanced with cuts to the public purse, despite the u-turn on the 45p higher tax rate. Liz Truss today said in Parliament that she wasn't going to do any cuts and she wants to continue with the 'growth strategy'. Good luck with that. In fact good luck would be that we don't have a full blown sovereign debt crisis and IMF bailout with the way these clowns are running the country. We've not learned that we in the UK are a middle of the road power and that means we have to have borrowing within a certain range and limit, even if the preference would be to balance the budget at 0 surplus or borrowing.

What the government should really be focusing on is not tax cuts for rich people and companies, but how our debt is going to be managed and at least the deficit reduced. Unfortunately for the past couple of years we believed we could go on borrowing like we are America. But we are not America and we cannot keep borrowing £100 billion a year and add billions more  as a long term strategic choice, via tax cuts or for that matter billions to public services without finding the money first. It is true during Covid we borrowed 3 x that amount, but that was acceptable as it was an emergency situation, wherein the economy was shut down, with the Bank of England supplying most of the cash for this, something which it can no longer do if it is to get inflation back under control.

Just like people say the energy price cap is an 'emergency response'. Which it is, but it could have been handled better, for example subsidies for a national insulation scheme and at the very least a public awareness campaign on how to cut down energy usage, without freezing this winter (which has been vetoed by Libertarian Truss as 'the nanny state', although it seems to me there is a difference between advise and compulsion, there was no suggestion of doing a Germany where there's a lot of measures now in place where you have to keep doors shut and lights off at certain times etc). 

Adding to this, the political left is gloating about all of this, but here is the rub: the market has turned against Truss because of the continual deficit and adding to that deficit, without signalling that it will cut elsewhere to reduce, if not balance, the budget. By the same token, the market will not tolerate the left's wish list of vastly increased public expenditure, unless it admits it will have to come with a price, that is if you want to increase public expenditure it will have to come with extra and increased taxes, which go beyond the usual stealth and indirect taxes. If we do get a labour government will we all be paying more tax. 

So the left are welcome to enjoy their brief bit of pleasure and gloating at what is an utterly insane government. But what comes around, turns around and when it is their turn, they will also be facing a lot of difficult and unpleasant choices. It may well be they inhereit a situation in which Liz Truss has been forced out , with a caretaker politician (Gove?) in power for 2 years, who has been forced to do severe austerity by the IMF, with any incoming government being expected to keep going with it, regardless of democracy (see Eurozone crisis). 

One final thought is that all of this may be a mute point because if the crisis in the pension fund world (these are the 'gold plated' final, but not totally funded, salary schemes now closed to most people) continues the government may have to do a 2008 and bail them out.  Younger Taxpayers bailing out those rich pensioners, while they themselves don't have final salaries. That would be another intergenerational mess. And what made this crisis? The Truss government's budget may have been the trigger, but the explosives were, like 2008, financial derivatives. Have we learned nothing?

Been busy !

 Hi All,

As people may or may not know the months of September /October are always busy because at this time of year, we have the Jewish 'high holidays'. We are on the last leg of a 'religious  marathon', having started on Sunday evening Sukkot or the festival of booths to be followed by the last bit Simchat Torah, which brings to an end the cycle of Torah readings or Parashah at Deuteronomy and begins the cycle anew starting at Genesis. 

Hope everyone is ok.

Shabbat Shalom!

 Hi All, 

Open thread .....

 And as president biden reminds us that we are at risk of nuclear war,  it's time for a parody song:

 

What is a carry trade?

 Hi All,

Someone asked me this at a recent dinner party, probably to catch me out...

A carry trade is borrowing in one currency and investing in another. The profit to be made is the difference between interest rates or the potential gain. 

For banks, the classical example is Japan, who was the king of carry trades woth $1 trillion, until the 2008 crash, when the trades began to unwind due to the lowering of interest rates in Europe, America and the UK. Banks would borrow in Japanese Yen, which came with a low interest rate and then lend this money in currencies that attracted a higher interest rate (such as the UK or another OECD nation). So the profit would be classical banking, or   the difference between borrowing at 1% and lending at 6 or 7%. 

For individuals a carry trade is using the entire limit of a 0% credit card before the interest is applied and investing it in either a saving account (little to no risk, but low rate) or if one wishes a higher, but riskier, return the stock or derivatives market.

A subset of the carry trade exists in the EU, which while it has the same currency has different yields for its bonds. In 2011 the ECB began one of its many LTRO (Long Term Refinancing Operations), which allowed Europe's banks to collectively borrow trillions, the collateral for these loans was of course  European government debt, but the ECB was not quite the ultra conservative Bundesbank as it accepted and did not discount or discriminate between member states .  The banks were able to use the bonds of Italy, Greece, Spain, Portugal, Ireland etc to get 100% of their face value,  which then they used to buy... more bonds of the same. why? Aside from the national pressure the  banking sectors in each country probably came under to buy 'our' debt, the capitalist insentive was the carry trade : the  interest rate spread (profit)  between the cost of borrowing from the ECB at 1%  (the carry) to these  bonds (Italy 5%, Greece 20%).