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Monday, July 30, 2012

UK M4 shows continuing decline


Figures released today by the Bank of England show that M4 lending (quarterly, annualised) shrank again in the second quarter of 2012 - slightly up from Q1, but still lower than before. Where will it end?

Playing the chartist game, I connected the last two pairs of highs and lows, expecting to see the lines cross somewhere and give us an indication of the bottom. Instead, the channel not only trends downward but is widening.

Join your own dots, but despite all the QE I don't see a terminus. Will the next inflection - the next "top" - be in negative territory?

INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

UK M4 shows continuing decline


Figures released today by the Bank of England show that M4 lending (quarterly, annualised) shrank again in the second quarter of 2012 - slightly up from Q1, but still lower than before. Where will it end?

Playing the chartist game, I connected the last two pairs of highs and lows, expecting to see the lines cross somewhere and give us an indication of the bottom. Instead, the channel not only trends downward but is widening.

Join your own dots, but despite all the QE I don't see a terminus. Will the next inflection - the next "top" - be in negative territory?

Monday, July 23, 2012

IRS and pension fund managers robbing distressed Americans

A miserable twist of the knife: Americans are increasingly defaulting on pension loans, and the taxman and plan manager make money out of it all.

The 401(k) plan is a contribution-based pension for employees. Many such plans allow loans, often with restrictions as to their purpose (e.g. for college fees, medical expenses or housing); but Leo Kolivakis relays reports of an estimated $37 billion in annual defaults, as the great financial crisis continues to claim victims.

The worst of it is, when the borrower defaults, income tax is charged on the loan - plus (often) an extra penalty (presumably to the benefit of the plan manager):

"This can take you from a $6,000 loan to a wipe-out of $10,000 from your 401(k savings) ... and this is happening to people at the very worse times of their personal and financial lives."

What to do with bankers, G4S etc

In Papua New Guinea, they know how to deal with those who expect excessive bonuses:

Police in remote Papua New Guinea have arrested members of an alleged cannibal cult accused of killing at least seven people, eating their brains raw and making soup from their penises...

The 29 people were part of a 1,000-strong group formed to combat errant sorcerers who... had begun charging exorbitant fees...

"We ate their brains raw and took body parts such as livers, hearts, penis and others back to the hausman (traditional men's houses) for our chief trainers to create other powers for the members to use," one of those arrested said.

Make mine a large one.

Sunday, July 22, 2012

Is the generosity of Spain's social security system preventing revolution?

The Talking Clock blog is following the anti-austerity protests in Spain live, claiming that the BBC is showing little interest (though the BBC gave this online a couple of days ago).

However, Fin24's report includes an interesting detail: the newly unemployed there are to still get 50% of basic salary (down from 70%).

This raises the question of differences between social security systems across the EU, and in fact the European Commission has been looking at exactly that in a paper issued in May 2012 (pdf).

The authors find that "Belgium, Denmark, Portugal, Spain, Finland and the Netherlands appear to be relatively generous in terms of unemployment insurance replacement rates and duration compared with the EU average, while in the UK, Malta, Slovakia, Estonia, Poland and Romania benefit conditions are relatively tight", although Spain is not named among the countries (Belgium, Malta, Austria, Denmark, Ireland, Finland and Portugal) that have the most generous social security systems overall.

So while obviously financially constrained, the protestors may have enough to keep going and make a fuss, and not so little that they are driven in desperation to serious and sustained acts of rebellion.

Is this the real point of social security: to maintain safe those in power?

Recuerdos del Forest of Dean

A special needs teaching colleague's retirement do last week. Just try to stop teachers talking. One of the older staff tells us she'd once taught in Coleford, where the children in her class shared just three surnames. Aunts, nieces and nephews all behind the desk. Some of the children were still at mother's breast - at 12 and 13.

Another teacher said she'd done supply work (commuting from refined Cheltenham) in another place in the Forest. Two huge mothers stood at the school door like (or as) bouncers. Inside, there were four adults in charge of a class of 18 children, the air nevertheless thick with missiles etc.

My old financial services boss had previously been a headteacher in Dean. His 60th birthday celebration was held in the Speech House in Coleford. He recalled that when he'd first arrived as a class teacher, his head had asked him how he was getting on with the children "I can't hear what they are saying," he replied; the first sign of the partial hearing loss (owing to noisy early-generation computer printers in the ICT suite where he taught) that eventually got him his early retirement with enhancement. Later, supplied with a hearing aid, he told the head, "I can hear them now, but I can't understand what they're saying" (he was from Lancashire). Later still, he told the head, "I can hear them now, and I can understand them now; but I don't like what they're saying."

More vernacular

At a garden centre cafe yesterday: a Yorkshire terrier was keen to make friends with people on other tables. Says her owner, "'Er's as saft as a boiled turnip".

Saturday, July 21, 2012

This could kill the big banks

...and a good thing, too.

Matt Taibbi reports on a proposed scheme for local authorities to compulsorily purchase negative-equity homes at current market value - realising big losses for the lenders - and then let the homeowners take out smaller, 100% LTV replacement loans.

Could the good guys win?

Wednesday, July 18, 2012

Breaking News: New EU Olympic Flag

The Council of Europe has today issued an emergency executive order to all member States concerning the use of national flags in association with the 2012 London Olympics.

Teams, contestants and sponsors must choose one of the three designs below, in lieu of the nationalistic devices displayed at previous Games. (The third option may be adapted according to the two- or three- letter designation of the member State concerned.) The new range of banners serve to remind onlookers of the unity and competitive strength of the European Union.

Spectators may on no account display flags, emblems or symbols of any EU member State, inside the grounds or buildings of official Olympic venues, or within 100 metres of such locations.

The UK is instructed to enforce the order with effect no later than 23:59 on Thursday 26th July 2012.

Financial losses on the recall of outdated items, if strictly necessary to comply with this executive order, may be reimbursed by EU central funds (details to be advised in due course).

Seven types of fart

A bit of social history. My late father-in-law and his brothers used to have a list of flatulence categories and it seems to date from the 1930s/40s if not earlier - I wonder if anyone has heard of these elsewhere, or anything similar?

Here they are, in ascending order of noise and destructive power:

  1. The Fizz
  2. The Fuzz
  3. The Fizzy Fuzz
  4. The Poop
  5. The Anti-Poop
  6. The Tear-arse
  7. The Rattler

Tuesday, July 17, 2012

How The System enslaves you - libertarians take note



How fast we agree to become laboratory rats. And note how the exultation and applause increases as you have to work harder to get the same reward.

In our Age of Abundance, is the liberty issue about self-denial? Are we enslaved as much by appetite as by force?

Sunday, July 15, 2012

Extreme blogging, extreme TV

I'm reading an Andy McNab yarn ("Exit Wound") and halfway through his protagonist (Nick Stone) says that Iranian President Ahmedinajad has his own blog (dormant since 2007). I don't know why it should surprise me, but it turns out to be true - and on blogspot, to boot. Here it is.

Any others? Did Bin Laden have one?

Mind you, I'm getting to the point where I watch Russian TV (RT) to get something like the truth about stuff that is scarcely covered on BBC et al. (Max Keiser is gonzo in style but revelatory in content) - and even Al-Jazeera, for goodness' sake. It's a reversal of the days when Germans listened to the BBC during WWII etc.

Speaking of Max Keiser, he interviewed Brit econ commentator Ian Fraser (from minute 12 onwards) a day or two ago, who revealed that following the Blue Arrow debacle in 1992 the message had come down from on high (see 15:15) that no senior banker or institution would ever again be prosecuted; and (see 16:00) that the Financial Services and Markets Act 2000 included a crippling clause that said the FSA had to consider the international mobility and competitiveness of our financial sector when deciding how to proceed against our red-braced Bolly-swigging crooks.

Where was either of those messages in the papers?

Wednesday, July 04, 2012

US financial system has now been reset

For the first time in 40-plus years, the ratio of monetary base to credit in America has returned to 5%.
(If you want to check the data, see here and here.)


INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

US Financial System has now been reset

For the first time in 40-plus years, the ratio of monetary base to credit in America has returned to 5%.
(If you want to check the data, see here and here.)

Tuesday, July 03, 2012

Is gold still fairly priced?

The nominal price of gold has soared over the last decade, prompting some to worry that it may be something of a bubble. And ceratinly its price path is erratic, reflecting sentiment more than monetary fundamentals.

But whether you look at the US monetary base, or alternatively at the growth of total credit market debt, gold is slightly below its 42-year average in relation to these benchmarks:



I didn't have the money in 2005 to pile in as I wanted to; but I'm starting to buy small amounts of physical gold now - no longer to make a killing in real terms, but as a hedge against inflation.

Why? A number of reasons:
  • the British Government is still not offering index-linked National Savings Certificates (I've written about this to my MP, who has written to the Chancellor, who has not replied so far);
  • the high streets around my area are still boasting a number of shops buying gold, not selling it;
  • China has (some time ago) announced its determination to build up a stock of 10,000 tonnes;
  • other central banks are buying;
  • you can still purchase gold in the UK without VAT.
There are so many prophets around, but which one of them will turn out to be correct? My feeling is that we face a deflationary/stagnatory phase, which will become so painful and (in a sort-of democracy) unsustainable that somehow or other, the monetary floodgates will open.

In the medium term, I kind of expect UK housing (ex-London and some other chi-chi areas) to cheapen as unemployment, uncertainty and bank crises continue; by the time we get to sub-Weimar I hope to have moved house (using much of our spare cash) and then with what's left I'll hope to be in fairly defensive stocks (utility companies etc), gold and maybe Marc Faber's beloved emerging markets.

For now it's cash, plus gold plus anything officially guaranteed to hold its value.

INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Is gold still fairly priced?

The nominal price of gold has soared over the last decade, prompting some to worry that it may be something of a bubble. And ceratinly its price path is erratic, reflecting sentiment more than monetary fundamentals.

But whether you look at the US monetary base, or alternatively at the growth of total credit market debt, gold is slightly below its 42-year average in relation to these benchmarks:



I didn't have the money in 2005 to pile in as I wanted to; but I'm starting to buy small amounts of physical gold now - no longer to make a killing in real terms, but as a hedge against inflation.

Why? A number of reasons:
  • the British Government is still not offering index-linked National Savings Certificates (I've written about this to my MP, who has written to the Chancellor, who has not replied so far);
  • the high streets around my area are still boasting a number of shops buying gold, not selling it;
  • China has (some time ago) announced its determination to build up a stock of 10,000 tonnes;
  • other central banks are buying;
  • you can still purchase gold in the UK without VAT.
There are so many prophets around, but which one of them will turn out to be correct? My feeling is that we face a deflationary/stagnatory phase, which will become so painful and (in a sort-of democracy) unsustainable that somehow or other, the monetary floodgates will open.

In the medium term, I kind of expect UK housing (ex-London and some other chi-chi areas) to cheapen as unemployment, uncertainty and bank crises continue; by the time we get to sub-Weimar I hope to have moved house (using much of our spare cash) and then with what's left I'll hope to be in fairly defensive stocks (utility companies etc), gold and maybe Marc Faber's beloved emerging markets.

For now it's cash, plus gold plus anything officially guaranteed to hold its value.

Sunday, July 01, 2012

UK baby boom since 2000

I'm picking up on an anonymous comment on conspiracy blog The Tap, in which the writer says they've noticed an increase in pram-pushers and it reminds them of an observation by Alan Watts that promiscuity increases before a major war.

I'm less sure about the cause - it may have more to do with a reaction to recession, possibly leading to more women deciding that in the absence of paid work it may be time to start or increase their family. But the ONS statistics do bear out the commenter's perception, and it seems not to be simply a quirk of demographics in his/her geographical area.

However, it's also not simply down to teenage mums - the average age of the mother is increasing (which could be because the births recorded are trending to more second or subsequent births).

The increase is also not merely in raw numbers (which one might expect as the total poulation grows) but also in births per 1,000 head of population.

Here's the data in graph form (ONS November 2011 update), starting with 1940 or 1997:




The end, and a new beginning

The Classic FM radio news said that "David Cameron" (the Prime Minister, apparently - Google him up) "may consider" a referendum on the UK's membership of the EU. (My position is that we're not in it.)

The Sunday paper (Mail, of course - I need to know what the gullible are thinking, they're - we're - the ones who vote) gave this a big front-page splash, though their (print-version) headline "BRITAIN TO GET VOTE ON EUROPE" might just as easily have been "PRIME MINISTER COUGHS." For a few seconds' further reading tells you his new sort-of-potential-policy is a bit of skirt-twitching, hinting that you might get lucky in 2015. It might be part of a General Election manifesto, or a stand-alone referendum (which might be in-out or might also include some alternative about staying in but clawing back some powers). Or it might be just a hand job, or maybe you should give up and buy a packet of chips.

We've had duplicitous bastards before. Think of John Major (who prided himself on being able to talk to "the man in the four-ale bar") and, of course, the lucky, hard-wriggling spermatozoon Blair who pierced the Labour Party and altered its DNA. But they only employed special advisers; Cameron simply was one, is one.

Perhaps everything that's happened since the 1960s has been a kind of reconditioning of our expectations, so that we become habituated to hoping and believing less and less every year. The end point will be when we don't buy newspapers (the proprietors are already starting to give up selling them), disbelieve what we see on telly news, stop voting altogether. Those with get-up-and-go will either run the country (how many modern politicians go straight into the machine from university!), own it (increasingly, from abroad, at least from a taxation standpoint) or leave it. The rest will lapse into a dumb brutishness quite, quite unlike that of the mediaeval peasantry.

I heard years ago (and it's plausible) that Allied soldiers taken prisoner in the Korean War were initially placed in a holding area, and their behaviour observed. Those who displayed signs of initiative were taken to smaller, heavily-controlled camps; the rest were herded into much larger pens with few guards. And when I taught in an inner-city school in Birmingham in the late 70s, I was interested to note that the very dumbest kids were white: anybody of the old population who had anything about them, had left, and the new incomers were entrepreneurial, legally or otherwise.

The British Left, with its self-loathing and penchant for anarchic mischief, and the British Right, with its love of money above all else, have conspired in a cultural subversion that I cannot see anywhere else on Earth. For decades, brains and talent have fled this country like Equitable Life investors scrambling to get out of their with-profits fund, while immigration has been keenly encouraged, by the Left on Gramsci-ite principles and the Right because cheap imported labour has helped in the transfer of wealth from the (increasingly indebted) working and lower middle classes to the rich.

But the last laugh will be on all of them. For as with America, the key is initiative: those who had the gumption to leave their country and try to make a living here will eventually acquire whatever schooling, skills and knowledge they need, but the jizz is hard-wired into their DNA. The Left will wither as a new class of entrepreneurs springs up that sees no need to support anyone who isn't family; the Right will find that the domination game is no longer so easy, and while they spent their time foxhunting and otherwise aping a class from which they did not spring, their businesses were outcompeted. Eventually they will be kept going in genteel captivity, like pandas, while a new class arises that works hard, protects their family and fears God in whatever form they worship Him.

As Alexander Pope, observing the self-indulgent decadence of the filthy rich in the eighteenth century, dared to hope:

Another age shall see the golden ear
Imbrown the slope, and nod on the parterre,
Deep harvests bury all his pride has planned,
And laughing Ceres reassume the land.