Tuesday, May 18, 2010
Is it time to get out of cash?
But we may be moving on to a new phase. Governments in the USA, the UK and now the European Union have poured quite staggering amounts of cash into the banking systems to prevent their collapse. Some commentators now think that we are heading for an inflationary period that will devalue savers' money (and interest rates on deposits are not matching the official inflation figures).
There is an argument for investing now, not to make a genuine gain, but because over time stocks and shares may not lose as much in real terms as cash at the bank. This is the view of Dr Marc Faber, for example (see excerpts from a recent interview here), even though he believes that the monetary system will eventually collapse (and presumably be replaced by a new currency).
There are other ways to protect against inflation, notably National Savings Index-Linked Certificates, which are backed by the government and will return growth in line with RPI plus 1% per annum or so. We can argue about how exactly inflation is measured - and that is relevant - but their definition of inflation will have to be fairly reasonable, we hope.
More speculative investors may be eyeing gold (which has already quadrupled in price since 2000), silver, oil, agricultural land etc - but commodities are risky and there are already funds investing in these areas with the advantage of borrowing very cheap money, thanks to the state-supported banks.
If you would like personal advice, do please get in touch.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
Monday, May 17, 2010
Can Osborne do it?
An economics professor was brought onto BBC News 24 this lunchtime; he pointed out that UK government spending runs at £700 billion per annum and UK GDP is something like £1,500 billion. £6 billion is peanuts, less than 1% of current spending.
A recent OECD study (this link is to John Mauldin's post on "Business Insider") suggests that we need to do far more to stabilise the economy. Even if we set ourselves a leisurely 20 years to bring debt-to-GDP down to 2007 (pre-crisis) levels, Britain would have to make savings of 3.5% of GDP. So using figures already given, I make that £52.5 billion per year.
Government statistics say that median earnings in the public sector in 2009 were £539 per week, or a shade over £28,000 per year. Let's assume that for every pound in pay you need to allow another pound in overheads. So every job cut saves £56,000 per annum. If we want to save 3.5% of GDP, we need to lose over 936,000 jobs.
Actually, it's worse than that, because there's the loss of tax (and NIC) revenue when you make someone unemployed; plus the additional cost of unemployment benefits, probably higher medical costs because of the health impact of joblessness, and so on. So, make that a target of more like 2 million jobs to lose? Especially if, on average, you cut less-well-paid jobs (teaching assistants and so on). That's out of a total of 6 million public sector employees, if you take John Redwood's figure; or 8 million if you take the first comment on that post, by Mark Wadsworth; i.e. a loss of a quarter to a third of the public workforce.
That's if you do it over 20 years. According to the OECD's report, doing it in 10 years would mean savings of 5.8% of GDP; or 10.6% over 5 years. Unimaginable.
Then there's the fact that we're starting from an annual budget deficit, not a balanced budget. Even before the credit crunch, the UK's deficit was running at 2.7% of GDP. According to the post by John Mauldin above, in 2011 the deficit is expected to be 9%!
So, it's just not to come from public sector layoffs alone. And even there, some of the cuts will impact the private sector, e.g. outsourced IT projects in the NHS, the education system and the widely-hated national ID card system.
The Welfare State is going to be hit hard. But how? State Pension Age raised to 70? Family payments for special needs children cut? Unemployment benefit payable for a limited period only, as in the USA (though even there they're having to extend the benefit period on an emergency basis)?
Or will we, despite desperate and hugely unpopular efforts by this new government, eventually end with default on a massive scale, either straightforward or by hyperinflation? Increasingly, this seems a distinct possibility.
I fear that George Osborne's attempts at reassuring the markets will not succeed for long. And if the Opposition makes maximum political capital out of the disaster, quite possibly the voters will reinstate Labour in five years' time, in the hope of mitigating the pain; which, if the next government plays along, may ignite the final financial crisis.
We must hope for the best and support this coalition in what must be far more serious measures than have been telegraphed to us so far.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
Debt, inflation and the looming currency crisis
_____________________________________________
The above is a recently-released video from the National Inflation Association in the USA (hat-tip: Tim Iacono). In short, it says that the budget cannot be balanced and the currency will eventually collapse. According to the NIA, perhaps a few wealthy investors will prosper from speculation in gold, silver, agricultural land, but the vast majority of Americans will suffer and the middle class will see their savings wiped out by inflation.
This is not a problem restricted to America. According to page 2 of this study by Citibank, the UK will not bring its government debt under control until 2013/2014, and even that is on assumptions that the author sees as optimistic. The second graph shows that compared to the debt-saddled "PIIGS" group of Western European countries, we will take longer than all of them just to be in a position to begin to reverse direction.
Further, the UK is by far the worst of the G7 countries in terms of the debt owed to foreigners, according to this article by Fraser Nelson of the Spectator magazine (and that was back in December 2008). So our economy is at risk from a reassessment of its creditworthiness by foreign lenders and we are vulnerable to a hike in interest rates - which in turn would make it far harder for us to service our debts. True, foreigners have recently shown themselves willing to continue lending to us, but that is against a background of concern about Greece. The picture could change in the intermediate future.
Finding out the true state of affairs with debt is difficult - it seems to be an embarrassing secret. We are given a confusing array of definitions and much of the discussion we hear on TV and radio is about government debt, rather than the total burden of debt within the economy. Even then, we hear talk of "reducing the deficit", which actually means continuing to get into debt, but not quite so fast - the actual total amount outstanding will increase for years to come.
If you want to get some notion of the overall liability, see the graphic on this post at Naked Capitalism: it shows that all in all, we are not much better off than Greece - and Germany is scarcely better off than the UK. The US is a giant debtor - this graph shows the position at the end of September last year: debt was c. 370% of GDP, or half as much again as Ireland's, relative to national income. To put it another way, the US now has 42% more debt-to-GDP than before the Wall Street Crash in 1929.
Even on this definition of debt, experts disagree about the extent of it. Another source (stockbrokers Charles Schwab) agrees on the US figure, and then says:
"But on this metric, we're in "good" company: The United Kingdom's total debt-to-GDP is a whopping 470%, Japan's is 460%, Spain's and South Korea's are 340%, Switzerland's is 315%, France's and Italy's are about 300%, Germany's is 275% and Canada's is 245%. These are all records.
"The "BRIC" countries (Brazil, Russia, India and China) all have total debt-to-GDP under 160%. However, since this study ended in 2008, we have to add in China's stimulus package, which was three times the size of the US package, not to mention China's banks lending out $1.3 trillion during 2009. Some believe China could now be more leveraged than the United States." (My emphasis.)
Pictorially, Schwab's figures would look like this:
Because of the crisis facing so many nations including the world's wealthiest, there is heavy pressure on their governments to keep interest rates low (or lower than inflation), while they try to shore up their public finances. This means that savers will see the value of their money reduce, even when interest is added to their accounts and not spent. When I worked at an insurance company in the late 80s, we had a sales aid that showed the real (adjusted for inflation) value of cash deposited with the Halifax Building Society for 10 years (from 1974 to 1984, if memory serves). Even with accumulated interest, the sum at the end would only buy half as much as when the cash was first deposited!
Much the same story can be seen with the stockmarket. In December 2008, I made the following graph reinterpreting the Dow Jones Index in the light of inflation:
In "real terms" (and yes, one can argue long about what is an appropriate measure of inflation) the apparent recovery in equities was actually a fall in value from 1974 to 1982 - a loss of about two-thirds in eight years. The picture for the FTSE is something similar (though not as severe as in the USA, which was paying for the Vietnam War on top of other problems): apparent gains, undermined by the fall in the purchasing power of money.
The difference between cash and equities is that the latter did eventually bounce back and turn a "real" profit, thanks (in my view) to very significant inflation in the money supply, not under a Labour government (though they did their fair share both before 1979 and after 1997), but under the Conservatives! I've written to people including Lord Tebbit and the economics editor of the Guardian, pointing out the long-running use of monetary inflation to make the economy seem healthy (while weakening it), but perhaps unsurprisingly, have had no response. However, if recent comment (see link just given) on the dimishing returns of monetary inflation are correct, we now approaching the point where further stimulus will actually reduce gross domestic product (GDP) - pumping more money in will be worse than useless.
The fact is, while some compare our situation to that of the Thirties and others look back at the Seventies, the debt problem is now far greater than in either period. The past is not necessarily going to be a good guide to the future. Respected commentators like Dr Marc Faber are coolly convinced that our currency system will simply break down; in which case the social consequences will be very unpleasant.
The challenge now is for you not to make a profit, but to find some way of hanging on to whatever wealth you have managed to accumulate. I cannot advise you personally here on this blog, but do please contact me if you are a client and would like a review.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
The terrifying truth about debt - and inflation
The above is a recently-released video from the National Inflation Association in the USA (hat-tip: Tim Iacono). In short, it says that the budget cannot be balanced and the currency will eventually collapse. According to the NIA, perhaps a few wealthy investors will prosper from speculation in gold, silver, agricultural land, but the vast majority of Americans will suffer and the middle class will see their savings wiped out by inflation.
This is not a problem restricted to America. According to page 2 of this study by Citibank, the UK will not bring its government debt under control until 2013/2014, and even that is on assumptions that the author sees as optimistic. The second graph shows that compared to the debt-saddled "PIIGS" group of Western European countries, we will take longer than all of them just to be in a position to begin to reverse direction.
Further, the UK is by far the worst of the G7 countries in terms of the debt owed to foreigners, according to this article by Fraser Nelson of the Spectator magazine (and that was back in December 2008). So our economy is at risk from a reassessment of its creditworthiness by foreign lenders and we are vulnerable to a hike in interest rates - which in turn would make it far harder for us to service our debts. True, foreigners have recently shown themselves willing to continue lending to us, but that is against a background of concern about Greece. The picture could change in the intermediate future.
Finding out the true state of affairs with debt is difficult - it seems to be an embarrassing secret. We are given a confusing array of definitions and much of the discussion we hear on TV and radio is about government debt, rather than the total burden of debt within the economy. Even then, we hear talk of "reducing the deficit", which actually means continuing to get into debt, but not quite so fast - the actual total amount outstanding will increase for years to come.
If you want to get some notion of the overall liability, see the graphic on this post at Naked Capitalism: it shows that all in all, we are not much better off than Greece - and Germany is scarcely better off than the UK. The US is a giant debtor - this graph shows the position at the end of September last year: debt was c. 370% of GDP, or half as much again as Ireland's, relative to national income. To put it another way, the US now has 42% more debt-to-GDP than before the Wall Street Crash in 1929.
Even on this definition of debt, experts disagree about the extent of it. Another source (stockbrokers Charles Schwab) agrees on the US figure, and then says:
"But on this metric, we're in "good" company: The United Kingdom's total debt-to-GDP is a whopping 470%, Japan's is 460%, Spain's and South Korea's are 340%, Switzerland's is 315%, France's and Italy's are about 300%, Germany's is 275% and Canada's is 245%. These are all records.
"The "BRIC" countries (Brazil, Russia, India and China) all have total debt-to-GDP under 160%. However, since this study ended in 2008, we have to add in China's stimulus package, which was three times the size of the US package, not to mention China's banks lending out $1.3 trillion during 2009. Some believe China could now be more leveraged than the United States." (My emphasis.)
Pictorially, Schwab's figures would look like this:
Because of the crisis facing so many nations including the world's wealthiest, there is heavy pressure on their governments to keep interest rates low (or lower than inflation), while they try to shore up their public finances. This means that savers will see the value of their money reduce, even when interest is added to their accounts and not spent. When I worked at an insurance company in the late 80s, we had a sales aid that showed the real (adjusted for inflation) value of cash deposited with the Halifax Building Society for 10 years (from 1974 to 1984, if memory serves). Even with accumulated interest, the sum at the end would only buy half as much as when the cash was first deposited!
Much the same story can be seen with the stockmarket. In December 2008, I made the following graph reinterpreting the Dow Jones Index in the light of inflation:
In "real terms" (and yes, one can argue long about what is an appropriate measure of inflation) the apparent recovery in equities was actually a fall in value from 1974 to 1982 - a loss of about two-thirds in eight years. The picture for the FTSE is something similar (though not as severe as in the USA, which was paying for the Vietnam War on top of other problems): apparent gains, undermined by the fall in the purchasing power of money.
The difference between cash and equities is that the latter did eventually bounce back and turn a "real" profit, thanks (in my view) to very significant inflation in the money supply, not under a Labour government (though they did their fair share both before 1979 and after 1997), but under the Conservatives! I've written to people including Lord Tebbit and the economics editor of the Guardian, pointing out the long-running use of monetary inflation to make the economy seem healthy (while weakening it), but perhaps unsurprisingly, have had no response. However, if recent comment (see link just given) on the dimishing returns of monetary inflation are correct, we now approaching the point where further stimulus will actually reduce gross domestic product (GDP) - pumping more money in will be worse than useless.
The fact is, while some compare our situation to that of the Thirties and others look back at the Seventies, the debt problem is now far greater than in either period. The past is not necessarily going to be a good guide to the future. Respected commentators like Dr Marc Faber are coolly convinced that our currency system will simply break down; in which case the social consequences will be very unpleasant.
The challenge now is for you not to make a profit, but to find some way of hanging on to whatever wealth you have managed to accumulate. I cannot advise you personally here on this blog, but do please contact me if you are a client and would like a review.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
Wednesday, May 12, 2010
Tuesday, May 11, 2010
Monday, May 10, 2010
Why not a Lab-Con pact?
"We want a proper government. A strong, honest government that works for us.
"One that doesn't make stupid compromises just to keep in power. One that works for what most people want.
"A job. A better chance for our children than we had. Money to pay bills, to pay for a bit of fun, to save for when we're old. Decent education and healthcare, keep crime down, protect us from enemies domestic and foreign.
"Apart from those things, if you have a wonderful vision of the future, write a novel or make a movie. We don't want revolutionaries, Puritans of any religion or none, national separatists or the European Brotherhood of Man.
"Now, get on with it. And stop lying and fiddling the expenses."
So, why not a coalition of Conservative and Labour? Up to the 70s/80s, when the country was tearing itself into pieces because of economic crisis after Bretton-Woods collapsed, there was quite a lot of consensus between the two sides.
If Clegg can talk face to face with Brown and his back can talk to Cameron, maybe Lab and Con could discover that they have more in common with each other than they have with the LibDems. (For a start, neither of them thinks that a white flag is a robust defence in a nuclear world.)
With 424 seats, a Lab/Con government of national unity would have a majority of 198. Enough to ignore special pleading and political blackmail from Alex Salmond, Ieuan Wyn Jones and the Northern Irish factions; enough to ignore the babel of grand reformist schemes from the LibDems; and enough left over to ignore episodes of up to half a hundred backbenchers at a time temporarily crossing the floor of the House in a hissy fit about their own pet projects.
We face enough challenges to occupy a full-length Parliament, challenges that all serious politicians would wish to solve together.
So, why not? Out of 650 Members of Parliament, is is really impossible to find 326 that would cooperate for the national good?
There might even be some Liberal Democrats willing to help.
Exports and loans
Goldman Sachs - "financial terrorists"
Who is Nick Clegg?
Like Baroness Ashton (Europe's first High Representative For Foreign Affairs), he looks like a natural loser who's won the Lottery, but is going to have it all taken away from him at some point. True, both are winners in a sense now, but the European setup that gave Clegg his first major political position as an MEP (after some years of service with the European Commission), and Ashton (I think) her last, has carefully arranged matters so that you have a big group of nonentities in a mock-Parliament, while all the real power is vested in the Council of Ministers. In short, these two are perfect stooges and the light of publicity does not flatter them.
It is, I think, significant that Clegg's postgraduate learning included a spell at the College of Europe in Bruges, an outfit whose purpose was described by postwar Euro-idealist Henri Brugmans as "to train an elite of young executives for Europe." I read that as a sort of McKinsey for pliable idiots. Other British Isles alumni include former Tory MP Nigel Forman, Neil Kinnock's sprog Stephen, LD stiff Simon Hughes, ScotNat MEP Alyn Smith (how a nationalist and a federalist? explain!), and Irish-born ex-Gen Sec of the European Commission David O'Sullivan.
Now, for a short spell, Clegg's playing with the big boys, and they're going to have his marbles and the bag they came in. Nothing will persuade any Labour or Conservative leader to agree to PR, a system that would guarantee perpetually recurring crises of governance like the present one. The Single Transferable Vote as some describe it (preference ranking within conflated groupings of constituencies) would tend to a squeeze of minor parties in favour of the largest two; tweaked versions of the Alternative Vote are obvious political fudges designed to include cosy dunroamin deadend spots for loyal, clapped-out Party hacks or political chessmen in search of a sinecure (I believe AV+ was Roy Jenkins' brainchild, if so the connection doesn't surprise).
The best that can be hoped for by LibDems is constituency-level Alternative Vote, and it's by no means certain that AV would prove greatly helpful to them. In habitually Conservative seats, many LD voters may be slightly disenchanted Tories who will return to the fold if they feel threatened by some Lib-Lab combination; in Labour seats, the same situation in reverse; and some Liberal seats could be threatened by odd tactical combinations of their enemies, questioning LD policies on e.g. nuclear disarmament, Eurointegration, immigration.
The best that can be hoped for by Nick Clegg, I think, is to do a Blair: sell out to powerful interests who will springboard him into some position less vulnerable to the people's franchise. Perhaps the reward for his long service to Europe will be a seat on the European Commission (maybe he still speaks to David O'Sullivan and friends - see above). He, and ultimately his descendants, will be accepted into that modern equivalent of the Hapsburg dynasty that is the nascent power support structure of the EU.
Or maybe he'll stand his ground, and watch his party get whittled away back down to six seats, a fate David Steel vividly remembers.
Sunday, May 09, 2010
It's the Tories who fear voting reform - and the LibDems who should fear it
There's a good reason, I think: a truly representative voting system would probably mean there would never again be a Conservative government.
Let's say that we had some form of nationwide Alternative Vote. The votes for the very small parties would likely pass on about equally between the Tories and Labour - maybe a little more Right than Left. The key would be how the LD votes would split, and I'd guess it would be not less than 80:20 in favour of a left of centre Labour party. Even now, that would mean an outright majority for Labour.
Just as American politics is basically a choice between two sides that from a British perspective seem right-wing, British politics under "fair voting" would be a choice between two left of centre parties, for to have any hope of power the Tories would have to share even more in "progressive" political values than they have done in many years. Indeed David Cameron's electoral sales pitch already reflects this, to some extent.
But if we go down this road, then we might be better off with a truly Presidential system, because the two candidates could be assessed not only on general policy direction but on character. We're mutating into a leader-driven system as it is, thanks in major part to the mass media, especially TV. At least a national direct election for the country's leadership would winnow out callow, jumped-up backroom boffins like Milliband - or so I'd hope.
It's much more difficult to judge what would happen if we retained the territorial constituency system but adopted the Alternative Vote. I don't have the time, the psephological database or the specialised computer programs and theoretical assumptions to study 650 constituencies and play out the permutations. But this is what Gordon Brown is rumoured to be offering the LibDems, and forming a coalition to get AV may be better than going for PR with the Tories and eventually ending up with a FrankenLeft party that swallows the LibDems whole.
If Clegg and co. come to a deal with the Conservatives without electoral reform, I think it'll be the end for Clegg; if they get PR, it could be the end of the third force in British politics. Yet Labour haven't enough to go on, even with the LibDems' support.
Perhaps the upshot will be another General Election, even sooner than the 12 - 18 months people are talking about. And that could fracture both Labour and the Conservatives, as Peter Hitchens has long suggested and wished.
We do live in interesting times.
Should we fear proportional representation?
The fact is, under the present system 95.5% of the seats went to the three major parties; if seats had been allocated in proportion to votes cast, the top three would still have had 88.3%. Between them, quite enough to vote down everyone else.
Yes, some of the "wrong types" (e.g. the BNP) would have got a voice in Parliament; but actually, the fourth biggest party would have been UKIP, with 20 seats - and under a different system, UKIP might have gained switch-support from those who voted BNP because of concerns about national sovereignty and the economic and social effects of relatively uncontrolled (yet disproportionately locally concentrated) immigration; leaving the race-haters fuming in an even tinier corner. Some other minorities would have even fewer seats than they have now, and we'd have some fresh voices on the benches. Is it really necessary to uphold a flawed existing arrangement merely because it gags mouths that might offend us?
Another objection is that the LibDems would be the kingmakers, the masters of the seesaw. Not necessarily: how many of those who voted LD tactically last week, would have voted directly for Labour or Conservative if they had thought their vote would count as much as anyone else's?
PR would break the link between an MP and his/her constituency, say some. Yet it seems that so much voting is simply for the rosette, and we have just seen a General Election campaign fought on presidential terms, without our having the right to elect the President.
In 26 years, I've been doorstepped twice by Parliamentary candidates - both them in the last month, because thanks to boundary changes I'm now in a marginal constituency. Before then, I had two Labour bods in succession, each obviously taking the view that they needn't make any effort because the seat was usually bombproof under First-Past-The-Post. (I have a sneaking - perhaps totally unfair - suspicion that the boundary was altered partly to shut out Respect, who were threatening to do well in this part of Birmingham.)
I'm not a fan of the party list kind of PR, because that takes away the voters' right to reject individuals they consider unsuitable - but the Single Transferable Vote (STV) would give a voice to us voiceless people, and we might be heard from time to time among the hubbub.
I give below a list of seats actually won, and another showing how brutally simple national PR would have allocated them; what it can't show is how votes would have been cast if people knew every vote counted absolutely equally, nationwide; or how the picture would change if you could express 2nd and 3rd choices in constituency-based STV voting.
Saturday, May 08, 2010
Will Cameron support the breakup of the UK?
David Cameron proposes to reduce the number of MPs by 10%, i.e. 65 out of 650.
On the GE results, giving Scotland her "independence" (within the European Empire, of course) would mean the Conservatives having 305 seats out of 591, a 9-seat majority. The DUP in Northern Ireland could add the support of another 8 seats, at a price.
Or the Conservatives could drop the Unionist part of their party's title altogether, and cut Northern Ireland and Wales "free" as well. Only 9 of the 117 constituencies in the quasi-Celtic countries voted Tory. This would leave an English-only Parliament (eagerly desired by some on the interwebs) of 533 seats, 297 of them Conservative - a 30-seat majority for the Tories, even on the latest disappointing showing. Central Office could then simply relocate to Buckingham Palace to begin a thousand-year reign.
The political temptation to assist the European fragmentarian project must be immense.
And then there is the financial side. Comparing revenue and expenditure, how much do Northern Ireland, Scotland and Wales cost the British government?
Stockmarkets: don't join the crooked card game
It may be worse than at first we thought. The savage drop could have been (this says it was) deliberately engineered by Goldman Sachs as a shot across the bows, warning legislators not to mess with them!
_______________________________________
Nathan Martin makes the point that Thursday's 1,000-point drop on the Dow Jones Index unveiled the truth: the current high valuation of the market is because of money thrown into it by banks and hedge funds, not ordinary private investors. The drop happened when the insiders stopped trading.
The question is, how much longer can the illusion be maintained? Why are they doing it? Is it to tempt investors back into the market so that they can suffer all the financial losses when the banks pull out?
This is an age when cynicism comes easily.
Thursday, May 06, 2010
Right, it's UKIP then
It's not about Britain's economic difficulties: disaster is pretty much assured whoever gets in. But we've been poor before; so what? Liberty is harder to recover than wealth.
First we have to get the power back from Europe, then we have to get it back from our venal and treacherous domestic politicians.
There is no system that will make people good and happy; that revolution is in the heart. The bureaucratic reification of good intentions becomes the slave of its own power and protocols.
We need some freedom to act. I shall do my tiny, practically insignificant bit to clear a little space so that those who have good will can practise it.
A vote for UKIP, this "contemptible little army", may encourage those elsewhere with a better chance - perhaps in the South West - to keep pushing back, to resist the Black Hole.
UPDATE
Some discussion of the deficiencies of Proportional Representation on Hatfeld Girl's site. I've submitted the following comment:
PR no, Alternative Vote (what I used to know as the Single Transferable Vote) yes. The latter is basically the same as First Past The Post but with AV the post stands at 50% of votes cast.
I don't see how this would necessarily lead to hung Parliaments, coalitions and weirdo fringe MPs, indeed I think it would help avoid them. You'd get more of a fight for the centre ground, but you'd get an MP that was more likely to have reflected some level of your choice so you wouldn't feel disenfranchised. And I think you'd get more examination of policies to determine 2nd and 3rd choices.
Turnout this time in the national elections was reportedly 65%, less than at any time in the 75 years from 1922-1997. And that's after market panic, credit crunch, the near destruction of the banking system, general hoo-ha, fedupness with Brown (how much of the vote depends on emotional spasm?) and Sam Cam's bump.
The present system is effectively useless and corrupt, which is why it will continue. I expect David Cameron to offer a Royal Commission and then do nothing, since the current arrangement suits Tweedledum and Tweedledee.
Tuesday, May 04, 2010
It's not the ship, it's the tide that matters
John Mauldin
The only winning strategy "for the long haul" is to be fully committed to the market when it is rising and economic fundamentals support that direction, and to be entirely out at all other times.
Karl Denninger
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
The current investment conundrum, in a nutshell
John Mauldin
The only winning strategy "for the long haul" is to be fully committed to the market when it is rising and economic fundamentals support that direction, and to be entirely out at all other times.
Karl Denninger
Monday, May 03, 2010
Could Norway be a safe haven?
Could the past give us a clue? No doubt those of you who have access to more sophisticated financial software and databases can do better - this is just a starting point for discussion.
Here's the 10-year history (O&A data, interbank rate, annually on 3rd May each year, rebased to 100% against the Kroner in 2000).
And in graphic form:
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
Should we go for Norwegian cash, bonds and shares?
Could the past give us a clue? No doubt those of you who have access to more sophisticated financial software and databases can do better - this is just a starting point for discussion.
Here's the 10-year history (O&A data, interbank rate, annually on 3rd May each year, rebased to 100% against the Kroner in 2000).
And in graphic form:
Sunday, May 02, 2010
A house is a home, not an investment
All the previous three sentences are misleading.
First, “average” is hard to define. According to nethouseprices.com, in 2010 a semi-detached house in Sheldon, Birmingham sold for £10,000 while another in Harborne changed hands for £470,000. During the same period in London, semis sold for between £130,000 and £10 million (93 other semis went for over £1 million).
Second, as the Nationwide report admits, house prices are still 10% below the peak reached in October 2007. The good news is that they are more affordable now: using the Nationwide’s online database, here is a graph of first-time buyer mortgage costs as a proportion of average take-home pay in the West Midlands (the most typical region in the country):
Third, we face a long period of economic difficulty, with the threat of high unemployment. A falling pound could result in higher food and energy costs, and if the UK’s credit rating drops interest rates could rise. Each of these factors could easily depress property prices.
You have to live somewhere, but don’t think of it as a money-maker.