Proud to be a bear

The Yorkshire vet "James Herriot" wrote of a rich farmer whose principle was, "When all the world goes one way, I go t'other."

Barry Ritholtz publishes a report by James Bianco saying that the Investor's Intelligence survey of investment newsletters shows bearishness at its lowest since 1963.

When nearly everyone agrees, nearly everyone's wrong. The system hasn't been fixed yet and we haven't yet had to face up to the full cost of the consequences. I'm not an active trader - how can you beat the City gunslingers? - so instead of trying to predict the waves I look for the tide.

Until the British Government withdrew Index-Linked Savings Certificates, I'd have settled for them, since I'm more interested in not losing than in making a killing. Now, and until money velocity levels out and QE leads to serious inflation, it's cash for me, plus, reluctantly at these prices, gold.

I agree with Mish:
_____________________

1. Gold has been sinking, as it should, if Congress is fiscally prudent.
2. Government Should be Prudent
3. Government Won't Be Prudent

Should Congress be fiscally prudent (and the fiscal cliff is not close to being fiscally prudent), I would change my stance on gold in one second flat.
_____________________

Proud to be a 5%-er, then.
 
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; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Fracking - new post

See Broad Oak Blog's Energy Page, here.

Why fracking - and other energy alternatives - won't save us completely

The discovery of large reserves of shale oil and gas has raised hopes that our economies may be rescued by a new energy bonanza. But this is not a rerun of the 1970s North Sea Oil boom that gave the UK economic relief for decades afterwards.

Attention is focused on the quantities of reserves, but the missing factor in the analysis is what it costs to exploit the energy source. What we should be looking at is "net energy profit", also known as the "energy profit ratio" or "energy return on investment (EROI)". The "profit" is accounted for not in dollars but in energy - what is put in, versus what is made available to the end user.

The table below is taken from an August 2010 article by Roger Blanchard of Lake Superior State University. It shows that the energy profit from shale oil is a mere 10% of what was obtainable from 1970s conventional oilfield production.

 

Other energy sources are even worse. For example, corn ethanol barely covers its energy costs and is controversial because it harms the poor: a May 2012 study concludes that the price of corn has tripled in Mexico because of this additional demand and associated financial speculation.

 

Wikipedia offers this EROI comparison of energy sources:

 

Corn ethanol is even worse than solar, and that's saying something.

 

Of the renewables, wind turbines look promising, though they are also stigmatised by some as noisy, unsightly bird-chopping machines. And the estimated EROI on them varies startlingly, according to this graph from a 2007 article in "Encyclopedia of the Earth" (updated 2011):

 

 

 Accounting for every scrap of energy in the process - from the production of equipment to its ultimate decommissioning - must be hideously complex, leaving the debate open to skewing by a variety of competing commercial interests and pressure groups (including, no doubt, the publishers of the above).

 

But accounting in financial terms is also biased by subsidies and permissions granted at the whim of governments swayed by industry lobbyists or trying to earn political credit with environmentally-minded voters. Money has already lost one of its three functions - as a store of value - and thanks to official interference in its quantity and distribution, is now rapidly losing another - its value as a unit of account, to inform decisions. Otherwise we would be unlikely to see so many British homes festooned with solar panels - an enthusiasm that has waned dramatically since the subsidy was cut this year.

 

Renewables will only go a small way towards replacing fossil and nuclear fuels, and shale fuels cannot promise "business as usual" in the meantime. Energy is not going to run out soon, but it will become more expensive, and our focus in the next few decades should be on restructuring the way we live.  We didn't do that when North Sea oil was gushing. Shale is pricey and will be attended by inconvenience and controversy, but it may be our last chance to adapt without even more catastrophic disruption to normal life.

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; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Why moneylenders MUST be busted

The equivalent of one US dollar invested on the night of Christ's birth at less than 4 per cent per annum, would today be worth more than the Earth's weight in gold.

Here's the math:

a. The Earth's mass is estimated at (5.9722 times 10 to the power 24) kilograms
b. According to goldprice.org, a kilo of gold today costs $53,235.21
c. a*b = $(3.17931 times 10 to the power 29)
d. $1.03434 to the power 2012 = $(3.18127 times 10 to the power 29)
e. d>c.

Yes, you say, but what about tax?

Let's assume that interest over the last two-millenia-and-a-bit was taxed every year at the outrageous rate of 50%. All that does, by reducing the effective interest rate to 1.7% p.a., is defer the date at which the goal is reached; in this case, the year 4030.

The same argument applies to inflation, as long as it's significantly less than the interest rate.

So in the long run, the lender must end up owning everything - provided he can always find borrowers and especially, always have his capital safe.

Our governments, by bailing out the banks, have ensured that capital security.

Better still, under the present arrangement banks hardly need their own capital at all. If the Federal Reserve conjures up a billion dollars and lends it to a bank at zero interest, and the bank uses the money to buy safe government securities (albeit at a low yield), then the bank is being drip-fed free cash. Inflation doesn't matter - there's no bank capital to erode, so all inflation does is reduce the value of the guaranteed profit.

Give the lender complete security of capital, and real interest after expenses, taxes and inflation, and you will in time give him the Earth.

Which is why there must be a reset, or Jubilee.

There is no such thing as a perpetual motion machine, or a safe paper-based solution to a broken economy in which a minority increasingly takes ownership of their fellows. Sooner or later, the gathering of wealth by materially unproductive means must end.

Cause for outrage: what bankers and traders have done to "the people"

"When floodwaters cover our homes, we expect that FEMA workers with emergency checks and blankets will find us. There is no moral or substantive difference between a hundred-year flood and the near-destruction of the global financial system by speculators immune from consequence. But if you and your spouse both lose your jobs and assets because of an unprecedented economic cataclysm having nothing to do with you, you quickly discover that your society expects you and your children to live malnourished on the streets indefinitely. "

- From "The Sharp, Sudden Decline of America's Middle Class" by Jeff Tietz, Rolling Stone magazine. The article details the harrowing experience of recession victims, many of whom have done "all the right things" and never been unemployed before.

Inequality is starkly worse in the USA than in other "developed" countries, as shown in the graph below (source):

 

 

That uses data from 2010, but according to the official Census it's getting worse:

 

"The Gini Index for the United States in the 2011 ACS (0.475) was significantly higher than in the 2010 ACS (0.469). This increase suggests more income inequality across the country."

_________________________________
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; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Cause for outrage: what bankers and traders have done to "the people"

"When floodwaters cover our homes, we expect that FEMA workers with emergency checks and blankets will find us. There is no moral or substantive difference between a hundred-year flood and the near-destruction of the global financial system by speculators immune from consequence. But if you and your spouse both lose your jobs and assets because of an unprecedented economic cataclysm having nothing to do with you, you quickly discover that your society expects you and your children to live malnourished on the streets indefinitely. "

- From "The Sharp, Sudden Decline of America's Middle Class" by Jeff Tietz, Rolling Stone magazine. The article details the harrowing experience of recession victims, many of whom have done "all the right things" and never been unemployed before.

Inequality is starkly worse in the USA than in other "developed" countries, as shown in the graph below (source):

 

 

That uses data from 2010, but according to the official Census it's getting worse:

 

"The Gini Index for the United States in the 2011 ACS (0.475) was significantly higher than in the 2010 ACS (0.469). This increase suggests more income inequality across the country."

Why buy gold?

Gold is a condensed way to hold your wealth.

Currently the most popular US gold coin, the American Gold Eagle, retails for around $1,800. A recent Federal Reserve survey says that the median US family had a net worth of $126,400 in 2007. Today, that would buy 70 gold eagles and some change. Everything you have, in two handfuls: two 4-inch-long rolls, weighing 43 ounces each.

Actually, less: the same Fed survey shows the average family net worth was down to $77,300 in 2010. That's 41 gold eagles and change; or, a handful of coins 4.63 inches long and weighing less than 50 ounces. It doesn't rust or rot, and although the value will vary, it'll never be worthless.

But there you are, gold in hand, standing in the street. You can't eat or wear the stuff, it won't cover your heads or cook your food. It doesn't earn interest, and unlike farm animals, it doesn't breed. And it doesn't protect you and your loved ones. Your 50-ounce stash against a 40-ounce, fully-loaded 1911 Colt 45? You'd be lucky to walk away empty-handed.

It preserves wealth, but not necessarily for you. Three years ago in central Britain, a man with a metal detector discovered a hoard of well over a thousand intricately-worked gold items. Together they weigh some 6.3 kilos - worth a third of a million dollars in scrap value (but over $5 million because of their history and artistry). The magnificent Anglo-Saxon treasure dates from the 7th or 8th century.

The key point is, whoever buried it didn't come back.

Gold doesn't ensure your survival if society breaks down altogether, but it can help protect you from the wipeout that happens when paper money becomes worthless. However, remember how the hungry Esau sold his inheritance to his brother Jacob in exchange for a bowl of stew: it's not enough to have gold, you need someone to sell it to, and at a fair price.

So ignore the apocalyptic prophets; gold is for troubled times, not for utter disaster, and it's not the only thing you should have. As Eric Sprott said recently, "most ... experts say that you should have 5% or 10% of your money in gold".

The question is, how to hold it.

Via a broker? MF Global held gold in a client account (effectively, as trustee) for investor Gerald Celente, yet the holding was seized by the firm's creditors when it collapsed in 2011.

Via a depository? Congressman Ron Paul has tried to get the Federal Reserve to open its vaults to auditors to find out how much is actually there; we're still waiting, and Germany is getting worried about its holding in the US. It is even rumoured that China has "lost" 80 tons from its own national treasury. Attractive stuff, is gold.

How else? An August 2012 article in Investors Chronicle looks at other ways: gold funds, gold bars, coins. Even then, you need to be confident that the fund holds 100% of its stock, 24/7 - you'll recall that fractional reserve banking began among gold dealers who took advantage of the fact that their customers usually didn't all want access to their metal at the same time. And it's worth noting that some outright physical fraud is now going on: tungsten has the same density and is far cheaper, so selling a gold-wrapped bar of tungsten represents a fat profit for criminals.

In these times of weakened trust, perhaps you could accumulate some gold coins from a reputable dealer, and keep them safe somehow - and don't tell those who don't need to know.

________________________________________
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; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Where are the rich investing?

Last week I visited a successful Midlands brokerage. The boss was looking where to invest tens of millions of pounds for a client.

Stocks, bonds, real estate, commodities?

No: cash.

He'd found somewhere that offered 3.6%. Security of capital, and protection against our current moderate inflation.

How many individuals and corporations around the world are doing much the same? Are they waiting for the optimistic losers to slug it out, before stepping in and buying up when everything gets cheaper?
_________________________________
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; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Why buy gold?

See new post, here.

Political Correctness: a straw in the wind

I deal with primary age children who are excluded from mainstream school. They have a variety of problems and we do the best we can to straighten them out. Without humour, we'd go under.

Currently we have a student social worker who comes in weekly for the experience. I told her the old joke, "How many kids with ADHD does it take to change a lightbulb? Ans.: Hey, let's go out and ride our bikes!"

Her mouth gave a small upward twitch and she said, "That shouldn't be funny."

Humour is anarchic and often contains a germ of truth. So it is the first target of the cold forces of repression.

I have been warned.

News for the confused

Bradley Wiggins is to be made Archbishop of Canterbury.

A translation of Guillaume de Machaut's "Un Po Apres Le Temps d'Autonne"

A little after autumn time

When those who cultivate the vine

Pick their grapes and fill the tun

And with work that’s lightly done

Each man offers to his fellow

Pears and grapes and peaches mellow

When in the soil the corn-seeds grow

And the leaf falls from the bough

By Nature’s or the wind’s design

In thirteen hundred forty-nine

On the ninth day of November

I was closed up in my chamber.

Had the sky been bright and clear

I should have gone to take the air

But the mountains and the meadows

Were hid in fog and deepest shadows

So I was taken by the gloom

Thinking in my lonely room

How all men everywhere are governed

By cronies meeting in the tavern

How truth and justice in the land

Are dead, slain by the hand

Of greed, who over them holds reign

As if she were a sovereign queen

How the rulers rob the ruled

Sack, plunder and assault the world

Crushing them in their distress

Merciless and pitiless

Great mischief seems it to my mind

When vice and power are combined

 

______________________________________________

 

(Translation by blog author, 03 November 2012. Copyright.)

 

Original text:

Un po apres le temps d’autonne

Que chascuns vandange et entonne

Qui a vingnes a vandangier

Et qu’on a a petit dangier

Pesches moust poires et roisins

dont on presente a ses voisins

Que li blez en la terre germe

Et que la fueille chiet dou cherme

Par nature ou dou vent qui vente

L’an mil trois cens nuef et quarante

Le novisme jour de novembre

M’en aloie par mi ma chambre

Et se li airs fust clers et purs

Je fusse ailleurs mais si obscurs

Estoit que montaignes et plains

Estoient de bruines pleins.

Si que la merencolioie

Tous seuls en ma chambre et pensoie

Comment par conseil de taverne

Li mondes par tout se gouverne

Comment justice et verite

Sont mortes par l’iniquite

D’avarice qui en maint regne

Com dame souvereinne regne

Com li signeur leur subgiez pillent

Roubent raembent et essillent

et mettent a destruction

Sans pitie ne compation

Si que grans meschies ce me samble

Est de vice et pooir ensamble.

From Le Jugement du roy de Navarre  by Guillaume de Machaut (d. 1377)

 

Paranoia

I like to browse other people's reading lists from time to time. Looking through Captain Ranty's today, I note:

• Letter From Amerika's blog has been removed entirely, the last post being one entitled "Junk Science and Big Pharma Evil Ruining Kids Lives". As someon who teaches children that are routinely prescribed medication for ADHD, I'd have read that if it were still up. Why the vapourisation?
• Lawful Rebellion's last post reproduced correspondence with a QC including the text of a petition to HM The Queen claiming that the UK's membership of the EU was illegally secured and that there have been numerous offences of treason committed in connection with that. Since then, zilch.

One could write a thriller about dissident bloggers being tracked down by State agents and "disappeared" - almost the perfect crime, since typically bloggers use pseudonyms and do not give geographic or other direct contact details. But would it be fiction?

British economy continues to slump

Shortly after the desperate clutching at straws ("1% Q3 GDP increase compared with the same time last year!") comes the bank lending figure: down another 0.9% annualised on the previous (also very disappointing) quarter.

QE is just buying time. The real economy is withering on the vine. Until debt is forgiven or defaulted, no real growth will happen. Demand is frozen because of debt and the overvaluation of unproductive assets.

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 money velocity at historic low

St Louis Fed figures show that the rate at which money changes hands is at it slowest since records began in 1959. The velocity of M2 is now 1.568, down from the historic high of 2.135 in mid-1997 - a reduction of 25.56%. The first 3 quarters of 2012 are all below the previous nadir in 1964.

Roughly speaking, for every 4 dollars spent at the end of the last Millennium, Americans are now spending 3.

But the money supply has not grown sufficiently to make up the shortfall (online figures only start from early November 1980, but the pattern is clear):

 

M2, the Fed explains, is a broad measure of money held by households, so in its way it reflects the state of the real or workaday economy.

 

The latest figure for M2 is $10.2 trillion, up from $4.03 trillion at the end of 1997, a year in which GDP was $8.33 trillion. If money velocity had not changed, current GDP would be not $15.78 trillion as it now is, but $21.8 trillion - 38% higher.

 

Quantitative Easing (not included in M2) is not to stimulate that kind of growth, but to avert or mitigate disaster.  So far, according to the November issue of Forbes magazine, $3.3 trillion has been poured into banks and quite a lot from there into the government, just to keep things going, but Mike Whitney of Global Research reports estimates of $4 - 10 trillion more needed. Even then, the cheap cash may be shoring up stocks and bonds, but is doing little to stimulate demand or support those who try to meet it.

 

The much-maligned Federal Reserve is buying time, but the question is whether anyone is doing anything useful during the reprieve. Governments of both parties have spent 30 years encouraging banks to funnel money into homes - largely unproductive and illiquid assets - and the drag of debt has finally slowed demand to a halt.

 

Meantime, productive capacity has been haemorrhaging Eastwards, and the pool of labour skills in the US are in danger of decay. Even if much consumer and real estate debt were forgiven now, it would be a challenge to rebuild and restaff factories; but all that, I think, is what has to happen.

 

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 money velocity at historic low

St Louis Fed figures show that the rate at which money changes hands is at it slowest since records began in 1959. The velocity of M2 is now 1.568, down from the historic high of 2.135 in mid-1997 - a reduction of 25.56%. The first 3 quarters of 2012 are all below the previous nadir in 1964.

Roughly speaking, for every 4 dollars spent at the end of the last Millennium, Americans are now spending 3.

But the money supply has not grown sufficiently to make up the shortfall (online figures only start from early November 1980, but the pattern is clear):

 

M2, the Fed explains, is a broad measure of money held by households, so in its way it reflects the state of the real or workaday economy.

 

The latest figure for M2 is $10.2 trillion, up from $4.03 trillion at the end of 1997, a year in which GDP was $8.33 trillion. If money velocity had not changed, current GDP would be not $15.78 trillion as it now is, but $21.8 trillion - 38% higher.

 

Quantitative Easing (not included in M2) is not to stimulate that kind of growth, but to avert or mitigate disaster.  So far, according to the November issue of Forbes magazine, $3.3 trillion has been poured into banks and quite a lot from there into the government, just to keep things going, but Mike Whitney of Global Research reports estimates of $4 - 10 trillion more needed. Even then, the cheap cash may be shoring up stocks and bonds, but is doing little to stimulate demand or support those who try to meet it.

 

The much-maligned Federal Reserve is buying time, but the question is whether anyone is doing anything useful during the reprieve. Governments of both parties have spent 30 years encouraging banks to funnel money into homes - largely unproductive and illiquid assets - and the drag of debt has finally slowed demand to a halt.

 

Meantime, productive capacity has been haemorrhaging Eastwards, and the pool of labour skills in the US are in danger of decay. Even if much consumer and real estate debt were forgiven now, it would be a challenge to rebuild and restaff factories; but all that, I think, is what has to happen.

 

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.

Reasons to visit Australia 2: the Bunyip

I first read about the Bunyip in Barry Humphries' first autobiography, "More, Please." Humphries costumed himself as one in an early Australian children's TV programme, in which he would recount Aboriginal legends. Part of the get-up was a large proboscis (some say the Bunyip resembles an elephant) and partway through live transmission the nose fell off. Characteristically, the future global entertainer compounded the misfortune by explaining to the watching youngsters, as he re-fixed the appendage, that he had leprosy; transmission was abruptly terminated.

Attempts have been made to explain away the Bunyip's existence, as with other marvellous and miraculous things; even, to date its first mythical appearance (1932).

On the other hand, it may be quite real and have made its way into Aboriginal folk-memory from 50,000 years ago, when the continent was first colonised by humans. When they arrived, the giant wombat or diprotodon roamed the land, a massive creature weighing nearly 8 times as much as the modern American grizzly bear:

(Pik: Wik)
Together with other giant meaty animals, it seems to have disappeared within a few thousand years of the immigrants' arrival. But like the coelocanth, believed 65 million years extinct prior to its rediscovery alive in 1938, there could be some left.

There are two reasons why we have no complete physical evidence of this creature:

1. It is rare, choosing as its habitat remote swamps and waterholes.

2. If you meet one, you will suddenly become rarer than it.

It also helped revive the Australian film industry, thanks to the 1970 movie "The Naked Bunyip" in which a naïf sex researcher conducts appropriate investigations; the maker bypassed censorship by covering the most objectionable images with Bunyip caricatures. Coincidentally, modern legend says the Bunyip (like Barry Humphries) prefers women victims, but "any port in a storm".

Totnes beats off Costa

News just in: Costa has withdrawn its attempt to barge into Totnes against the will of thousands of residents (though not their local councillors). They'd thought they could use legal threats and cosy cooperation with the planners to override objections. Not that they've always taken the trouble to get planning permission before opening another branch. It's been a hard fight by clever, articulate people; most other communities have had to cave in.

Some may take the view of the spectacularly misguided (but he's still young, bless him) Tom Doran in The Independent (such a hackneyed use of the word "embrace", too) that opposing large-scale capitalism is a Leftist thing. If so, please define politically the 41 independent traders who offer coffee there. Liberty for the individual is not at all the same as liberty for large corporations to engulf and devour in their quest for infinite growth.

You'd think the MSM pseudosophisticates who chorus their support for Big MD dream of retiring to Birmingham city centre. Unlike about a million Brummies.

Let's hear it for Poujadism and "the defense of the common man against the elites" - surely a theme close to the hearts of libertarians.

Reasons to visit Australia 1: The Cigarette Snail

(Pic: Wik)

This little beauty is found in coral reefs and shallow waters in the Indian Ocean, but the beer isn't so good there. So come to Australia, where the last recorded fatal attack on a local was in 1935. Worldwide, only 30 deaths in 300 years, so the odds are in your favour.

The "cigarette" monicker is because it's said to poison you so fast you only have time for a smoke. That's a wild exaggeration: actually you have a few hours. And the creeping paralysis doesn't hurt too much - the stinger injects an analgesic together with the venom.

How language changes: "Savile row suit"

From the Duden Anglais Encylopedia of Contemporary Language (2020 Edition):

(In this example, the pronunciation has altered because of the substitution of one homonym by another.)

Savile Row Suit [sævɨl roʊ suːt] (archaic): expensive, handmade gentleman's apparel. Savile Row was one of the famous centres of the London garment trade. The work has since been outsourced to China, India and latterly Vietnam, and the street is now best known for its branches of Costa Coffee, TKMaxx and other consumer chain outlets, plus the largest unemployment benefit office in Manche Nord (formerly SEEDA/EMDI, previously "South-East England" (q.v.)).

Savile Row Suit [sævɨl raʊ suːt] (modern): expensive legal action taken to deny contemporary knowledge of, or indirect involvement in, an entertainer's sexual misdeeds. This phrase gained currency in the aftermath of the October 2012 Newsnight/Panorama controversy (current affairs programmes on the now-defunct British Broadcasting Corporation (see "Sky BEEB")) over the late Sir Jimmy Savile.

Its usage then extended to cover the sexual exploitation of "underage" girls by many popular musicians and film- and TV-programme-makers in the 20th and early 21st centuries. The usage is expected to decline in the near future, as the age of consent has since been lowered to 14 and is scheduled (pending Presidential Assent) to be abolished entirely as per old NCCL recommendations. (The NCCL, now known as Liberty, had sometime included among its officers future Labour Government ministers Patricia Hewitt and Harriet Harman, whose position on these matters may have changed.)

In any case, details of any such alleged past offences are now unpublishable in the EU following the European Privacy Directive of 2019, which incorporates many of the features demanded by the European Privacy Association and chose to go further in the light of scandals involving certain French, Belgian and Italian politicians in the late 2010s.

Among the consequences of that Directive are the "weeding" of newspapers, magazines and other ephemera from libraries (such as the Bodleian) and national collections, to expunge allegations such as the ones that appeared in the scurrilous Spiked magazine in the 1990s concerning a British (see glossary) government minister and a certain North African hotel.

UK more vulnerable to systemic banking tremors than Ireland

That's gross debt, not net debt; but it's the equivalent of balancing two squirming elephants instead of two oranges. Thank you, banks.

Data from: Graham Summers, Phoenix Capital Research.

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 more vulnerable to systemic banking tremors than Ireland

That's gross debt, not net debt; but it's the equivalent of balancing two squirming elephants instead of two oranges. Thank you, banks.

Data from: Graham Summers, Phoenix Capital Research.

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.

Mr Cameron has another vicarious emotion

Hot on the heels of Mr Cameron's vague fantasy of doing something about Europe comes this:

"Tells friends... wants... could... has discussed his views..."

Meaning Cameron has told him to tell him, just like he gave Useless Eustace Grayling's opinion to him (a feeble fire that Ken Clarke has immediately pissed on).

To be vulgar, Cameron and Gove (and Grayling, as discussed yesterday) are cock-teasers. They lift their skirts and what you see is just what you won't get, no matter how many drinks you buy them. The Daily Mail plays along because it knows which side its bread is buttered; it would turn Cameron's fart into a Hallelujah Chorus. Until it switches to sinister clown Boris Johnson.

We now have a political elite composed of overprivileged, useless chinless wonders, fainéants occupying the place of people who might achieve something for somebody apart from themselves.

They are the choking bozone layer above us and it's time we got some fresh air.

The privatisation of crime by Failing Grayling

Householders are now encouraged to enter a fantasyland where they confront and subdue intruders and are authorised to use "disproportionate" force.

1. Force that is "disproportionate" is unjust in common law. You are already entitled to use force according to what seems reasonable in the circumstances, which can mean killing someone else. Should you succeed, some might advise (unofficially) that you should then go totally over the top and make a bloody mess of the perpetrator, as evidence that you were panicking and so didn't kill him in cold blood. One shot, jail; the whole magazine plus pistol-butt-smashing the face to a pulp while screaming like a banshee for ten minutes, walk free - maybe. A knife fight - far messier: they often don't die straight away, which is why deceased knife victims often have many, many wounds. You think you're going to win this?

2. You are likely to be asleep when a burglar comes in. What are the chances that you will wake in time to recognise the threat, and that you will be stronger, fitter and quicker than the intruder who is already fully pumped-up to the extent that (typically) after the break-in he raids your fridge and biscuit tin to replenish his adrenalin-haywired blood-sugar level? And what about his Number Two, who unknown to you is behind you as you are dealing with Number One? Possibly also Three and Four, and a lookout? How about when you're ill, or old, or crippled?

3. If self-defence becomes the norm, don't expect the criminal to come in unarmed.

What this is really about, is the failure of the police and the courts. If police patrolled regularly, checking gates and shop doors, you'd be protected. If first-offence burglary was punished by a stiff prison sentence - as it used to be - your property would be protected. If hanging were still a legal punishment, your life (and the lives of your loved ones) would be protected.

As it is, you're on your own, son.

That EU Nobel Peace Prize

 

Mel Brooks - I Want Peace (from "The Producers", Embassy Pictures, 1968)

I don't want war. All I want is peace. Peace.             

Peace!

A little piece of Poland
A little piece of France             
A little piece of Portugal
And Austria perchance

A little slice of Turkey
And all that that entails                 
Und then a piece of England Scotland
Ireland and Wales

A little nip of Norway
A little spot of Greece
A little hunk of Hungary
Oh what a lovely feast

A little bite of Belgium
And now for some dessert
Armenia Albania
And Russia wouldn't hurt

What exactly is liberty?

Dick Puddlecote has another go at Prohibition (the American experience of which is widely misunderstood), and (being naturally contrarian myself) I have a geat deal of sympathy for his opposition to officialdom.

But we can easily be misled into thinking there are only two positions to take: bans, or complete lack of restriction. I think lovers of freedom need to develop a more nuanced stance. As I comment there:

It's not the making available that harmful, it's the pushing. Look how licensing laws have been progressively relaxed since the 50s, mostly for the benefit of brewers and the supermarket lobby.

And the advertising - remember the 1989 Woodpecker cider ad showing a couple of woodpeckers seated on the ground, cans in hand, with the slogan"Get out of your tree with Woodpecker Cider"? There's a reference to it in this book (p 368 in Google Books - even there the text is unavailable online) but it seems impossible to retrieve the image - it's like getting hold of the Sun's "Gotcha!" Belgrano front page.

The liberty of the individual is distinct from the liberty of powerful commercial enterprises to exploit our weaknesses, and in this context I do not consider businesses to be persons with the right to liberty.

I think libertarians need to consider how they may inadvertently be acting as unpaid agents for the more questionable sectors of corporate capitalism; and to what extent liberty is better exercised in controlling an appetite rather than giving way to it.

Superficial consumer uptick, underlying concerns continue

Back in June, I noted that credit card lending had declined over the previous 12 months; now, according to the Bank of England, there has been a sharp recovery:

Similarly, the second-quarter report from ING Direct's Consumer Savings Monitor (PDF) shows a rise in consumer savings balances:

Yet the figures for UK M4 continue to decline:

So are these signs of recovering confidence? Perhaps the credit card figures reflect a temporary Jubilee Year / Olympics buildup feelgood splurge, and the plumping up of the savings cushion shows continuing underlying caution; otherwise, why not spend from savings rather than rack up plastic debt? And the M4 figures indicate a deflationary undertow beneath the surface.

But the aggregate statistics may be misleading. It could be that some who still have their heads above water, are saving hard while they can, and others are driven to buy on the card because they have no savings and cannot get more bank credit.

The next quarter may clarify the picture.

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.

Superficial consumer uptick, underlying concerns continue

Back in June, I noted that credit card lending had declined over the previous 12 months; now, according to the Bank of England, there has been a sharp recovery:

Similarly, the second-quarter report from ING Direct's Consumer Savings Monitor (PDF) shows a rise in consumer savings balances:

Yet the figures for UK M4 continue to decline:

So are these signs of recovering confidence? Perhaps the credit card figures reflect a temporary Jubilee Year / Olympics buildup feelgood splurge, and the plumping up of the savings cushion shows continuing underlying caution; otherwise, why not spend from savings rather than rack up plastic debt? And the M4 figures indicate a deflationary undertow beneath the surface.

But the aggregate statistics may be misleading. It could be that some who still have their heads above water, are saving hard while they can, and others are driven to buy on the card because they have no savings and cannot get more bank credit.

The next quarter may clarify the picture.

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.

Tyranny in the name of freedom: a case history

We're watching with interest BBC's "Wartime Farm" series, about efforts to increase food production in Britain in World War Two. Last week's episode (number 4) included a sadly instructive story about a farmer who ran foul of what seems to have been the stupidity and inflexibility of centralised bureaucracy. Resisting it, he paid with his life.

The incident is covered from 23:19 in the programme, and also described in the online Radio Times. A Hampshire tenant farmer called Ray Walden had been ordered to plough up "roughly half" of his farmland for extra corn production to meet "War Ag."targets, but according to a contemporary interviewed in the programme, some of that land was too wet and unsuitable for corn. Walden refused and when served with an eviction notice (as some 2,000 farmers were, during the War) barricaded himself in his house and in the ensuing 18-hour siege shot at those trying to remove him, wounding one or two in the process. Walden was shot in the head and fatally injured.

The contemporary report by the Hampshire Chronicle, covering the events and the inquest, is here. However, significant extra details are given in this account, which tells us that (a) under wartime regulations the proceedings of the inquest were held in secret, the public and Press being excluded, and (b) no evidence was offered on the late man's behalf to explain why he had acted as he did. In the latter account the Cultivation Order is also said to have been for only four acres to be ploughed, not half the (62 acre) farm as in the BBC's version, which raises the possibility that there may have been some falsification in the evidence given at the inquest in order to make the Min of Ag's demand seem more reasonable.

Only one man, only one death - but that's all any of us has, despite the BBC's attempt in the programme to sweeten the bitter pill by reference to "the greater good". In how many areas does government act like a kind of Juggernaut, rolling over anyone who gets in its single-minded, sometimes simple-minded way?

UPDATE

A comment on this post at Orphans of Liberty:

Well, what a surprising thing to stumble upon. George Walden is an ancestor of mine, on my mother’s side. Family legend has long held that “dark forces” were at work of a more local nature, namely anti-Papism in the form of the vicar and a long-held grudge over disputed debts with a local worthy. In light of these, favours were called in and a ridiculous land demand was drawn up. All rumour and hearsay, of course. The family were most offended by the suggestion that he committed suicide.

Readers may know that anti-Catholic prejudice still ran pretty strongly in those days, as my late mother-in-law found when as a youngster she spent time in Scotland. And money is often a cause of trouble.

China expanding into Russia

From France 24 (hat-tip: farmlandgrab.org) (loosely translated by me with Google Translate's help):

Long closed to foreigners, Siberia is now opening up to China. More and more Chinese are crossing the Amur River to settle there. Their presence is beginning to worry the Russian authorities, who see them as new competition.

Since the fall of the Soviet Union, the Chinese have been leaving the Middle Kingdom in growing numbers to settle on the other side of the border, in Russia, in the Far East region historically known as Eastern Siberia.

 FRANCE 24 reporters went to Blagoveshchensk, a Russian city located more than 8,000 kilometers from Moscow and merely 800 meters from China. The two countries are separated only by the Amur River. In winter, when the river freezes, one can cross on foot.In summer, it takes less than ten minutes to get from one bank to the other.

 It was once a front line where the armored divisions of the two feuding brother Communist states threatened each other. Now "Blago", formerly a closed city, has become the symbol of Far East "sinicization". Here, without the Chinese there is no future. The development of the economy depends entirely on relations with China. Derelict ex-collective farms have been taken over by Chinese. There are many mixed marriages and Chinese is the principal foreign language taught at school and university. Here, all Chinese speak Russian and the Russians know a few words of Chinese.

Generally this cohabitation is going well, although there are some who object to the "peaceful invasion". Many Russians are worried about their country becoming a "reservoir" of raw materials for their Chinese neighbour who buys their oil and exploits their forests and farmland. Others who are forced out of the labour market by the cheap and efficient Chinese workforce denounce them as a "yellow peril".

That xenophobic language is completely contradicted by the reality that the Russians need the Chinese here. In "Blago", they remember a time not so long ago when Chinese products helped the Russians to take the brunt of the post-Soviet transition. And today, it is thanks to Chinese entrepreneurs that the Russian economy is modernizing.

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.